Vol. 79 Thursday, 

No. 215 November 6, 2014 

Part III 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 405, 411, 413, and 414 

Medicare Program; End–Stage Renal Disease Prospective Payment 

System, Quality Incentive Program, and Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies; Final Rule 


tkelley on DSK3SPTVN1PROD with RULES3
66120 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 411, 413, and 414 

[CMS–1614–F] 

RIN 0938–AS13 

Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule will update 

and make revisions to the End-Stage 

Renal Disease (ESRD) prospective 

payment system (PPS) for calendar year 

(CY) 2015. This rule also finalizes 

requirements for the ESRD quality 

incentive program (QIP), including for 

payment years (PYs) 2017 and 2018. 

This rule will also make a technical 

correction to remove outdated terms and 

definitions. In addition, this final rule 

sets forth the methodology for adjusting 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) fee schedule payment 

amounts using information from the 

Medicare DMEPOS Competitive Bidding 

Program (CBP); makes alternative 

payment rules for certain DME under 

the Medicare DMEPOS CBP; clarifies 

the statutory Medicare hearing aid 

coverage exclusion and specifies 

devices not subject to the hearing aid 

exclusion; will not update the definition 

of minimal self-adjustment; clarifies the 

Change of Ownership (CHOW) and 

provides for an exception to the current 

requirements; revises the appeal 

provisions for termination of a CBP 

contract, including the beneficiary 

notification requirement under the 

Medicare DMEPOS CBP, and makes a 

technical change to the regulation 

related to the conditions for awarding 

contracts for furnishing infusion drugs 

under the Medicare DMEPOS CBP. 

DATES: Effective on January 1, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Stephanie Frilling, (410) 786–4507, for 

issues related to the ESRD PPS, the 

ESRD PPS CY 2015 Base Rate, Wage 

Indices, Drugs Used for the Treatment of 

ESRD, and Payment for Frequent 

Hemodialysis. 

Michelle Cruse, (410) 786–7540, for 

issues related to the ESRD PPS, the Low 

Volume Payment Adjustment, and the 

Wage Index. 

Wendy Tucker, (410) 786–3004, for 

issues related to the Low Volume 

Payment Adjustment and the Wage 

Index. 

Heidi Oumarou, (410) 786–7342, for 

issues related to the ESRD PPS Market 

Basket Update. 

James Poyer, (410) 786–2261, for 

issues related to the ESRD QIP. 

Christopher Molling (410) 786–6399 

and Hafsa Vahora (410) 786–7899 for 

issues related to the methodology for 

making national price adjustments 

based upon information gathered from 

the DMEPOS CBP. 

Sandhya Gilkerson, (410) 786–4085, 

for issues related to the alternative 

payment methodologies under the CBP. 

Sandhya Gilkerson, (410) 786–4085 

and Michelle Peterman, 410–786–2581 

for issues related to the clarification of 

the statutory Medicare hearing aid 

coverage exclusion. 

Michelle Peterman, (410) 786–2591 

for issues related to the definition of 

minimal self-adjustment at 414.402. 

Janae James (410) 786–0801 for issues 

related to CHOW and breach of contract 

appeals. 

SUPPLEMENTARY INFORMATION: 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

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

Government Printing Office. This 

database can be accessed via the 

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

Addenda Are Only Available Through 

the Internet on the CMS Web site 

In the past, a majority of the Addenda 

referred to throughout the preamble of 

our proposed and final rules were 

available in the Federal Register. 

However, the Addenda of the annual 

proposed and final rules will no longer 

be available in the Federal Register. 

Instead, these Addenda to the annual 

proposed and final rules will be 

available only through the Internet on 

the CMS Web site. The Addenda to the 

End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) rules 

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

ESRDPayment/PAY/list.asp. Readers 

who experience any problems accessing 

any of the Addenda to the proposed and 

final rules of the ESRD PPS that are 

posted on the CMS Web site identified 

above should contact Stephanie Frilling 

at 410–786–4507. 

Table of Contents 

To assist readers in referencing 

sections contained in this final rule, we 

are providing a Table of Contents. Some 

of the issues discussed affect the 

payment policies, but do not require 

changes to the regulations in the Code 

of Federal Regulations (CFR). 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

2. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

3. Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 

B. Summary of the Major Provisions 

1. ESRD PPS 

2. ESRD QIP 

3. DMEPOS 

C. Summary of Costs and Benefits 

1. Impacts of the Final ESRD PPS 

2. Impacts for ESRD QIP 

3. Impacts for DMEPOS 

II. Calendar Year (CY) 2015 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, 

Public Comments, and Responses to 

Comments on the CY 2015 ESRD PPS 

Proposed Rule 

C. Routine Updates and Policy Changes to 

the CY 2015 ESRD PPS 

1. ESRD PPS Base Rate 

a. Changes to the Drug Utilization 

Adjustment 

i. The Drug Utilization Adjustment 

Finalized in CY 2014 ESRD PPS Final 

Rule 

ii. PAMA Changes to the Drug Utilization 

Adjustment 

b. Payment Rate Update for CY 2015 

c. CY 2015 ESRD PPS Wage Index BudgetNeutrality Adjustment 

d. Labor-Related Share 

2. ESRD Bundled Market Basket and LaborRelated Share 

a. Rebasing and Revision the ESRD 

Bundled Market Basket 

i. Cost Category Weights 

ii. Price Proxies for the CY 2012 ESRDB 

Market Basket 

iii. 2012-Based ESRDB Market Basket 

Updates Compared to 2008-Based 

ESRDB Market Basket Updates 

b. Proposed ESRDB Market Basket Update, 

Adjusted for Multifactor Productivity for 

CY 2015 

c. Labor-Related Share 

d. Responses to Comments on Proposed 

Market Basket Rebasing & Revision 

e. Final ESRDB Market Basket and LaborRelated Share 

3. The CY 2015 ESRD PPS Wage Indices 

a. Background 

b. Implementation of New Labor Market 

Delineations 

c. Transition Period 

4. CY 2015 Update to the Outlier Policy 

a.CY 2015 Update to the Outlier Services 

MAP Amounts and Fixed-Dollar Loss 

Amounts 

b. Outlier Policy Percentage 

D. Restatement of Policy Regarding 

Reporting and Payment for More than 

Three Dialysis Treatments per Week 

1. Reporting More than Three Dialysis 

Treatments per Week on Claims 


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2. Medical Necessity for More Than Three 

Treatments per Week 

E. Delay of Payment for Oral-Only Drugs 

under the ESRD PPS 

F. ESRD Drug Categories Included in the 

ESRD PPS Base Rate 

G. Low-Volume Payment Adjustment 

(LVPA) 

1. Background 

2. The United States Government 

Accountability Office Study on the 

LVPA 

a. The GAO’s Main Findings 

b. The GAO’s Recommendations 

3. Clarification of the LVPA Policy 

a. Hospital-Based ESRD Facilities 

b. Cost Reporting Periods Used for 

Eligibility 

H. Continued Use of ICD–9–CM Codes and 

Corrections to the ICD–10–CM Codes 

Eligible for the Co-morbidity Payment 

Adjustment 

III. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

A. Background 

B. Considerations in Updating and 

Expanding Quality Measures under the 

ESRD QIP 

C. Web sites for Measure Specifications 

D. Updating the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

Clinical Measure for the PY 2016 ESRD 

QIP and Future Payment Years 

E. Oral-Only Drug Measures in the ESRD 

QIP 

F. Requirements for the PY 2017 ESRD QIP 

1. Revision to the Expanded ICH CAHPS 

Reporting Measure 

2. Measures for the PY 2017 ESRD QIP 

a. PY 2016 Measures Continuing in PY 

2017 and Future Payment Years 

b. Policy for Determining when a Measure 

is ‘‘Topped-Out’’ in the ESRD QIP, and 

the Removal of a Topped-Out Measure 

from the ESRD QIP, Beginning with PY 

2017 

c. New Measures Proposed for PY 2017 and 

Future Payment Years 

i. Standardized Readmission Ratio (SRR) 

Clinical Measure 

3. Performance Period for the PY 2017 

ESRD QIP 

4. Performance Standards, Achievement 

Thresholds, and Benchmarks for the PY 

2017 ESRD QIP 

a. Performance Standards, Achievement 

Thresholds, and Benchmarks for the 

Clinical Measures in the PY 2017 ESRD 

QIP 

b. Finalized Performance Standards, 

Achievement Thresholds, and 

Benchmarks for the Clinical Measures 

Proposed for the PY 2017 ESRD QIP 

c. Performance Standards for the PY 2017 

Reporting Measures 

5. Scoring the PY 2017 ESRD QIP Measures 

a. Scoring Facility Performance on Clinical 

Measures Based on Achievement 

b. Scoring Facility Performance on Clinical 

Measures Based on Improvement 

6. Weighting the Total Performance Score 

7. Minimum Data for Scoring Measures for 

the PY 2017 ESRD QIP and Changing the 

Attestation Process for Patient 

Minimums 

8. Payment Reductions for the PY 2017 

ESRD QIP 

9. Data Validation 

10. Monitoring Access to Dialysis Facilities 

11. Extraordinary Circumstances Exception 

F. Requirements for the PY 2018 ESRD QIP 

1. Modification of the Mineral Metabolism 

Reporting Measure Beginning in PY 2018 

2. New Measures for the PY 2018 ESRD 

QIP and Future Payment Years 

a. Standardized Transfusion Ratio (STrR) 

Clinical Measure 

b. Adoption of the Pediatric Peritoneal 

Dialysis Adequacy Clinical Measure in 

the Dialysis Adequacy Measure Topic 

c. ICH CAHPS Clinical Measure 

d. Screening for Clinical Depression and 

Follow-Up Reporting Measure 

e. Pain Assessment and Follow-Up 

Reporting Measure 

f. NHSN Healthcare Personnel Influenza 

Vaccination Reporting Measure 

2. Performance Period for the PY 2018 

ESRD QIP 

3. Performance Standards, Achievement 

Thresholds, and Benchmarks for the PY 

2018 ESRD QIP 

a. Performance Standards, Achievement 

Thresholds, and Benchmarks for the 

Clinical Measures in the PY 2018 ESRD 

QIP 

b. Estimated Performance Standards, 

Achievement Thresholds, and 

Benchmarks for the Clinical Measures 

Proposed for the PY 2018 ESRD QIP 

c. Performance Standards for the PY 2018 

Reporting Measures 

4. Scoring the PY 2018 ESRD QIP Measures 

a. Scoring Facility Performance on Clinical 

Measures Based on Achievement 

b. Scoring Facility Performance on Clinical 

Measures Based on Improvement 

c. Scoring the ICH CAHPS Clinical 

Measure 

d. Calculating Facility Performance on 

Reporting Measures 

5. Minimum Data for Scoring Measures for 

the PY 2018 ESRD QIP 

6. Calculating the Clinical Measure Domain 

Score 

7. Calculating the Reporting Measure 

Domain Score and the TPS for the PY 

2018 ESRD QIP 

8. Example of the PY 2018 ESRD QIP 

Scoring Methodology 

9. Payment Reductions for the PY 2018 

ESRD QIP 

H. Future Considerations for Stratifying 

ESRD QIP Measures for Dual-Eligible 

Beneficiaries 

IV. Technical Corrections for 42 Part 405 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2015 ESRD PPS 

V. Methodology for Adjusting DMEPOS 

Payment Amounts using Information 

from Competitive Bidding Programs 

A. Background 

1. Fee Schedule Payment Basis for Certain 

DMEPOS 

2. DMEPOS Competitive Bidding Programs 

Payment Rules 

3. Adjusting Payment Amounts using 

Information from the DMEPOS 

Competitive Bidding Program 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Methodology for Adjusting DMEPOS 

Payment Amounts using Information 

from Competitive Bidding Programs 

1. Proposed Regional Adjustments Limited 

by National Parameters 

2. Methodology for Items and Services 

Included in Limited Number of 

Competitive Bidding Programs 

3. Adjusted Payment Amounts for 

Accessories used with Different Types of 

Base Equipment 

4. Adjustments to Single Payment 

Amounts that Result from Unbalanced 

Bidding 

5. National Mail Order Program—Northern 

Mariana Islands 

6. Updating Adjusted Payment Amounts 

VI. Final Payment Methodologies and 

Payment Rules for Durable Medical 

Equipment and Enteral Nutrition 

Furnished under the Competitive 

Bidding Program 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Payment Methodologies and Payment 

Rules for Durable Medical Equipment 

and Enteral Nutrition Furnished under 

the Competitive Bidding Program 

1. Payment on a continuous rental basis for 

select items 

2. Responsibility for repair of beneficiaryowned power wheelchairs furnished 

under CBPs 

VII. Scope of Hearing Aid Coverage 

Exclusion 

A. Background 

B. Current Issues 

C. Proposed Provisions 

VIII. Definition of Minimal Self-Adjustment 

of Orthotics Under Competitive Bidding 

A. Background 

B. Current Issues 

C. Summary of the Proposed Provisions 

and Responses to Comments on the 

Definition of Minimal Self-Adjustment of 

Orthotics Under Competitive Bidding 

IX. Revision to Change of Ownership Rules 

to Allow Contract Suppliers to Sell 

Specific Lines of Business 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Revision to Change of Ownership Rules 

to Allow Contract Suppliers to Sell 

Specific Lines of Business 

X. Changes to the Appeals Process for 

Termination of Competitive Bidding 

Contract 

XI. Technical Change Related to Submitting 

Bids for Infusion Drugs under the 

DMEPOS Competitive Bidding Program 

XII. Accelerating Health Information 

Exchange 

XIII. Collection of Information Requirements 

XIV. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impact 

B. Detailed Economic Analysis 

1. CY 2015 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

b. Effects on Other Providers 

c. Effects on the Medicare Program 


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d. Effects on Medicare Beneficiaries 

e. Alternatives Considered 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2017 ESRD QIP 

b. Effects of the PY 2018 ESRD QIP 

3. DMEPOS Provisions 

a. Effects of the Final Methodology for 

Adjusting DMEPOS Payment Amounts 

using Information from Competitive 

Bidding Programs 

b. Effects of the Final Special Payment 

Methodologies under the Competitive 

Bidding Program 

c. Effects of the Final Clarification of the 

Scope of the Medicare Hearing Aid 

Coverage Exclusion 

d. Definition of Minimal Self-Adjustment 

of Orthotics Under Competitive Bidding 

e. Effects of the Final Revision to Change 

of Ownership Rules to Allow Contract 

Suppliers to Sell Specific Lines of 

Business 

C. Accounting Statement 

XV. Regulatory Flexibility Act Analysis 

XVI. Unfunded Mandates Reform Act 

Analysis 

XVII. Federalism Analysis 

XVIII. Congressional Review Act 

XIX. 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: 

ACO—Affordable Care Organization 

AHRQ—Agency for Healthcare Research and 

Quality 

ANOVA—Analysis of Variance 

ARM—Adjusted Ranking Metric 

ASP—Average Sales Price 

ATRA—The American Taxpayer Relief Act of 

2012 

AV—Arterial Venous 

BEA—Bureau of Economic Analysis 

BLS—Bureau of Labor Statistics 

BMI—Body Mass Index 

CBA—Competitive Bidding Area 

CBP—Competitive Bidding Program 

CBSA—Core based statistical area 

CCN—CMS Certification Number 

CDC—Centers for Disease Control and 

Prevention 

CfC—Conditions for Coverage 

CHOW—Change of Ownership 

CKD—Chronic Kidney Disease 

CMSQS—CMS Quality Strategy 

CPAP—Continuous positive airway pressure 

CY—Calendar Year 

DFC—Dialysis Facility Compare 

DME—Durable Medical Equipment 

DMEPOS—Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

ESA—Erythropoiesis stimulating agent 

ESRD—End-Stage Renal Disease 

ESRDB—End-Stage Renal Disease bundled 

ESRD PPS—End-Stage Renal Disease 

Prospective Payment System 

FDA—Food and Drug Administration 

GEM—General Equivalence Mappings 

HCP—Healthcare Personnel 

Health IT—Health Information Technology 

HD—Hemodialysis 

HAIs—Healthcare-Acquired Infections 

HCPCS—Healthcare Common Procedure 

Coding System 

HCFA—Health Care Financing 

Administration 

HLM—Hierarchical Logistic Modeling 

HHS—Department of Health and Human 

Services 

ICD—International Classification of Diseases 

ICD–9–CM—International Classification of 

Disease, 9th Revision, Clinical 

Modification 

ICD–10–CM—International Classification of 

Disease, 10th Revision, Clinical 

Modification 

ICH CAHPS—In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems 

IGI—IHS Global Insight 

IIC—Inflation-indexed charge 

IOLs—Intraocular Lenses 

IPPS—Inpatient Prospective Payment System 

ICH CAHPS—In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Services 

IUR—Inter-unit reliability 

MAC—Medicare Administrative Contractor 

MAP—Medicare Allowable Payment 

MFP—Multifactor Productivity 

MIPPA—Medicare Improvements for Patients 

and Providers Act of 2008 

MLR—Minimum Lifetime Requirement 

MSA—Metropolitan statistical areas 

NAMES—National Association of Medical 

Equipment Suppliers 

NHSN—National Health Safety Network 

NQF—National Quality Forum 

NQS—National Quality Strategy 

OBRA—Omnibus Budget Reconciliation Act 

OMB—Office of Management and Budget 

P&O—Prosthetics and orthotics 

PAMA—Protecting Access to Medicare Act of 

2014 

PC—Product category 

PD—Peritoneal Dialysis 

PEN—Parenteral and enteral nutrition 

PFS—Physician Fee Schedule 

QIP—Quality Incentive Program 

RMA—Reporting Measure Adjuster 

RSPA—Regional single payment amounts 

RUL—Reasonable useful lifetime 

SAF—Standard Analysis File 

SHR—Standardized Hospitalization Ratio 

Admissions 

SMR—Standardized Mortality Ratio 

SPA—Single payment amount 

SRR—Standardized Readmissions Ratio 

STrR—Standardized Transfusion Ratio 

TENS—Transcutaneous electrical nerve 

stimulation 

TEP—Technical Expert Panel 

TPS—Total Performance Score 

VBP—Value Based Purchasing 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

On January 1, 2011, we implemented 

the ESRD PPS, a case-mix adjusted 

bundled prospective payment system 

for renal dialysis services furnished by 

ESRD facilities. This rule updates and 

makes revisions to the End-Stage Renal 

Disease (ESRD) prospective payment 

system (PPS) for calendar year (CY) 

2015. 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), and section 1881(b)(14)(F) of 

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

MIPPA and amended by section 3401(h) 

of the Affordable Care Act Public Law 

111–148), established that beginning CY 

2012, and each subsequent year, the 

Secretary shall annually increase 

payment amounts by an ESRD market 

basket increase factor, reduced by the 

productivity adjustment described in 

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

Section 632 of the American Taxpayer 

Relief Act of 2012 (ATRA) (Pub. L 112– 

240) included several provisions that 

apply to the ESRD PPS. Section 632(a) 

of ATRA added section 1881(b)(14)(I) to 

the Act, which required the Secretary, 

by comparing per patient utilization 

data from 2007 with such data from 

2011, to reduce the single payment 

amount to reflect the Secretary’s 

estimate of the change in utilization of 

ESRD-related drugs and biologicals. We 

finalized the amount of the drug 

utilization adjustment pursuant to this 

section in the CY 2014 ESRD PPS final 

rule with a 3- to 4-year transition (78 FR 

72161 through 72170). Section 632(b) of 

ATRA prohibited the Secretary from 

paying for oral-only ESRD-related drugs 

and biologicals under the ESRD PPS 

before January 1, 2016. And finally, 

section 632(c) of ATRA requires the 

Secretary, by no later than January 1, 

2016, to analyze the case-mix payment 

adjustments under section 

1881(b)(14)(D)(i) of the Act and make 

appropriate revisions to those 

adjustments. 

On April 1, 2014, the Congress 

enacted the Protecting Access to 

Medicare Act of 2014 (PAMA) (Pub. L. 

113–93). Section 217 of PAMA included 

several provisions that apply to the 

ESRD PPS. Specifically, sections 

217(b)(1) and (2) of PAMA amend 

sections 1881(b)(14)(F) and (I) of the 

Act. We interpret the amendments to 

sections 1881(b)(14)(F) and (I) as 

replacing the drug utilization 

adjustment that was finalized in the CY 

2014 ESRD PPS final rule (78 FR 72161 

through 72170) with specific provisions 

that dictate what the market basket 

update will be for CY 2015 (0.0 percent) 

and how it will be reduced in CYs 2016 

through 2018. Section 217(a)(1) of 

PAMA amends section 632(b)(1) of 

ATRA, which now provides that the 

Secretary may not pay for oral-only 


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drugs and biologicals used for the 

treatment of ESRD under the ESRD PPS 

prior to January 1, 2024. Section 

217(a)(2) further amends section 

632(b)(1) of ATRA by adding a sentence 

that provides: ‘‘Notwithstanding section 

1881(b)(14)(A)(ii) of the Social Security 

Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), 

implementation of the policy described 

in the previous sentence shall be based 

on data from the most recent year 

available.’’ Finally, PAMA section 

217(c) provides that, as part of the CY 

2016 ESRD PPS rulemaking, the 

Secretary shall establish a process for (1) 

determining when a product is no 

longer an oral-only drug; and (2) 

including new injectable and 

intravenous products into the ESRD PPS 

bundled payment. As discussed further 

below, section 212 of PAMA provides 

that the Secretary may not adopt ICD– 

10–CM prior to October 1, 2015. 

Accordingly, HHS published a final rule 

on August 4, 2014 that established 

October 1, 2015 as the new ICD–10 

compliance date, and required the use 

of ICD–9 through September 30, 2015. 

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 years (PYs) 2017 and 2018. 

The program is authorized under 

section 1881(h) of 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 

or exceed performance standards 

established by CMS. 

3. Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

This final rule finalizes a 

methodology for making national price 

adjustments to payments for Durable 

Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) paid 

under fee schedules based upon 

information gathered from the DMEPOS 

competitive bidding programs (CBPs) 

and finalizes the phase-in of special 

payment rules in a limited number of 

competitive bidding areas (CBAs) under 

the CBP for certain specified DME at 42 

CFR 414.408 and 414.409. This final 

rule clarifies the statutory Medicare 

hearing aid coverage exclusion under 

section 1862(a)(7) of the Act and the 

regulation at § 411.15(d) to further 

specify the scope of this exclusion. In 

addition, this final rule will not finalize 

the definition of minimal selfadjustment at § 414.402 to identify 

certain individuals with specialized 

training with regard to off-the-shelf 

(OTS) orthotics under the CBP. This 

final rule revises the Change of 

Ownership (CHOW) policy in the 

current regulations to allow a product 

category to be severed from a 

competitive bidding contract and 

transferred to a new contract when a 

contract supplier sells a distinct line of 

business to a new qualified owner. This 

rule amends § 414.423 to clarify the 

effective date for terminations of 

competitive bidding contracts, and the 

deadline for contract suppliers notifying 

its beneficiaries of its contract 

termination. Finally, this rule includes 

a technical change related to submitting 

bids for infusion drugs under the CBP. 

B. Summary of the Major Provisions 

1. ESRD PPS 

• CY 2015 ESRD PPS base rate: For 

CY 2015, the ESRD PPS base rate is 

$239.43. This amount reflects a 0.0 

percent update to the payment rate as 

required by section 1881(b)(14)(F)(i) of 

the Act, as amended by section 217(b)(2) 

of PAMA, and the application of the 

wage index budget-neutrality 

adjustment factor of 1.001729 to the CY 

2014 ESRD PPS base rate of $239.02. 

• Rebasing and revision of the ESRD 

bundled (ESRDB) market basket: For CY 

2015, we are rebasing and revising the 

ESRDB market basket; which entails an 

update to the base year of the ESRDB 

market basket from 2008 to 2012. The 

base year update results in a shift in 

relative costs from prescription drugs to 

compensation; mainly driven by the 

decreased utilization of drugs in 

furnishing ESRD treatments experienced 

from 2008 to 2012. Additionally, while 

we proposed to use PPI—Vitamin, 

Nutrient, and Hematinic Preparations as 

the pharmaceutical price proxy (instead 

of the current PPI—Pharmaceuticals for 

Human Use, Prescription), we are 

finalizing, based on comments, a blend 

of PPI—Biological Products for Human 

Use (78 percent) and PPI—Vitamin, 

Nutrient, and Hematinic Preparations 

(22 percent). The resulting CY 2015 

market basket less MFP adjustment 

would have been 1.6 percent (2.1 

percent ESRDB market basket update 

less 0.5 percent MFP adjustment); 

however, section 1881(b)(14)(F)(i) of the 

Act, as amended by section 217(b)(2) of 

PAMA requires the market basket less 

MFP adjustment to be 0.0 percent for CY 

2015. 

• CY 2015 ESRD PPS labor-related 

share: As a result of the ESRDB market 

basket rebasing and revision, outlined 

above, the CY 2015 labor-related share 

is 50.673 percent compared to the 

current labor-related share of 41.737 

percent. This change to the labor-related 

share will have a significant impact on 

payments for certain ESRD facilities, 

specifically those ESRD facilities that 

have low wage index values. Therefore, 

for CY 2015 we are implementing the 

labor-related share of 50.673 with a 2- 

year transition. 

• CY 2015 wage indices 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 2015, 

the application of the wage index 

budget-neutrality adjustment factor will 

continue to apply to the base rate when 

computing payments under the ESRD 

PPS. In addition, we will continue our 

policy for the gradual phase-out of the 

wage index floor and reduce the wage 

index floor values to 0.40 for CY 2015, 

as finalized in the CY 2014 ESRD PPS 

final rule (78 FR 72173 through 72174). 

• Update to wage index core-based 

statistical areas (CBSA): Beginning 

January 1, 2015, we will implement the 

new CBSA delineations as described in 

the February 28, 2013 OMB Bulletin No. 

13–01, for all ESRD facilities, with a 2- 

year transition. Facilities will receive 50 

percent of their CY 2015 wage index 

based on the CBSA delineations for CY 

2014 and 50 percent of their CY 2015 

wage index based on the new CBSA 

delineations. In CY 2016, facilities’ 

wage index values will be based 100 

percent on the new CBSA delineations. 

• CY 2015 ESRD PPS outlier payment 

adjustment: We have updated the 

outlier services fixed-dollar loss and 

Medicare Allowable Payments (MAPs) 

amounts for adult and pediatric patients 

for CY 2015 using 2013 claims data. 

Based on the use of more current data, 

the fixed-dollar loss amount for 

pediatric beneficiaries will increase 

from $54.01 to $54.35 and the MAP 

amount will increase from $40.49 to 

$43.57, as compared to CY 2014 values. 

For adult beneficiaries, the fixed-dollar 

loss amount will decrease from $98.67 

to $86.19 and the MAP amount will 

increase from $50.25 to $51.29. 

• Clarification for the low-volume 

payment adjustment (LVPA): We 

clarified two policies regarding 

Medicare Administration Contractor 

(MAC) verification for LVPA eligibility 

requirements and are implementing 

conforming changes to the LVPA 

regulation text at 42 CFR 413.232. The 

first clarification explains that MACs 

can consider supporting data from 

hospital-based ESRD facilities to verify 

the facility’s total treatment count. The 

second clarification explains that MACs 

can add or prorate treatment counts 

from non-standard cost reporting 


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periods (those that are not 12-month 

periods) where there is a change in 

ownership that does not result in a new 

Provider Transaction Access Number. 

• ICD–10–CM codes eligible for the 

ESRD PPS co-morbidity payment 

adjustment: Section 212 of PAMA 

provides that the Secretary may not 

adopt ICD–10–CM prior to October 1, 

2015. An August 4, 2014 HHS final rule 

delayed the transition from ICD–9–CM 

to ICD–10–CM until October 1, 2015 

and required the continued use of ICD– 

9 through September 30, 

2015.Therefore, the ESRD PPS will 

continue to use ICD–9–CM through 

September 30, 2015, and will require 

the use of ICD–10–CM beginning 

October 1, 2015 for purposes of the comorbidity payment adjustments. For CY 

2015, we are correcting several 

typographical errors and omissions in 

the ICD–9–CM to ICD–10–CM crosswalk 

tables that appeared in the CY 2014 

ESRD PPS final rule. 

• Delay of payment for oral-only 

drugs under the ESRD PPS: 

Section 217(a)(1) of PAMA amended 

section 632(b)(1) of ATRA, which now 

provides that the Secretary ‘‘may not 

implement the policy under section 

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

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

payment system), prior to January 1, 

2024.’’ Accordingly, we are finalizing 

our proposal to amend the date in 42 

CFR 413.174(f)(6) from January 1, 2016 

to January 1, 2024, and to amend the 

date in § 413.237(a)(1)(iv) regarding 

outlier payments for oral-only ESRDrelated drugs made under the ESRD PPS 

to January 1, 2024. 

2. ESRD QIP 

This final rule implements 

requirements for the ESRD QIP, 

including measure sets for PYs 2017 and 

2018. 

• PY 2017 Measure Set: For PY 2017, 

we are removing one measure from the 

ESRD QIP, the Hemoglobin Greater than 

12 g/dL clinical measure, on the basis 

that it is ‘‘topped out’’. We are also 

adopting the Standardized Readmission 

Ratio (SRR) clinical measure, which 

assesses care coordination. 

• PY 2018 Measure Set: For PY 2018, 

we are adopting two new clinical 

measures—the Standardized 

Transfusion Ratio (STrR) and Pediatric 

Peritoneal Dialysis Adequacy—and 

three new reporting measures: (1) Pain 

Assessment and Follow-Up; (2) Clinical 

Depression Screening and Follow-Up; 

and (3) National Healthcare Safety 

Network (NHSN) Healthcare Personnel 

Influenza Vaccination. We are also 

converting the In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems (ICH CAHPS) 

survey reporting measure to a clinical 

measure. 

• Revision to the ICH CAHPS 

Reporting Measure: Beginning with the 

PY 2017 program year, we are revising 

the ICH CAHPS reporting measure to 

determine facility eligibility for the 

measure based on the number of surveyeligible patients treated during the 

‘‘eligibility period’’, which we define as 

the Calendar Year (CY) that immediately 

precedes the performance period. 

Survey-eligible patients are defined in 

the ICH CAHPS measure specifications 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html and 

https://ichcahps.org. 

• Revision to the Mineral Metabolism 

Reporting Measure: Beginning with the 

PY 2018 program year, we are revising 

the Mineral Metabolism reporting 

measure to allow facilities to submit 

both serum phosphorus and plasma 

phosphorus measurements. 

• Extraordinary Circumstances 

Exemption: Beginning with the PY 2017 

ESRD QIP, we are exempting dialysis 

facilities from all requirements of the 

ESRD QIP clinical and reporting 

measures during the months in which 

they are forced to close due to a natural 

disaster or other extraordinary 

circumstances. 

• New Scoring Methodology for PY 

2018: Beginning with PY 2018, we are 

using a new scoring methodology for the 

ESRD QIP. This scoring methodology 

creates the Clinical Measure Domain, 

within which facility scores on clinical 

measures will be divided into 

subdomains that align with National 

Quality Strategy (NQS) domains and 

weighted according to the number of 

measures in a subdomain, facility 

experience with the measure, and the 

measure’s alignment with CMS 

priorities for quality improvement. 

These weighted scores will be summed 

to produce a facility’s Clinical Measure 

Domain score. A facility’s Clinical 

Measure Domain score will be weighted 

to comprise 90 percent of the facility’s 

TPS, and the facility’s scores on the 

reporting measures will be weighted 

equally to comprise the remaining 10 

percent of the facility’s TPS. 

3. DMEPOS 

• The methodology for making 

national price adjustments based upon 

information gathered from the DMEPOS 

CBPs: As required by the MIPPA, this 

rule finalizes methodologies for using 

information from the DMEPOS CBP to 

adjust the fee schedule amounts for 

DME in areas where CBPs are not 

implemented. The rule finalizes the 

same methodologies to adjust the fee 

schedule amounts for enteral nutrition 

and off-the shelf (OTS) orthotics in areas 

where CBPs are not implemented. 

• Phase-in of special payment rules 

in a limited number of CBAs under the 

CBP for certain, specified DME: This 

rule finalizes a phase-in of special 

payment rules for certain DME at 42 

CFR 414.408 and 414.409 under the 

DMEPOS CBP in a limited number of 

CBAs. 

• Medicare hearing aid coverage 

exclusion under section 1862(a)(7) of 

the Act: This rule modifies the 

regulation at § 411.15 to address the 

scope of the statutory hearing aid 

exclusion and note the types of devices 

that are not subject to the hearing aid 

exclusion. 

• Definition of minimal selfadjustment at § 414.402: This rule will 

not finalize changes to the ‘‘minimal 

self-adjustment’’ definition to specify 

certain ‘‘individuals with specialized 

training’’ with regard to the definition of 

OTS orthotics under the CBP. 

• Change of Ownership Rules to 

Allow Contract Suppliers to Sell 

Specific Lines of Business: This rule 

establishes an exception under the 

CHOW rules to allow CMS to sever a 

product category from a contract, 

incorporate the product category into a 

new contract, and transfer the new 

contract to a qualified new owner under 

certain specific circumstances. 

• Appeals Process for Termination of 

a Competitive Bidding Contract: This 

rule amends § 414.423 to clarify the 

effective date for terminations of 

competitive bidding contracts, and the 

deadline for contract suppliers notifying 

its beneficiaries of its contract 

termination. 

C. Summary of Costs and Benefits 

In section XIV of this final rule, we set 

forth a detailed analysis of the impacts 

of the finalized changes for affected 

entities and beneficiaries. The impacts 

include the following: 

1. Impacts of the Final ESRD PPS 

The impact chart in section XIV.B.1 of 

this final rule displays the estimated 

change in payments to ESRD facilities in 

CY 2015 compared to estimated 

payments in CY 2014. The overall 

impact of the CY 2015 changes is 

projected to be a 0.3 percent increase in 

payments. Hospital-based ESRD 

facilities have an estimated 0.5 percent 

increase in payments compared with 

freestanding facilities with an estimated 

0.3 percent increase. 


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We estimate that the aggregate ESRD 

PPS expenditures will increase by 

approximately $30 million from CY 

2014 to CY 2015. This reflects a $0 

change from the payment rate update 

and a $30 million increase due to the 

updates to the outlier threshold 

amounts. As a result of the projected 0.3 

percent overall payment increase, we 

estimate that there will be an increase 

in beneficiary co-insurance payments of 

0.3 percent in CY 2015, which translates 

to approximately $10 million. 

2. Impacts for ESRD QIP 

The overall economic impact of the 

ESRD QIP is an estimated $12 million 

in PY 2017 and $11.8 million in PY 

2018. In PY 2017, we expect the total 

payment reductions to be approximately 

$11.9 million, and the costs associated 

with the collection of information 

requirements for the validation of NHSN 

data feasibility study to be 

approximately $27 thousand for all 

ESRD facilities. In PY 2018, we expect 

the total payment reductions to be 

approximately $11.6 million, and the 

costs associated with the collection of 

information requirements for the NHSN 

Healthcare Personnel Influenza 

Vaccination reporting measure to be 

approximately $248 thousand for all 

ESRD facilities. 

The ESRD QIP will continue to 

incentivize facilities to provide highquality care to beneficiaries. 

3. Impacts for DMEPOS 

a. Final Methodology for Making 

National Price Adjustments to DMEPOS 

Fee Schedule Amounts Based Upon 

Information Gathered From the CBPs 

The final regulation adjusts Medicare 

fee schedule amounts for items subject 

to DMEPOS CBPs beginning January 1, 

2016, using information from the 

DMEPOS CBPs to be applied to items in 

non-competitive bidding areas. It is 

estimated that these adjustments would 

save over $4.4 billion in gross payments 

for the 5-year period beginning January 

1, 2016, and ending December 30, 2020. 

The estimated gross savings are 

primarily derived from price reductions 

for items. It is expected that most of the 

economic impact would result from 

reduced payment amounts. The ability 

of suppliers to furnish items is not 

expected to be impacted. 

b. Phase-In of Special Payment Rules 

Under the CBP for Certain DME and 

Enteral Nutrition in Certain CBAs 

We believe that the special payment 

rules we are finalizing for certain DME 

under the DMEPOS CBPs would not 

have a significant impact on 

beneficiaries and suppliers. Contract 

suppliers are responsible for furnishing 

items and services needed by the 

beneficiary, and the cost to suppliers for 

furnishing these items and services does 

not change based on whether or not the 

equipment and related items and 

services are paid for separately under a 

capped rental payment method. Because 

the supplier’s bids would reflect the 

cost of furnishing items in accordance 

with the new payment rules, we expect 

the overall savings to generally be the 

same as they are under the current 

payment rules. 

Furthermore, the final special 

payment rules would be phased in 

under a limited number of areas first to 

evaluate their impact on the program, 

beneficiaries, and suppliers, including 

costs, quality, and access. Expanded use 

of the special payment rules in other 

areas or for other items would be 

addressed in future rulemaking. 

c. Clarification of the Statutory 

Medicare Hearing Aid Coverage 

Exclusion Under Section 1862(a)(7) of 

the Act 

This final rule clarifies the scope of 

the Medicare coverage exclusion for 

hearing aids. This rule will not have a 

fiscal impact on the Medicare program 

because there will be no change in the 

devices that are currently covered for 

Medicare payment purposes. This rule 

provides further guidance about 

coverage of DME with regard to the 

statutory hearing aid exclusion. 

d. Definition of Minimal SelfAdjustment at 42 CFR 414.402 

This final rule will not finalize the 

definition of minimal self-adjustment at 

this time. 

e. Change of Ownership Rules To Allow 

Contract Suppliers To Sell Specific 

Lines of Business 

This rule finalizes changes to the 

CHOW rules in order to limit disruption 

to the normal course of business for 

DME suppliers. This final rule 

establishes an exception under the 

current CHOW rules to allow CMS to 

sever a product category from a contract, 

incorporate the product category into a 

new contract, and transfer the new 

contract to a qualified new owner under 

certain specific circumstances. This 

change would impact businesses in a 

positive way by allowing them to 

conduct everyday transactions with less 

disruption from our rules and 

regulations. 

II. Calendar Year (CY) 2015 End-Stage 

Renal Disease (ESRD) Prospective 

Payment System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

On August 12, 2010, we published in 

the Federal Register a final rule (75 FR 

49030 through 49214) in which we 

implemented a case-mix adjusted 

bundled PPS for Medicare outpatient 

ESRD dialysis services beginning 

January 1, 2011, in accordance with 

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

by section 153(b) of MIPPA. On 

November 10, 2011, we published in the 

Federal Register a final rule (76 FR 

70228 through 70316) in which we 

made a number of routine updates for 

CY 2012, implemented the second year 

of the transition to the ESRD PPS, made 

several policy changes and 

clarifications, and made technical 

changes. On November 9, 2012, we 

published in the Federal Register a final 

rule (77 FR 67450 through 67531) in 

which we made a number of routine 

updates for CY 2013, implemented the 

third year of the transition to the ESRD 

PPS, and made several policy changes 

and reiterations. 

On December 2, 2013, we published 

in the Federal Register a final rule (78 

FR 72156 through 72253) in which we 

made a number of routine updates for 

CY 2014, implemented the fourth and 

final year of the transition to the ESRD 

PPS, implemented sections 632(a) and 

(b)(1) of ATRA, and made several policy 

changes and clarifications. Specifically, 

we updated the ESRD PPS base rate to 

$239.02 per treatment to reflect the CY 

2014 ESRD bundled (ESRDB) market 

basket update of 3.2 percent minus a 

multifactor productivity adjustment of 

0.4 percent, that is, a 2.8 percent 

increase. This amount also reflected the 

application of the wage index budgetneutrality adjustment of 1.000454, the 

home dialysis training add-on budgetneutrality adjustment factor of 0.999912, 

and the portion of the drug utilization 

adjustment for CY 2014, or $8.16, and 

delayed the payment for oral-only 

ESRD-related drugs and biologicals until 

January 1, 2016. In addition, this rule 

also extends the gradual reduction of 

the wage index floor, delays application 

of ICD–10–CM diagnosis codes to the 

comorbidity payment adjustment and 

updates the fixed-dollar loss and MAP 

amounts for the outlier policy. 


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B. Summary of the Proposed Provisions, 

Public Comments, and Responses to 

Comments on the CY 2015 ESRD PPS 

Proposed Rule 

The proposed rule, titled ‘‘Medicare 

Program; End-Stage Renal Disease 

Prospective Payment System, Quality 

Incentive Program, and Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies’’ (79 FR 40208 through 40315), 

(hereinafter referred to as the CY 2015 

ESRD PPS proposed rule), was 

published in the Federal Register on 

July 11, 2014, with a comment period 

that ended on September 2, 2014. In that 

proposed rule, for the ESRD PPS, we 

proposed routine updates to the 

payment system; proposed to 

implement the statutory provisions set 

forth in PAMA, and clarified policies for 

billing and payment of short frequent 

hemodialysis services and facility 

eligibility requirements for the lowvolume payment adjustment (LVPA) 

available under the ESRD PPS. We 

received approximately 400 public 

comments on our proposals, including 

comments from: ESRD facilities; 

national renal groups, nephrologists and 

patient organizations; patients and care 

partners; manufacturers; health care 

systems; and nurses. In addition, we 

received a several thousand signature 

petition requesting that CMS include 

‘‘full coverage ‘‘of the cost of home 

hemodialysis patient training under 

Medicare. We note that we made no 

proposals in our CY 2015 ESRD PPS 

proposed rule regarding these issues, 

and therefore we are not finalizing a 

modification to them in this final rule. 

We will, however, consider the 

comments set forth in the petition and 

in other public comments in the future. 

In addition, we received other 

comments regarding policies for the 

ESRD PPS for which we made no 

proposals. For example, a few 

comments from industry stakeholders 

and medical associations encouraged 

CMS to consider race and ethnicity 

when assessing the cost of care. One 

commenter contended that African 

American dialysis patients require 

significantly more ESA utilization per 

treatment. Another commenter 

encouraged CMS to monitor race and 

ethnicity for the purpose of establishing 

a race adjustment factor in the future. 

We will consider these comments as we 

refine the payment system in CY 2016. 

Other comments requested that CMS 

clarify inconsistent manual language in 

Internet Only Manual Pub. 100–02 

Medicare Benefit Policy, chapter 11 

End-Stage Renal Disease. We appreciate 

these suggestions and will clarify our 

manual language through sub-regulatory 

guidance. 

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 

2015 ESRD PPS. Comments related to 

the paperwork burden are addressed in 

the ‘‘Collection of Information 

Requirements’’ section in this final rule. 

Comments related to the impact analysis 

are addressed in the ‘‘Economic 

Analyses’’ section in this final rule. 

C. Routine Updates and Policy Changes 

to the CY 2015 ESRD PPS 

1. ESRD PPS Base Rate 

In the CY 2011 ESRD PPS final rule 

(75 FR 49071 through 49083), we 

discussed the development of the ESRD 

PPS per treatment base rate that is 

codified in the Medicare regulations at 

§§ 413.220 and 413.230. The CY 2011 

ESRD PPS final rule also provides a 

detailed discussion of the methodology 

used to calculate the ESRD PPS base 

rate and the computation of factors used 

to adjust the ESRD PPS base rate for 

projected outlier payments and 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 as required by 

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

updated to CY 2011, and represented 

the average per treatment Medicare 

Allowable Payment (MAP) for 

composite rate and separately billable 

services. In accordance with section 

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

regulations at § 413.230, the ESRD PPS 

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

applicable facility adjustments, 

geographic differences in area wage 

levels using an area wage index, as well 

as applicable outlier payments or 

training payments. 

a. Changes to the Drug Utilization 

Adjustment 

i. The Drug Utilization Adjustment 

Finalized in the CY 2014 ESRD PPS 

Final Rule 

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

added by section 632(a) of the American 

Taxpayer Relief Act of 2012 (ATRA), 

required that, for services furnished on 

or after January 1, 2014, the Secretary 

shall make reductions to the single 

payment for renal dialysis services to 

reflect the Secretary’s estimate of the 

change in the utilization of ESRDrelated drugs and biologicals (excluding 

oral-only ESRD-related drugs) by 

comparing per patient utilization data 

from 2007 with such data from 2012. 

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

that in making the reductions, the 

Secretary take into account the most 

recently available data on Average Sales 

Prices (ASP) and changes in prices for 

drugs and biologicals reflected in the 

ESRD market basket percentage increase 

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

Consistent with these requirements, in 

CY 2014, we finalized a payment 

adjustment to the CY 2014 ESRD PPS 

base rate that reflected the change in 

utilization of ESRD-related drugs and 

biologicals from CY 2007 to CY 2012. 

Specifically, we finalized the drug 

utilization adjustment amount of $29.93 

per treatment, and finalized a policy to 

implement this amount over a 3- to 4- 

year transition period. For CYs 2014 and 

2015, we stated that we would 

implement the transition by offsetting 

the payment update by a portion of the 

reduction amount necessary to create an 

overall impact of zero percent for 

facilities from the previous year’s 

payments. For example, in CY 2014 we 

finalized a per treatment drug 

utilization adjustment amount for the 

first transition year of $8.16 or 3.3 

percent, which represented the CY 2014 

ESRDB market basket update minus 

productivity and other impacts to create 

an overall impact of zero percent. For a 

complete discussion of the methodology 

for computing the drug utilization 

adjustment, please see the CY 2014 

ESRD PPS final rule (78 FR 72161 

through 72170). 

ii. PAMA Changes to the Drug 

Utilization Adjustment 

On April 1, 2014, Congress enacted 

PAMA. Section 217(b), titled 

‘‘Mitigation of the Application of 

Adjustment to ESRD Bundled Payment 

Rate to Account for Changes in the 

Utilization of Certain Drugs and 

Biologicals,’’ amends section 

1881(b)(14)(I) of the Act by inserting 

‘‘and before January 1, 2015’’ after 

January 1, 2014. This amendment 

effectively eliminates the remaining 

years of the drug utilization adjustment 

transition. In its place, the PAMA 

amendments to section 1881(b)(14)(F)(i) 

dictate what the market basket increase 

factor will be for 2015 and how it will 

be reduced in 2016 through 2018. In 

particular, PAMA section 217(b)(2)(C) 

amended section 1881(b)(14)(F)(i) by 

adding subclause (III), which provides 

that ‘‘[n]otwithstanding subclauses (I) 

and (II), in order to accomplish the 

purposes of subparagraph (I) with 

respect to 2015, the increase factor 

described in subclause (I) for 2015 shall 

be 0.0 percent.’’ We interpret subclause 


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(III) to mean that the market basket 

increase factor less the productivity 

adjustment for 2015 is 0.0 percent. 

The PAMA amendments also provide 

for a payment reduction in lieu of the 

drug utilization adjustment in 2016 

through 2018. In particular, PAMA 

section 217(b)(2)(ii) further amends 

section 1881(b)(14)(i)(I) by adding at the 

end the following new sentence, ‘‘In 

order to accomplish the purpose of 

subparagraph (I) with respect to 2016, 

2017, and 2018, after determining the 

increase factor described in the 

preceding sentence for each of 2016, 

2017, and 2018, the Secretary shall 

reduce such increase factor by 1.25 

percentage points for each of 2016 and 

2017 and by 1 percentage point for 

2018.’’ We interpret this provision as 

requiring us to reduce the market basket 

increase factor for 2016 through 2018 by 

the percentages prescribed in the 

statute. 

Comment: All commenters were 

supportive of CMS’s interpretation of 

section 217 of PAMA and agreed that 

PAMA required a 0.0 percent market 

basket update in CY 2015. A few 

commenters expressed concern that the 

cumulative economic effect of ATRA’s 

drug reduction, sequestration, and now 

PAMA’s 0.0 percent update may be 

jeopardizing care and access for 

Medicare beneficiaries. Some 

commenters noted an unstainable 

Medicare payment trajectory and cited 

an independent analysis that estimates 

a mean gross margin of negative 7.4 

percent for CY 2018. 

Response: We thank the commenters 

for their support of our interpretation of 

section 217 of PAMA as requiring a 0.0 

percent market basket update for CY 

2015. We acknowledge the commenters’ 

concern for the collective effects of 

reduced Medicare margins on care 

quality and patient access. However, 

PAMA, ATRA, and sequestration were 

congressionally mandated payment 

reductions and CMS must implement 

them. CMS has finalized policies that 

would mitigate the negative impacts of 

statutorily mandated reductions on 

facility margins. For example, we 

proposed and finalized a transition not 

to exceed four years for the ATRA drug 

utilization adjustment, thus reducing 

the CY 2014 payment reduction from 

$29.93 to $8.16. We adopted this 

transition policy to mitigate the negative 

economic impact for facilities (78 FR 

72161 through 72170), and to ensure our 

beneficiaries’ access to quality care. 

Comment: A few commenters 

requested greater transparency in the 

data used to establish the annual update 

and other Medicare payment updates 

included in the ESRD PPS. One 

commenter noted that transparency in 

rate setting data gives the industry 

confidence in a predictable and fair 

payment methodology, and that 

facilities can only then make 

operational and investment decisions 

for the future. Other commenters 

provided a specific list of data files they 

need in order to replicate CMS’s update 

calculations, and provided additional 

analysis to CMS: annual claims level 

rate setting files for the ESRD PPS; 

Medicare Part D Standard Analytic File 

(SAF); 100 percent SAF for physician 

services; and Medicare Part C SAF. 

Response: We agree with commenters 

that transparency in rate setting is 

desirable. We posted the provider-level 

impact file with the proposed rule 

because we believe that furnishing an 

impact file, sorted by facility, is the 

most transparent method and enables 

facilities to assess the economic impact 

of policy changes at the facility level. In 

addition, beginning in CY 2015, we 

have made a Limited Data Set (LDS) of 

ESRD PPS facility claims used for CY 

2015 rate settings available for purchase. 

A link to the LDS file was included in 

our proposed rule in section XIX titled 

Files Available to the Public via the 

Internet (79 FR 40311). Likewise, we 

included an updated LDS file with this 

final rule that is discussed in section 

XIX of this rule. The LDS files are 

available for purchase at http:// 

www.cms.gov/research-statistics-dataand=systems/files-for-order/ 

limiteddatasets/ 

endstagerenaldiseasesystemfile.html. 

We note that interested parties may 

request Part D data from CMS at 

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

Prescription-Drug-Coverage/ 

PrescriptionDrugCovGenIn/Downloads/ 

GuidePartD, and we will consider 

furnishing encounter data under 

Medicare Part C, and other Medicare 

claims files in the future. 

b. Payment Rate Update for CY 2015 

As discussed in section II.A of this 

final rule, section 1881(b)(14)(F)(i) of 

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

MIPPA and amended by section 3401(h) 

of the Affordable Care Act, provides 

that, beginning in 2012, the ESRD PPS 

payment amounts are required to be 

annually increased by the rate of 

increase in the ESRD market basket, 

reduced by the productivity adjustment 

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

of the Act. In accordance with section 

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

by PAMA section 217(b)(2)(C), we are 

finalizing a 0.0 percent update to the CY 

2014 ESRD PPS base rate of $239.02 for 

CY 2015. 

Comment: Generally, commenters 

were supportive of the CY 2015 

proposed base rate. Some commenters 

cautioned that CMS ‘‘maintain financial 

integrity’’ of the ESRD PPS by 

addressing crucial components of the 

payment system that inappropriately 

reduce the base rate. A few commenters 

identified the ESRD PPS payment 

components of case-mix and the outlier 

policy as examples of payment 

adjustments that they believe are 

structurally broken. The commenters 

contend that these adjustments result in 

lowering overall payments to facilities, 

making it difficult for facilities to 

furnish high quality care to patients. 

Response: We thank the commenters 

for their support of the proposed CY 

2015 ESRD PPS base rate. While we do 

not agree with the commenters who 

contend that the case-mix and outlier 

adjustments are structurally broken, we 

believe that these adjustments have 

been underutilized in the payment 

system. We note that section 632 of 

ATRA requires CMS to review the casemix payment adjustments and make 

appropriate modifications by CY 2016. 

We will consider these comments as 

part of that larger ESRD PPS refinement 

that will take place for CY 2016. 

Comment: Other commenters 

cautioned CMS to correct what they 

term ‘‘flaws in standardization,’’ calling 

upon CMS to use the most current data 

available in re-calculating the 

standardization factor in this final rule 

in order to mitigate losses facilities may 

have in CY 2015. As an alternative, 

commenters suggest that CMS make an 

interim reduction to the adjustor values 

that would take into account the 

decrease in drug utilization. With these 

values, CMS could reduce the dollars in 

the standardization factor for CY 2015. 

They estimated that the standardization 

factor discrepancy accounts for a loss of 

one to two percent in the base rate. 

They also suggested that for 2015, 

CMS: (1) Eliminate the co-morbidity 

case-mix adjustments because the 

facilities are unable to obtain the 

necessary documentation to substantiate 

a co-morbid diagnosis and thus, are 

unable to claim the adjustment; and (2) 

reduce the outlier percentage so that it 

reflects the percentage of cases paid as 

outlier cases (0.5 percent) and so that it 

is paid out annually in its entirety, or 

else provide for a zero percent outlier 

policy. 

Response: We thank the commenters 

for their suggestions for protecting the 

integrity of the base rate and 

questioning the necessity for some 

payment adjustments available under 

the ESRD PPS. However, as we stated in 

the CY 2011 ESRD PPS final rule (75 FR 


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49081), to account for the overall effects 

of the proposed ESRD PPS patient- and 

facility-level adjustment factors and 

wage indexes, we had to standardize 

payments in order to ensure that total 

projected PPS payments were equal to 

what would otherwise have been paid 

had the ESRD PPS not been 

implemented, prior to application of the 

98 percent budget-neutrality 

adjustment. The standardization factor 

was calculated by dividing total 

estimated payments in 2011 under the 

basic case-mix adjusted composite rate 

payment system by estimated payments 

under the final ESRD PPS in 2011. 

We wish to remind commenters that 

we used the best data available for the 

development of the standardization 

factor and made a good faith effort to 

simulate payments under the ESRD PPS 

beginning in CY 2011. In addition, CMS 

plans to conduct a regression analysis 

for the CY 2016 ESRD PPS rulemaking 

cycle to reassess the appropriateness of 

the patient- and facility-level payment 

adjustments applied under the ESRD 

PPS. This analysis will include a 

thoughtful assessment of utilization and 

economic impact of the various 

payment adjustments under the PPS to 

determine whether they should 

continue to apply, or if the magnitude 

of the adjustments is over or 

understated in the ESRD PPS. 

We plan to consider all of the 

improvements suggested as part of the 

ESRD PPS refinement for CY 2016. We 

do not think it would be appropriate to 

eliminate any co-morbidity adjustments 

in isolation from a broader refinement 

that assesses all current and potentially 

significant adjustments. 

c. CY 2015 ESRD PPS Wage Index 

Budget-Neutrality Adjustment 

As discussed in section II.C of this 

final rule, for CY 2015 we apply the 

wage index budget-neutrality 

adjustment factor of 1.001729 to the CY 

2014 ESRD PPS base rate (that is, 

$239.02), yielding a CY 2015 ESRD PPS 

wage index budget-neutrality adjusted 

base rate of $239.43 ($239.02 × 1.001729 

= $239.43). 

Comment: Commenters were 

supportive of the CY 2015 proposed 

wage index budget-neutrality 

adjustment. A few commenters noted 

the small payment increase for CY 2015, 

and thanked CMS for continuing to 

apply an updated wage index budgetneutrality adjustment in a year where a 

0.0 percent market basket update was 

congressionally mandated. 

Response: We thank the commenters 

for their support of our finalized wage 

index budget-neutrality factor, and note 

that the wage index budget-neutrality 

update is computed separately from the 

annual market basket update. Therefore, 

the wage index budget-neutrality update 

continues to apply even in years when 

a 0.0 market basket update is statutorily 

required. 

d. Labor-Related Share 

As discussed in section II.C.2 of this 

final rule, as part of the ESRDB market 

basket rebase and revision, we are 

updating the labor-related share from 

41.737 percent to 50.673 percent. We 

noted that some ESRD facilities are 

adversely affected by this update. For 

example, rural facilities and facilities 

located in core-based statistical areas 

(CBSA) with wage indexes below 1.0 

will experience reduced payments due 

to an increase in the labor-related share, 

while other facilities located in CBSAs 

where wage indices are above 1.0 will 

experience increased payments. While 

we are finalizing the new labor-related 

share of 50.673 percent, we shall 

implement this value using a 2-year 

transition. 

Therefore, for CY 2015 we will apply 

50 percent of the value of the current 

labor-related share under the ESRD PPS 

(41.737 percent) and 50 percent of the 

value of the new labor-related share 

(50.673 percent), add the percentages 

together and divide by two, for a CY 

2015 labor-related share of 46.205 

percent ((41.737 + 50.673)/2 = 46.205). 

Beginning in CY 2016, we will apply 

100 percent of the total labor-related 

share of 50.673 percent. We shall 

continue to apply a labor-related share 

of 50.673 percent in computing a wage 

index-adjusted base rate for ESRD 

facilities until such time in the future 

the ESRDB market basket is again 

rebased or revised. This approach is 

similar to the transition finalized for the 

CY 2015 wage indexes and discussed in 

section II.3 of this final rule, and is 

intended to allow ESRD facilities time 

to adjust to the new labor-related share. 

Comment: While the majority of 

commenters supported the updated 

labor-related share, some commenters 

expressed concern regarding the 

negative impact for rural facilities and 

any facility with a wage index value of 

less than 1.0, and noted that they will 

experience reduced ESRD PPS 

payments in CY 2015 as a result of the 

updated labor-related share. A few 

commenters contended that this update 

would be better received during a larger 

payment system refinement and 

encouraged CMS to delay the ESRDB 

market basket update, with the new 

labor-related share, until CY 2016 where 

negative impacts could be offset with 

other payment system refinements. 

Another commenter noted that if the 

ESRDB market basket update was 

delayed until CY 2016, 2012 audited 

cost reports would be available to 

ensure better accuracy. The commenter 

noted that the PAMA legislation 

mandated the audits and provided $18 

million to fund the effort. 

Response: We thank the commenters 

for their support of our updated laborrelated share. We share stakeholders’ 

concern for negatively impacted 

facilities. Moreover, we agree with 

commenters that delaying the ESRDB 

market basket update until CY 2016 may 

have the advantage of offsetting some of 

the negative impact indicated in section 

XIV of this final rule. However, we 

believe the labor-related share has been 

undervalued in the payment system, 

especially after the ATRA drug 

utilization reduction finalized in the 

ESRD PPS CY 2014 final rule (78 FR 

72161 through 72170). Therefore, we are 

finalizing a labor-related share of 46.205 

percent for CY 2015 and a labor-related 

share of 50.673 percent for CY 2016 and 

until such time in the future the laborrelated share is updated. 

Lastly, we wish to clarify for 

commenters that the audits of Medicare 

cost reports beginning during 2012 will 

not be available for CY 2016 

rulemaking. Any cost report findings 

resulting from the statutorily-mandated 

audits of Medicare cost reports 

beginning during 2012 will be available 

for future ESRDB market basket updates. 

Comment: Many commenters 

supported the update to the laborrelated share and the 2-year transition to 

dampen the immediate impact of the 

change. A few commenters thanked 

CMS for appropriately recognizing 

shifting costs in furnishing dialysis 

services from drugs to labor. 

Response: We thank the commenters 

for their support and note that we 

considered implementing the full 

amount of the revised labor-related 

share percentage of 50.673 for CY 2015, 

but that would have increased the CY 

2015 proposed wage index budgetneutrality factor. Such an increase 

would have resulted in a further 

decrease in CY 2015 Medicare payments 

to rural facilities, and an additional 

increase to urban facilities. When we 

apply the transition labor-related share 

of 46.205 percent the disparity in 

impacts for rural and urban facilities is 

reduced, resulting in a more stable 

economic environment for all facilities 

in general. We believe that offsetting the 

negative economic impact for rural 

facilities with the 2-year transition for 

the labor-share will enhance access to 

quality care for Medicare beneficiaries 

living in rural communities. (For more 

information of the CY 2015 Impact of 


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Changes in Payments to ESRD Facilities 

for CY 2015 ESRD final rule, see section 

XIV of this final rule). Therefore, we 

believe a 2-year transition strikes an 

appropriate balance between ensuring 

that ESRD PPS payments are as accurate 

and stable as possible, while giving 

rural and urban facilities in low wage 

index areas time to adjust to the new 

labor-related share. 

Comment: A few commenters 

requested that CMS consider a longer 

transition to further mitigate the 

financial pressures on rural providers. 

One commenter encouraged CMS to 

provide a longer transition period, 

‘‘such as 3 or 4 years.’’ Another 

commenter encouraged CMS to extend 

the transition to 3 years to give rural 

facilities more time to adjust to the 

lower reimbursement and ‘‘get them 

closer to the end of the PAMA cuts.’’ 

Response: We thank the commenters 

for their concern for the economic 

impacts on rural and urban facilities 

located in areas with low wage indices. 

In addition, we acknowledge the 

commenter’s suggestion to extend the 

transition period to 3 or 4 years to allow 

disadvantaged facilities time to adjust to 

the new labor-related share percentage. 

However, we continue to believe a 2- 

year transition strikes an appropriate 

balance between allowing ESRD 

facilities time to adjust to the new laborrelated share while appropriately 

accounting for facility costs associated 

with labor in furnishing renal dialysis 

services. 

In summary, we are finalizing a CY 

2015 ESRD PPS base rate of $239.43. 

This reflects, updated claims data used 

for rate setting, a 0.0 percent payment 

update consistent with section 

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

by section 217(b)(2) of PAMA, a 2-year 

transition for the labor related 

share(46.205 percent for CY 2015 and 

50.673 for CY 2016), and the CY 2015 

wage index budget-neutrality 

adjustment factor of 1.001729. 

2. ESRD Bundled Market Basket and 

Labor-Related Share 

a. Rebasing and Revision of the ESRD 

Bundled Market Basket 

In July, we proposed to rebase and 

revise the ESRD Bundled (ESRDB) 

market basket for CY 2015. In 

accordance with section 

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

2012, the ESRD payment amounts are 

required to be annually increased by an 

ESRD market basket increase factor that 

is reduced by the productivity 

adjustment in section 

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

application of the productivity 

adjustment may result in the increase 

factor being less than 0.0 for a year and 

may result in payment rates for a year 

being less than the payment rates for the 

preceding year. The statute also 

provides that the market basket increase 

factor should reflect the changes over 

time in the prices of an appropriate mix 

of goods and services used to furnish 

renal dialysis services. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49151 through 49162), we 

established an ESRDB market basket 

using CY 2008 as the base year. This 

market basket was used to annually 

update the ESRD base rate payments for 

CY 2012, CY 2013, and CY 2014. 

In the CY 2015 ESRD proposed rule, 

we proposed to rebase and revise the 

ESRDB market basket for CY 2015, in 

accordance with, section 

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

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. The multi-factor 

productivity adjustment is applied to 

the ESRDB market basket update under 

the requirements of sections 

1881(b)(14)(F)(i)(II) and 

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

The CY 2012-based ESRDB market 

basket represents the costs of operating 

and capital-related costs. The 

percentage change in the ESRDB market 

basket reflects the average change in the 

price of a fixed set of goods (both 

operating and capital) and services 

purchased by ESRD facilities necessary 

for providing renal dialysis services. For 

further background information, see the 

CY 2011 final rule with comment period 

(75 FR 49151 through 49162). 

The ESRDB market basket is a fixedweight (Laspeyres-type) price index. A 

Laspeyres-type index compares the cost 

of purchasing a specified mix of goods 

and services in a selected base period to 

the cost of purchasing that same group 

of goods and services at current prices. 

The effects on total expenditures 

resulting from changes in the quantity 

or mix of goods and services purchased 

subsequent or prior to the base period 

are, by design, not considered. 

The market basket is constructed in 

three main steps: the first step is to 

select a base period and estimate total 

base period expenditure shares for 

mutually exclusive and exhaustive 

spending categories. We use total costs 

for operating and capital expenses. 

These shares are called ‘‘cost’’ or 

‘‘expenditure’’ weights. The second step 

is to match each expenditure category to 

a price/wage variable, called a price 

proxy. We draw these price proxy 

variables from publicly available 

statistical series published on a 

consistent schedule, preferably at least 

quarterly. The final step involves 

multiplying the price proxy index level 

for each spending category by the cost 

weight for that category. The sum of 

these products (that is, cost weights 

multiplied by proxy index levels) for all 

cost categories yields the composite 

index level of the market basket for a 

given quarter or year. Repeating the 

third step for other quarters and years 

produces a time series of market basket 

index levels, from which we can 

calculate rates of growth. 

We proposed to use CY 2012 as the 

base year for the rebased and revised 

ESRDB market basket cost weights. The 

cost weights are based on the cost report 

data for independent ESRD facilities. 

We refer to the market basket as a CY 

market basket because the base period 

for all price proxies and weights are set 

to CY 2012 = 100. Source data included 

CY 2012 Medicare cost reports (Form 

CMS–265–11), supplemented with 2012 

data from the U.S. Census Bureau’s 

Services Annual Survey (SAS) for 

Kidney Dialysis Centers (NAICS 

621492). Medicare cost reports from 

hospital-based ESRD providers were not 

used to construct the proposed ESRDB 

market basket because data from 

independent ESRD facilities tend to 

better reflect the actual cost structure 

faced by the ESRD facility itself, and are 

not influenced by the allocation of 

overhead over the entire institution, as 

can be the case with hospital-based 

providers. This approach is consistent 

with our standard methodology used in 

the development of other market 

baskets. 

b. Rebasing and Revision of the ESRD 

Bundled Market Basket 

The terms ‘‘rebasing’’ and ‘‘revising’’, 

while often used interchangeably, 

actually denote different activities. 

Rebasing means shifting the base year 

for the structure of costs of the input 

price index (for example, we proposed 

to shift the base year cost structure from 

CY 2008 to CY 2012). Revising means 

changing data sources, cost categories, 

price proxies, and/or methodology used 

in developing the input price index. We 

proposed both to rebase and revise the 

ESRDB market basket. 

We selected CY 2012 as the new base 

year because 2012 is the most recent 

year for which relatively complete 

Medicare cost report (MCR) data are 

available. In developing the market 

basket, we reviewed ESRD expenditure 

data from ESRD MCRs (CMS Form 265– 

11) for CY 2012 for each freestanding 

ESRD facility that reported expenses 

and payments. The CY 2012 cost reports 


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are those with cost reporting periods 

beginning on or after January 1, 2012 

and before December 31, 2012. 

We developed cost category weights 

for the proposed CY 2012-based ESRDB 

market basket in two stages. First, we 

derived base weights for nine major 

categories (Wages and Salaries, 

Employee Benefits, Medical Supplies, 

Lab Services, Housekeeping & 

Operations, Pharmaceuticals, 

Administrative and General, CapitalRelated Building & Fixed Equipment, 

and Capital-Related Machinery) from 

the ESRD MCRs. Second, we proposed 

to divide the Administrative & General 

cost category into further detail using 

2012 U.S. Census Bureau Services 

Annual Survey (SAS) Data for the 

industry Kidney Dialysis Centers 

(NAICS 621492). We applied the 2012 

distributions from the SAS data to the 

2012 ‘‘Administrative & General’’ cost 

weight to yield the more detailed 2012 

cost weights. This is similar to the 

methodology we used to break the 2008- 

based Administrative & General Costs 

into more detail for the ESRDB market 

basket as detailed in the CY 2011 ESRD 

final rule (75 FR 49154 through 49159). 

For more information on the SAS data, 

see http://www.census.gov/services/sas/

about_the_surveys.html. 

We proposed to include a total of 20 

detailed cost categories in the CY 2012- 

based ESRDB market basket, which is 

four more cost categories than the CY 

2008-based ESRDB market basket. In 

addition, we proposed to further 

decompose both the Wages and Salaries 

and Employee Benefits cost categories 

into four more detailed cost categories 

reflecting the occupational mix of full 

time equivalents (FTEs) at ESRD 

facilities. The four detailed occupational 

categories are: (1) Health-related 

workers; (2) Management workers; (3) 

Administrative workers; and (4) Service 

workers. Having more detailed cost 

categories for these compensation costs 

enables them to be proxied more 

precisely. We also proposed to collapse 

the Professional Fees and All Other 

Services cost categories into single 

categories rather than splitting those 

categories into Labor-Related and NonLabor-Related Services. In addition, we 

proposed to revise our labels for All 

Other Materials to Medical Materials 

and Supplies, Laboratories to Lab 

Services, and All Other Labor-Related/

Non Labor-Related to All Other Goods 

and Services. 

i. Cost Category Weights 

Using Worksheets A and B from the 

CY 2012 Medicare cost reports, we 

computed cost shares for nine major 

expenditure categories: Wages and 

Salaries, Employee Benefits, 

Pharmaceuticals, Supplies, Lab 

Services, Administrative and General 

(A&G), Housekeeping and Operations, 

Capital-Related Building & Equipment, 

and Capital-Related Machinery. Edits 

were applied to include only cost 

reports that had total costs greater than 

zero. In order to reduce potential 

distortions from outliers in the 

calculation of the cost weights for the 

major expenditure categories, cost 

values for each category less than the 

5th percentile or greater than the 95th 

percentile were excluded from the 

computations. The resulting data set 

included information from 

approximately 4,700 independent ESRD 

facilities’ cost reports from an available 

pool of 5,333 cost reports. Expenditures 

for the nine cost categories as a 

proportion of total expenditures can be 

found in the CY 2015 Proposed Rule (79 

FR 40217). 

Some costs are reported on the 

Medicare cost report but are not 

included in the ESRD bundled payment. 

For example, we removed the expenses 

related to vaccine costs from total 

expenditures since these are excluded 

from the ESRD bundled payment, but 

reported on the Medicare cost report. 

We also proposed to expand the 

expenditure categories developed from 

the Medicare cost reports to allow for 

more detailed expenditure 

decomposition. To expand these cost 

categories, SAS data were used because 

the Medicare Cost Reports do not collect 

detailed information on the items of 

interest. Those categories include: 

Benefits for all employees, professional 

fees, telephone, utilities, and all other 

goods and services. We chose to 

separately break out these categories to 

more accurately reflect ESRD facility 

costs. For a detailed description of how 

the costs were further refined to yield 

the proposed 2012-based ESRDB cost 

weights please see (79 FR 40217 through 

40221). 

Table 1 lists all of the cost categories 

and cost weights in the CY 2012-based 

ESRDB market basket compared to the 

cost categories and cost weights in the 

CY 2008-based ESRDB market basket. 

TABLE 1—COMPARISON OF THE CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY 

2008-BASED ESRDB MARKET BASKET COST CATAGORIES & WEIGHTS

2008 Cost category 

2008 Cost 

weight 

(percent) 

2012 Cost 

weight 

(percent) 

2012 Cost category 

Total .............................................................. 100 .000 100 .000 Total. 

Compensation ............................................... 33 .509 42 .497 Compensation. 

Wages and Salaries ............................... 26 .755 33 .650 Wages and Salaries. 

Employee Benefits ................................. 6 .754 8 .847 Employee Benefits. 

Utilities ........................................................... 1 .264 1 .839 Utilities. 

Electricity ................................................ 0 .621 0 .973 Electricity. 

Natural Gas ............................................ 0 .127 0 .101 Natural Gas. 

Water and Sewerage ............................. 0 .516 0 .765 Water and Sewerage. 

All Other Materials ........................................ 39 .765 28 .139 Medical Materials and Supplies. 

Pharmaceuticals ..................................... 25 .052 16 .510 Pharmaceuticals. 

Supplies ................................................. 9 .216 10 .097 Supplies. 

Lab Services .......................................... 5 .497 1 .532 Lab Services. 

All Other Services ......................................... 15 .929 15 .277 All Other Goods and Services. 

Telephone .............................................. 0 .597 0 .468 Telephone Service. 

Housekeeping and Operations .............. 2 .029 3 .785 Housekeeping and Operations. 

Labor-Related Services ......................... 2 .768 ......................

Prof. Fees: Labor-related ....................... 1 .549 0 .617 Professional Fees (Labor-related and NonLabor-related services). 

All Other Labor-related .......................... 1 .219 ......................

NonLabor-Related Services ................... 10 .535 10 .407 All Other Goods and Services 

Prof. Fees: Nonlabor-related ................. 0 .224 ......................

All Other Nonlabor-related ..................... 10 .311 ......................


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1http://oig.hhs.gov/oei/reports/oei-03-12- 

00550.asp 

TABLE 1—COMPARISON OF THE CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY 

2008-BASED ESRDB MARKET BASKET COST CATAGORIES & WEIGHTS—Continued 

2008 Cost category 

2008 Cost 

weight 

(percent) 

2012 Cost 

weight 

(percent) 

2012 Cost category 

Capital Costs ................................................. 9 .533 12 .248 Capital Costs. 

Capital Related-Building and Equipment 7 .459 8 .378 Capital Related-Building and Equipment. 

Capital Related-Machinery ..................... 2 .074 3 .870 Capital Related-Machinery. 

Note: Totals may not sum to 100.000 percent due to rounding 

ii. Price Proxies for the CY 2012 ESRDB 

Market Basket 

For each cost category in the CY 2012- 

based ESRDB market basket, we selected 

the most appropriate wage and price 

proxies that measure the rate of price 

change for each expenditure category. 

An explanation of our rationale for the 

proposed price proxies used for each 

cost category can be found in the 

proposed rule (79 FR 40221 through 

40224). With the exception of the 

pharmaceuticals cost category, all of the 

price proxies we proposed to use for 

each cost category weight are the same 

in this final rule. We based the price 

proxies on Bureau of Labor Statistics 

(BLS) data and grouped them into one 

of the following BLS categories: 

• Employment Cost Indexes. 

Employment Cost Indexes (ECIs) 

measure the rate of change in 

employment wage rates and employer 

costs for employee benefits per hour 

worked. These indexes are fixed-weight 

indexes and strictly measure the change 

in wage rates and employee benefits per 

hour. 

• Producer Price Indexes. Producer 

Price Indexes (PPIs) measure price 

changes for goods sold in other than 

retail markets. PPIs are used when the 

purchases of goods or services are made 

at the wholesale level. 

• Consumer Price Indexes. Consumer 

Price Indexes (CPIs) measure change in 

the prices of final goods and services 

bought by consumers. CPIs are only 

used when the purchases are similar to 

those of retail consumers rather than 

purchases at the wholesale level, or if 

no appropriate PPIs were available. 

We evaluated the price proxies using 

the criteria of reliability, timeliness, 

availability, and relevance: 

• Reliability. Reliability indicates that 

the index is based on valid statistical 

methods and has low sampling 

variability. Widely accepted statistical 

methods ensure that the data were 

collected and aggregated in a way that 

can be replicated. Low sampling 

variability is desirable because it 

indicates that the sample reflects the 

typical members of the population. 

• Timeliness. Timeliness implies that 

the proxy is published regularly, 

preferably at least once a quarter. We 

believe that using proxies that are 

published regularly (at least quarterly, 

whenever possible) helps to ensure that 

we are using the most recent data 

available to update the market basket. 

• Availability. Availability means that 

the proxy is publicly available. We 

prefer that our proxies are publicly 

available because this ensures that the 

market basket updates are as transparent 

to the public as possible. 

• Relevance. Relevance means that 

the proxy is applicable and 

representative of the cost category 

weight to which it is applied. 

Pharmaceuticals 

In the CY 2015 proposed rule, we 

proposed to change the price proxy used 

for the pharmaceuticals cost category 

from the one used for the 2008-based 

ESRDB market basket—the PPI: 

Pharmaceuticals for Human Use, 

Prescription (79 FR 40223). We 

referenced a recent Health and Human 

Services Office of the Inspector General 

(OIG) report titled ‘‘Update: Medicare 

Payment for End Stage Renal Disease 

Drugs’’ which recommended that CMS 

consider updating the ESRD payment 

bundle using a factor that takes into 

account drug acquisition costs. CMS 

had responded to this recommendation 

by stating that we would consider these 

findings in the continual evaluation of 

the ESRD market basket, particularly 

during the next rebasing and revising of 

the market basket index.1

Drug acquisition cost data is not 

publicly available, nor are the methods 

used to determine it transparent, and, 

therefore, wouldn’t meet our price 

proxy criteria of relevance, reliability, 

transparency, and public availability. 

However, after considering several 

viable options that do meet the criteria 

we proposed to use the PPI: Vitamin, 

Nutrient, and Hematinic Preparations 

(BLS series code #WPU063807). 

Based on public comments and, for 

the reasons articulated below in 

comments and responses, we have 

decided to finalize a price proxy blend 

as the price proxy for the 

pharmaceutical cost category. The blend 

we are using is 22 percent PPI: Vitamin, 

Nutrient, and Hematinic Preparations 

(BLS series code #WPU063807) and 78 

percent PPI: Biological Products, 

Human Use (BLS series code 

#WPU063719). Table 2 lists all price 

proxies for the revised and rebased 

ESRDB market basket. 

TABLE 2—PRICE PROXIES FOR THE CY 2012-BASED ESRDB MARKET BASKET

Cost category Price proxy Cost weight 

(percent) 

Compensation ........................................... ..................................................................................................................................... 42 .497 

Wages and Salaries .......................... ..................................................................................................................................... 33 .650 

Health-related Wages ECI—Wages & Salaries—Hospital (Civilian) ............................................................. 26 .920 

Management Wages ECI—Wages & Salaries—Management, Business, and Financial (Private) ............. 2 .356 

Administrative Wages ECI—Wages & Salaries—Office and Administrative Support (Private) .................... 2 .356 

Service Wages ........................... ECI—Wages & Salaries—Service Occupations (Private) 2 .019 

Employee Benefits ............................ ..................................................................................................................................... 8 .847 

Health-related Benefits ECI—Benefits—Hospital (Civilian) ............................................................................. 7 .078 


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TABLE 2—PRICE PROXIES FOR THE CY 2012-BASED ESRDB MARKET BASKET—Continued 

Cost category Price proxy Cost weight 

(percent) 

Management Benefits ECI—Benefits—Management, Business, and Financial (Private) 0 .619 

Administrative Benefits ECI—Benefits—Office and Administrative Support (Private) 0 .619 

Service Benefits ......................... ECI—Benefits—Service Occupations (Private) ......................................................... 0 .531 

Utilities ............................................... ..................................................................................................................................... 1 .839 

Electricity .................................... PPI—Commercial Electric Power ............................................................................... 0 .973 

Natural Gas ................................ PPI—Commercial Natural Gas .................................................................................. 0 .101 

Water and Sewerage CPI—Water and Sewerage Maintenance .................................................................. 0 .765 

Medical Materials and Supplies ..................................................................................................................................... 28 .139 

Pharmaceuticals ......................... Blend of PPI Biological Products for Human Use and PPI—Vitamin, Nutrient, and 

Hematinic Preparations 

16 .510 

Supplies ...................................... PPI—Surgical and Medical Instruments .................................................................... 10 .097 

Lab Services .............................. PPI—Medical Laboratories ......................................................................................... 1 .532 

All Other Goods and Services ..................................................................................................................................... 15 .277 

Telephone Service CPI—Telephone Services .......................................................................................... 0 .468 

Housekeeping and Operations PPI—Cleaning and Building Maintenance Services 3 .785 

Professional Fees ECI—Compensation—Professional and Related Occupations (Private) 0 .617 

All Other Goods and Services PPI—Finished Goods less Foods and Energy .......................................................... 10 .407 

Capital Costs ..................................... ..................................................................................................................................... 12 .248 

Capital Related Building and 

Equipment 

PPI—Lessors of Nonresidential Buildings ................................................................. 8 .378 

Capital Related Machinery PPI—Electrical Machinery and Equipment ................................................................ 3 .870 

Total .................................... ..................................................................................................................................... 100 .000 

Note: Totals may not sum to 100.000 percent due to rounding. 

iii. 2012-Based ESRDB Market Basket 

Updates Compared to 2008-Based 

ESRDB Market Basket Updates 

Beginning with the CY 2015 ESRD 

PPS update, we proposed to adopt the 

CY 2012-based ESRDB market basket as 

the appropriate market basket of goods 

and services for the ESRD PPS. 

Based on the IHS Global Insight, Inc. 

(IGI) first quarter 2014 forecast with 

history through the fourth quarter of 

2013, the proposed CY 2012-based 

ESRDB market basket for CY 2015 was 

2.0 percent while the proposed CY 

2008-based ESRDB market basket for CY 

2015 was 2.7 percent. 

Table 3 compares the proposed CY 

2012-based ESRDB market basket and 

the CY 2008-based ESRDB market 

basket percent changes. For the 

historical period between CY 2011 and 

CY 2013, the average difference between 

the two market baskets was ¥1.8 

percentage points. This is primarily the 

result of the proposed lower 

pharmaceutical cost share weight 

combined with the proposed revised 

price proxy for the pharmaceutical cost 

category. For the CY 2014 and CY 2015 

forecasts, the differences in the market 

basket forecasts are mainly driven by 

the same factors as in the historical 

period. 

TABLE 3—PROPOSED CY 2012-BASED ESRDB MARKET BASKET AND CY 2008 BASED ESRDB MARKET BASKET, 

PERCENT CHANGES: 2011–2015 

Calendar year (CY) 

Proposed CY 

2012-based 

ESRDB 

market basket 

CY 2008-based 

ESRDB market 

basket 

Historical data: 

CY 2011 .................................................................................................................................................... 1.2 2.8 

CY 2012 .................................................................................................................................................... 1.4 3.4 

CY 2013 .................................................................................................................................................... 1.1 3.0 

Average CY 2011–2013 ........................................................................................................................... 1.3 3.1 

Forecast: 

CY 2014 .................................................................................................................................................... 1.8 2.3 

CY 2015 .................................................................................................................................................... 2.0 2.7 

Source: IHS Global Insight, Inc. 1st quarter 2014 forecast with historical data through 4th quarter 2013. 

b. Proposed ESRDB Market Basket 

Update, Adjusted for Multifactor 

Productivity for CY 2015 

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

Act, beginning in CY 2012, ESRD PPS 

payment amounts shall be annually 

increased by an ESRD market basket 

percentage increase factor reduced by 

the productivity adjustment. For CY 

2015, section 1881(b)(14)(F)(i)(III) of the 

Act, as added by section 217(b)(2) of 

PAMA, requires the Secretary to 

implement a 0.0 percent ESRDB market 

basket increase to the ESRD PPS base 

rate. In addition, we interpret the 

reference to ‘‘[n]otwithstanding 

subclause (III)’’ that was added to 

amended section 1881(b)(14)(F)(i)(III) of 

the Act as precluding the application of 

the multi-factor productivity (MFP) 

adjustment in 2015. As a result of these 

provisions, the proposed CY 2015 ESRD 

market basket increase was 0.0 percent. 

We note that the proposed 2012-based 

ESRDB market basket update less the 

productivity adjustment for CY 2015 

would have been 1.6 percent, or 2.0 

percent less 0.4 percentage point, based 


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on IGI’s 1st quarter 2014 forecast of the 

ESRDB market basket and MFP. 

c. Labor-Related Share 

We define the labor-related share 

(LRS) as those expenses that are laborintensive and vary with, or are 

influenced by, the local labor market. 

The labor-related share of a market 

basket is determined by identifying the 

national average proportion of operating 

costs that are related to, influenced by, 

or vary with the local labor market. The 

labor-related share is typically the sum 

of Wages and Salaries, Benefits, 

Professional Fees, Labor-related 

Services, and a portion of the Capital 

share from a given market basket. 

We proposed to use the 2012-based 

ESRDB market basket cost weights to 

determine the labor-related share for 

ESRD facilities of 50.673 percent, as 

shown in Table 4 below. These figures 

represent the sum of Wages and 

Salaries, Benefits, Housekeeping and 

Operations, 87 percent of the weight for 

Professional Fees (details discussed 

below), and 46 percent of the weight for 

Capital-related Building and Equipment 

expenses (details discussed below). We 

note that this is a similar methodology 

used to compute the labor-related share 

used from CY 2011 through CY 2014. 

TABLE 4—CY 2015 LABOR-RELATED SHARE AND CY 2014 ESRDB LABOR-RELATED SHARE

Cost category 

Proposed 

CY 2015 ESRDB 

labor-related 

share 

(percent) 

CY 2014 

ESRDB laborrelated share 

(percent) 

Wages .............................................................................................................................................................. 33.650 26.755 

Benefits ............................................................................................................................................................ 8.847 6.754 

Housekeeping and operations ......................................................................................................................... 3.785 2.029 

Professional fees (labor-related) ..................................................................................................................... 0.537 2.768 

Capital labor-related ........................................................................................................................................ 3.854 3.431 

Total .......................................................................................................................................................... 50.673 41.737 

The labor-related share for 

Professional Fees (87 percent) reflects 

the proportion of ESRD facilities’ 

professional fees expenses that we 

believe vary with local labor market. We 

conducted a survey of ESRD facilities in 

2008 to better understand the 

proportion of contracted professional 

services that ESRD facilities typically 

purchase outside of their local labor 

market. These purchased professional 

services include functions such as 

accounting and auditing, management 

consulting, engineering, and legal 

services. Based on the survey results, we 

determined that, on average, 87 percent 

of professional services are purchased 

from local firms and 13 percent are 

purchased from businesses located 

outside of the ESRD facility’s local labor 

market. Thus, we proposed to include 

87 percent of the cost weight for 

Professional Fees in the labor-related 

share, the same percentage as used in 

prior years. 

The labor-related share for capitalrelated expenses (46 percent of ESRD 

facilities’ adjusted Capital-related 

Building and Equipment expenses) 

reflects the proportion of ESRD 

facilities’ capital-related expenses that 

we believe varies with local labor 

market wages. Capital-related expenses 

are affected in some proportion by 

variations in local labor market costs 

(such as construction worker wages) 

that are reflected in the price of the 

capital asset. However, many other 

inputs that determine capital costs are 

not related to local labor market costs, 

such as interest rates. The 46-percent 

figure is based on regressions run for the 

inpatient hospital capital PPS in 1991 

(56 FR 43375). We use a similar 

methodology to calculate capital-related 

expenses for the labor-related shares for 

rehabilitation facilities (70 FR 30233), 

psychiatric facilities, long-term care 

facilities, and skilled nursing facilities 

(66 FR 39585). 

d. Responses to Comments on Proposed 

Market Basket Rebasing & Revision 

Comment: Many commenters support 

rebasing the ESRDB market basket using 

the most current and accurate data that 

are available. Most commenters stated 

that an updated base year allows the 

market basket to better reflect the 

relative costs of running an ESRD 

facility under the PPS and accurately 

captures the decline in dialysis drug use 

that has occurred since 2008 (the base 

year of the current market basket). 

Response: We thank the commenters 

who supported the rebasing of the 

ESRDB market basket to reflect cost data 

for 2012. The 2012 MCR data is the first 

year of data available under the bundled 

PPS system and reflects the changes to 

the relative costs associated with 

furnishing ESRD treatments. We agree 

that the decline in dialysis drug use 

since 2008 and its subsequent impact on 

the relative costs of other goods and 

services is an important update to 

consider when estimating price 

pressures faced by providers. 

Comment: Several commenters 

requested that CMS delay the market 

basket rebasing until CY2016 so that the 

rebasing weights could be based on 

2012 audited cost report data instead of 

the proposed unaudited reports. One 

commenter claimed that audits have 

historically shown that facilities’ cost 

reports have included unallowable costs 

that either overstate or understate 

provider costs. They believe these errors 

could change the results of the cost 

share weights derived from the market 

basket data. 

Response: We disagree with the 

commenters that the market basket 

rebasing should be delayed until CY 

2016 in order to use audited cost report 

data rather than the unaudited reports. 

First, the audits will begin in fiscal year 

2015 and the processing and analysis of 

the audited data could take several years 

to complete and therefore would not be 

available to use for the CY 2016 

updates. Additionally, although the 

audits might lead to different cost levels 

reported by some providers, we don’t 

believe that different levels would result 

in substantial variation in the relative 

cost share weights derived from the 

unaudited data since the cost weights 

are based on shares of the total rather 

than on levels. Additionally the weights 

are derived from all providers and 

therefore for a change to appear in the 

market basket cost shares the 

misreporting would have to be prevalent 

across a significant percentage of 

providers. Therefore, we do not agree 

the upcoming audits are a reason to 

delay the update to the market basket 

weights for CY 2015. We believe the use 

of the 2012 Medicare Cost Report data 

to be a technical improvement to the use 

of the 2008 ESRD relative cost shares. 


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Comment: One commenter believes 

that rebasing the market basket goes 

against the intent of PAMA since the 

rebasing will result in decreased 

payments to some providers and 

increased payments to others. They 

believe that PAMA was passed to 

mitigate the adjustment to ESRD 

bundled payments for all dialysis 

facilities by dictating a market basket 

update for CY 2015 through 2018. 

Response: The CY 2015 ESRD PPS 

update will be 0.0 percent as mandated 

by PAMA. For CY 2016 through CY 

2018, PAMA mandates a reduction to 

the market basket increase to the ESRD 

PPS payment updates. PAMA did not 

specify what the annual updates would 

be for those years. It is critical that CMS 

estimate an appropriate market basket 

increase that reflects the inputs used to 

furnish ESRD treatments in order for the 

legislatively required reductions to be 

applied in CYs 2016 through 2018. 

Comment: One commenter believes 

that the difference in the market basket 

rate using the 2008 data versus the 2012 

data is significant. They compared rules 

where market basket rebasings have 

been proposed and finalized for other 

providers such as hospital and home 

health and found that the rebasings did 

not result in significant changes in 

current or historical market basket 

updates. 

Response: We agree with the 

commenter that the rebasing of other 

market baskets has not, historically, 

resulted in significant changes to the 

market basket update rate. However, 

between 2008 and 2012 the dialysis 

market experienced considerable 

changes. Most notable was the change in 

the relative cost of pharmaceuticals; 

specifically, the cost category weight 

dropped from 25.052 percent to 16.510 

percent, due largely to decreases in drug 

utilization. In addition, we updated the 

price proxy associated with the 

pharmaceutical cost category based in 

part on the recommendation of a Health 

and Human Services Office of the 

Inspector General (OIG) report titled 

‘‘Update: Medicare Payment for End 

Stage Renal Disease Drugs.’’ The 

combined changes to the 

pharmaceutical cost weight and the 

update of the pharmaceutical price 

proxy are the primary drivers of the 

changes to the market basket updates. 

For CY 2015, we note that the changes 

to the cost share weights from 2008 to 

2012 account for about 50 percent of the 

difference while the change to the price 

proxy, as finalized, accounts for the 

other 50 percent of the difference. 

Comment: One commenter requested 

clarification on several of the cost 

category calculations based on MCR 

data. First, the commenter requested we 

review the ‘‘Administrative and 

General’’ (A&G) and ‘‘Wages & Salaries’’ 

cost categories. The commenter 

specifically requested that CMS clarify 

the source of the percentage of nondirect wages associated with A&G that 

are obtained from Sheet A of the MCR 

as well as verify the method used on 

worksheet B to estimate total costs for 

each cost center. Second, the 

commenter requested that CMS clarify 

whether estimated salary costs for 

capital-related machinery were 

reallocated to salaries or if they were 

not. 

Response: Below we clarify the 

calculation of the Wages & Salaries cost 

share methodology as well as the 

method for inclusion of the CapitalRelated Machinery cost center into the 

moveable capital cost share weight. 

To capture the salary costs associated 

with non-direct patient care cost 

centers, we calculated salary 

percentages for non-direct patient care 

from worksheet A of the MCR. The 

estimated ratios were calculated as the 

ratio of salary costs (worksheet A, 

columns 1 & 2) to total costs (worksheet 

A, column 4). The ratios were calculated 

for seven distinct cost centers: 

‘Operations & Maintenance’ combined 

with ‘Machinery & Rental & 

Maintenance’ (line 3 & 6), Housekeeping 

(line 4), EH&W Benefits for Direct Pt. 

Care (line 8), Supplies (line 9), 

Laboratory (line 10), Administrative & 

General (line 11), and Drugs (line 12). 

Each of the ratios for the seven cost 

centers was applied to the 

corresponding reimbursable costs center 

totals as reported on worksheet B. The 

worksheet B totals were based on the 

sum of reimbursable costs reported on 

lines 8–17. We did not use line 18, the 

subtotal line, as the commenter 

presumes. For example, the salary 

percentage for supplies (as measured by 

line 9 on worksheet A) was applied to 

the total expenses for the supply cost 

center (the sum of costs reported on 

worksheet B, column 7, lines 8–17). 

Regarding the calculation of costs 

associated with ‘Machinery & Rental & 

Maintenance’, the estimated salary ratio 

for this category was calculated jointly 

with the ratio for ‘Operations & 

Maintenance’ expenses. Therefore the 

same ratio was applied to ‘Operations & 

Maintenance’ and ‘Machinery & Rental 

& Maintenance’. This ratio was applied 

to the total of worksheet B, column 4, 

lines 8–17. The salaries associated with 

the ‘Machinery & Rental & Maintenance’ 

costs were added to ‘Total Salaries’. The 

remaining costs reported in worksheet B 

column 4, line 8–17 were considered 

moveable capital-related expenses 

(excluding salaries). We believe, the 

commenter’s confusion was the result of 

the estimated salary share for the capital 

‘Machinery & Rental & Maintenance’ 

costs being combined with the operation 

and maintenance costs before being 

added to salaries rather than being 

added separately. We hope this clarifies 

that the salary portion of ‘Machinery & 

Rental & Maintenance’ costs follows the 

same method as all other cost centers. 

Comment: One commenter requested 

CMS revisit the allocation of laboratory 

costs from A&G once some of the 

providers have re-filed their cost 

reports. The commenter recommends 

that CMS not allocate A&G to the 

laboratory cost center and apply the lab 

price proxy only to directly reported lab 

costs. They note that allocating A&G to 

laboratory costs would overstate the 

proportion of lab costs based upon their 

understanding as to how some providers 

will allocate these costs once they re-file 

the cost reports. 

Response: The lab costs included in 

the lab category in the rebased and 

revised ESRDB market basket do not 

include any allocation of administrative 

and general (A&G) costs. The costs are 

calculated based on lab expenses 

reported on Medicare Cost Report, 

worksheet B, lines 8–17, and column 8. 

We did not allocate any A&G costs to 

the lab category for the 2012 cost shares. 

Comment: One commenter noted that 

what goes into each of the provided 

categories is not standardized. They 

believe that CMS should use consistent 

information from all providers to ensure 

the accuracy of the data. They note that 

smaller dialysis facilities, especially 

those in rural areas, will likely struggle 

to collect the information required to be 

reported on the MCR. 

Response: We are sensitive to all 

reasonable cost report data being 

included in the calculation of the 

market basket cost share weights. We 

perform various trimming techniques to 

estimate the variability in the cost share 

weight results. Trimming the data 

removes providers that may have 

misreported costs or are extreme 

outliers. We analyze the results of the 

cost share weights for various samples 

of providers to ensure reasonability of 

the overall cost share weights. We also 

compare the results to other publicly 

available data sources for 

reasonableness of results. Our trimming 

methods rely on relative share outliers 

rather than dollar level outliers. 

Therefore, smaller dialysis facilities are 

subject to similar criteria as larger 

facilities to be included or excluded 

based on trimming methods. For 

example, we would exclude a provider 

in a 5 percent trim if the cost weight for 


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the wages and salaries was plus or 

minus 2 standard deviations from the 

mean cost weight of all providers for 

wages and salaries. If costs are 

significantly misreported we are unable 

to use the data, as submitted. It is the 

facility’s responsibility to work with the 

MACs to ensure proper reporting. 

Comment: One commenter is 

concerned with CMS re-apportioning 

certain costs and increasing the laborrelated share of the ESRD PPS base rate. 

The commenter notes that they have one 

of the lowest CBSA wage indexes in the 

continental United States and are 

therefore impacted adversely when the 

labor-related share increases. Their 

concern is based on CMS’s reliance 

upon assumptions to re-apportion 

certain costs. The commenter believes 

these cost assumptions may not 

accurately reflect the percentage of the 

ESRD PPS base rate impacted by the 

wage rate. The commenter recommends 

that CMS determine how it may best 

collect specific data on the labor-related 

cost categories where CMS currently 

relies on assumptions. 

Response: We believe the 

assumptions that we have made in 

determining the labor-related share are 

reasonable and follow a similar 

methodology and assumptions used in 

other CMS PPS payment systems. The 

commenter’s recommendation to review 

how we may gather detailed information 

on the ESRD PPS’s labor-related cost 

categories is helpful in identifying 

future research opportunities. As part of 

CMS’s ongoing efforts to update and 

refine the Medicare Cost Reports we can 

explore the opportunities for collecting 

more specific information. Beyond the 

Medicare Cost Reports, we can explore 

conducting new surveys that would 

help determine the costs that are 

influenced or vary with the local labor 

market, although these are subject to 

resource availability and approval 

through OMB’s standard survey and 

auditing process (see ‘‘Standards and 

Guidelines for Statistical Surveys’’ 

http://www.whitehouse.gov/sites/

default/files/omb/assets/omb/inforeg/

statpolicy/standards_stat_surveys.pdf 

and ‘‘Guidance on Agency Survey and 

Statistical Information Collections’’ 

http://www.whitehouse.gov/sites/

default/files/omb/assets/omb/inforeg/

pmc_survey_guidance_2006.pdf). 

Comment: Many commenters 

disagreed with the proposed price proxy 

for the drug cost category in the ESRDB 

market basket. They requested we 

reconsider the proposed proxy and use 

either a more appropriate index: The 

PPI Biological Products, Human Use 

(PPI–BPHU), or a composite proxy that 

would better reflect the costs of drugs 

and biologicals that are included in the 

ESRD bundle. Some commenters noted 

that ESAs account for over 80 percent of 

drug expenses and noted they are 

supplied by a sole source manufacturer 

that routinely imposes product price 

increases on facilities. Some 

commenters further point out that since 

ESAs are fully represented in, the PPI– 

BPHU, it is more relevant than the PPI 

Vitamin, Nutrient, & Hematinic 

Preparations (PPI–VNHP). Some 

commenters agreed that the PPI– 

Pharmaceutical for Human Use, 

Prescription (PPI–RX) is likely not the 

most appropriate proxy since it does not 

track well with the acquisition costs for 

ESRD drugs, as documented by the OIG 

study. Another commenter notes that 

the drugs in the PPI–VHNP include nonprescription (over-the-counter) 

medicines. 

Response: Given concerns raised by 

commenters and further analysis into 

the appropriateness of the proposed 

price proxy, we agree with the 

commenters that the proposed PPI– 

VNHP suffers some shortcomings that 

can be mitigated if we were to use the 

PPI –BPHU. Most importantly, the PPI– 

BPHU measures the price change of 

drugs that are prescriptions, and ESAs 

would be captured within this index if 

they are included in the PPI sample 

(although, because the PPI relies on 

confidentiality with respect to the 

companies and drugs/biologicals 

included in the sample, we do not know 

if these drugs are indeed reflected in 

this price index). However, we believe 

the PPI–BPHU is an appropriate proxy 

to use because although ESAs may be a 

small part of the fuller category of 

biological products, we can examine 

whether the price increases for the ESA 

drugs are similar to the drugs included 

in the PPI–BPHU. We did this by 

comparing the historical price changes 

in the PPI–BPHU and the ASP for ESAs 

and found the cumulative growth to be 

consistent over several years. We will 

continue to monitor the trends in the 

prices for ESA drugs as measured by 

other price data sources to ensure that 

the PPI–BPHU is still an appropriate 

price proxy. 

On the other hand, since the non-ESA 

drugs used in the treatment of ESRD are 

mainly vitamins and nutrients, we 

believe that the PPI–VNHP is the best 

available proxy for these types of drugs. 

While this index does include over-thecounter drugs as well as prescription 

drugs, a comparison of trends in the 

prices for non-ESA drugs shows growth 

to the proposed PPI–VNHP. 

Therefore we think it is appropriate to 

use both the PPI–VNHP and the PPI– 

BPHU, and we will proxy the price 

change for drugs included in the ESRD 

bundle by a blended drug price proxy 

with 78 percent of the index measured 

by the PPI–BPHU and 22 percent of the 

index measured by the PPI–VNHP. The 

shares within the blend are based on the 

2012 ESRD Part B spending for ESA and 

non-ESA drugs included in the bundle. 

ESA drugs are those considered as a 

form of epoeitin alpha while the nonESA drugs are the remaining drugs 

specified in the ESRD bundle. 

Comment: One commenter claims that 

the OIG criticism of the current index as 

the drug price proxy—the PPI 

Pharmaceuticals for Human Use, 

Prescription—was based on a 

retrospective analysis of drugs price 

trends during a narrow 3-year window 

at a significant time of transition in the 

ESRD marketplace. They claim that if 

the OIG looked at a broader window of 

time (for example, 2003–2012), it would 

likely show that the PPI for prescription 

drugs has more closely tracked to cost 

changes for most drugs within the ESRD 

PPS. They note the OIG raised concerns 

with the use of the PPI–RX prior to the 

implementation of the ESRD PPS and 

CMS did not concur with the 

recommendation at that time and they 

noted that the OIGs figures were not 

suitable for inferring future price trends. 

The commenter recommends that CMS 

continue to use the PPI–RX as the 

proxy. 

Response: At the time of the 

implementation of the ESRD market 

basket, we proposed and finalized the 

use of the PPI–RX since it is the proxy 

used in other CMS market baskets to 

proxy drug price growth and it would be 

representative of the average 

prescription drug price increase for the 

overall prescription drug market. 

However, analysis of the pricing trends 

of the drugs used in furnishing ESRD 

care (either the acquisition costs 

collected by OIG or by ASP data as 

collected by CMS) show relatively flat 

price growth over the 2008–2014 period 

(when taken on average) while the PPI 

RX has grown at a much faster rate. 

Additionally, there are a limited number 

of drugs included in the ESRD bundle 

and those drugs are mainly defined as 

biological products which are not 

captured in the PPI–RX. Therefore, as 

explained in the proposed rule, we do 

not believe that the PPI–RX should 

continue to be used in the ESRDB 

market basket. 

Comment: One commenter 

recommended that the pharmaceutical 

price proxy changes be suspended and 

CMS follow the OIG recommendation to 

determine how drug acquisition costs 

may be taken into consideration when 

updating the ESRD PPS base rate. 


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2https://oig.hhs.gov/oei/reports/oei-03-12- 

00550.pdf, Appendix D. 

Response: The direct use of drug 

acquisition costs in the ESRD market 

basket is not possible, as noted in our 

response to the OIG recommendation: 

‘‘We will consider these findings in our 

continual evaluation of the ESRD 

market basket, particularly during the 

next rebasing and revising of the index. 

As we have done for all of the market 

baskets developed by CMS, we will base 

the decision on which price proxy is 

used on four criteria: reliability, 

timeliness, availability, and relevance. 

We will be evaluating alternative data 

sources and methods to determine if we 

can improve the relevance of the ESRD 

drug price proxy while not sacrificing 

on the other three requirements. For 

instance, the data used in the OIG 

analysis is based on acquisition cost 

data, which is not data that is readily 

available in a public or timely manner. 

Additionally, the ESRD annual market 

basket updates are based on a projection 

and any price proxy ultimately will 

need to be forecasted. The more 

restrictive or specific a price series, the 

more difficult it can be to accurately 

forecast future price movements. 

Finally, the price proxy should also 

reflect price trends associated with an 

efficient market; therefore, to the extent 

market inefficiencies exist, there would 

be concerns with using direct cost or 

price data.’’ 2

Comment: Several commenters 

relayed the concern that CMS is making 

changes to the market basket that 

exacerbate the payment problems 

particularly for rural and low volume 

facilities while not contemporaneously 

addressing other changes to the ESRD 

payment. Other commenters support the 

proposed revised labor-related share as 

it reflects the proportionate decline over 

the past three years in EPO utilization. 

They recognize the impact on nonprofit 

and small providers with wage adjustors 

less than 1.0, and therefore support a 2- 

year transition for labor changes and 

updated CBSAs. 

Response: We believe that the 

proposed 2012-based ESRDB market 

basket is a technical improvement to the 

2008-based ESRDB market basket and 

therefore should be implemented in CY 

2015. A transition policy, for the revised 

labor-related share, was proposed and 

finalized that will help to mitigate the 

impact to providers for any given year. 

e. Final ESRDB Market Basket and 

Labor-Related Share 

In summary, we are finalizing the 

rebasing and revision of the ESRDB 

market basket effective for CY 2015. The 

cost share weights will be based on the 

2012 cost shares detailed in the 

proposed rule (79 FR 40217 through 

40221) and presented in this final rule. 

We are also finalizing a labor-related 

share of 50.673 percent as detailed in 

the proposed rule (79 FR 40225 through 

40226) and presented in this final rule. 

We are finalizing all price proxies, as 

proposed, with the exception of the 

price proxy for the pharmaceutical cost 

category. As detailed in our response to 

comments, we believe that the PPI– 

VNHP suffers some shortcomings that 

can be mitigated with the use of the 

PPI–BPHU, particularly for the ESA 

drugs. We will, however, continue to 

monitor the trends in the prices for ESA 

drugs as measured by other price data 

sources to ensure that the PPI–BPHU is 

still an appropriate price proxy given 

the unique market conditions related to 

the manufacturing and production of 

these types of drugs. On the other hand 

we will use the PPI–VNHP for the 

remaining drugs included in the ESRDB 

market basket. While this index does 

include over-the-counter drugs as well 

as prescription drugs, a comparison of 

trends in the prices for non-ESA drugs 

shows growth similar to the PPI–VNHP. 

Therefore, we are finalizing a blend of 

the PPI Biological Products, Human Use 

(PPI–BPHU) and the PPI Vitamin, 

Nutrient, & Hematinic Preparations 

(PPI–VNHP). The weights within the 

blend are based on 2012 estimated 

ESRD Part B spending for the drugs 

used in the bundle, which results in a 

split of 78 percent for ESAs (proxied by 

the PPI–BPHU) and 22 percent for nonESAs (proxied by the PPI–VNHP). 

Section 1881(b)(14)(F)(i)(III) of the 

Act, as added by section 217(b)(2) of 

PAMA requires a 0.0 percent market 

basket less productivity update for CY 

2015. We are therefore finalizing 0.0 

percent as the ESRDB market basket 

update less productivity adjustment for 

CY 2015. In the absence of PAMA, the 

CY2015 ESRDB market basket update 

less productivity would be 1.6 percent 

(2.1 percent market basket update less 

0.5 percent MFP adjustment), based on 

the IHS Global Insight, Inc. (IGI) third 

quarter 2014 forecast with historical 

data through the second quarter of 2014. 

Table 5 compares the update of the 

proposed market basket to the final 

market basket; the only difference 

between the two arises from the change 

to the pharmaceutical price proxy. 

TABLE 5—FINAL CY 2012-BASED ESRDB AND PROPOSED CY 2012-BASED ESRDB MARKET BASKET, PERCENT

CHANGES: 2011–2015 

Calendar Year (CY) 

Final CY 2012- 

based ESRDB 

market basket 

Final CY 2012- 

based ESRDB 

market basket 

Historical data: 

2011 .............................................................................................................. 1.2 1.7 

2012 .............................................................................................................. 1.4 1.5 

2013 .............................................................................................................. 1.1 1.4 

Average CY 2011–2013 ............................................................................... 1.2 1.5 

Forecast: 

2014 .............................................................................................................. 1.4 1.6 

2015 .............................................................................................................. 2.0 2.1 

Source: IHS Global Insight, Inc. 3rd quarter 2014 forecast with historical data through 2nd quarter 2014. 

3. The CY 2015 ESRD PPS Wage Indices 

a. Background 

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

Act provides that the ESRD PPS may 

include a geographic wage index 

payment adjustment, such as the index 

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

the Act. In the CY 2011 ESRD PPS final 

rule (75 FR 49117), we finalized for the 

ESRD PPS the use of the Office of 

Management and Budget’s (OMB) CoreBased Statistical Areas (CBSAs)-based 

geographic area designations described 

in OMB bulletin 03–04, issued June 6, 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66137 

2003 as the basis for revising the urban 

and rural areas and their corresponding 

wage index values. This bulletin, as 

well as subsequent bulletins, is 

available online at http://

www.whitehouse.gov/omb/bulletins_

index2003-2005. 

We also finalized that we would use 

the urban and rural definitions used for 

the Medicare IPPS but without regard to 

geographic reclassification authorized 

under sections 1886(d)(8) and (d)(10) of 

the Act. In the CY 2012 ESRD PPS final 

rule (76 FR 70239), we finalized that, 

under the ESRD PPS, we will continue 

to utilize the ESRD PPS wage index 

methodology, first established under the 

basic case-mix adjusted composite rate 

payment system, for updating the wage 

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

define urban and rural areas. 

b. Implementation of New Labor Market 

Delineations 

OMB publishes bulletins regarding 

CBSA changes, including changes to 

CBSA numbers and titles. In accordance 

with our established methodology, we 

have historically adopted via 

rulemaking CBSA changes that are 

published in the latest OMB bulletin. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, which 

established revised delineations for 

Metropolitan Statistical Areas, 

Micropolitan Statistical Areas, and 

Combined Statistical Areas, and 

provided guidance on the use of the 

delineations of these statistical areas. A 

copy of this bulletin may be obtained at 

http://www.whitehouse.gov/sites/

default/files/omb/bulletins/2013/b-13- 

;01.pdf. According to OMB, ‘‘[t]his 

bulletin provides the delineations of all 

Metropolitan Statistical Areas, 

Metropolitan Divisions, Micropolitan 

Statistical Areas, Combined Statistical 

Areas, and New England City and Town 

Areas in the United States and Puerto 

Rico based on the standards published 

on June 28, 2010, in the Federal 

Register (75 FR 37246 through 37252) 

and Census Bureau data.’’ In this CY 

2015 ESRD PPS final rule, when 

referencing the new OMB geographic 

boundaries of statistical areas, we are 

using the term ‘‘delineations’’ rather 

than the term ‘‘definitions’’ that we have 

used in the past, consistent with OMB’s 

use of the terms (75 FR 37249). Because 

the bulletin was not issued until 

February 28, 2013, with supporting data 

not available until later, and because the 

changes made by the bulletin and their 

ramifications needed to be extensively 

reviewed and verified, we were unable 

to undertake such a lengthy process 

before publication of the FY 2014 IPPS/ 

LTCH PPS proposed rule and, thus, did 

not implement changes to the hospital 

wage index for FY 2014 based on these 

new CBSA delineations. Likewise, for 

the same reasons, the CY 2014 ESRD 

PPS wage index (based upon the prefloor, pre-reclassified hospital wage 

data, which is unadjusted for 

occupational mix) also did not reflect 

the new CBSA delineations. In the FY 

2015 IPPS/LTCH PPS final rule (79 FR 

49951 through 49963), we finalized the 

implementation of the new CBSA 

delineations as described in the 

February 28, 2013 OMB Bulletin No. 

13–01, beginning with the FY 2015 IPPS 

wage index. Similarly, in this CY 2015 

ESRD PPS final rule, we are finalizing 

the new CBSA delineations as described 

in the February 28, 2013 OMB Bulletin 

No. 13–01, beginning with the CY 2015 

ESRD PPS wage index. We believe that 

the most current CBSA delineations 

accurately reflect the local economies 

and wage levels of the areas where 

facilities are located, and we believe 

that it is important for the ESRD PPS to 

use the latest CBSA delineations 

available in order to maintain an up-todate payment system that accurately 

reflects the reality of populations shifts 

and labor market conditions. We have 

reviewed our findings and impacts 

relating to the new CBSA delineations 

using the most recent data available at 

the time of this final rule, and have 

concluded that there is no compelling 

reason to further delay the 

implementation of the CBSA 

delineations as set forth in OMB 

Bulletin 13–01. 

In order to implement these changes 

for the ESRD PPS, it is necessary to 

identify the new labor market area 

delineation for each county and facility 

in the country. For example, there 

would be new CBSAs, urban counties 

that would become rural, rural counties 

that would become urban, and existing 

CBSAs that would be split apart. 

Because the wage index of urban areas 

is typically higher than that of rural 

areas, ESRD facilities currently located 

in rural counties that will become 

urban, beginning January 1, 2015, will 

generally experience an increase in their 

wage index values. We identified 

approximately 100 counties and 110 

facilities that will move from rural to 

urban status when we adopt the new 

CBSA delineations beginning in CY 

2015. Table 6: (CY 2015 Rural to Urban 

CBSA Crosswalk) shows the CBSA 

delineations for CY 2014 and the rural 

wage index values for CY 2015 based on 

those delineations, compared to the 

final CBSA delineations for CY 2015 

and the urban wage index values for CY 

2015 based on the new delineations, 

and the percentage change in these 

values for those counties that will 

change from rural to urban when we 

adopt the new CBSA delineations. 

Approximately 100 facilities will 

experience an increase in their wage 

index values. 

TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK

County name State 

ESRD PPS CY 2014 

CBSA delineations 

Final ESRD PPS CY 2015 

CBSA delineations Change in 

value 

(percent) CBSA Urban/Rural 

Wage 

Index 

Value 

CBSA Urban/Rural 

Wage 

Index 

Value 

BALDWIN ....................................... AL 01 RURAL ............... 0.6963 19300 URBAN ................. 0.7248 4.09% 

PICKENS ........................................ AL 01 RURAL ............... 0.6963 46220 URBAN ................. 0.8337 19.73 

COCHISE ....................................... AZ 03 RURAL ............... 0.9125 43420 URBAN ................. 0.8937 ¥2.06 

LITTLE RIVER ................................ AR 04 RURAL ............... 0.7311 45500 URBAN ................. 0.7362 0.70 

WINDHAM ...................................... CT 07 RURAL ............... 1.1251 49340 URBAN ................. 1.1493 2.15 

SUSSEX ......................................... DE 08 RURAL ............... 1.0261 41540 URBAN ................. 0.9289 ¥9.47 

CITRUS .......................................... FL 10 RURAL ............... 0.8006 26140 URBAN ................. 0.7625 ¥4.76 

GULF .............................................. FL 10 RURAL ............... 0.8006 37460 URBAN ................. 0.7906 ¥1.25 

HIGHLANDS ................................... FL 10 RURAL ............... 0.8006 42700 URBAN ................. 0.7982 ¥0.30 

SUMTER ......................................... FL 10 RURAL ............... 0.8006 45540 URBAN ................. 0.8095 1.11 

WALTON ........................................ FL 10 RURAL ............... 0.8006 18880 URBAN ................. 0.8156 1.87 

LINCOLN ........................................ GA 11 RURAL ............... 0.7425 12260 URBAN ................. 0.9225 24.24 


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66138 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK—Continued 

County name State 

ESRD PPS CY 2014 

CBSA delineations 

Final ESRD PPS CY 2015 

CBSA delineations Change in 

value 

(percent) CBSA Urban/Rural 

Wage 

Index 

Value 

CBSA Urban/Rural 

Wage 

Index 

Value 

MORGAN ........................................ GA 11 RURAL ............... 0.7425 12060 URBAN ................. 0.9369 26.18 

PEACH ........................................... GA 11 RURAL ............... 0.7425 47580 URBAN ................. 0.7542 1.58 

PULASKI ......................................... GA 11 RURAL ............... 0.7425 47580 URBAN ................. 0.7542 1.58 

KALAWAO ...................................... HI 12 RURAL ............... 1.0741 27980 URBAN ................. 1.0561 ¥1.68 

MAUI ............................................... HI 12 RURAL ............... 1.0741 27980 URBAN ................. 1.0561 ¥1.68 

BUTTE ............................................ ID 13 RURAL ............... 0.7398 26820 URBAN ................. 0.8933 20.75 

DE WITT ......................................... IL 14 RURAL ............... 0.8362 14010 URBAN ................. 0.9165 9.60 

JACKSON ....................................... IL 14 RURAL ............... 0.8362 16060 URBAN ................. 0.8324 ¥0.45 

WILLIAMSON ................................. IL 14 RURAL ............... 0.8362 16060 URBAN ................. 0.8324 ¥0.45 

SCOTT ............................................ IN 15 RURAL ............... 0.8416 31140 URBAN ................. 0.8605 2.25 

UNION ............................................ IN 15 RURAL ............... 0.8416 17140 URBAN ................. 0.9473 12.56 

PLYMOUTH .................................... IA 16 RURAL ............... 0.8451 43580 URBAN ................. 0.8915 5.49 

KINGMAN ....................................... KS 17 RURAL ............... 0.7806 48620 URBAN ................. 0.8472 8.53 

ALLEN ............................................ KY 18 RURAL ............... 0.7744 14540 URBAN ................. 0.8410 8.60 

BUTLER .......................................... KY 18 RURAL ............... 0.7744 14540 URBAN ................. 0.8410 8.60 

ACADIA .......................................... LA 19 RURAL ............... 0.7580 29180 URBAN ................. 0.7869 3.81 

IBERIA ............................................ LA 19 RURAL ............... 0.7580 29180 URBAN ................. 0.7869 3.81 

ST. JAMES ..................................... LA 19 RURAL ............... 0.7580 35380 URBAN ................. 0.8821 16.37 

TANGIPAHOA ................................ LA 19 RURAL ............... 0.7580 25220 URBAN ................. 0.9452 24.70 

VERMILION .................................... LA 19 RURAL ............... 0.7580 29180 URBAN ................. 0.7869 3.81 

WEBSTER ...................................... LA 19 RURAL ............... 0.7580 43340 URBAN ................. 0.8325 9.83 

ST. MARYS .................................... MD 21 RURAL ............... 0.8554 15680 URBAN ................. 0.8593 0.46 

WORCESTER ................................ MD 21 RURAL ............... 0.8554 41540 URBAN ................. 0.9289 8.59 

MIDLAND ........................................ MI 23 RURAL ............... 0.8207 33220 URBAN ................. 0.7935 ¥3.31 

MONTCALM ................................... MI 23 RURAL ............... 0.8207 24340 URBAN ................. 0.8799 7.21 

FILLMORE ...................................... MN 24 RURAL ............... 0.9124 40340 URBAN ................. 1.1398 24.92 

LE SUEUR ...................................... MN 24 RURAL ............... 0.9124 33460 URBAN ................. 1.1196 22.71 

MILLE LACS ................................... MN 24 RURAL ............... 0.9124 33460 URBAN ................. 1.1196 22.71 

SIBLEY ........................................... MN 24 RURAL ............... 0.9124 33460 URBAN ................. 1.1196 22.71 

BENTON ......................................... MS 25 RURAL ............... 0.7589 32820 URBAN ................. 0.8991 18.47 

YAZOO ........................................... MS 25 RURAL ............... 0.7589 27140 URBAN ................. 0.7891 3.98 

GOLDEN VALLEY .......................... MT 27 RURAL ............... 0.9024 13740 URBAN ................. 0.8686 ¥3.75 

HALL ............................................... NE 28 RURAL ............... 0.8924 24260 URBAN ................. 0.9219 3.31 

HAMILTON ..................................... NE 28 RURAL ............... 0.8924 24260 URBAN ................. 0.9219 3.31 

HOWARD ....................................... NE 28 RURAL ............... 0.8924 24260 URBAN ................. 0.9219 3.31 

MERRICK ....................................... NE 28 RURAL ............... 0.8924 24260 URBAN ................. 0.9219 3.31 

JEFFERSON .................................. NY 33 RURAL ............... 0.8208 48060 URBAN ................. 0.8386 2.17 

YATES ............................................ NY 33 RURAL ............... 0.8208 40380 URBAN ................. 0.8750 6.60 

CRAVEN ......................................... NC 34 RURAL ............... 0.7995 35100 URBAN ................. 0.8994 12.50 

DAVIDSON ..................................... NC 34 RURAL ............... 0.7995 49180 URBAN ................. 0.8679 8.56 

GATES ............................................ NC 34 RURAL ............... 0.7995 47260 URBAN ................. 0.9223 15.36 

IREDELL ......................................... NC 34 RURAL ............... 0.7995 16740 URBAN ................. 0.9073 13.48 

JONES ............................................ NC 34 RURAL ............... 0.7995 35100 URBAN ................. 0.8994 12.50 

LINCOLN ........................................ NC 34 RURAL ............... 0.7995 16740 URBAN ................. 0.9073 13.48 

PAMLICO ........................................ NC 34 RURAL ............... 0.7995 35100 URBAN ................. 0.8994 12.50 

ROWAN .......................................... NC 34 RURAL ............... 0.7995 16740 URBAN ................. 0.9073 13.48 

OLIVER ........................................... ND 35 RURAL ............... 0.7099 13900 URBAN ................. 0.7216 1.65 

SIOUX ............................................. ND 35 RURAL ............... 0.7099 13900 URBAN ................. 0.7216 1.65 

HOCKING ....................................... OH 36 RURAL ............... 0.8329 18140 URBAN ................. 0.9539 14.53 

PERRY ........................................... OH 36 RURAL ............... 0.8329 18140 URBAN ................. 0.9539 14.53 

COTTON ......................................... OK 37 RURAL ............... 0.7799 30020 URBAN ................. 0.7918 1.53 

JOSEPHINE ................................... OR 38 RURAL ............... 1.0083 24420 URBAN ................. 1.0086 0.03 

LINN ................................................ OR 38 RURAL ............... 1.0083 10540 URBAN ................. 1.0879 7.89 

ADAMS ........................................... PA 39 RURAL ............... 0.8719 23900 URBAN ................. 1.0104 15.88 

COLUMBIA ..................................... PA 39 RURAL ............... 0.8719 14100 URBAN ................. 0.9347 7.20 

FRANKLIN ...................................... PA 39 RURAL ............... 0.8719 16540 URBAN ................. 1.0957 25.67 

MONROE ........................................ PA 39 RURAL ............... 0.8719 20700 URBAN ................. 0.9372 7.49 

MONTOUR ..................................... PA 39 RURAL ............... 0.8719 14100 URBAN ................. 0.9347 7.20 

UTUADO ......................................... PR 40 RURAL ............... 0.4000 10380 URBAN ................. 0.4000 0.00 

BEAUFORT .................................... SC 42 RURAL ............... 0.8374 25940 URBAN ................. 0.8708 3.99 

CHESTER ....................................... SC 42 RURAL ............... 0.8374 16740 URBAN ................. 0.9073 8.35 

JASPER .......................................... SC 42 RURAL ............... 0.8374 25940 URBAN ................. 0.8708 3.99 

LANCASTER .................................. SC 42 RURAL ............... 0.8374 16740 URBAN ................. 0.9073 8.35 

UNION ............................................ SC 42 RURAL ............... 0.8374 43900 URBAN ................. 0.8277 ¥1.16 

CUSTER ......................................... SD 43 RURAL ............... 0.8312 39660 URBAN ................. 0.8989 8.14 

CAMPBELL ..................................... TN 44 RURAL ............... 0.7365 28940 URBAN ................. 0.7015 ¥4.75 

CROCKETT .................................... TN 44 RURAL ............... 0.7365 27180 URBAN ................. 0.7747 5.19 

MAURY ........................................... TN 44 RURAL ............... 0.7365 34980 URBAN ................. 0.8969 21.78 


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TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK—Continued 

County name State 

ESRD PPS CY 2014 

CBSA delineations 

Final ESRD PPS CY 2015 

CBSA delineations Change in 

value 

(percent) CBSA Urban/Rural 

Wage 

Index 

Value 

CBSA Urban/Rural 

Wage 

Index 

Value 

MORGAN ........................................ TN 44 RURAL ............... 0.7365 28940 URBAN ................. 0.7015 ¥4.75 

ROANE ........................................... TN 44 RURAL ............... 0.7365 28940 URBAN ................. 0.7015 ¥4.75 

FALLS ............................................. TX 45 RURAL ............... 0.7855 47380 URBAN ................. 0.8137 3.59 

HOOD ............................................. TX 45 RURAL ............... 0.7855 23104 URBAN ................. 0.9386 19.49 

HUDSPETH .................................... TX 45 RURAL ............... 0.7855 21340 URBAN ................. 0.8139 3.62 

LYNN .............................................. TX 45 RURAL ............... 0.7855 31180 URBAN ................. 0.8830 12.41 

MARTIN .......................................... TX 45 RURAL ............... 0.7855 33260 URBAN ................. 0.8940 13.81 

NEWTON ........................................ TX 45 RURAL ............... 0.7855 13140 URBAN ................. 0.8508 8.31 

OLDHAM ........................................ TX 45 RURAL ............... 0.7855 11100 URBAN ................. 0.8277 5.37 

SOMERVELL .................................. TX 45 RURAL ............... 0.7855 23104 URBAN ................. 0.9386 19.49 

BOX ELDER ................................... UT 46 RURAL ............... 0.8891 36260 URBAN ................. 0.9225 3.76 

AUGUSTA ...................................... VA 49 RURAL ............... 0.7674 44420 URBAN ................. 0.8326 8.50 

BUCKINGHAM ............................... VA 49 RURAL ............... 0.7674 16820 URBAN ................. 0.9053 17.97 

CULPEPER .................................... VA 49 RURAL ............... 0.7674 47894 URBAN ................. 1.0403 35.56 

FLOYD ............................................ VA 49 RURAL ............... 0.7674 13980 URBAN ................. 0.8473 10.41 

RAPPAHANNOCK .......................... VA 49 RURAL ............... 0.7674 47894 URBAN ................. 1.0403 35.56 

STAUNTON CITY ........................... VA 49 RURAL ............... 0.7674 44420 URBAN ................. 0.8326 8.50 

WAYNESBORO CITY .................... VA 49 RURAL ............... 0.7674 44420 URBAN ................. 0.8326 8.50 

COLUMBIA ..................................... WA 50 RURAL ............... 1.0892 47460 URBAN ................. 1.0934 0.39 

PEND OREILLE ............................. WA 50 RURAL ............... 1.0892 44060 URBAN ................. 1.1425 4.89 

STEVENS ....................................... WA 50 RURAL ............... 1.0892 44060 URBAN ................. 1.1425 4.89 

WALLA WALLA .............................. WA 50 RURAL ............... 1.0892 47460 URBAN ................. 1.0934 0.39 

FAYETTE ........................................ WV 51 RURAL ............... 0.7410 13220 URBAN ................. 0.8024 8.29 

RALEIGH ........................................ WV 51 RURAL ............... 0.7410 13220 URBAN ................. 0.8024 8.29 

GREEN ........................................... WI 52 RURAL ............... 0.9041 31540 URBAN ................. 1.1130 23.11 

The wage index values of rural areas 

are typically lower than that of urban 

areas. Therefore, ESRD facilities located 

in a county that is currently designated 

as urban under the ESRD PPS wage 

index that will become rural when we 

adopt the new CBSA delineations may 

experience a decrease in their wage 

index values. We identified 

approximately 35 counties and 30 ESRD 

facilities that will move from urban to 

rural status when we adopt the new 

CBSA delineations beginning in CY 

2015. Table 7: (CY 2015 Urban to Rural 

CBSA Crosswalk) shows the CBSA 

delineations for CY 2014 and the urban 

wage index values for CY 2015 based on 

those delineations, compared with the 

CBSA delineations and wage index 

values for CY 2015 based on those 

delineations, and the percentage change 

in these values for those counties that 

would change from urban to rural, 

beginning in CY 2015, when we adopt 

the new CBSA delineations. We expect 

that when we adopt the new CBSA 

delineations illustrated in Table 7 

below, approximately 30 facilities will 

experience a decrease in their wage 

index values. 

TABLE 7—CY 2015 URBAN TO RURAL CBSA CROSSWALK

County name State 

ESRD PPS CY 2014 CBSA delineations Final ESRD PPS CY 2015 CBSA 

delineations Change in 

value 

CBSA Urban/Rural (percent) 

Wage 

Index 

Value CBSA Urban/Rural 

Wage 

Index 

Value 

FRANKLIN ............................. AR 22900 URBAN .................................. 0.7593 04 RURAL .......... 0.7311 ¥3.71 

POWER ................................. ID 38540 URBAN .................................. 0.9672 13 RURAL .......... 0.7398 ¥23.51 

FRANKLIN ............................. IN 17140 URBAN .................................. 0.9473 15 RURAL .......... 0.8416 ¥11.16 

GIBSON ................................. IN 21780 URBAN .................................. 0.8537 15 RURAL .......... 0.8416 ¥1.42 

GREENE ................................ IN 14020 URBAN .................................. 0.9062 15 RURAL .......... 0.8416 ¥7.13 

TIPTON .................................. IN 29020 URBAN .................................. 0.8990 15 RURAL .......... 0.8416 ¥6.38 

FRANKLIN ............................. KS 28140 URBAN .................................. 0.9419 17 RURAL .......... 0.7779 ¥17.41 

GEARY .................................. KS 31740 URBAN .................................. 0.8406 17 RURAL .......... 0.7779 ¥7.46 

NELSON ................................ KY 31140 URBAN .................................. 0.8593 18 RURAL .......... 0.7748 ¥9.83 

WEBSTER ............................. KY 21780 URBAN .................................. 0.8537 18 RURAL .......... 0.7748 ¥9.24 

FRANKLIN ............................. MA 44140 URBAN .................................. 1.0271 22 RURAL .......... 1.1553 12.48 

IONIA ..................................... MI 24340 URBAN .................................. 0.8965 23 RURAL .......... 0.8288 ¥7.55 

NEWAYGO ............................ MI 24340 URBAN .................................. 0.8965 23 RURAL .......... 0.8288 ¥7.55 

GEORGE ............................... MS 37700 URBAN .................................. 0.7396 25 RURAL .......... 0.7570 2.35 

STONE .................................. MS 25060 URBAN .................................. 0.8179 25 RURAL .......... 0.7570 ¥7.45 

CRAWFORD .......................... MO 41180 URBAN .................................. 0.9366 26 RURAL .......... 0.7725 ¥17.52 

HOWARD .............................. MO 17860 URBAN .................................. 0.8319 26 RURAL .......... 0.7725 ¥7.14 

WASHINGTON ...................... MO 41180 URBAN .................................. 0.9366 26 RURAL .......... 0.7725 ¥17.52 

ANSON .................................. NC 16740 URBAN .................................. 0.9230 34 RURAL .......... 0.7899 ¥14.42 


tkelley on DSK3SPTVN1PROD with RULES3
66140 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

TABLE 7—CY 2015 URBAN TO RURAL CBSA CROSSWALK—Continued 

County name State 

ESRD PPS CY 2014 CBSA delineations Final ESRD PPS CY 2015 CBSA 

delineations Change in 

value 

CBSA Urban/Rural (percent) 

Wage 

Index 

Value CBSA Urban/Rural 

Wage 

Index 

Value 

GREENE ................................ NC 24780 URBAN .................................. 0.9371 34 RURAL .......... 0.7899 ¥15.71 

ERIE ...................................... OH 41780 URBAN .................................. 0.7784 36 RURAL .......... 0.8348 7.25 

OTTAWA ............................... OH 45780 URBAN .................................. 0.9129 36 RURAL .......... 0.8348 ¥8.56 

PREBLE ................................. OH 19380 URBAN .................................. 0.8938 36 RURAL .......... 0.8348 ¥6.60 

WASHINGTON ...................... OH 37620 URBAN .................................. 0.8186 36 RURAL .......... 0.8348 1.98 

STEWART ............................. TN 17300 URBAN .................................. 0.7526 44 RURAL .......... 0.7277 ¥3.31 

CALHOUN ............................. TX 47020 URBAN .................................. 0.8473 45 RURAL .......... 0.7847 ¥7.39 

DELTA ................................... TX 19124 URBAN .................................. 0.9703 45 RURAL .......... 0.7847 ¥19.13 

SAN JACINTO ....................... TX 26420 URBAN .................................. 0.9734 45 RURAL .......... 0.7847 ¥19.39 

SUMMIT ................................. UT 41620 URBAN .................................. 0.9512 46 RURAL .......... 0.9005 ¥5.33 

CUMBERLAND ...................... VA 40060 URBAN .................................. 0.9625 49 RURAL .......... 0.7554 ¥21.52 

DANVILLE CITY .................... VA 19260 URBAN .................................. 0.7963 49 RURAL .......... 0.7554 ¥5.14 

KING AND QUEEN ............... VA 40060 URBAN .................................. 0.9625 49 RURAL .......... 0.7554 ¥21.52 

LOUISA .................................. VA 40060 URBAN .................................. 0.9625 49 RURAL .......... 0.7554 ¥21.52 

PITTSYLVANIA ..................... VA 19260 URBAN .................................. 0.7963 49 RURAL .......... 0.7554 ¥5.14 

SURRY .................................. VA 47260 URBAN .................................. 0.9223 49 RURAL .......... 0.7554 ¥18.10 

MORGAN ............................... WV 25180 URBAN .................................. 0.9080 51 RURAL .......... 0.7274 ¥19.89 

PLEASANTS .......................... WV 37620 URBAN .................................. 0.8186 51 RURAL .......... 0.7274 ¥11.14 

We note that facilities in some urban 

CBSAs will experience a change in their 

wage index values even though they 

remain urban because an urban CBSA’s 

boundaries and/or the counties 

included in that CBSA could change. 

Table 8 (CY 2015 Urban to a Different 

Urban CBSA Crosswalk) shows those 

counties that experienced a change in 

their wage index value when the CBSA 

delineations for CY 2014 and urban 

wage index values for CY 2015 based on 

those delineations, compared with the 

CBSA delineations and urban wage 

index values for CY 2015 based on those 

delineations, and the percentage change 

in these values for counties that will 

remain urban even though the CBSA 

boundaries and/or counties included in 

that CBSA will change. 

TABLE 8—CY 2015 URBAN TO A DIFFERENT URBAN CBSA CROSSWALK

County name State 

ESRD PPS CY 2014 CBSA delineations Final ESRD PPS CY 2015 CBSA 

delineations Change in 

value 

CBSA Urban/Rural (percent) 

Wage 

Index 

Value CBSA Urban/Rural 

Wage 

Index 

Value 

FLAGLER .............................. FL 37380 URBAN .................................. 0.8462 19660 URBAN .......... 0.8376 ¥1.02 

DE KALB ............................... IL 16974 URBAN .................................. 1.0412 20994 URBAN .......... 1.0299 ¥1.09 

KANE ..................................... IL 16974 URBAN .................................. 1.0412 20994 URBAN .......... 1.0299 ¥1.09 

MADISON .............................. IN 11300 URBAN .................................. 1.0078 26900 URBAN .......... 1.0133 0.55 

MEADE .................................. KY 31140 URBAN .................................. 0.8593 21060 URBAN .......... 0.7701 ¥10.38 

ESSEX ................................... MA 37764 URBAN .................................. 1.0769 15764 URBAN .......... 1.1159 3.62

OTTAWA ............................... MI 26100 URBAN .................................. 0.8136 24340 URBAN .......... 0.8799 8.15 

JACKSON .............................. MS 37700 URBAN .................................. 0.7396 25060 URBAN .......... 0.7896 6.76 

BERGEN ................................ NJ 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

HUDSON ............................... NJ 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

MIDDLESEX .......................... NJ 20764 URBAN .................................. 1.0989 35614 URBAN .......... 1.2837 16.82 

MONMOUTH ......................... NJ 20764 URBAN .................................. 1.0989 35614 URBAN .......... 1.2837 16.82 

OCEAN .................................. NJ 20764 URBAN .................................. 1.0989 35614 URBAN .......... 1.2837 16.82

PASSAIC ............................... NJ 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

SOMERSET ........................... NJ 20764 URBAN .................................. 1.0989 35084 URBAN .......... 1.1233 2.22 

BRONX .................................. NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

DUTCHESS ........................... NY 39100 URBAN .................................. 1.1533 20524 URBAN .......... 1.1345 ¥1.63 

KINGS .................................... NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

NEW YORK ........................... NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

ORANGE ............................... NY 39100 URBAN .................................. 1.1533 35614 URBAN .......... 1.2837 11.31 

PUTNAM ................................ NY 35644 URBAN .................................. 1.3110 20524 URBAN .......... 1.1345 ¥13.46 

QUEENS ................................ NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

RICHMOND ........................... NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

ROCKLAND ........................... NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

WESTCHESTER ................... NY 35644 URBAN .................................. 1.3110 35614 URBAN .......... 1.2837 ¥2.08 

BRUNSWICK ......................... NC 48900 URBAN .................................. 0.8867 34820 URBAN .......... 0.8620 ¥2.79 

BUCKS .................................. PA 37964 URBAN .................................. 1.0837 33874 URBAN .......... 1.0157 ¥6.27 

CHESTER .............................. PA 37964 URBAN .................................. 1.0837 33874 URBAN .......... 1.0157 ¥6.27 

MONTGOMERY .................... PA 37964 URBAN .................................. 1.0837 33874 URBAN .......... 1.0157 ¥6.27 


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TABLE 8—CY 2015 URBAN TO A DIFFERENT URBAN CBSA CROSSWALK—Continued 

County name State 

ESRD PPS CY 2014 CBSA delineations Final ESRD PPS CY 2015 CBSA 

delineations Change in 

value 

CBSA Urban/Rural (percent) 

Wage 

Index 

Value CBSA Urban/Rural 

Wage 

Index 

Value 

ARECIBO ............................... PR 41980 URBAN .................................. 0.4449 11640 URBAN .......... 0.4213 ¥5.30 

CAMUY .................................. PR 41980 URBAN .................................. 0.4449 11640 URBAN .......... 0.4213 ¥5.30 

CEIBA .................................... PR 21940 URBAN .................................. 0.4000 41980 URBAN .......... 0.4438 10.95 

FAJARDO .............................. PR 21940 URBAN .................................. 0.4000 41980 URBAN .......... 0.4438 10.95 

GUANICA .............................. PR 49500 URBAN .................................. 0.4000 38660 URBAN .......... 0.4154 3.85 

GUAYANILLA ........................ PR 49500 URBAN .................................. 0.4000 38660 URBAN .......... 0.4154 3.85 

HATILLO ................................ PR 41980 URBAN .................................. 0.4449 11640 URBAN .......... 0.4213 ¥5.30 

LUQUILLO ............................. PR 21940 URBAN .................................. 0.4000 41980 URBAN .......... 0.4438 10.95 

PENUELAS ............................ PR 49500 URBAN .................................. 0.4000 38660 URBAN .......... 0.4154 3.85 

QUEBRADILLAS ................... PR 41980 URBAN .................................. 0.4449 11640 URBAN .......... 0.4213 ¥5.30 

YAUCO .................................. PR 49500 URBAN .................................. 0.4000 38660 URBAN .......... 0.4154 3.85 

ANDERSON .......................... SC 11340 URBAN .................................. 0.8744 24860 URBAN .......... 0.9161 4.77 

GRAINGER ............................ TN 34100 URBAN .................................. 0.6983 28940 URBAN .......... 0.7015 0.46 

LINCOLN ............................... WV 16620 URBAN .................................. 0.7988 26580 URBAN .......... 0.8846 10.74 

PUTNAM ................................ WV 16620 URBAN .................................. 0.7988 26580 URBAN .......... 0.8846 10.74 

Likewise, ESRD facilities currently 

located in a rural area may remain rural 

under the new CBSA delineations but 

experience a change in their rural wage 

index value due to implementation of 

the new CBSA delineations. Table 9 (CY 

2015 Changes to the Statewide Rural 

Wage Index Crosswalk) shows the CBSA 

delineations for CY 2014 and the rural 

statewide wage index values for CY 

2015, compared with the rural statewide 

wage index values for CY 2015, and the 

percentage change in these values. 

TABLE 9—CY 2015 CHANGES TO THE STATEWIDE RURAL WAGE INDEX CROSSWALK 

State 

ESRD PPS CY 2014 

CBSA delineations 

Final ESRD PPS CY 2015 

CBSA delineations Change 

in value 

(perCBSA Urban/Rural cent) Wage 

index 

value 

CBSA Urban/Rural 

Wage 

index 

value 

AL .............................................................. 39 RURAL ..................... 0.8719 39 RURAL .................... 0.8083 ¥7.3 

AZ .............................................................. 19 RURAL ..................... 0.7580 19 RURAL .................... 0.7108 ¥6.2 

CT .............................................................. 51 RURAL ..................... 0.7410 51 RURAL .................... 0.7274 ¥1.8 

FL ............................................................... 49 RURAL .................... 0.7674 10 RURAL ..................... 0.8371 9.1 

GA .............................................................. 38 RURAL .................... 1.0083 38 RURAL .................... 0.9949 ¥1.3 

HI ............................................................... 34 RURAL .................... 0.7995 34 RURAL .................... 0.7899 ¥1.2 

IL ................................................................ 44 RURAL .................... 0.7365 44 RURAL ..................... 0.7277 ¥1.2 

KS .............................................................. 01 RURAL .................... 0.6963 01 RURAL ..................... 0.6914 ¥0.7 

KY .............................................................. 28 RURAL .................... 0.8924 28 RURAL ..................... 0.8877 ¥0.5 

LA .............................................................. 17 RURAL ..................... 0.7806 17 RURAL .................... 0.7779 ¥0.3 

MD ............................................................. 25 RURAL .................... 0.7589 25 RURAL .................... 0.7570 ¥0.3 

MI ............................................................... 33 RURAL ..................... 0.8208 33 RURAL .................... 0.8192 ¥0.2 

MS ............................................................. 50 RURAL .................... 1.0892 50 RURAL .................... 1.0877 ¥0.1 

NC .............................................................. 45 RURAL .................... 0.7855 45 RURAL ..................... 0.7847 ¥0.1 

NE .............................................................. 18 RURAL .................... 0.7744 18 RURAL ..................... 0.7748 0.1 

NY .............................................................. 14 RURAL .................... 0.8362 14 RURAL ..................... 0.8369 0.1 

OH ............................................................. 11 RURAL .................... 0.7425 11 RURAL .................... 0.7439 0.2 

OR ............................................................. 36 RURAL .................... 0.8329 36 RURAL .................... 0.8348 0.2 

PA .............................................................. 07 RURAL .................... 1.1251 07 RURAL ..................... 1.1295 0.4 

TN .............................................................. 52 RURAL ..................... 0.9041 52 RURAL .................... 0.9087 0.5 

TX .............................................................. 23 RURAL ..................... 0.8207 23 RURAL .................... 0.8288 1.0 

UT .............................................................. 03 RURAL ..................... 0.9125 03 RURAL .................... 0.9219 1.0 

VA .............................................................. 12 RURAL .................... 1.0741 12 RURAL ..................... 1.0872 1.2 

WA ............................................................. 46 RURAL ..................... 0.8891 46 RURAL .................... 0.9005 1.3 

WI .............................................................. 21 RURAL .................... 0.8554 21 RURAL ..................... 0.8746 2.2 

WV ............................................................. 10 RURAL ..................... 0.8006 10 RURAL .................... 0.8371 4.6 

While we believe that the new CBSA 

delineations will result in wage index 

values that are more representative of 

the actual costs of labor in a given area, 

we also recognize that use of the new 

CBSA delineations will result in 

reduced payments to some facilities. In 

particular, approximately 30 facilities 

would experience reduced payments 

when we adopt the new CBSA 

delineations. At the same time, use of 

the new CBSA delineations will result 

in increased payments for 

approximately 100 facilities, while the 

majority of facilities would experience 


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66142 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

no change in payments due to the 

implementation of the new CBSA 

delineations. We are finalizing the 

implementation the new CBSA 

delineations, as proposed, using a 2-year 

transition with a 50/50 blended wage 

index value for all facilities in CY 2015 

and 100 percent of the wage index based 

on the new CBSA delineations in CY 

2016. 

Comment: Commenters largely agreed 

with the implementation of the new 

CBSAs and thanked CMS for offsetting 

any negative impacts with a 2-year 

transition. A few commenters expressed 

concerns for low wage areas and for 

areas where hospital wage data is not 

available, and where proxies are used to 

establish an areas wage index. Another 

commenter requested reclassification to 

address the Wheeling WV–OH wage 

index, as well as, other areas with very 

low wage indices. The commenter also 

suggested that we apply the rural floor 

policy that applies in the IPPS under 

which an urban area with a wage index 

below the statewide rural average would 

be paid the statewide rural average wage 

index value. 

Response: We thank the commenters 

for their support and are finalizing the 

CY 2015 ESRD PPS wage indexes as 

proposed. We agree that some areas of 

the country will continue to have low 

wage values, despite the annual updated 

hospital wage data and the finalized 

new CBSA delineations. However, the 

purpose of updating the ESRD PPS wage 

indexes as part of our annual update is 

based upon the premise that our wage 

index value should reflect the costs of 

furnishing renal dialysis services in the 

area where those services are provided 

In addition, the ESRD PPS uses ‘‘prefloor’’ and ‘‘pre re-classified’’ hospital 

wage data in computing the wage 

indexes used in the ESRD PPS. That is, 

the ESRD PPS uses IPPS wage data that 

has not been adjusted based on hospital 

reclassifications or application of the 

IPPS rural floor policy. Because we do 

not collect ESRD facility wage data, we 

rely upon IPPS hospital wage data as the 

best wage proxy for ESRD facilities. We 

believe the IPPS hospital wage data 

most closely reflects the costs of 

furnishing renal dialysis services in an 

area and it is the most accurate and upto-date wage data. We understand that 

many rural areas generally have lower 

wage values than urban areas, and that 

in some cases rural facilities may have 

to compete with urban areas for staffing. 

In addition, a few areas do not have a 

hospital upon which to base a wage 

index and we apply a proxy wage index 

value as described in the CY 2014 ESRD 

PPS final rule (78 FR 72172). For these 

reasons, we plan to evaluate the effect 

of the IPPS rural floor policy, the wage 

index floor, and other wage indexrelated policies under the ESRD PPS. 

c. Transition Period 

We considered having no transition 

period and fully implementing the new 

CBSA delineations beginning in CY 

2015, which would mean that all 

facilities would have payments based on 

the new delineations starting on January 

1, 2015. However, because more 

facilities would have increased rather 

than decreased payments beginning in 

CY 2015, and because the overall 

amount of ESRD payments would 

increase slightly due to the new CBSA 

delineations, the wage index budgetneutrality factor would be higher. This 

higher factor would reduce the ESRD 

PPS per treatment base rate for all 

facilities paid under the ESRD PPS, 

despite the fact that the majority of 

ESRD facilities are unaffected by the 

new CBSA delineations. We believe that 

it would be appropriate to provide for 

a transition period to mitigate any 

resulting short-term instability of a 

lower ESRD PPS base rate as well as any 

negative impacts to facilities that 

experience reduced payments. 

Comment: Generally, commenters 

were supportive of our proposed 

transition to implement the new CBSA 

delineations and our CY 2015 wage 

indices. Many commenters agreed that 

the transition approach allowed all 

facilities the ability to adjust to their 

new status, without lowering the overall 

base rate for all providers. A few 

commenters noted that a longer 

transition period would be helpful for 

rural providers. 

Response: We thank the commenters 

for their support and agree that the 

transition period allows all facilities to 

adjust to their new CBSA status. We 

continue to believe that the transition 

period is sufficient to mitigate the 

economic impact for ESRD facilities as 

the impact analysis demonstrates an 

impact of less than 1 percent. 

Therefore, we are finalizing a 2-year 

transition blended wage index for all 

facilities. Facilities would receive 50 

percent of their CY 2015 wage index 

value based on the CBSA delineations 

for CY 2014 and 50 percent of their CY 

2015 wage index value based on the 

new CBSA delineations. This results in 

an average of the two values. A facility’s 

CY 2016 wage index values will be 

based 100 percent on the new CBSA 

delineations. We believe a 2-year 

transition strikes an appropriate balance 

between ensuring that ESRD PPS 

payments are as accurate and stable as 

possible while giving facilities time to 

adjust to the new CBSA delineations. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49117), we finalized a policy to 

use the labor-related share of 41.737 

percent for the ESRD PPS. For the CY 

2015 ESRD PPS, we are finalizing a 

labor-related share of 50.673 percent, 

which we are implementing with a 2- 

year transition of 46.205 percent for CY 

2015 and 50.673 percent for CY 2016. 

For a complete discussion of the 

changes in the CY 2015 ESRD PPS 

market basket and labor-related share, as 

well as the transition of the labor-related 

share. See section II.C of this final rule. 

Comment: One commenter 

encouraged CMS to explore alternative 

payment mechanisms for small rural 

providers. Whereas a standard payment 

rate that is adjusted based on the 

national labor-related share may work 

for providers with moderate to high 

patient volumes, the same does not hold 

true for small rural providers. Small 

providers have a different cost structure 

than larger counterparts. Specifically, 

small rural providers incur a higher 

share of non-labor costs than the 

national average. For example, a small 

facility with 20 patients may only need 

part-time employees. The small rural 

town may not have potential employees 

with the appropriate skill set who are 

willing to work part time. As a result, 

the ESRD facility will pay significant 

amounts for mileage and lodging for 

employees to travel from other sites, or 

the facility may hire contracted labor. 

The commenter encouraged CMS to 

evaluate the labor versus non-labor costs 

for small rural facilities compared to the 

national average and propose payment 

adjustments to address inequalities. 

Response: We thank the commenters 

for their concern for rural facilities and 

appreciate the suggestions for 

alternative payment mechanisms for 

small rural ESRD facilities. We plan to 

consider these comments as part of the 

ESRD PPS refinement in CY 2016. 

4. CY 2015 Update 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 are the following items and 

services that are included in the ESRD 

PPS bundle: (i) ESRD-related drugs and 

biologicals that were or would have 

been, prior to January 1, 2011, 

separately billable under Medicare Part 

B; (ii) ESRD-related laboratory tests that 

were or would have been, prior to 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66143 

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 

(75 FR 49142), we stated that for 

purposes of determining whether an 

ESRD facility would be eligible for an 

outlier payment, it would be necessary 

for the facility to identify the actual 

ESRD outlier services furnished to the 

patient by line item on the monthly 

claim. Renal dialysis drugs, laboratory 

tests, and medical/surgical supplies that 

we would recognize as outlier services 

were specified in Attachment 3 of 

Change Request 7064, Transmittal 2033 

issued August 20, 2010, rescinded and 

replaced by Transmittal 2094, dated 

November 17, 2010. With respect to the 

outlier policy, Transmittal 2094 

identified additional drugs and 

laboratory tests that may be eligible for 

ESRD outlier payment. Transmittal 2094 

was rescinded and replaced by 

Transmittal 2134, dated January 14, 

2011, which was issued to correct the 

subject on the Transmittal page and 

made no other changes. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70246), we eliminated the 

issuance of a specific list of eligible 

outlier service drugs which were or 

would have been separately billable 

under Medicare Part B prior to January 

1, 2011. However, we use separate 

guidance to continue to identify renal 

dialysis service drugs which were or 

would have been covered under Part D 

for outlier eligibility purposes in order 

to provide unit prices for calculating 

imputed outlier services. We also can 

identify, through our monitoring efforts, 

items and services that are incorrectly 

being identified as eligible outlier 

services in the claims data. Information 

about these items and services and any 

updates to the list of renal dialysis items 

and services that qualify as outlier 

services are made through 

administrative issuances, if necessary. 

Our regulations at § 413.237 specify 

the methodology used to calculate 

outlier payments. An ESRD facility is 

eligible for an outlier payment if its 

actual or imputed Medicare Allowable 

Payment (MAP) amount per treatment 

for ESRD outlier services exceeds a 

threshold. The MAP amount represents 

the average incurred amount per 

treatment for services that were or 

would have been considered separately 

billable services prior to January 1, 

2011. The threshold is equal to the 

ESRD facility’s predicted ESRD outlier 

services MAP amount per treatment 

(which is case-mix adjusted) plus the 

fixed-dollar loss amount. In accordance 

with § 413.237(c) of the regulations, 

facilities are paid 80 percent of the per 

treatment amount by which the imputed 

MAP amount for outlier services (that is, 

the actual incurred amount) exceeds 

this threshold. ESRD facilities are 

eligible to receive outlier payments for 

treating both adult and pediatric 

dialysis patients. 

In the CY 2011 ESRD PPS final rule, 

using 2007 data, we established the 

outlier percentage at 1.0 percent of total 

payments (75 FR 49142 through 49143). 

We also established the fixed-dollar loss 

amounts that are added to the predicted 

outlier services MAP amounts. The 

outlier services MAP amounts and 

fixed-dollar loss amounts are different 

for adult and pediatric patients due to 

differences in the utilization of 

separately billable services among adult 

and pediatric patients (75 FR 49140). 

As we explained in the CY 2011 ESRD 

PPS final rule (75 FR 49138 through 

49139), the predicted outlier services 

MAP amounts for a patient are 

determined by multiplying the adjusted 

average outlier services MAP amount by 

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

outlier services payment multipliers 

developed from the regression analysis 

to compute the payment adjustments. 

For CY 2014, the outlier services MAP 

amounts and fixed-dollar loss amounts 

were based on 2012 data (78 FR 72180). 

Therefore, the outlier thresholds for CY 

2014 were based on utilization of renal 

dialysis items and services furnished 

under the ESRD PPS. Because of the 

utilization of ESAs and other outlier 

services have continued to decline 

under the ESRD PPS, we lowered the 

MAP amounts and fixed-dollar loss 

amounts for CYs 2013 and 2014 to allow 

for an increase in payments for ESRD 

beneficiaries requiring higher resources. 

a. CY 2015 Update to the Outlier 

Services MAP Amounts and FixedDollar Loss Amounts 

For CY 2015, we did not propose any 

changes to the methodology used to 

compute the MAP or fixed-dollar loss 

amounts. Rather, the proposed rule 

updated the outlier services MAP 

amounts and fixed-dollar loss amounts 

to reflect the utilization of outlier 

services reported on 2013 claims using 

the December 2013 claims file. For this 

final rule, the outlier services MAP 

amounts and fixed dollar loss amounts 

were updated using the 2013 claims 

from the June 2014 claims file. The 

impact of this update is shown in Table 

10, which compares the outlier services 

MAP amounts and fixed-dollar loss 

amounts used for the outlier policy in 

CY 2014 with the updated estimates 

finalized in this rule. The estimates for 

the final CY 2015 outlier policy, which 

are included in Column II of Table 10, 

were inflation adjusted to reflect 

projected 2015 prices for outlier 

services. 

TABLE 10—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY

Column I Column II 

Final outlier policy for CY 2014 

(based on 2012 data price inflated to 2014) * 

Proposed outlier policy for CY 

2015 (based on 2013 data 

price inflated to 2015) * 

Age 

< 18 

Age 

> = 18 

Age 

< 18 

Age 

> = 18 

Average outlier services MAP amount per treatment 1 ................................... $37.29 $51.97 $39.89 $52.98 

Adjustments: 

Standardization for outlier services 2 ........................................................ 1.1079 0.9866 1.1145 0.9878 

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

Adjusted average outlier services MAP amount 3 .................................... $40.49 $50.25 $43.57 $51.29 

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

the outlier threshold 4 ................................................................................... $54.01 $98.67 $54.35 $86.19 


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TABLE 10—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY—Continued 

Column I Column II 

Final outlier policy for CY 2014 

(based on 2012 data price inflated to 2014) * 

Proposed outlier policy for CY 

2015 (based on 2013 data 

price inflated to 2015) * 

Age 

< 18 

Age 

> = 18 

Age 

< 18 

Age 

> = 18 

Patient months qualifying for outlier payment ................................................. 6.7% 5.3% 6.3% 6.3% 

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

2014 prices in Column I and projected 2015 prices in Column II). 1Excludes patients for whom not all data were available to calculate projected payments. The outlier services MAP amounts are based on 

2013 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg for Aranesp that are in placeunder 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 2013 data to yield total outlier payments that represent 1 percent of total projected payments for the ESRD PPS. 

As demonstrated in Table 10, the 

estimated fixed-dollar loss amount that 

determines the CY 2015 outlier 

threshold amount for adults (Column II) 

is lower than that used for the CY 2014 

outlier policy (Column I). The threshold 

is lower in spite of the fact that the 

average outlier services MAP per 

treatment has increased. Between 2012 

and 2013, the variation in outlier 

services across patients declined among 

adults. The net result is an increase in 

the percentage of patient-months 

qualifying for outlier payment (6.3 

percent based on 2013 data versus 5.3 

percent based on 2012 data) but a 

decrease in the average outlier payment 

per case. The estimated fixed-dollar loss 

amount that determines the CY 2015 

outlier threshold amount for pediatric 

patients (Column II) is slightly higher 

than that used for the CY 2014 outlier 

policy (Column I). 

For pediatric patients, there was an 

increase in the overall average outlier 

service MAP amount between 2012 

($37.29 per treatment as shown in 

Column I) and 2013 ($40.05 per 

treatment, as shown in Column II). In 

addition, there was a continuing 

tendency in 2013 for a relatively small 

percentage of pediatric patients to 

account for a disproportionate share of 

the total outlier service MAP amounts. 

The 1 percent target for outlier 

payments is therefore expected to be 

achieved based on a smaller percentage 

of pediatric outlier cases using 2013 

data compared to 2012 data (6.3 percent 

of pediatric patient months are expected 

to qualify for outlier payments rather 

than 6.7 percent). These patterns led to 

the estimated fixed-dollar loss amount 

for pediatric patients being slightly 

higher for the outlier policy for CY 2015 

compared to the outlier policy for CY 

2014. 

The updated fixed-dollar loss 

amounts are added to the predicted 

MAP amounts per treatment, yielding 

the outlier thresholds for CY 2015 from 

$98.67 to $86.19 for adult patients and 

from $54.01 to $54.35 for pediatric 

patients compared with CY 2014 

amounts. We estimate that the 

percentage of patient months qualifying 

for outlier payments under the current 

policy will be 6.3 percent for both adult 

and pediatric patients, based on the 

2013 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 ESAs and other injectable 

drugs). 

b. Outlier Policy Percentage 

42 CFR 413.220(b)(4) stipulates that 

the per treatment base rate is reduced by 

1 percent to account for the proportion 

of the estimated total payments under 

the ESRD PPS that are outlier payments. 

Based on the 2013 claims, outlier 

payments represented approximately 

0.5 percent of total payments, again 

falling short of the 1 percent target due 

to further declines in the use of outlier 

services. Recalibration of the thresholds, 

which use 2013 data, reflects the 

reduced variation in outlier services 

among adults, is expected to result in 

aggregate outlier payments close to the 

1 percent target in CY 2015. We believe 

the update to the outlier MAP and fixeddollar loss amounts for CY 2015 will 

increase payments for ESRD 

beneficiaries requiring higher resource 

utilization and move us closer to 

meeting our 1 percent outlier policy. 

We note that recalibration of the 

fixed-dollar loss amounts in this final 

rule for CY 2015 outlier payments 

results in no change in payments to 

ESRD facilities for beneficiaries with 

renal dialysis items and services that are 

not eligible for outlier payments, but 

increases payments to ESRD facilities 

for beneficiaries with renal dialysis 

items and services that are eligible for 

outlier payments. Therefore, beneficiary 

co-insurance obligations would also 

increase for renal dialysis services 

eligible for outlier payments. 

Comment: All commenters expressed 

disappointment that the outlier target 

percentage has not been achieved under 

the ESRD PPS. Some commenters 

encouraged CMS to revise the target so 

that the adjustment would be more 

attainable for facilities. Other 

commenters requested that CMS 

eliminate the adjustment from the 

payment system altogether and return 

the 1 percent back to the base rate for 

CY 2015. One commenter suggested that 

CMS could annually update the amount 

withheld in the outlier pool based on 

actual use in the two prior years. Still 

other commenters encouraged CMS to 

return the outlier ‘‘pool’’ to facilities, as 

the adjustment erroneously lowered the 

base rate in prior years. 

Response: We thank the commenters 

for their suggestions in improving the 

ESRD PPS outlier policy. With regard to 

the comment that we eliminate the 

outlier adjustment altogether, we note 

that, under section 1881(b)(14)(D)(ii) of 

the Act, the ESRD PPS must ‘‘include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variations in the amount 

of erythropoiesis stimulating agents 

necessary for anemia management.’’ 

Therefore, we would be unable to do so 

and comply with section 

1881(b)(14)(D)(ii) of the Act. In addition, 

it is important to note that the ESRD 

PPS base rate captures the cost for the 


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average patient. To the extent data 

analysis continues to show that certain 

patients, including certain racial and 

ethnic groups, receive more ESAs than 

average, we believe an outlier policy, 

even a small one, is an important 

payment adjustment to provide under 

the ESRD PPS. Concerning comments 

that we modify the outlier payment 

adjustment, we did not propose to do 

so, therefore, we will not finalize such 

an adjustment. However, we will 

consider the commenters’ suggestions as 

part of the refinement process that we 

will undertake in the CY 2016 ESRD 

PPS proposed and final rules. 

We share the industry’s frustration 

that payments under the outlier policy 

have not reached 1 percent of total 

ESRD PPS payments. However, the 

outlier policy is a target percentage 

rather than a ‘‘pool.’’ As we explained 

in the CY 2014 ESRD PPS final rule (78 

FR 72165), each year we simulate 

payments under the ESRD PPS in order 

to set the outlier fixed-dollar loss and 

MAP amounts for adult and pediatric 

patients to try to achieve the 1 percent 

outlier policy. We do not increase the 

base rate to account for years where 

outlier payments were less than 1 

percent of total ESRD PPS payments, 

nor would we reduce the base rate if the 

outlier payments exceed 1 percent of 

total ESRD PPS payments. Rather, we 

would simulate payments in the 

following year and adjust the fixeddollar loss and MAP amounts to try to 

achieve outlier payments that meet the 

1 percent outlier percentage. This 

approach to updating the outlier policy 

is consistent with how we update 

outlier policies in other Medicare 

prospective payment systems, for 

example, the prospective payment 

system for inpatient psychiatric 

facilities. 

We believe the 1 percent outlier 

percentage has not been reached under 

the payment system due to the 

significant drop, over 20 percent, in the 

utilization of high cost drugs such as 

Epogen. In fact, we believe the drop in 

utilization of ESAs and the QIP 

measures, have made it less likely that 

a patient’s treatment costs would meet 

the outlier threshold, despite the fact we 

have lowered the MAP amounts as part 

of our annual update to the payment 

system since 2011. We believe that the 

2013 data used to update the CY 2015 

outlier policy are representative of 

stable drug utilization, and we believe 

that in the future the outlier policy will 

be an important payment adjustment 

compensating facilities for high cost 

services as the adjustment was 

intended. 

D. Restatement of Policy Regarding 

Reporting and Payment for More Than 

Three Dialysis Treatments per Week 

1. Reporting More Than Three Dialysis 

Treatments per Week on Claims 

Since the composite payment system 

was implemented in the 1980s, CMS has 

reimbursed ESRD facilities based upon 

three hemodialysis treatments per week 

and allowed for the payment of 

additional weekly dialysis treatments 

with medical justification. When a 

dialysis modality regimen requires more 

than three weekly dialysis treatments, 

such as with short, frequent 

hemodialysis (HD) and peritoneal 

dialysis (PD) modalities, we apply 

payment edits to ensure that Medicare 

payment on the monthly claim is 

consistent with the three times-weekly 

dialysis treatment payment limit, which 

translates to payment for 13 treatments 

for a 30-day month and 14 treatments 

for a 31-day month. 

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

Act, the ESRD PPS may provide for 

payment on the basis of renal dialysis 

services furnished during a week, or 

month, or such other appropriate unit of 

payment as the Secretary specifies. In 

the CY 2011 ESRD PPS final rule (75 FR 

49064), CMS finalized the per treatment 

basis of payment in which ESRD 

facilities are paid for up to three 

treatments per week, unless there is 

medical justification for more than three 

treatments per week. We codified the 

per-treatment unit of payment under the 

ESRD PPS at 42 CFR 413.215(a). Also in 

the CY 2011 ESRD PPS final rule (75 FR 

49078), we explained how we converted 

patient weeks to HD-equivalent sessions 

for PD patients. Specifically, we noted 

that one week of PD was considered 

equivalent to three HD treatments. For 

example, a patient on PD for 21 days 

would have (21/7) × 3 or 9 HDequivalent sessions. Our policy is that 

ESRD facilities treating patients on PD 

or home HD will be paid for up to three 

HD-equivalent sessions for each week of 

dialysis, unless there is medical 

justification for furnishing additional 

treatments. 

Increasingly, some ESRD facilities 

have begun to offer dialysis modalities 

where the standard treatment regimen is 

more than three treatments per week. 

Also, we have observed a payment 

variation among Medicare 

Administrative Contractors (MACs) in 

processing claims for dialysis treatments 

for modalities that require more 

frequent dialysis, resulting in payment 

of more than 14 treatments per month 

without medical justification. Lastly, 

CMS has received several requests for 

clarification regarding Medicare 

payment and billing policies for dialysis 

treatments for modalities requiring more 

than three treatments per week that are 

furnished in-facility or in the patient’s 

home. Specifically, ESRD facilities, 

renal physician groups, and MACs have 

requested billing guidance regarding 

whether all of the dialysis treatments 

furnished to the patient during the 

billing month should be reported on the 

claim form, even though the Medicare 

benefit only provides for payment of 

three dialysis treatments per week. 

For these reasons, we are reiterating 

our policy with respect to payment for 

more than three dialysis treatments per 

week. We note that we are not changing 

our policy for reporting extra dialysis 

sessions. ESRD facility claims should 

continue to include all dialysis 

treatments furnished during the month 

on claims, but payment is limited to 

three dialysis treatments per week 

through the payment edits of 13 

treatments for a 30-day month or 14 

treatments for a 31-day month. For 

example, an ESRD facility that furnishes 

dialysis services to patients who dialyze 

using modalities requiring shorter, more 

frequent dialysis (for example, a dialysis 

regimen of 4, 5, 6 or 7 days a week infacility or at home), should report all of 

the patient’s dialysis treatments on the 

monthly claim. However, payment for 

these services will reflect existing 

claims processing system edits, and the 

monthly Medicare payment would 

mirror the Medicare ESRD benefit of 

three dialysis treatments per week. 

2. Medical Necessity for More Than 

Three Treatments per Week 

Under the ESRD benefit, we have 

always recognized that some patient 

conditions benefit from more than three 

dialysis sessions per week and as such, 

the Medicare policy for medically 

necessary additional dialysis treatments 

was developed. Under this policy, the 

MACs determine whether additional 

treatments furnished during a month are 

medically necessary. While Medicare 

does not define specific patient 

conditions that meet the requirements of 

medical necessity, we do furnish 

instructions to MACs to consider 

appropriate patient conditions that 

would result in a patient’s medical need 

for additional dialysis treatments (for 

example, excess fluid of five or more 

pounds). When such patient conditions 

are indicated with the claim requesting 

payment, we instruct MACs to consider 

medical justification and the 

appropriateness of payment for the 

additional sessions. 

In section 50.A of the Medicare 

Benefit Policy Manual (Pub. 100–02), 

we explained our policy regarding 


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payment for hemodialysis-equivalent 

PD and payment for more than three 

dialysis treatments per week under the 

ESRD PPS. We restated that ESRD 

facilities are paid for a maximum of 13 

treatments during a 30-day month and 

14 treatments during a 31-day month 

unless there is medical justification for 

additional treatments. The only time 

facilities should seek payment for 

additional dialysis sessions, is when the 

patient has a medical need for 

additional dialysis and the facility has 

furnished supporting medical 

justification of the patient’s condition 

for the extra treatments. Modality choice 

does not constitute medical 

justification. 

Comment: Commenters were 

generally supportive of our policy 

clarification for reporting short frequent 

hemodialysis treatments. Many 

commenters noted the importance of 

allowing Medicare payment for 

additional medically necessary weekly 

treatments. One commenter requested 

that CMS clarify that medical 

justification is subject to approval by the 

MAC’s medical officer, as opposed to 

the MAC’s local policy decisions. 

Response: We thank the commenters 

for their support of our policy 

clarification and agree with commenters 

that when medically necessary 

additional dialysis treatments are 

warranted based upon the patients’ 

medical conditions, Medicare should 

pay for those treatments. In addition, 

CMS has no national policy for medical 

justification for additional dialysis 

treatments, and we rely upon either a 

MAC’s local coverage determination 

(LCD) policy or medical review by a 

physician working under the direction 

of the MAC’s medical director. 

Comment: One commenter expressed 

concern that the language in the 

proposed rule gives more authority to 

the MACs to determine medical 

necessity. The commenter cited to the 

proposed rule that states, ‘‘the MACs 

determine whether additional 

treatments furnished during a month are 

medically necessary,’’ and encouraged 

CMS to communicate to the MACs that 

physicians are ultimately responsible 

for determining the medical justification 

of ESRD services after considering the 

patient’s health status and relevant 

evidence-based medicine. The MAC’s 

responsibility is to review the 

documentation provided by the 

physician to ensure the medical 

justification meets the guidelines set 

forth by CMS. 

Another commenter indicated that 

longer or more frequent schedules are 

purposefully prescribed by the 

physician to meet individual patient 

medical and lifestyle needs and because 

the patient would medically benefit 

based upon the ever-expanding base of 

clinical literature finding clinical 

benefit to these schedules compared to 

conventional dialysis schedules. The 

commenter believes that if such a 

regimen is prescribed based upon sound 

medical justification, it should be 

eligible for payment of the additional 

treatments under CMS’s long-standing 

policy. The commenter believes this 

approach has worked effectively for 

many years during the modest growth of 

home hemodialysis (HHD) and there is 

no evidence of overutilization. The 

commenter believes this is the policy 

described in the proposed rule. 

Other commenters pointed out that, 

while a growing body of research shows 

that more frequent dialysis improves 

patient outcomes overall, the payment 

policy for dialysis is limited based on 

three times per week HD treatments. 

The flexibility in permitting extra 

payments for HD treatments, when 

medical justification is provided, is a 

reasonable approach to ensuring those 

patients who need the extra treatments 

the most are able to get them. 

Response: We agree with the 

commenter that, while we refer to 

MACs’ approval for the payment of 

medically necessary additional weekly 

treatments, we do not mean that the 

MACs make these decisions 

unilaterally. Rather, necessity for these 

extra treatments is reviewed, and 

ultimately paid or unpaid, based upon 

the policy and payment guidance 

furnished by Medicare, the local 

policies and guidance of the MAC, and 

the information submitted by the 

patient’s physician. It was not our intent 

to imply a change in our requirements 

for medical justification for additional 

treatments, nor were we dismissing the 

importance of the assessment of the 

patient’s physician. We will continue to 

follow research assessing the clinical 

benefits of more frequent dialysis 

schedules and monitoring the number of 

treatments furnished and paid per 

month. 

In circumstances where a 

nephrologist has ‘‘prescribed’’ shorter, 

more frequent hemodialysis for their 

patient there should be no expectation 

of payment beyond three treatments per 

week. For prescribed dialysis regimes 

beyond three sessions per week, 

furnished in the home or in center, such 

as four, five, six or even seven times per 

week, payment for the additional 

weekly treatments is based on patient 

conditions, supported by medical 

documentation, that require additional 

dialysis. 

Comment: One commenter believes 

that it is inconsistent for CMS to require 

that all dialysis treatments be reported, 

while limiting payment to three times 

per week. 

Response: We thank the commenter 

for their comment; however, dialysis 

services furnished by a facility are 

reported to Medicare, for purposes of 

payment, on a monthly claim form. 

During a given month, weekly dialysis 

services may differ in terms of number 

of treatments, drug dosing, acute casemix or other payment adjustments, 

laboratory services. Therefore, we 

require that all dialysis services be 

reported on the Medicare 72x type of 

bill so that all of the services furnished 

to the beneficiary will be identifiable on 

the claim form. More importantly, 

reporting all treatments furnished 

allows CMS to keep up with changes in 

dialysis schedules over time. 

Comment: One commenter believes a 

reference we made in the proposed rule 

to ‘‘dialysis modalities that require more 

frequent dialysis’’ could be 

misconstrued or misunderstood. The 

commenter believes the reference 

implies a comparison of more frequent 

home HD to PD, where daily exchanges 

are required in order to deliver a 

minimally adequate dose. The 

commenter pointed out that home HD, 

and the equipment that delivers this 

home therapy, may be prescribed with 

adequate dose delivery under a variety 

of treatment schedules, from the 

conventional thrice-weekly to longer or 

more frequent schedules. The 

commenter suggests that correlating 

short more frequent HD with PD should 

be avoided. 

Response: We thank the commenter 

for this clarification and we will avoid 

such references in the future. 

Comment: One commenter disagreed 

with CMS’s policy and stated that it 

should not preclude modality choice as 

a medical justification for more frequent 

HD treatments, as precluding modality 

choice would likely have a significant 

adverse impact on the physical and 

emotional well-being of patients 

undergoing home hemodialysis 

currently, and would significantly limit 

Medicare beneficiaries’ access to home 

HD. The commenter contends that this 

policy is counter to CMS and Congress’s 

stated goal of promoting the use of home 

dialysis in lieu of continued growth of 

patients undergoing in-center 

hemodialysis. A few commenters 

encouraged CMS to continue to be 

flexible in providing beneficiaries with 

more than three treatments per week 

when medically necessary. Other 

commenters noted that they support our 

objectives in removing barriers for home 


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dialysis modalities, including home 

hemodialysis, but only if our policies do 

not shift resources from in-center 

patients. 

Response: Payments provided by 

MACs for additional hemodialysis 

weekly dialysis treatments that are 

furnished in-facility or in the home, 

have been audited by CMS. We 

recognize that some MACs were not 

requiring documented patient 

conditions for medical justification for 

additional weekly treatments and were 

inappropriately authorizing Medicare 

payment for additional dialysis services 

where no medical justification was 

included in the claim. Thus, our intent 

in clarifying our policy was to remind 

facilities and MACs of the Medicare 

ESRD benefit, which only allows for the 

payment of three weekly dialysis 

treatments, and that additional weekly 

dialysis treatments may be paid for if 

there’s documented medical 

justification. We believe that our policy 

clarification will result in a consistent 

Medicare benefit for all beneficiaries 

and eliminate the regional payment 

differences for HD. 

Lastly, we thank the commenters who 

suggest that Medicare should remove 

the barriers to home modalities while 

not jeopardizing the Medicare base rate 

for in-facility services. We agree with 

these commenters and believe our ESRD 

PPS payment policies have contributed 

to the increase in utilization of home 

dialysis modalities as indicated in Table 

11 below. 

BILLING CODE 4120–01–P 

BILLING CODE 4120–01–C 

E. Delay of Payment for Oral-Only Drugs 

Under the ESRD PPS 

As we discussed in the CY 2014 ESRD 

PPS final rule (78 FR 72185 through 

72186), section 1881(b)(14)(A)(i) of the 

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

Medicare Improvements for Patients and 

Providers Act of 2008 (MIPPA), requires 

the Secretary to implement a payment 

system under which a single payment is 

made to a provider of services or a renal 

dialysis facility for ‘‘renal dialysis 

services’’ in lieu of any other payment. 

Section 1881(b)(14)(B) of the Act defines 

renal dialysis services, and subclause 

(iii) of that section states that these 

services include ‘‘other drugs and 

biologicals that are furnished to 

individuals for the treatment of ESRD 

and for which payment was (before the 

application of this paragraph) made 

separately under this title, and any oral 

equivalent form of such drug or 

biological[.]’’ 

We interpreted this provision as 

including not only injectable drugs and 

biologicals used for the treatment of 

ESRD (other than ESAs, which are 

included under clause (ii) of section 

1881(b)(14)(B)), but also all noninjectable oral drugs used for the 

treatment of ESRD furnished under title 

XVIII of the Act. We also concluded 

that, to the extent ESRD-related oralonly drugs do not fall within clause (iii) 

of the statutory definition of renal 

dialysis services, such drugs would fall 

under clause (iv), and constitute other 

items and services used for the 

treatment of ESRD that are not described 

in clause (i) of section 1881(b)(14)(B). 

As such, CMS finalized and 

promulgated the payment policies for 

oral-only drugs used for the treatment of 

ESRD in the CY 2011 ESRD PPS final 

rule (75 FR 49038 through 49053), and 

we defined ‘‘renal dialysis services’’ at 

42 CFR 413.171(3) as including, among 

other things ‘‘other drugs and 

biologicals that are furnished to 

individuals for the treatment of ESRD 

and for which payment was (prior to 

January 1, 2011) made separately under 

Title XVIII of the Act (including drugs 

and biologicals with only an oral 

form).’’ 

Although ESRD-related oral-only 

drugs are included in the definition of 


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renal dialysis services, in the CY 2011 

ESRD PPS final rule (75 FR 49044), we 

also finalized a policy to delay payment 

for these drugs under the PPS until 

January 1, 2014. We stated that there 

were certain advantages to delaying the 

implementation of payment for oralonly drugs, including allowing ESRD 

facilities additional time to make 

operational changes and logistical 

arrangements in order to furnish oralonly ESRD-related drugs and biologicals 

to their patients. Accordingly, 42 CFR 

413.174(f)(6) provides that payment to 

an ESRD facility for renal dialysis 

service drugs and biologicals with only 

an oral form is incorporated into the 

PPS payment rates effective January 1, 

2014. 

On January 3, 2013, the Congress 

enacted ATRA. Section 632(b) of ATRA 

states that the Secretary ‘‘may not 

implement the policy under section 

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

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

payment system), prior to January 1, 

2016.’’ Accordingly, in the CY 2014 

ESRD PPS final rule (78 FR 72185 

through 72186), we delayed payment for 

ESRD-related oral-only drugs under the 

ESRD PPS until January 1, 2016, instead 

of on January 1, 2014, which is the 

original date we finalized for payment 

of ESRD-related oral-only drugs under 

the ESRD PPS. We implemented this 

delay by revising the effective date for 

providing payment for oral-only ESRDrelated drugs under the ESRD PPS at 42 

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

to January 1, 2016. In addition, we also 

changed the date when oral-only drugs 

would be eligible for outlier services 

under the outlier policy described in 42 

CFR 413.237(a)(1)(iv) from January 1, 

2014 to January 1, 2016. 

On April 1, 2014, PAMA was enacted. 

Section 217(a)(1) of PAMA amended 

section 632(b)(1) of ATRA, which now 

provides that the Secretary ‘‘may not 

implement the policy under section 

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

Regulations (relating to oral-only ESRD 

drugs in the ESRD prospective payment 

system), prior to January 1, 2024.’’ 

Accordingly, payment for ESRD-related 

oral-only drugs will not be made under 

the ESRD PPS prior to January 1, 2024 

instead of on January 1, 2016, which is 

the date we finalized for payment of 

ESRD-related oral-only drugs under the 

ESRD PPS in the CY 2014 ESRD PPS 

final rule (78 FR 72186). 

We shall implement this delay by 

modifying the effective date for 

providing payment for renal dialysis 

oral-only drugs and biologicals under 

the ESRD PPS at 42 CFR 413.174(f)(6) 

from January 1, 2016 to January 1, 2024. 

We also shall change the date in 42 CFR 

413.237(a)(1)(iv) regarding outlier 

payments for oral-only ESRD-related 

drugs made under the ESRD PPS from 

January 1, 2016 to January 1, 2024. We 

continue to believe that oral-only drugs 

used for the treatment of ESRD are an 

essential part of the ESRD PPS payment 

bundle and should be paid for under the 

ESRD PPS as soon as possible, or 

beginning January 1, 2024. We received 

no public comments on these proposals 

and therefore will finalize our 

regulatory changes to 42 CFR Part 413 

as proposed. 

In addition to the delay of payment 

for renal dialysis oral-only drugs, 

section 217(a)(2) of PAMA further 

amended section 632(b)(1) of ATRA by 

adding a new sentence that provides, 

‘‘[n]otwithstanding section 

1881(b)(14)(A)(ii) of the Social Security 

Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), 

implementation of the policy described 

in the previous sentence shall be based 

on data from the most recent year 

available.’’ We interpret this provision 

to mean that we are not to use per 

patient utilization data from 2007, 2008, 

or 2009 (whichever has the lowest per 

patient utilization) as we were required 

to do for the original ESRD PPS in 

implementing payment for renal 

dialysis oral-only drugs under the ESRD 

PPS. We will make proposals consistent 

with section 632(b)(1) of ATRA, as 

amended by section 217(a)(2) of PAMA, 

in future rulemaking. 

Section 217(c) of PAMA requires the 

Secretary, as part of the CY 2016 ESRD 

PPS rulemaking, to establish a process 

for ‘‘(1) determining when a product is 

no longer an oral-only drug; and (2) 

including new injectable and 

intravenous products into the bundled 

payment under such system.’’ 

Consistent with this statutory 

requirement, we plan to propose a drug 

designation process in our CY 2016 

rulemaking cycle. 

Comment: We received many 

comments from industry stakeholders 

questioning CMS’s authority to 

incorporate additional renal dialysis 

services into the payment bundle. A few 

commenters were encouraged by CMS’s 

request for comments and outlined a 

comprehensive 7 principle drug 

designation process. Other commenters 

urged CMS to be cautious when adding 

renal dialysis services to the bundle and 

noted that separate payment for new 

services would be important until 

utilization and practice patterns have 

been established. Another commenter 

urged that the process should be 

transparent, predictable, and result in 

increases to the payment rate to reflect 

the cost of these therapies and to 

promote adoption of innovations with a 

demonstrated impact on patient 

outcomes. 

One commenter recommends a 

collaborative process to determine when 

a product is no longer an oral-only drug, 

noting that MIPPA is unclear on this 

point for non-ESA medications. The 

commenter suggests that reasonable 

criteria for inclusion of previously oralonly agents in the bundle may be when 

a parenteral formulation has been 

adequately shown to be clinically 

superior in terms of efficacy and safety 

with acceptable cost and costeffectiveness compared to already 

available oral medications. The 

commenter also believes it would be 

appropriate to include new products in 

the bundle if they are intended to be 

used in practice as substitutes for 

already bundled products or if their 

primary use reflects management of 

conditions specifically related to ESRD 

and its complications as evidenced by 

current use of bundled medications or 

oral but not bundled medications. 

Response: We thank the commenters 

for the thoughtful comments regarding a 

drug designation process. We will take 

these comments into consideration 

when we propose the drug designation 

process in the CY 2016 ESRD PPS 

proposed rule. In response to 

commenters who questioned CMS’s 

authority, we believe CMS does have 

the authority to add services to the 

bundle. Our definition of renal dialysis 

services, which was adopted in our CY 

2011 ESRD PPS final rule (75 FR 49036), 

is consistent with section 

1881(b)(14)(B)(iii) of the Act that 

includes as renal dialysis services, 

‘‘Other drugs and biologicals that are 

furnished to individuals for the 

treatment of end stage renal disease and 

for which payment was (before 

application of this [new ESRD PPS]) 

made separately under this title, and 

any oral equivalent form of such drug or 

biological.’’ We continue to believe that 

we have the authority to add drugs and 

biologicals that are furnished to 

individuals for the treatment of ESRD to 

the payment bundle. We have done this 

in the case when new ESAs have been 

made available. 

Lastly, we thank the commenters for 

the very thoughtful 7 principle drug 

designation process outlined in 

comments. Specifically, we are 

encouraged by recommendations 

regarding processes for coverage and 

payment, data collection, and 

protections for providers and 

beneficiaries so that facilities ‘‘are not 

forced to absorb the drug’s new costs 

themselves.’’ 


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F. ESRD Drug Categories Included in the 

ESRD PPS Base Rate 

In the CY 2011 ESRD PPS final rule 

(75 FR 49050), we finalized Table 4, 

(Renal Dialysis Service ESRD Drug 

Categories Included in the Final ESRD 

PPS Base Rate), and have included 

Table 12 below for the purpose of this 

discussion. In that rule, we noted that 

the categories of drugs and biologicals 

used for access management, anemia 

management, anti-infectives, bone and 

mineral metabolism, and cellular 

management would always be 

considered renal dialysis drugs when 

furnished to an ESRD patient, and that 

payment for such drugs would be 

included in the ESRD PPS payment 

bundle. As such, beginning January 1, 

2011, Medicare no longer makes a 

separate payment when a drug or 

biological (except for renal dialysis oralonly drugs for which we are delaying 

payment under the ESRD PPS until 

January 1, 2024) identified in the 

categories listed in the following table is 

furnished to a Medicare ESRD 

beneficiary. 

TABLE 12—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE FINAL ESRD PPS BASE RATE

Drug category Rationale for inclusion 

Access Management ...................... Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication 

is given, and provide anesthetic for access placement. 

Anemia Management ...................... Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes 

ESAs as well as iron. 

Anti-infectives .................................. Vancomycin and daptomycin used to treat access site infections. 

Bone and Mineral Metabolism ........ Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders 

and calcimimetics. 

Cellular Management ...................... Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49050), we noted that we 

included the anti-infective drugs of 

vancomycin and daptomycin because 

these drugs were routinely furnished for 

the renal dialysis conditions, such as, 

access site infections and peritonitis. 

However, in the CY 2012 ESRD PPS 

final rule (76 FR 70242 through 70243), 

we responded to public comments that 

noted that vancomycin is a common 

anti-infective drug appropriate for 

treating infections that are both ESRDand non-ESRD-related by modifying our 

policy to eliminate the payment 

restriction for vancomycin when it is 

furnished for reasons other than for the 

treatment of ESRD. In addition, we 

finalized the use of CMS payment 

modifier AY (Item or service furnished 

to an End-Stage Renal Disease (ESRD) 

patient that is not for the treatment of 

ESRD) and instructed facilities to 

append the modifier to the claim line 

reporting vancomycin to indicate that 

the drug was furnished for reasons other 

than for the treatment of ESRD. The 

presence of the AY modifier on the 

claim line allows the MAC to make a 

separate payment for the drug when it 

is furnished by the facility to a Medicare 

beneficiary for reasons other than for the 

treatment of ESRD. 

In the CY 2013 ESRD PPS final rule 

(77 FR 67461), we further amended this 

policy to allow ESRD facilities to bill 

separately for daptomycin when it is 

furnished to ESRD beneficiaries for 

reasons other than for the treatment of 

ESRD. Once again, we instructed 

facilities to append claim lines reporting 

daptomycin furnished for reasons other 

than for the treatment of ESRD with the 

AY modifier so that MACs would be 

able to make a separate payment. 

Because we have removed the 

payment limitation for both vancomycin 

and daptomycin, and because we 

believe that anti-infectives are a drug 

category that may be furnished for both 

ESRD- and non-ESRD-related reasons, 

we updated the list of drug categories 

that are always considered renal dialysis 

drugs under the ESRD PPS by removing 

the drug category for anti-infectives. We 

included Table 13 (Renal Dialysis 

Service ESRD Drug Categories Included 

in the ESRD PPS Base Rate and Not 

Separately Payable) below to 

appropriately recognize the drug 

categories that are always considered to 

be renal dialysis services and we 

confirm that the revised table reflects 

policy changes made in the CY 2012 

and CY 2013 ESRD PPS rulemaking 

cycles and does not constitute new 

policy. 

Over the past few years, we have 

received payment and billing inquiries 

requesting clarification for the payment 

for drugs represented by one of the drug 

categories included in the ESRD PPS, 

but not furnished for the treatment of 

ESRD. Therefore, we clarify that any 

drug included in the drug categories of 

access management, anemia 

management, bone and mineral 

metabolism, and cellular management is 

not separately paid by Medicare 

regardless of why the drug is being 

furnished. In addition, the facility may 

not furnish a prescription for such drugs 

with the expectation that a Medicare 

Part D payment would be made, as the 

payment for the drug is included in the 

ESRD PPS payment bundle. Beginning 

in CY 2011 when the ESRD PPS was 

implemented, Part D plan sponsors were 

encouraged to implement prior 

authorization requirements for drugs in 

the categories below in Table 13. In 

addition, the drug categories presented 

below are covered by the ESRD PPS 

payment regardless of whether the drug 

is expected to be taken at home or on 

non-dialysis days. 

TABLE 13—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE ESRD PPS BASE RATE AND NOT

SEPARATELY PAYABLE

Drug category Rationale for inclusion 

Access Management ...................... Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication 

is given, and provide anesthetic for access placement. 

Anemia Management ...................... Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes 

ESAs as well as iron. 


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TABLE 13—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE ESRD PPS BASE RATE AND NOT

SEPARATELY PAYABLE—Continued 

Drug category Rationale for inclusion 

Bone and Mineral Metabolism ........ Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders 

and calcimimetics. 

Cellular Management ...................... Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine. 

The drug categories that may be 

separately paid by Medicare when 

furnished for reasons other than for the 

treatment of ESRD were included in 

Table 5 (ESRD Drug Categories Included 

in the ESRD PPS Base Rate But May be 

Used for Dialysis and non-Dialysis 

Purposes) (75 FR 49051). Table 14 is 

included below for the purpose of this 

discussion. When any drug identified in 

the drug categories listed in Table 14 

(antiemetics, anti-infectives, 

antipruritic, anxiolytic, excess fluid 

management, fluid and electrolyte 

management, or pain management), is 

furnished for the treatment of ESRD, 

payment for the drug is included in the 

ESRD PPS payment and may not be paid 

separately. When these drugs are used 

for the treatment of ESRD, the facility 

may not furnish a prescription for such 

drugs with the expectation that a 

Medicare Part D payment would be 

made, as the payments for the injectable 

drugs, which are generally more 

expensive than oral substitutes, in those 

categories were included in computing 

the ESRD PPS base rate. Therefore, 

drugs in these categories furnished for 

the treatment of ESRD are covered by 

the ESRD PPS payment regardless of 

whether the drug is expected to be taken 

at home or on non-dialysis days. 

If a drug represented by a drug 

category in Table 14 is furnished by 

ESRD facilities for reasons other than for 

the treatment of ESRD, a separate 

Medicare payment is permitted when 

the AY modifier is indicated on the 

claim line reporting the drug for 

payment. Prescriptions for oral versions 

of drugs used for non-ESRD conditions 

are appropriately billed to Part D. 

TABLE 14—ESRD DRUG CATEGORIES INCLUDED IN THE ESRD BASE RATE BUT MAY BE USED FOR DIALYSIS AND NONDIALYSIS PURPOSES

Antiemetic ....................................... Used to prevent or treat nausea and vomiting secondary to dialysis. Excludes antiemetics used in conjunction with chemotherapy as these are covered under a separate benefit category. 

Anti-infectives .................................. Used to treat infections. May include antibacterial and antifungal drugs. 

Antipruritic ....................................... Drugs in this classification have multiple clinical indications and are included for their action to treat itching 

secondary to dialysis. 

Anxiolytic ......................................... Drugs in this classification have multiple actions but are included for the treatment of restless leg syndrome secondary to dialysis. 

Excess Fluid Management ............. Drug/fluids used to treat fluid excess/overload. 

Fluid and Electrolyte Management 

Including Volume Expanders.

Intravenous drugs/fluids used to treat fluid and electrolyte needs. 

Pain Management ........................... Drugs used to treat graft site pain and to treat pain medication overdose. 

Comment: A few commenters, 

including national industry 

organizations, expressed appreciation 

for our efforts to clarify what drugs and 

biologicals are included in the ESRD 

PPS payment bundle. However, they 

expressed concern that current guidance 

has resulted in Part D plan sponsors’ 

inappropriately refusing to cover oral 

drugs that are not renal dialysis services 

nor essential to the delivery of such 

services. Specifically, they noted that 

beneficiaries have had difficulties 

obtaining necessary medications such as 

oral antibiotics prescribed for 

pneumonia and pain medications 

prescribed for back pain. 

A commenter believes that, prior to 

January 1, 2014, there appeared to be a 

clear understanding as to what drugs 

and biologicals should be reimbursed 

through the ESRD PPS and those that 

should appropriately be covered under 

Part D. The commenter noted that 

guidance issued by CMS in 2011 to all 

Part D plans correctly recognized that 

drugs used as substitutes for any of the 

drugs listed in Table C of the CY 2011 

ESRD PPS final rule, or used to 

accomplish the same effect, would also 

be covered under the ESRD bundled 

payment and were, therefore, ineligible 

for separate payment. 

However, implementation of the CY 

2014 Part D Call Letter provision for 

prior authorization for drug categories 

that may be renal dialysis services but 

may also prescribed for other conditions 

has resulted in confusion for Part D plan 

sponsors and delays in beneficiaries 

obtaining essential medications at the 

pharmacy. Another commenter pointed 

out that patients should not be put in 

the middle of benefit determinations, 

and that they should receive their 

medications when they arrive at the 

pharmacy and payment disputes should 

be settled after the fact. 

Response: There has been no change 

in CMS policy with respect to the drugs 

considered to be renal dialysis services 

and covered under the ESRD PPS since 

CY 2013 when we removed daptomycin 

from the list of drug categories that are 

always considered to be renal dialysis 

services as discussed above. However, 

in response to increases in billing under 

Part D for drugs that may be for renal 

dialysis services but may also be 

prescribed for other conditions, we 

issued guidance in the CY 2014 Part D 

Call Letter to strongly encourage Part D 

sponsors to place beneficiary-level prior 

authorization edits on all drugs in the 

seven categories identified in the CY 

2011 ESRD PPS final rule as drugs that 

‘‘may be’’ ESRD-related for beneficiaries 

on dialysis (75 FR 49051). These 

include: Antiemetics, anti-infectives, 

antipruritics, anxiolytics, excess fluid 

management, fluid and electrolyte 

management including volume 


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expanders, and pain management 

(analgesics). 

Since our new guidance took effect 

January 1, 2014, various stakeholders 

have raised concerns regarding the 

policy’s impact on beneficiary access. 

We are considering various alternatives 

for dealing with this issue, as it has 

always been our intention to eliminate 

or minimize disruptions or delays for 

ESRD beneficiaries’ receiving essential 

medications. We plan to issue guidance 

in the near future to address this issue. 

Comment: A national industry 

organization commented that, prior to 

implementation of the ESRD PPS, most 

of the drugs that were listed as ‘‘may be 

related to the treatment of ESRD were 

also prescribed for patients to take, at 

home, on non-dialysis treatment days. 

The commenter pointed out that CMS 

did not reflect Medicare payments for 

those oral drugs in calculating the ESRD 

PPS base rate. Therefore, CMS should 

continue to allow payment under Part D 

for those drug categories, that may be for 

the treatment of ESRD, but that are 

prescribed for non-dialysis days. The 

commenter requested that we revise the 

regulation text to provide that 

prescription drugs and biologicals that 

may be within the bundle are covered 

under the Part B bundle only when they 

are directly related to the provision of 

renal dialysis services. 

Another commenter pointed out that 

a reasonable criterion regarding which 

medications are covered under the 

bundled payment should be if the 

medication is essential to perform 

dialysis or whether the dialysis 

treatment could be altered or intensified 

in some way that it would make the 

medication unnecessary. For instance, 

lidocaine cream for access site pain with 

cannulation would be included in the 

bundle, while an anti-pruritic agent 

taken twice daily for chronic pruritus 

that persists despite adequate dialysis 

would not be included in the bundle. 

Response: In order to maintain the 

integrity of the ESRD PPS base rate and 

the payment bundle implemented in CY 

2011, the drugs and biologicals that we 

consider to be renal dialysis services are 

those that are routinely given to patients 

‘‘for the treatment of ESRD’’ and were 

billed separately to Part B prior to 

implementation of the ESRD PPS and 

where the payments for the injectable 

versions was included in the base rate. 

Therefore, if a facility would have 

furnished an injectable drug and 

received separate payment for that drug 

under Part B prior to the ESRD PPS, it 

would not be appropriate today to 

unbundle the oral versions of those 

injectable drugs by providing a 

prescription for a substitute drug to be 

taken on non-dialysis days and expect 

that drug to be covered under Part D. 

For more information regarding the 

injectable drugs included in the ESRD 

PPS base rate, please refer to Table C of 

the CY 2011 ESRD PPS Final Rule (75 

FR 49205). 

G. Low-Volume Payment Adjustment 

(LVPA) 

1. Background 

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

requires a payment adjustment that 

‘‘reflects the extent to which costs 

incurred by low-volume facilities (as 

defined by the Secretary) in furnishing 

renal dialysis services exceed the costs 

incurred by other facilities in furnishing 

such services, and for payment for renal 

dialysis services furnished on or after 

January 1, 2011, and before January 1, 

2014, such payment adjustment shall 

not be less than 10 percent.’’ As a result 

of this provision and the regression 

analysis conducted for the ESRD PPS, 

effective January 1, 2011, the ESRD PPS 

provides a facility-level payment 

adjustment of 18.9 percent to ESRD 

facilities that meet the definition of a 

low-volume facility. 

Under 42 CFR 413.232(b), a lowvolume facility is an ESRD facility that: 

(1) Furnished less than 4,000 treatments 

in each of the 3 cost reporting years 

(based on as-filed or final settled 12- 

consecutive month cost reports, 

whichever is most recent) preceding the 

payment year; and (2) Has not opened, 

closed, or received a new provider 

number due to a change in ownership 

in the 3 cost reporting years (based on 

as-filed or final settled 12-consecutive 

month cost reports, whichever is most 

recent) preceding the payment year. 

Under § 413.232(c), for purposes of 

determining the number of treatments 

furnished by the ESRD facility, the 

number of treatments equals the 

aggregate number of treatments 

furnished by other ESRD facilities that 

are both under common ownership and 

25 road miles or less from the ESRD 

facility in question. This geographic 

proximity criterion is only applicable to 

ESRD facilities that were Medicare 

certified on or after January 1, 2011. 

For purposes of determining 

eligibility for the low-volume payment 

adjustment (LVPA), ‘‘treatments’’ means 

total hemodialysis (HD) equivalent 

treatments (Medicare and nonMedicare). For peritoneal dialysis (PD) 

patients, one week of PD is considered 

equivalent to 3 HD treatments. In the CY 

2012 ESRD PPS final rule (76 FR 70236), 

we clarified that we base eligibility on 

the three years preceding the payment 

year and those years are based on cost 

reporting periods. We further clarified 

that the ESRD facility’s cost reports for 

the cost reporting periods ending in the 

three years preceding the payment year 

must report costs for 12-consecutive 

months. 

In order to receive the LVPA under 

the ESRD PPS, an ESRD facility must 

submit a written attestation statement to 

its Medicare Administrative Contractor 

(MAC) that it qualifies as a low-volume 

ESRD facility and that it meets all of the 

requirements specified at 42 CFR 

413.232. In the CY 2012 ESRD PPS final 

rule (76 FR 70236), we finalized a yearly 

November 1 deadline for attestation 

submission and we revised the 

regulation at § 413.232(f) to reflect this 

date. We noted that this timeframe 

provides 60 days for a MAC to verify 

that an ESRD facility meets the LVPA 

eligibility criteria. Further information 

regarding the administration of the 

LVPA is provided in CMS Pub. 100–02, 

Medicare Benefit Policy Manual, 

chapter 11, section 60.B.1. 

2. The United States Government 

Accountability Office Study on the 

LVPA 

The Medicare Improvements for 

Patients and Providers Act of 2008 

(MIPPA) required the United States 

Government Accountability Office (the 

GAO) to study the LVPA. The GAO 

examined (1) the extent to which the 

LVPA targeted low-volume, high-cost 

facilities that appeared necessary for 

ensuring access to care; and (2) CMS’s 

implementation of the LVPA, including 

the extent to which CMS paid the 2011 

LVPA to facilities eligible to receive the 

adjustment. To do this work, the GAO 

reviewed Medicare claims, facilities’ 

annual cost reports, and data on dialysis 

facilities’ locations to identify and 

compare facilities that were eligible for 

the LVPA with those that received the 

adjustment. The GAO published a 

report 13–287 on March 1, 2013, 

entitled, ‘‘End-Stage Renal Disease: CMS 

Should Improve Design and Strengthen 

Monitoring of Low-Volume 

Adjustment’’. The report found multiple 

discrepancies in the identification of 

low-volume facilities which are 

summarized below. 

a. The GAO’s Main Findings 

The GAO found that many of the 

facilities eligible for the LVPA were 

located near other facilities, indicating 

that they might not have been necessary 

for ensuring access to care. They also 

identified certain facilities with 

relatively low-volume that were not 

eligible for the LVPA but had aboveaverage costs and appeared to be 

necessary for ensuring access to care. 


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Lastly, they stated the design of the 

LVPA provides facilities with an 

adverse incentive to restrict their service 

provision to avoid reaching the 4,000 

treatment threshold. The GAO 

calculated that Medicare overpaid an 

estimated $5.3 million for the LVPA to 

dialysis facilities that did not meet the 

eligibility requirements established by 

CMS. They indicated in their report that 

the guidance that CMS issued for 

implementation of the regulatory 

requirements was sometimes unclear 

and not always available when needed, 

and the misunderstanding of LVPA 

eligibility likely was exacerbated 

because CMS conducted limited 

monitoring of the Medicare contractors’ 

administration of LVPA payments. 

b. The GAO’s Recommendations 

In the conclusion of their study, the 

GAO provided Congress with the 

following recommendations: (1) To 

more effectively target facilities 

necessary for ensuring access to care, 

the Administrator of CMS should 

consider restricting the LVPA to lowvolume facilities that are isolated; (2) To 

reduce the incentive for facilities to 

restrict their service provision to avoid 

reaching the LVPA treatment threshold, 

the Administrator of CMS should 

consider revisions such as changing the 

LVPA to a tiered adjustment; (3) To 

ensure that future LVPA payments are 

made only to eligible facilities and to 

rectify past overpayments, the 

Administrator of CMS should take the 

following four actions: require Medicare 

contractors to promptly recoup 2011 

LVPA payments that were made in 

error; investigate any errors that 

contributed to eligible facilities not 

consistently receiving the 2011 LVPA 

and ensure that such errors are 

corrected; take steps to ensure that CMS 

regulations and guidance regarding the 

LVPA are clear, timely, and effectively 

disseminated to both dialysis facilities 

and Medicare contractors; and improve 

the timeliness and efficacy of CMS’s 

monitoring regarding the extent to 

which Medicare contractors are 

determining LVPA eligibility correctly 

and promptly re-determining eligibility 

when all necessary data become 

available. 

In response to the GAO’s 

recommendations, we concurred with 

the need to ensure that the LVPA is 

targeted effectively at low-volume highcost facilities in areas where 

beneficiaries may lack other dialysis 

care options. We also agreed to take 

action to ensure appropriate payment is 

made in the following ways: (1) 

Evaluating our policy guidance and 

contractor instructions to ensure 

appropriate application of the LVPA; (2) 

using multiple methods of 

communication to MACs and ESRD 

facilities to deliver clear and timely 

guidance; and (3) improving our 

monitoring of MACs and considering 

measures that provide specific 

expectations. 

3. Clarification of the LVPA Policy 

For CY 2015, we are not making 

changes to the adjustment or to the 

magnitude of the adjustment value. In 

accordance with section 632(c) of 

ATRA, for CY 2016 we will assess and 

address other necessary LVPA policy 

changes when we use updated data and 

reevaluate all of the patient- and 

facility-level adjustments together in a 

regression analysis similar to the 

analysis that is discussed in the CY 

2011 ESRD PPS final rule (75 FR 49083). 

At this time, we are not changing the 

criteria in such a way that the number 

of low-volume facilities would deviate 

substantially from the number of 

facilities originally modeled to receive 

the adjustment in the first year of 

implementation. This is because of the 

interaction of the LVPA with other 

payment adjustments under the ESRD 

PPS. As discussed in the CY 2011 ESRD 

PPS final rule (75 FR 49081), we 

standardized the ESRD PPS base rate to 

account for the payment variables and it 

would not be appropriate to make 

changes to one variable in the regression 

when it could potentially affect the 

other adjustments or the standardization 

factor. However, there are two 

clarifications under the LVPA policy 

(discussed below) that we can address 

in this year’s rulemaking that we believe 

are responsive to stakeholder’s concerns 

and GAO’s concern that the LVPA 

should effectively target low-volume, 

high cost-facilities. 

a. Hospital-Based ESRD Facilities 

As stated above, for purposes of 

determining eligibility for the LVPA, 

‘‘treatments’’ means total hemodialysis 

(HD) equivalent treatments (Medicare 

and non-Medicare) and for peritoneal 

dialysis (PD) patients, one week of PD 

is considered equivalent to 3 HD 

treatments. Once a MAC receives an 

attestation from an ESRD facility, it 

reviews the ESRD facility’s cost reports 

to verify that the facility meets the lowvolume criteria specified at 42 CFR 

413.232(b). Specifically, the ESRD 

facility cost report is used to verify the 

total treatment count that an ESRD 

facility furnishes in its fiscal year, 

which includes Medicare and nonMedicare treatments. For independent 

ESRD facilities, this information is 

provided on Worksheet C of the Form 

CMS–265–11 form (previously Form 

CMS–265–94) and for hospital-based 

ESRD facilities, this information is on 

Worksheet I–4 of the Form CMS–2552– 

10. 

After the LVPA was implemented, we 

began hearing concerns from multiple 

stakeholders, including members of 

Congress and rural hospital-based ESRD 

facilities, about the MACs’ LVPA 

eligibility determinations. The 

stakeholders indicated that because 

hospital-based ESRD facilities are 

financially integrated with a hospital, 

their costs and treatment data are 

aggregated in the I-series of the 

hospital’s cost report. This means that if 

there is more than one ESRD facility 

that is affiliated with a hospital, the cost 

and treatment data for all facilities are 

aggregated on Worksheet I–4, typically 

causing the facilities’ treatment counts 

to exceed the 4,000-treatment criterion. 

We have learned that some MACs 

accepted treatment counts from 

hospital-based ESRD facilities other 

than those provided on the hospital’s 

cost report and, as a result, certain 

hospital-based ESRD facilities received 

the LVPA. Other MACs solely used the 

aggregated treatment counts from the 

hospital’s cost report to verify LVPA 

eligibility, which resulted in denials for 

many hospital-based facilities that 

would have qualified for the adjustment 

if the MACs had considered other 

supporting documentation. 

We agree with stakeholders that 

limiting the MAC review to the hospital 

cost reports for verification of LVPA 

eligibility for hospital-based ESRD 

facilities places these facilities at a 

disadvantage and does not comport with 

the intent of our policy. We believe it 

can be necessary for MACs to use other 

supporting data to verify the treatment 

counts for individual hospital-based 

facilities that would meet the eligibility 

criteria for the LVPA if their treatment 

counts had not been aggregated with 

one or more other facilities on their 

hospitals’ cost reports. Because LVPA 

eligibility is based on cost report 

information and the individual hospitalbased facility treatment counts is the 

source of the aggregated treatment 

counts reported in the cost report, 

however, we continue to believe that 

cost report data is an integral part of the 

process of verifying whether a hospitalbased facility meets the LVPA eligibility 

criteria. 

For these reasons, we are clarifying 

that MACs may consider other 

supporting data, such as a hospitalbased facility’s total treatment count, 

along with the facility’s cost reports and 

attestation, to verify it meets the lowvolume eligibility criteria provided at 42 


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CFR 413.232(b). The attestation should 

continue to be configured around the 

parent hospital’s cost reports, that is, it 

should be for the same fiscal periods. 

The MAC can consider other supporting 

data in addition to the total treatments 

reported in each of the 12-consecutive 

month cost reports, such as the 

individual facility’s total treatment 

counts, rather than the hospital’s cost 

report alone, to verify the number of 

treatments that were furnished by the 

individual hospital-based facility that is 

seeking the adjustment. Consistent with 

this policy clarification, hospital-based 

ESRD facilities’ eligibility for the LVPA 

should be determined at an individual 

facility level and their total treatment 

counts should not be aggregated with 

other ESRD facilities that are affiliated 

with the hospital unless the affiliated 

facilities are commonly owned and 

within 25 miles. 

MACs have discretion as to the format 

of the attestation and any supporting 

data, however, the facility must provide 

the total number of Medicare and nonMedicare treatments for the three cost 

reporting years preceding the payment 

year for all of the hospital-based 

facilities for which treatment counts 

appear on the hospital’s cost report. 

This will allow MACs to determine 

which treatments on the cost report 

were furnished by the individual 

hospital-based facility that is seeking 

the LVPA and which treatments were 

furnished by other affiliated facilities. 

Finally, we shall amend the regulation 

text by adding a new paragraph (h)(1) to 

§ 413.232 to reflect this clarification of 

current policy under which MACs can 

verify hospital-based ESRD facilities’ 

eligibility for the LVPA using 

supporting data in addition to hospital 

cost reports. 

b. Cost Reporting Periods Used for 

Eligibility 

In the CY 2012 ESRD PPS final rule 

(76 FR 70236), we clarified that for 

purposes of eligibility under 42 CFR 

413.232(b), we base eligibility on the 

three years preceding the payment year 

and those years are based on cost 

reporting periods. We further clarified 

that the ESRD facility’s cost reports for 

the cost reporting periods ending in the 

three years preceding the payment year 

must report costs for 12-consecutive 

months. 

After the LVPA was implemented, we 

began hearing concerns from the 

industry that there is a conflict within 

our policy. Currently, our policy allows 

an ESRD facility to remain eligible for 

the LVPA when they have a change of 

ownership (CHOW) that does not result 

in a new Provider Transaction Access 

Number (PTAN). However, our 

regulations at § 413.232(b) suggest that 

MACs must verify treatment counts 

using cost reports for 12-consecutive 

month cost periods even though 

CHOWs often result in costs reports that 

are nonstandard, that is, longer or 

shorter than 12 months. In particular, 

the previous owner’s final cost report 

may not coincide with the ESRD 

facility’s cost report fiscal year end 

under its new ownership, resulting in 

two costs reports that are not 12- 

consecutive month cost reports. For 

example, where a CHOW occurs in the 

middle of the cost reporting period and 

the new owner wishes to retain the 

established cost report fiscal year end, 

the previous owner submits a final cost 

report covering their period of 

ownership and the new owner submits 

a cost report covering the remainder of 

the cost reporting period. Alternatively, 

a new owner could also choose not to 

retain the previous owner’s established 

cost reporting fiscal year end, in which 

case the CHOW could result in a cost 

reports that exceed twelve months when 

combined. Further details regarding the 

policies for filing cost reports during a 

CHOW are available in the Provider 

Reimbursement Manual—Part 1, chapter 

15, ‘‘Change of Ownership.’’ 

We are clarifying the policies 

governing LVPA that may prevent an 

otherwise qualified ESRD facility from 

receiving the adjustment. We have 

always intended that if an ESRD facility 

has a CHOW where the new owner 

accepts the previous owner’s assets and 

liabilities by retaining the facility’s 

PTAN, they should continue to be 

eligible for the LVPA. However, some 

MACs used a strict reading of the 

regulatory language and denied these 

ESRD facilities the LVPA. Other MACs 

added short cost reports together or 

prorated treatment counts for cost 

reporting periods spanning greater than 

12 months. 

In order to ensure consistent 

verification of LVPA eligibility, we are 

restating our intention that when there 

is a CHOW that does not result in a new 

PTAN but creates two non-standard cost 

reporting periods (that is, periods that 

are shorter or longer than 12 months) 

the MAC is either to add the two nonstandard cost reporting periods together 

where combined they would equal 12- 

consecutive months or prorate the data 

when they would exceed 12-consecutive 

months to determine the total 

treatments furnished for a full cost 

reporting period as if there had not been 

a CHOW. 

For example, prior to a CHOW, 

Facility A had a cost reporting period 

that spanned January 1 through 

December 31. Facility A had a CHOW 

mid-year that did not result in a new 

PTAN but caused a break in the cost 

reporting period. Consistent with the 

clarification of our policy, the MAC 

would add Facility A’s cost report that 

spanned January 1 through May 31 to its 

cost report that spanned June 1 through 

December 31 to verify the total 

treatment count. 

The other situation that could occur is 

when a CHOW results in a change of the 

original fiscal period. For example, prior 

to a CHOW, Facility B had a cost 

reporting period that spanned January 1 

through December 31 and, based on its 

cost reports for 2012 and 2013; it met 

the LVPA eligibility criteria. Then, 

Facility B had a CHOW in the beginning 

of 2014 that did not result in a new 

PTAN, but changed its cost reporting 

period to that of its new owner, October 

1, 2014 through September 30, 2015. 

This scenario would create a short and 

a long cost report that would not total 

12 months that the MAC would need to 

review for verification. That is, Facility 

B would have a cost report that spanned 

January 1, 2014 through July 31, 2014 (7 

months) and a cost report that spanned 

August 1, 2014 through September 30, 

2015 (14 months). 

In this situation, the MAC should 

combine the two non-standard cost 

reporting periods that in combination 

may exceed 12-consecutive months and 

prorate the data to equal a full 12- 

consecutive month period. Finally, we 

shall amend the regulation text by 

adding a new paragraph (h)(2) to 

§ 413.232 to clarify the verification 

process for ESRD facilities that 

experience a CHOW with no change in 

the PTAN. 

Section 413.232(f) requires ESRD 

facilities to submit LVPA attestations by 

November 1 of each year. However, the 

changes we are finalizing to the LVPA 

regulation text would not be finalized in 

enough time to give the ESRD facilities 

the opportunity to learn about the 

policy clarifications and provide an 

attestation to their MAC by November 1, 

2014. For these reasons, we are 

amending § 413.232(f) to extend the 

deadline for CY 2015 LVPA attestations 

until December 31, 2014. This 

timeframe would allow ESRD facilities 

to reassess their eligibility and apply for 

the LVPA for CY 2015. It would also 

give MACs an opportunity to verify any 

new attestations and reassess LVPA 

eligibility verifications made since 2011. 

We will issue guidance with additional 

detail regarding this policy clarification, 

which will include details about the 

process ESRD facilities should follow to 

seek the LVPA for past years. 


tkelley on DSK3SPTVN1PROD with RULES3
66154 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

Comment: Commenters were largely 

supportive of our policy clarification 

and proposed regulation changes 

regarding the facility eligibility 

requirements for the LVPA available 

under the ESRD PPS. A few commenter 

encouraged CMS to ‘‘redesign’’ the 

LVPA adjustment during the CY 2016 

rulemaking, which will include 

refinements of the payment system. One 

commenter encouraged CMS to consider 

a facility’s distance to the nearest 

facility and develop and rural 

adjustment factor as part of the 

adjustment. Other commenters urged 

CMS to implement the GAO 

recommendations. Some commenters 

encouraged CMS to consider travel time 

as well as distance in their 

consideration of the aggregate number of 

treatments furnished by ESRD facilities 

within 25 miles of each other under 

common ownership, and other 

commenters suggested that CMS 

identify critical access facilities and 

consider changes to the LVPA to protect 

access to isolated essential facilities. 

Another commenter asked that CMS 

consider a larger adjustment for those 

facilities that are more than 50 miles 

from the closest dialysis facilities, as 

closure of these facilities would create 

particular hardship for patients. 

Response: We thank the commenters 

for their support of our policy 

clarification and supporting regulation 

changes. We will finalize these 

provisions as proposed. In addition, we 

thank the commenters for their 

suggestions in computing a low-volume 

payment adjustment in the future, and 

we will consider these comments for 

purposes of refinement in CY 2016. 

Comment: A few commenters thanked 

CMS for extending the attestation filing 

deadline to December 31 so that affected 

facilities would have enough time to 

gather any supporting documentation 

necessary for determining a facility’s 

total treatment count. Another 

commenter suggested that CMS further 

clarify what years a facility is able to reattest for LVPA eligibility. One 

commenter cited an independent study 

claiming that over 1,000 facilities with 

treatment counts of less than 3,200 were 

not identified as low-volume facilities 

under the ESRD PPS. 

Response: We thank the commenters 

for their support and agree that 

extending the deadline by 60 days will 

allow facilitates to gather any 

documentation that supports a facility’s 

treatment count. In addition, we clarify 

that facilities that believe they have 

been denied the LVPA payment 

adjustment under the ESRD PPS may 

attest to any of the payment years since 

CY 2011. We thank the commenter who 

furnished independent data and plan to 

consider treatment count thresholds as 

part of our policy refinement in CY 

2016. 

Comment: One commenter 

recommended that CMS specify which 

years MACs will be required to reassess 

for incorrect determinations. In 

addition, as some MACs have advised 

ESRD facilities not to submit an 

application due to perceived 

ineligibility, they recommend CMS 

allow these facilities that did not file 

attestations to do so for prior years and 

receive a determination from the MAC. 

Response: ESRD facilities that did not 

submit an attestation for CY 2011 

through CY 2014 due to perceived 

ineligibility, but which now believe 

they qualify for the LVPA based upon 

our policy clarifications, should submit 

an attestation to their MAC for a 

determination. Likewise, facilities that 

submitted attestations and were denied, 

but now believe they qualify based upon 

the policy clarifications, should submit 

an attestation to their MAC for a 

redetermination. 

Comment: One commenter supports 

allowing the submission of additional 

data for all types of facilities, not only 

those that are hospital-based, because 

the commenter indicated such data 

could help the contractors more 

effectively identify facilities that qualify 

for the LVPA. The commenter indicated 

that more can and should be done to 

make sure that MACs are appropriately 

evaluating facilities to ensure accurate 

determinations. 

Response: We will consider this 

suggestion as part of the ESRD PPS 

refinement. In the meantime, we are 

planning to issue additional subregulatory guidance to MACs in an 

effort to ensure accurate LVPA 

determinations. We thank the 

commenter for their support and are 

finalizing the revision to § 413.232(f) to 

extend the deadline for CY 2015 LVPA 

attestations until December 31, 2014. 

H. Continued Use of ICD–9–CM Codes 

and Corrections to the ICD–10–CM 

Codes Eligible for the Co-morbidity 

Payment Adjustment 

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

requires that the ESRD PPS include a 

payment adjustment based upon casemix that may take into account, among 

other things, patient co-morbidities. Comorbidities are specific patient 

conditions that coexist with the 

patient’s principal diagnosis that 

necessitates dialysis. The co-morbidity 

payment adjustments recognize the 

increased costs associated with comorbidities and provide additional 

payment for certain conditions that 

occur concurrently with the need for 

dialysis. For a detailed discussion of our 

approach to developing the comorbidity payment adjustment, see the 

CY 2011 ESRD PPS final rule (75 FR 

49094 through 49108). 

In the CY 2011 ESRD PPS final rule, 

we finalized six co-morbidity categories 

that are eligible for a co-morbidity 

payment adjustment, each with 

associated International Classification of 

Diseases, 9th Revision, Clinical 

Modification (ICD–9–CM) diagnosis 

codes (75 FR 49100). These categories 

include three acute, short-term 

diagnostic categories (pericarditis, 

bacterial pneumonia, and 

gastrointestinal tract bleeding with 

hemorrhage) and three chronic 

diagnostic categories (hereditary 

hemolytic sickle cell anemia, 

myelodysplastic syndrome, and 

monoclonal gammopathy). The comorbidity categories eligible for an 

adjustment and their associated ICD–9– 

CM codes were published in the 

Appendix of the CY 2011 ESRD PPS 

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

Recognized for the Comorbidity 

Payment Adjustment (75 FR 49211). 

In the CY 2012 ESRD PPS final rule 

(76 FR 70252), we clarified that the 

ICD–9–CM codes eligible for the comorbidity payment adjustment are 

subject to the annual ICD–9–CM coding 

updates that occur in the hospital IPPS 

final rule and are effective October 1st 

every year. We explained that any 

updates to the ICD–9–CM codes that 

affect the categories of co-morbidities 

and the diagnoses within the comorbidity categories that are eligible for 

a co-morbidity payment adjustment 

would be communicated to ESRD 

facilities through sub-regulatory 

guidance. Together with the rest of the 

healthcare industry, CMS was 

scheduled to implement the 10th 

revision of the ICD coding scheme, that 

is, ICD–10–CM, on October 1, 2014. 

Hence, in the CY 2014 ESRD PPS (78 FR 

72175 through 72179), we finalized a 

policy that ICD–10–CM codes will be 

eligible for a co-morbidity payment 

adjustment where they crosswalk from 

ICD–9–CM codes that are eligible for a 

co-morbidity payment adjustment, with 

two exceptions. 

On April 1, 2014, PAMA was enacted. 

Section 212 of PAMA, titled ‘‘Delay in 

Transition from ICD–9–CM to ICD–10– 

CM Code Sets,’’ provides that ‘‘[t]he 

Secretary of Health and Human Services 

may not, prior to October 1, 2015, adopt 

ICD–10–CM code sets as the standard 

for code sets under section 1173(c) of 

the Social Security Act (42 U.S.C. 

1320d–2(c)) and § 162.1002 of title 45, 

Code of Federal Regulations.’’ On May 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66155 

1, 2014, the Secretary announced that 

HHS expected to issue an interim final 

rule that would require use of ICD–10– 

CM beginning October 1, 2015 and 

continue to require use of ICD–9–CM 

through September 30, 2015. This 

announcement is available on the CMS 

Web site at http://cms.gov/Medicare/

Coding/ICD10/index.html. 

Since the publication of the CY 2015 

ESRD PPS proposed rule on July 11, 

2014, HHS finalized the new 

compliance date of October 1, 2015 for 

ICD–10–CM and ICD–10–PCS in an 

August 4, 2014 final rule titled 

‘‘Administrative Simplification: Change 

to the Compliance Date for the 

International Classification of Diseases, 

10th Revision (ICD–10–CM and ICD– 

10–PCS).’’ The rule also requires HIPAA 

covered entities to continue to use ICD– 

9 through September 30, 2015. 

Before the passage of PAMA, our 

policy required facilities to utilize ICD– 

10–CM codes to identify co-morbidities 

eligible for the co-morbidity payment 

adjustment beginning October 1, 2014. 

However, in light of section 212 of 

PAMA and the Secretary’s 

announcement of the new compliance 

date for ICD–10, we proposed to require 

use of ICD–10–CM to identify comorbidities beginning on October 1, 

2015, and, until that time, we would 

continue to require use of the ICD–9– 

CM codes to identify co-morbidities 

eligible for the co-morbidity payment 

adjustment. The ICD–9–CM codes that 

are eligible for the co-morbidity 

payment adjustment are listed in the 

crosswalk tables below. 

Because facilities will begin using 

ICD–10–CM during the calendar year to 

which this rule applies, we are 

correcting several typographical errors 

and omissions in the Tables that 

appeared in the CY 2015 ESRD PPS 

final rule. First, we are correcting one 

ICD–9–CM diagnosis code that was 

incorrectly identified due to a 

typographical error in Table 1—ONE 

ICD–9–CM CODE CROSSWALKS TO 

ONE ICD–10–CM CODE (78 FR 72176). 

In Table 2—ONE ICD–9–CM CODE 

CROSSWALKS TO MULTIPLE ICD–10– 

CM CODES (78 FR 72177), we are 

correcting two ICD–10–CM codes 

because of typographical errors and 

finalizing two additional ICD–10–CM 

codes that were inadvertently omitted 

from the crosswalk. Lastly, in Table 3— 

MULTIPLE ICD–9–CM CODES 

CROSSWALK TO ONE ICD–10–CM 

CODE (78 FR 72178), we are including 

9 additional ICD–10–CM crosswalk 

codes for eligibility for the comorbidity 

payment adjustment. These codes were 

omitted in error from the CY 2014 ESRD 

PPS final rule, and we have furnished 

an updated Table 15 below reflecting 

the additional codes. 

We note that the ICD–10–CM codes 

that facilities will be required to use to 

identify eligible co-morbidities when 

ICD–10–CM becomes the required 

medical data code set on October 1, 

2015 are those that were finalized in the 

CY 2014 ESRD PPS final rule at 78 FR 

72175 to 78 FR 72179 with the 

corrections and proposed additions 

included below. 

Table 15—ONE ICD–9–CM CODE 

CROSSWALKS TO ONE ICD–10–CM 

CODE (78 FR 72175 Through 78 FR 

72176) 

Table 15 lists all the instances in 

which one ICD–9–CM code crosswalks 

to one ICD–10–CM code. We finalized a 

policy in last year’s rule that all 

identified ICD–10–CM codes would 

receive a co-morbidity adjustment with 

the exception of K52.81 Eosinophilic 

gastritis or gastroenteritis. We have 

since discovered that under the section 

titled Myelodysplastic Syndrome, ICD– 

9–CM code 238.7 Essential 

thrombocythemia was in accurately 

identified. The table below has been 

amended to accurately identify ICD–9– 

CM diagnostic code 238.71 Essential 

thrombocythemia. 

TABLE 15—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

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

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

537.83 Angiodysplasia of stomach and duodenum with hemorrhage .. K31.811 Angiodysplasia of stomach and duodenum with bleeding. 

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

Bacterial Pneumonia 

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

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

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

482.2 Pneumonia due to Hemophilus influenzae [H. influenzae] ......... J14 Pneumonia due to Hemophilus influenzae. 

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

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

482.41 Methicillin susceptible pneumonia due to Staphylococcus 

aureus.

J15.211 Pneumonia due to Methicillin susceptible Staphylococcus 

aureus. 

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

aureus. 

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

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

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

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

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

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

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

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

Pericarditis 

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


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66156 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

TABLE 15—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

Hereditary Hemolytic and Sickle Cell Anemia 

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

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

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

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

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

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

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

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

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

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

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

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

Myelodysplastic Syndrome 

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

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

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

abnormality. 

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

Table 16—ONE ICD–9–CM CODE 

CROSSWALKS TO MULTIPLE ICD–10– 

CM CODES (78 FR 72177 Through 78 

FR 72178) 

Table 16 lists all of the instances in 

which one ICD–9–CM code crosswalks 

to multiple ICD–10–CM codes. We 

finalized a policy in last year’s rule that 

all identified ICD–10–CM codes would 

receive a co-morbidity adjustment with 

the exception of D89.2 

Hypergammaglobulinemia, unspecified. 

Under the section titled Gastrointestinal 

Bleeding, ICD–9–CM code 562 

Diverticulosis of small intestine with 

hemorrhage was in accurately 

identified, as the complete code number 

is 562.02. The table below has been 

amended to accurately identify ICD–9– 

CM diagnostic code 562.02 

Diverticulosis of small intestine with 

hemorrhage. 

Also under the section titled 

Gastrointestinal Bleeding, ICD–9–CM 

diagnostic code 562.13 Diverticulitis of 

colon with hemorrhage did not include 

a complete crosswalk to ICD–10–CM 

diagnostic codes. Therefore, we are 

including ICD–10–CM diagnostic codes 

K57.81 Diverticulitis of intestine, part 

unspecified, with perforation and 

abscess with bleeding and K57.93 

Diverticulitis of intestine, part 

unspecified, without perforation or 

abscess with bleeding, in addition to the 

ICD–10–CM diagnostic codes K57.21, 

K57.33, K57.41, and K57.53, as eligible 

for the co-morbidity payment 

adjustment when the use of ICD–10–CM 

is required, on October 1, 2015. 

Under the section titled Pericarditis, 

ICD–10–CM code 130.1 Infective 

pericarditis was inaccurately identified. 

The table below has been amended to 

accurately identify the ICD–10–CM 

diagnostic code I30.1 Infective 

pericarditis as eligible for a comorbidity payment adjustment when 

the use of ICD–10–CM is required, on 

October 1, 2015. 

TABLE 16—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

562.02 Diverticulosis of small intestine with hemorrhage ..................... K57.11 Diverticulosis of small intestine without perforation or abscess 

with bleeding. 

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

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

with bleeding. 

K57.13 Diverticulitis of small intestine without perforation or abscess 

with bleeding. 

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

and abscess with bleeding. 

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

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

with bleeding. 

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

or abscess with bleeding. 

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


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TABLE 16—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

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

with bleeding. 

K57.33 Diverticulitis of large intestine without perforation or abscess 

with bleeding. 

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

and abscess with bleeding. 

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

K57.81 Diverticulitis of intestine, part unspecified, with perforation and 

abscess with bleeding. 

K57.93 Diverticulitis of intestine, part unspecified, without perforation 

or abscess with bleeding. 

Bacterial Pneumonia 

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

J85.1 Abscess of lung with pneumonia. 

J85.2 Abscess of lung without pneumonia. 

Pericarditis 

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

I32 Pericarditis in diseases classified elsewhere. 

M32.12 Pericarditis in systemic lupus erythematosus. 

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

I30.9 Acute pericarditis, unspecified. 

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

I30.9 Acute pericarditis, unspecified. 

Hereditary Hemolytic and Sickle Cell Anemia 

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

deficiency. 

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

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

D55.3 Anemia due to disorders of nucleotide metabolism. 

D55.8 Other anemias due to enzyme disorders. 

D55.9 Anemia due to enzyme disorder, unspecified. 

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

D57.412 Sickle-cell thalassemia with splenic sequestration. 

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

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

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

D57.02 Hb-SS disease with splenic sequestration. 

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

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

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

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

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

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

Monoclonal Gammopathy 

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

D89.2 Hypergammaglobulinemia, unspecified. 

Myelodysplastic Syndrome 

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

D46.1 Refractory anemia with ring sideroblasts. 

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

D46.21 Refractory anemia with excess of blasts 1. 

D46.4 Refractory anemia, unspecified. 

D46.A Refractory cytopenia with multilineage dysplasia. 

D46.B Refractory cytopenia with multilineage dysplasia and ring 

sideroblasts. 

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

D46.Z Other myelodysplastic syndromes. 


tkelley on DSK3SPTVN1PROD with RULES3
66158 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

Table 17—MULTIPLE ICD–9–CM 

CODES CROSSWALK TO ONE ICD–10– 

CM CODE (78 FR 72178) 

Table 17 displays the crosswalk 

where multiple ICD–9–CM codes 

crosswalk to one ICD–10–CM code. We 

finalized a policy in last year’s rule that 

all of the ICD–10–CM codes listed in 

Table 3 would be eligible for the comorbidity payment adjustment. Under 

the section titled Gastrointestinal 

Bleeding, nine ICD–10–CM codes (K25.0 

Acute gastric ulcer with hemorrhage, 

K25.2 Acute gastric ulcer with both 

hemorrhage and perforation, K25.4 

Chronic or unspecified gastric ulcer 

with hemorrhage, K25.6 Chronic or 

unspecified gastric ulcer with both 

hemorrhage and perforation, K26.0 

Acute duodenal ulcer with hemorrhage, 

K26.2 Acute duodenal ulcer with both 

hemorrhage and perforation, K26.4 

Chronic or unspecified duodenal ulcer 

with hemorrhage, K26.6 Chronic or 

unspecified duodenal ulcer with both 

hemorrhage and perforation, and K27.0 

Acute peptic ulcer, site unspecified, 

with hemorrhage) and the 

corresponding ICD–9–CM codes were 

inadvertently omitted from the 

crosswalk. Therefore, we are finalizing 

ICD–10–CM diagnostic codes—K25.0, 

K25.2, K25.4, K25.6, K26.0, K26.2, 

K26.4, K26.6, K27.0—will be eligible for 

the comorbidity payment adjustment 

beginning October 1, 2015. We also 

finalize that the corresponding ICD–9– 

CM codes will be eligible for the 

comorbidity adjustment through 

September 30, 2015. 

TABLE 17—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

531.00 Acute gastric ulcer with hemorrhage, without mention of obstruction.K25.0 Acute gastric ulcer with hemorrhage. 

531.01 Acute gastric ulcer with hemorrhage, with obstruction.

531.20 Acute gastric ulcer with hemorrhage and perforation, without 

mention of obstruction.

K25.2 Acute gastric ulcer with both hemorrhage and perforation. 

531.21 Acute gastric ulcer with hemorrhage and perforation, with obstruction.

531.40 Chronic or unspecified gastric ulcer with hemorrhage, without 

mention of obstruction.

K25.4 Chronic or unspecified gastric ulcer with hemorrhage. 

531.41 Chronic or unspecified gastric ulcer with hemorrhage, with obstruction.

531.60 Chronic or unspecified gastric ulcer with hemorrhage and perforation, without mention of obstruction.K25.6 Chronic or unspecified gastric ulcer with both hemorrhage and 

perforation. 

531.61 Chronic or unspecified gastric ulcer with hemorrhage and perforation, with obstruction.

532.00 Acute duodenal ulcer with hemorrhage, without mention of obstruction.K26.0 Acute duodenal ulcer with hemorrhage. 

532.01 Acute duodenal ulcer with hemorrhage, with obstruction.

532.20 Acute duodenal ulcer with hemorrhage and perforation, without mention of obstruction.K26.2 Acute duodenal ulcer with both hemorrhage and perforation. 

532.21 Acute duodenal ulcer with hemorrhage and perforation, with 

obstruction.

532.40 Chronic or unspecified duodenal ulcer with hemorrhage, without mention of obstruction.K26.4 Chronic or unspecified duodenal ulcer with hemorrhage. 

532.41 Chronic or unspecified duodenal ulcer with hemorrhage, with 

obstruction.

532.60 Chronic or unspecified duodenal ulcer with hemorrhage and 

perforation, without mention of obstruction.

K26.6 Chronic or unspecified duodenal ulcer with both hemorrhage 

and perforation. 

532.61 Chronic or unspecified duodenal ulcer with hemorrhage and 

perforation, with obstruction.

533.00 Acute peptic ulcer of unspecified site with hemorrhage, without mention of obstruction.K27.0 Acute peptic ulcer, site unspecified, with hemorrhage. 

533.01 Acute peptic ulcer of unspecified site with hemorrhage, with 

obstruction.

533.20 Acute peptic ulcer of unspecified site with hemorrhage and 

perforation, without mention of obstruction.

K27.2 Acute peptic ulcer, site unspecified, with both hemorrhage and 

perforation. 

533.21 Acute peptic ulcer of unspecified site with hemorrhage and 

perforation, with obstruction.

533.40 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage, without mention of obstruction.

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

533.41 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage, with obstruction.

533.60 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage and perforation, without mention of obstruction.

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

hemorrhage and perforation. 

533.61 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage and perforation, with obstruction.

534.00 Acute gastrojejunal ulcer with hemorrhage, without mention of 

obstruction.

K28.0 Acute gastrojejunal ulcer with hemorrhage. 

534.01 Acute gastrojejunal ulcer, with hemorrhage, with obstruction.

534.20 Acute gastrojejunal ulcer with hemorrhage and perforation, 

without mention of obstruction.

K28.2 Acute gastrojejunal ulcer with both hemorrhage and perforation. 

534.21 Acute gastrojejunal ulcer with hemorrhage and perforation, 

with obstruction.


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66159 

3 2013 Annual Progress Report to Congress: 

National Strategy for Quality Improvement in 

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

workingforquality/nqs/nqs2013annlrpt.htm. 

TABLE 17—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

534.40 Chronic or unspecified gastrojejunal ulcer with hemorrhage, 

without mention of obstruction.

K28.4 Chronic or unspecified gastrojejunal ulcer with hemorrhage. 

534.41 Chronic or unspecified gastrojejunal ulcer, with hemorrhage, 

with obstruction.

534.60 Chronic or unspecified gastrojejunal ulcer with hemorrhage 

and perforation, without mention of obstruction.

K28.6 Chronic or unspecified gastrojejunal ulcer with both hemorrhage and perforation. 

534.61 Chronic or unspecified gastrojejunal ulcer with hemorrhage 

and perforation, with obstruction.

Bacterial Pneumonia 

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

482.31 Pneumonia due to Streptococcus, group A.

482.39 Pneumonia due to other Streptococcus.

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

482.89 Pneumonia due to other specified bacteria.

We received no comments on our 

proposals to amend or modify our ICD– 

9–CM/ICD–10–CM crosswalk and, 

therefore, we are finalizing these 

changes as proposed. 

III. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

A. Background 

For more than 30 years, monitoring 

the quality of care provided by dialysis 

facilities to patients with end-stage renal 

disease (ESRD) has been an important 

component of the Medicare ESRD 

payment system. The ESRD Quality 

Incentive Program (QIP) is the most 

recent step in fostering improved 

patient outcomes by establishing 

incentives for dialysis facilities to meet 

or exceed performance standards 

established by CMS. The ESRD QIP is 

authorized by section 1881(h) of the 

Social Security Act (the Act), which was 

added by section 153(c) of the Medicare 

Improvements for Patients and 

Providers Act (MIPPA). 

Specifically, section 1881(h) requires 

the Secretary to establish an ESRD QIP 

by (i) selecting measures; (ii) 

establishing the performance standards 

that apply to the individual measures; 

(iii) specifying a performance period 

with respect to a year; (iv) developing a 

methodology for assessing the total 

performance of each facility based on 

the performance standards with respect 

to the measures for a performance 

period; and (v) applying an appropriate 

payment reduction to facilities that do 

not meet or exceed the established Total 

Performance Score (TPS). The proposed 

rule, titled ‘‘Medicare Program; EndStage Renal Disease Prospective 

Payment System, Quality Incentive 

Program, and Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies’’ (79 FR 40208 through 40315), 

(hereinafter referred to as the CY 2015 

ESRD PPS Proposed Rule), was 

published in the Federal Register on 

July 11, 2014, with a comment period 

that ended on September 2, 2014. In that 

proposed rule, we made proposals for 

the ESRD QIP, including adding new 

measures, revising existing measures; 

refining the scoring methodology; 

modifying the program’s public 

reporting requirements; continuing the 

data validation pilot program for 

CROWNWeb and introducing a 

validation feasibility study for the 

NHSN Bloodstream Infection clinical 

measure. We received 46 public 

comments on the ESRD QIP proposals, 

including comments from ESRD 

facilities; national renal groups, 

nephrologists 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 

program. Comments related to the 

paperwork burden are addressed in the 

‘‘Collection of Information 

Requirements’’ section of this final rule. 

Comments related to the impact analysis 

are addressed in the ‘‘Economic 

Analyses’’ section of this final rule. 

B. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP 

Throughout the past decade, Medicare 

has been transitioning from a program 

that pays for healthcare based on 

particular services furnished to a 

beneficiary to a program that bases 

payments to providers and suppliers on 

the quality of services they furnish. By 

paying for the quality of care rather than 

simply the quantity of care, and by 

focusing on better care and lower costs 

through improvement, prevention and 

population health, expanded healthcare 

coverage, and enterprise excellence, we 

are strengthening the healthcare system 

while also advancing the National 

Strategy for Quality Improvement in 

Health Care (that is, the National 

Quality Strategy (NQS)). We are also 

working to update a set of domains and 

specific quality measures for our Value 

Based Purchasing (VBP) programs, and 

to link the aims of the NQS with our 

payment policies on a national scale. 

We are working in partnership with 

beneficiaries, providers, advocacy 

groups, the National Quality Forum 

(NQF), the Measures Application 

Partnership, operating divisions within 

the Department of Health and Human 

Services (HHS), and other stakeholders 

to develop new measures where gaps 

exist, refine measures where necessary, 

and remove measures when appropriate. 

We are also collaborating with 

stakeholders to ensure that the ESRD 

QIP serves the needs of our beneficiaries 

and also advances the goals of the NQS 

to improve the overall quality of care, 

improve the health of the U.S. 

population, and reduce the cost of 

quality healthcare.3

We believe that the development of an 

ESRD QIP that is successful in 

supporting the delivery of high-quality 

healthcare services in dialysis facilities 

is paramount. We seek to adopt 

measures for the ESRD QIP that promote 

better, safer, and more coordinated care. 

Our measure development and selection 

activities for the ESRD QIP take into 

account national priorities such as those 

established by the HHS Strategic Plan 

(http://www.hhs.gov/strategic-plan/

priorities.html), the NQS (http://


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www.ahrq.gov/workingforquality/nqs/

nqs2013annlrpt.htm), and the HHS 

National Action Plan to Prevent 

Healthcare Associated Infections (HAIs) 

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

esrd.html). To the extent feasible and 

practicable, we have sought to adopt 

measures that have been endorsed by a 

national consensus organization; 

recommended by multi-stakeholder 

organizations; and developed with the 

input of providers, beneficiaries, health 

advocacy organizations, and other 

stakeholders. 

We received a number of general 

comments on our proposals, which we 

summarize and respond to here. 

Comment: Some commenters were 

concerned about the number of 

measures used in the ESRD QIP. 

Commenters stated that as the number 

of measures in the ESRD QIP grows, so 

do the costs to providers and CMS. 

Commenters also stated that 

implementing too many measures 

dilutes the impact of poor performance 

on individual measures in the ESRD 

QIP. Commenters recommended that 

CMS ‘‘strive to include measures that 

address multiple domains of CMS’s VBP 

programs and are not duplicative.’’ 

Response: We understand that there 

are a number of measures we proposed 

to be added to the ESRD QIP. One of the 

reasons we proposed to adopt measures 

for both PY 2017 and PY 2018 in the CY 

2015 ESRD PPS Proposed Rule this rule 

(and why the majority of the new 

measures were proposed for adoption in 

PY 2018) was to provide facilities with 

a sufficient amount of time to 

implement processes that would enable 

them to successfully report the measure 

data and achieve high scores on the 

measures. Although we recognize that 

adopting more measures in the ESRD 

QIP increases costs to facilities as well 

as CMS, we believe these increased 

costs are outweighed by the benefits to 

patients of incentivizing quality care in 

the domains that the measures cover. 

We further note that the new measures 

adopted for the ESRD QIP will not 

dilute the weight of the PY 2017 clinical 

measure set or the PY 2018 clinical 

measure set, as compared to the weights 

that we assigned to the PY 2016 clinical 

measure set. The PY 2017 program 

contains the same amount of clinical 

measures as the PY 2016 program, and 

the clinical measure sets receive the 

same weight in both programs. 

Additionally, the weight of the clinical 

measures in the PY 2018 program will 

be increased from 75 percent of a 

facility’s TPS (as specified in the PY 

2017 program) to 90 percent, and we 

believe that this added weight will 

preserve the program’s strong incentives 

for facilities to achieve high scores on 

the clinical measures. Finally, we agree 

with commenters who recommend that, 

where possible, individual ESRD QIP 

measures should span multiple 

domains. We agree that adopting 

measures that span multiple domains, 

such as the SRR measure, allows us to 

address multiple aspects of quality, 

reduces the total number of measures in 

the ESRD QIP, and presents less burden 

for facilities than adopting multiple 

measures that each address a single 

domain. Going forward, we will 

continue to strive to ensure that the 

ESRD QIP measure set is as 

parsimonious as possible. 

Comment: Some commenters 

requested that CMS explore new 

methods of adjusting quality metrics for 

patient case mix, because ESRD QIP 

measures, as currently specified, place 

facilities treating sicker patients at a 

disadvantage. For example, dialysis 

patients who are admitted to nursing 

homes and long-term care hospitals 

(LTCHs) often still receive their ESRD 

treatment at the dialysis facility. These 

patients are ‘‘inherently sicker and 

require more care than the general 

dialysis population.’’ Therefore, dialysis 

facilities that only treat patients who are 

admitted to LTCHs or nursing homes are 

at a disadvantage under the current 

methodology. Commenter stated that 

comparing facilities with similar case 

mixes would be a fairer way to evaluate 

facility performance. 

Response: We appreciate the 

commenters’ concerns regarding the 

exploration of new methods of adjusting 

for patient case mix to ensure facilities 

are not penalized for caring for sicker 

patients. The SRR and STrR clinical 

measures are risk-adjusted on the basis 

of patient case mix. We make an effort 

to adjust for case mix where clinical 

evidence and methodological rigor 

indicate doing so is appropriate, and we 

consider the appropriateness of riskadjusting for case mix as part of our 

ongoing reevaluation of quality 

measures implemented in the ESRD 

QIP. 

Comment: A commenter was 

concerned that many ESRD QIP 

measures include patients who are only 

treated at a facility for a short period of 

time in the facility. The commenter 

believes that outcomes for these patients 

should be attributed to other facilities 

(that is, other dialysis facilities and 

hospitals), rather than a facility that had 

a limited opportunity to provide care for 

a patient. 

Response: We believe the measure 

specifications appropriately account for 

patients seen at a facility for a limited 

period of time by implementing 

exclusion criteria specific to quality 

measures as deemed appropriate. For 

example, the STrR measure excludes all 

patients who have not received 

treatment at a facility for 60 days. The 

Hypercalcemia measure requires 30 

days of treatment in the facility. The Kt/ 

V dialysis adequacy measures exclude 

patient-months where fewer than 7 

treatments are billed for the patient, and 

the vascular access measures require a 

minimum of 4 months of claims. An 

analogous exclusion is not appropriate 

for the SRR, where facility attribution is 

defined by a hospital discharge, and not 

time in treatment at a facility. 

Comment: One commenter 

recommended that CMS include the 

Standardized Mortality Ratio (SMR) in 

the ESRD QIP, because the ‘‘medical 

literature has shown SMR is more 

indicative of the quality of care received 

at a facility than Standardized 

Readmissions Ratio (SRR) or 

Standardized Transfusion Ratio (STrR).’’ 

Response: We thank the commenter 

for the input. We will consider 

proposing to adopt the SMR measure for 

future payment years. 

Comment: One commenter 

recommended that CMS include a 

measure of the percent of eligible 

patients on the transplant wait-list in 

the ESRD QIP, because this indicator of 

patient status ‘‘is under the immediate 

auspices of the dialysis team.’’ Other 

commenters recommended that CMS 

develop one or more measures on fluid 

management because this area is a high 

priority concern for clinicians, patients, 

and facilities. Another commenter 

recommended that CMS develop a 

measure evaluating the employment rate 

among ESRD patients ages 18–54, 

because the ability to maintain regular 

employment is an indicator of both 

positive clinical and psychosocial 

outcomes in the ESRD population. 

Commenter stated that monitoring 

employment statistics among the ESRD 

population will shift facility focus 

toward patients’ overall well-being 

rather than just clinical outcomes. 

Response: We thank the commenters 

for their input and will take their 

recommendations into consideration as 

we proceed with our measure 

development work. 

Comment: One commenter 

recommended CMS fully test its system 

for calculating ESRD QIP scores because 

in the past 2 years scores on the 

National Health Safety Network (NHSN) 

Bloodstream Infection and Dialysis 

Adequacy measures have been 

miscalculated. 

Response: We agree that it is essential 

to calculate ESRD QIP measure scores 

correctly. The purpose of the annual 


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4Ravani, J Am Soc Nephrol 24: 465–473, 2013. 

Preview Period process is to give 

facilities the opportunity to identify 

scoring issues and request score 

changes. We further note that scoring 

issues related to the NHSN and Dialysis 

Adequacy measures were resolved via 

the Preview Period processes, and we 

take this as an indication that the 

process is working as intended. 

Comment: One commenter supported 

CMS’s goal of improving coordination of 

care for ESRD patients, but stated that 

the adoption of measures that may 

implicate providers outside of the 

dialysis facility should be delayed until 

renal-specific accountable care 

organizations can be established 

because without an incentive to 

cooperate, other healthcare providers 

may not share necessary information 

with dialysis facilities. Commenters also 

stated that many facilities lack the tools 

necessary to effectively address care 

coordination. Commenters supported 

the Comprehensive ESRD Care Initiative 

currently in development, and 

recommended that CMS delay the 

adoption of any care coordination 

measures until results are available from 

that model. 

Response: We appreciate stakeholder 

support of the ESRD Seamless Care 

Organization (ESCO) model. However, 

we do not believe that the ESCO’s focus 

on coordination of care should preclude 

the ESRD QIP from implementing 

measures intended to improve care 

coordination, because collecting and 

analyzing results from the model will 

take a number of years, and it may not 

be possible to extrapolate results 

obtained from the small sample of 

facilities included in the model to all 

facilities nationwide. In addition, by 

including measures on coordination of 

care in the ESRD QIP before the ESCOs 

are in place, we will be able to 

positively impact care coordination for 

a large percentage of ESRD patients in 

the near future, and will be able to 

collect important data on care 

coordination from a wide array of 

facilities, which would better inform its 

future model development efforts. 

Comment: One commenter 

recommended that CMS develop new 

measures on anemia management 

because transfusions have increased as 

facilities’ utilization of ESAs has 

declined. 

Response: We agree with the 

commenter than anemia management is 

a major concern among patients with 

ESRD, and will continue to take this 

into account in future measure 

development. We also note that the 

ESRD QIP currently includes a measure 

on anemia management and ESA 

dosage, the Anemia Management 

reporting measure, and that the 

intention of the STrR measure we are 

adopting for the PY 2018 program is to 

monitor and prevent transfusions 

related to underutilization of ESAs. 

Comment: Many commenters 

recommended modifying the Vascular 

Access Type measures such that 

facilities are not penalized when grafts 

are placed in certain patients (for 

example, diabetics with intrinsic 

vascular disease). Commenters stated 

that outcomes for these patients are 

comparable when grafts or fistulae are 

used, and that the absence of a graft 

measure in the Vascular Access Type 

measure topic disincentivizes a 

clinically appropriate access that is 

selected after consultation with patients. 

As an intermediate step, some 

commenters recommended assigning 

the catheter and fistula measures, 

respectively, two-thirds and one-third 

the weight of the Vascular Access Type 

measure topic. 

Response: The current NQF-endorsed 

vascular access quality measures 

adopted for use in the program (NQF 

#0257: Hemodialysis Vascular Access— 

Maximizing Placement of Arterial 

Venous Fistula (AVF) and NQF #0256: 

Hemodialysis Vascular Access— 

Minimizing Use of Catheters as Chronic 

Dialysis Access) consider Arterial 

Venous (AV) fistula use as a positive 

outcome, prolonged use of tunneled 

catheter as a negative outcome, and 

incorporates the clinical equipoise 

regarding AV grafts, effectively creating 

three categories of outcome (AV fistula 

= positive; AV graft = neutral; prolonged 

use of tunneled catheter = negative). We 

believe this paradigm to be generally 

appropriate. Positive incentives are 

provided for AV fistula creation, but 

dialysis providers must remain 

cognizant of the clinical impact of 

prolonged use of tunneled catheters 

because of the negative incentive 

provided for that outcome. This paired 

incentive structure reflects consensus 

best practice, and supports maintenance 

of the gains in vascular access success 

achieved via the Fistula First Project 

over the last decade. Furthermore, a 

recent large meta-analysis demonstrates 

poorer survival with AV graft compared 

to AV fistula, raising important 

questions about the commenter’s 

assertion of clinical appropriateness of 

AV graft as an alternative to AV fistula.4

We appreciate the commenters’ 

suggestion to revise the relative weights 

of the catheter and fistula components 

of the Vascular Access Type measure 

topic to increase the focus on ‘‘catheter 

last’’. We will take this into 

consideration in as we continue to 

revise and refine the ESRD QIP measure 

set, and we may use future rulemaking 

to propose changes to the measures’ 

relative weights. 

Comment: One commenter 

recommended that CMS exclude 

patients with a limited life expectancy 

from the Vascular Access Type: Catheter 

≥90 days clinical measure. 

Response: We appreciate the 

commenters’ suggestion to exclude 

patients with a limited life expectancy 

from the measure denominator and will 

consider whether this type of revision is 

feasible and appropriate for this 

measure. 

Comment: Some commenters 

recommended that CMS consider 

making incentive payments to facilities 

meeting and/or exceeding benchmarks 

in the ESRD QIP in addition to 

penalizing facilities that do not meet or 

make progress toward the standards, 

because the current incentive program 

only withholds funding from the 

nation’s kidney care infrastructure. One 

commenter recommended working to 

find ways, within the statutory 

authorities of the Act, to provide 

facilities with payment incentives for 

high performance in the ESRD QIP. The 

commenter stated that doing so is 

consistent with the principle that valuebased purchasing programs should 

‘‘redistribute to providers all of the 

funding that was set aside in accordance 

with their performance on the quality 

measures.’’ 

Response: We do not believe that we 

have the statutory authority to provide 

facilities with incentive payments for 

high performance on ESRD QIP 

measures. 

Comment: One commenter 

recommended that CMS revise the 

nomenclature it uses to categorize 

measures in the ESRD QIP because the 

current terminology is confusing and 

may contribute to a lack of patient 

understanding. The commenter stated 

that the use of the terms ‘‘clinical’’ and 

‘‘reporting’’ do not align with the 

commonly accepted meaning of those 

words. The commenter recommended 

that CMS replace the term ‘‘clinical 

measures’’ with ‘‘accountability 

measures’’ and replace the term 

‘‘reporting measures’’ with ‘‘required 

data submission.’’ 

Response: We disagree that the terms 

‘‘clinical measure’’ and ‘‘reporting 

measure’’ are confusing. Specifically, 

the term ‘‘clinical’’ indicates that the 

clinical measures pertain to clinical care 

and aspects of the clinical environment 

that improve patient care. Furthermore, 

the term ‘‘reporting’’ indicates that 

reporting measures pertain to how well 


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a facility meets requirements for 

reporting data to CMS. Accordingly, we 

do not believe it is necessary to revise 

the nomenclature used to categorize 

measures in the ESRD QIP. 

Comment: Some commenters were 

concerned that the ESRD QIP lacks a 

strategic vision and encouraged CMS to 

consult with the ESRD community to 

establish a clear set of principles and 

goals for the program. Commenter stated 

that the program currently seems to be 

focusing on adding new measures 

without considering whether each 

measure will drive improvements in 

dialysis care. 

Response: The goals of the ESRD QIP 

closely align with the goals of the CMS 

Quality Strategy (the CMSQS). The 

CMSQS is designed to guide the 

activities of various components 

throughout the Agency and is aligned 

with the Department of Health and 

Human Services’ (HHS’) National 

Quality Strategy (the NQS). The six 

goals of the CMSQS are organized 

around NQS’ three broad aims and drive 

and orient all of CCSQ’s quality 

improvement programs, including the 

ESRD QIP, insofar as these aims align 

with the statutory goals of the program. 

The following figure illustrates the six 

goals of the CMSQS, which have been 

informed by extensive consultation with 

stakeholders across the country: 

BILLING CODE 4120–01–P 

BILLING CODE 4120–01–C 

The strategic vision of the ESRD QIP is 

to adopt measures that address each of 

these goals. The following table illustrates the program’s efforts to 

implement this strategic vision: 

TABLE 18—ESRD QIP ALIGNMENT WITH CMSQS QUALITY STRATEGY GOALS

CMSQS Goal Measure 

Promote effective prevention and treatment of chronic disease ............ Kt/V Measure Topic ....................... Hemodialysis.

Peritoneal Dialysis. 

Pediatric Hemodialysis. 

Pediatric Peritoneal Dialysis. 

Vascular Access Type Measure 

Topic.

Fistula. 

Catheter for at Least 90 Days. 

Mineral Metabolism Reporting. 

Anemia Management Reporting. 

Hypercalcemia. 

Standardized Transfusion Ratio. 

Screening for Depression and Follow Up reporting. 

Pain Assessment and Follow-Up reporting. 

Strengthen person and family engagement as partners in their care .... ICH CAHPS Reporting (PY 2017) and Clinical (PY 2018). 

Promote effective communication and coordination of care ................... Standardized Readmissions Ratio. 

Make care safer by reducing harm caused in the delivery of care ........ NHSN Bloodstream Infection in Hemodialysis Outpatients. 

NHSN Healthcare Personnel Influenza Vaccination reporting. 

Work with communities to promote best practices of healthy living ....... None. 

Making care affordable ............................................................................ None. 


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As the table above illustrates, the ESRD 

QIP has not proposed or finalized 

measures for the following quality goals: 

• Work with communities to promote 

the best practices of healthy living. 

• Making care affordable. 

We will evaluate these remaining goals, 

particularly the goal of making care 

affordable, to assess their 

appropriateness as policy goals for the 

ESRD QIP. In addition to evaluating the 

ESRD QIP measure set in terms of how 

well it addresses legislative mandates, 

NQS and CMSQS goals, we are also 

evaluating how well the measure set 

addresses policy priorities that 

stakeholders have brought to our 

attention. We continue to engage both 

external and internal stakeholders on a 

regular basis, to communicate the 

strategic vision of the program as well 

as to engage in dialogue useful to the 

development and implementation of 

policy that will effectively create 

improvements in the quality of care 

provided to ESRD beneficiaries. 

Comment: Some commenters were 

concerned that CMS is proposing to 

adopt a number of measures that have 

not been reviewed or endorsed by NQF. 

One commenter stated that the Social 

Security Act authorizes the program to 

adopt measures that have not been 

endorsed by NQF, but the commenter 

recommended that this authority should 

only be exercised rarely. 

Response: As described above, we 

may adopt non-NQF-endorsed measures 

under the ESRD QIP exception authority 

in section 1881(h)(2)(B)(ii) of the Act. 

This provision provides that, 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 as long as due consideration is 

given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

Although we proposed some measures 

that are not currently NQF-endorsed, 

they are pending NQF endorsement, and 

we are actively seeking this 

endorsement. We also considered other 

available measures that have been 

endorsed by the NQF and found no 

other feasible and practical measures. In 

addition, the MAP has supported or 

conditionally supported all of the 

measures proposed for the PY 2017 and 

PY 2018 ESRD QIP. 

Comment: Some commenters were 

concerned about the process CMS uses 

to develop measures for ESRD. 

Commenters stated that the measure 

development process does not consider 

the day-to-day operations of a dialysis 

facility, appears to be pre-determined 

and closed to influence from the ESRD 

community, is insufficiently 

transparent, and is not focused on areas 

that are of concern to the ESRD 

community. 

Response: Our development process 

makes use of the CMS Measures 

Management System Blueprint, which is 

publicly available at https://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/Measures

ManagementSystemBlueprint.html. The 

CMS Blueprint guides measure 

development through all stages in order 

to prepare the measures for public 

comment, and submission to NQF. 

Development work begins with an 

extensive review of relevant literature, 

which is then presented to a panel of 

technical experts (members of which are 

selected after a public call for 

nominations) convened for the purpose 

of providing guidance to our quality 

measure development contractor. These 

panels typically include practicing 

nephrologists and nurses, ESRD 

researchers, and other experts who may 

meaningfully contribute to the content 

area under discussion. The results of 

their deliberations are posted publicly 

on a CMS Web site, and any measures 

developed through this process undergo 

a 30-day public comment period prior to 

being considered for inclusion in the 

ESRD QIP. We have additionally 

submitted most of our measures to NQF 

for endorsement, and as part of that 

process, we must submit extensive 

documentation supporting the measure 

specifications, and the measure is 

scrutinized extensively by a steering 

committee to assess measure 

importance, scientific acceptability, 

feasibility, and usability. Furthermore, 

we propose the measures through our 

annual notice and comment rulemaking 

process to allow for public comments. 

Comment: One commenter 

recommended CMS ensure the integrity 

of the data used to develop measures 

and score facilities on measures in the 

ESRD QIP. Other commenters did not 

support the use of multiple data sources 

in the ESRD QIP. 

Response: We are continuing to work 

diligently to ensure the validity and 

reliability of data that is used to 

calculate facility scores and to develop 

measures for the ESRD QIP. We believe 

that our efforts to solicit stakeholder 

feedback through the CROWNWeb 

Users Group have dramatically 

accelerated our efforts on this, and we 

looking forward to the continued 

collaboration. 

We believe that our measures are 

currently valid and reliable, and use a 

variety of tools to assess reliability and 

validity. We base our measure 

specifications on rigorous clinically 

peer-reviewed findings, convene 

technical expert panels of clinicians and 

statistical experts, run medical record 

reliability pilot tests, and submit 

measures to the Secretary’s consensusbased endorsement entity and the 

Measures Application Partnership for 

review. We use these tools as 

appropriate and feasible to ensure 

validity and reliability. 

We believe that it is appropriate to 

use more than one data source to collect 

ESRD QIP measure data because the use 

of multiple data sources ensures that 

measure scores are calculated using the 

most reliable data source available, and 

that data from one source can be 

validated against data from another 

source. 

Comment: A commenter 

recommended that CMS align 

measurement methodologies and 

reporting requirements across CMS 

ESRD quality programs. Commenter 

stated that current misalignments are 

creating confusion and are burdening 

facility staff. 

Response: The ESRD QIP, Dialysis 

Facility Compare program, and the 

Dialysis Facility Reports program have 

different purposes, which in certain 

cases necessitates divergent measure 

specifications and scoring 

methodologies. We are currently in the 

process of reviewing measure 

specifications and scoring 

methodologies across the three 

programs, and we will continue to 

create alignments where appropriate. 

Comment: A number of commenters 

recommended applying six exclusion 

criteria to all measures in the ESRD QIP 

unless there is a clinical or operational 

reason not to do so: (1) Beneficiaries 

who die within the applicable month; 

(2) Beneficiaries who receive fewer than 

7 treatments in a month; (3) 

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; (4) Transient 

dialysis patients; (5) Pediatric patients 

(unless the measure is specific to 

pediatric patients); and (6) Kidney 

transplant recipients with a functioning 

graft. Commenter also recommended 

that patients should only be attributed 

to a facility after being assigned to the 

facility for 60 days, and that the dialysis 

adequacy measures should exclude 

patients with fewer than four eligible 

claim months. 


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Response: We considered applying 

these six global exclusion criteria in 

response to comments on the CY 2014 

ESRD PPS proposed rule (78 FR 72192). 

We agree with commenters that 

exclusion criteria for the ESRD QIP 

measures should be consistent, where 

feasible. We further believe, however, 

that exclusions also need to take into 

account the population to which a 

measure applies and the settings for 

which the measures were developed (for 

example, in-center hemodialysis as 

opposed to home hemodialysis). As 

stated in previous rules, we will 

continue to look for ways to align 

exclusion criteria for measures in the 

ESRD QIP, as long as there is evidence 

to support such consistency. 

Comment: Commenter stated that 

measures in the ESRD QIP 

predominantly focus on in-center 

dialysis. Commenter recommended 

developing new measures, and 

modifying existing measures, to take 

greater account of peritoneal and home 

hemodialysis. Commenter further 

recommended that measure 

development activities should utilize 

data from patients on home dialysis, 

rather than extrapolating data from 

patients on in-center dialysis. 

Commenter stated that this is 

particularly important for measures of 

dialysis adequacy, because patients on 

home hemodialysis receive four to six 

treatments per week, while patients on 

in-center hemodialysis receive three 

treatments per week on average. Other 

commenters recommended that CMS 

increase home hemodialysis patients’ 

representation in current ESRD QIP 

measures, particularly in measures 

directly assessing quality of care and 

patient experience, such as the ICH 

CAHPS survey. These commenters 

stated that home hemodialysis patients 

represent 10 percent of the ESRD 

population and are excluded from most 

measures currently used in the program. 

Response: We appreciate commenters’ 

interest in ensuring that home dialysis 

patients are appropriately included in 

the ESRD QIP. Because home 

hemodialysis patients currently 

comprise a small percentage of the 

ESRD population, we have confronted 

challenges in developing quality 

measures that can meaningfully 

distinguish facility performance in the 

quality of care furnished to these 

patients, and many of our existing 

measures specifically exclude home 

hemodialysis patients from the 

denominator for this reason. However, 

we remain interested in exploring ways 

to capture these patients in the ESRD 

QIP, including developing measures 

that would assess their quality of care. 

Comment: Some commenters 

recommended that CMS reevaluate the 

Dialysis Adequacy measure topic, 

because the measures assess the 

quantity and sufficiency of dialysis, but 

do not account for the patient’s overall 

health. Commenters stated that this 

results in a focus on meeting the 

measure standard, rather than achieving 

the Kt/V level that is best for the 

individual patient. 

Response: The current measure 

specifications are informed by the 

KDOQI clinical practice guidelines and 

the current body of evidence about 

respective clinical thresholds. These 

minimum standards do not specifically 

preclude individualization of care, but 

treatment should not fall below the 

minimum standards supported by 

evidence and guidelines. 

Comment: One commenter was 

concerned that the ESRD QIP 

overemphasizes laboratory-based 

measures and stated that measures that 

assess a patient’s quality of life are more 

meaningful. 

Response: We recognize that the 

majority of the measures that we 

previously adopted for the ESRD QIP 

involve laboratory measurements (for 

example, the Hypercalcemia and 

Dialysis Adequacy clinical measures). 

However, we also note that we are 

finalizing many measures in this final 

rule that are not laboratory-based 

measures, such as the SRR, STrR, and 

ICH CAHPS clinical measures, as well 

as the Screening for Depression and 

Follow-Up and the Pain Assessment and 

Follow-Up reporting measures. These 

non-laboratory based measures are 

intended to address patients’ quality of 

life by assessing patient and family 

engagement in their care, the clinical 

care patients receive, and conditions 

impacting patients’ ability to participate 

in activities of daily living. 

Comment: One commenter 

recommended CMS develop a 

‘‘palliative care exclusion’’ to avoid 

unfairly penalizing facilities for 

tailoring a very ill patient’s care to the 

patient’s informed preferences. Another 

commenter stated that the ESRD QIP 

does not meet the needs of patients 

pursuing palliative care because it does 

not include measures that assess 

improvements in quality of life or 

whether care is consistent with patients’ 

treatment goals. The commenter 

recommended that CMS develop 

measures that prioritize patient comfort 

and align the care furnished with 

patient preferences and goals. 

Commenter also recommended that 

CMS develop measures on reducing the 

social and psychological impact of 

ESRD, advanced care planning, facility 

documentation of surrogate decisionmakers, facility assessment of patients’ 

needs on first visit after hospitalization, 

and medication reconciliation. 

Response: We recognize that some 

patients may seek palliative care, and 

that it is important to take this into 

account when developing robust 

clinical quality measures for patients 

with ESRD. Through our ongoing 

measure maintenance work, we will 

consider this and other potential 

exclusion criteria, and their role in 

measure specifications. We will also 

consider the commenter’s 

recommendations as we establish 

priorities for future measure 

development. 

Comment: One commenter 

recommended that CMS reinstate the 

Hemoglobin Less than 10 g/dL clinical 

measure, because it protects patients 

from anemia under-treatment. 

Commenter stated that since the 

removal of the Hemoglobin Less than 10 

g/dL clinical measure, mean 

hemoglobin levels among dialysis 

patients have declined and transfusions 

have increased, indicating that facilities 

are not adequately addressing anemia in 

this population. Commenter further 

stated that a Hemoglobin Less than 10g/ 

dL measure is consistent with FDA 

labeling of Erythropoiesis stimulating 

agents (ESAs) because ESA treatment 

should be initiated when patients reach 

a hemoglobin level of 10 g/dL. 

Commenter also states that the goal of 

maintaining a hemoglobin level of at 

least 10 g/dL is appropriate because the 

risk of receiving a transfusion increases 

four-fold when hemoglobin levels fall 

below 10 g/dL. 

Response: We appreciate commenter’s 

recommendation to re-adopt the 

Hemoglobin < 10 g/dL clinical measure 

in the ESRD QIP. As discussed in the 

proposed rule, we share commenter’s 

concerns about adequate maintenance of 

patients’ hemoglobin levels. In addition, 

FDA guidance advises that treatment of 

anemia should minimize the occurrence 

of transfusions among ESRD dialysis 

patients, and we believe that the STrR 

is consistent with the guidance, and will 

serve to guard against underutilization 

of ESAs among patients. For this reason, 

we proposed to implement the STrR 

clinical measure in Payment Year 2018. 

Comment: Some commenters stated 

that patient-months indicating a Kt/V 

value greater than 2.5 should not be 

excluded from the Hemodialysis 

measures, because patients on nocturnal 

dialysis may achieve such values, and 

they should be included in the measure. 

Response: As stated in the CY 2013 

ESRD PPS Final Rule, ‘‘We do not 

currently have the ability to identify 


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patients who are receiving thrice weekly 

in-center nocturnal hemodialysis and do 

not have a measure specific to this 

population . . . 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’’ (77 FR 

67488). As part of our measure reevaluation process, we are considering 

alternatives to the 2.5 cut-off for spKt/ 

V values, as well as avenues for 

identifying patients receiving in-center 

nocturnal hemodialysis. We will 

continue to pursue both avenues of 

inquiry in our ongoing effort to provide 

as comprehensive and accurate an 

assessment of dialysis adequacy in the 

QIP as is possible. 

Comment: One commenter 

recommended that CMS use raw data to 

independently calculate Kt/V values for 

the Dialysis Adequacy clinical measure 

topic, because this will improve the 

measures’ accuracy. 

Response: As stated in the CY 2013 

ESRD PPS Final Rule, ‘‘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’’ (77 FR 67489). 

This is still true because the measure 

continues to be based on data reported 

on Medicare claims. We continue to 

believe that Medicare claims are a 

reliable data source for this purpose 

because instructions for submission of 

Kt/V on Medicare Claims are very 

specific in the requirement to report Kt/ 

V calculated from either Daugirdas II or 

urea kinetic modeling, the two most 

reliable methods for determining Kt/V, 

consistent with the most recent NKF 

KDOQI consensus recommendations 

and supported by a recent Technical 

Expert Panel convened in 2013. 

Comment: Commenter recommended 

converting the Hypercalcemia clinical 

measure to a reporting measure, because 

the ESRD PPS will not be including 

oral-only drugs until 2024. Commenter 

stated that this provision of the ESRD 

PPS will delay the economic incentives 

for facilities to underutilize oral-only 

drugs, so the hypercalcemia measure is 

not needed to protect patient safety. 

Response: We believe it is important 

to retain Hypercalcemia as a clinical 

measure in the ESRD QIP because this 

measure is the only clinical outcome 

measure endorsed by NQF for bone 

mineral metabolism, and issues related 

to bone mineral metabolism are 

tremendously important for patients 

with ESRD. The anticipated addition of 

oral medications in the ESRD PPS may 

incentivize the use of less costly 

calcium-based phosphorus binders and 

less use of cinacalcet, which may lead 

to increased hypercalcemia in the ESRD 

dialysis population. We further note 

that the measure’s clinical significance 

has already been accounted for in the 

scoring methodology that was finalized 

for the PY 2016 program and proposed 

for PY 2017–2018, wherein the 

Hypercalcemia measure is given less 

weight than other measures. 

Comment: Some commenters 

recommended that CMS work with the 

kidney community to develop a 

composite phosphorous/calcium/PTH 

measure, because a composite measure 

would be more likely to improve patient 

outcomes than a measure evaluating one 

of the individual components. 

Response: We welcome an 

opportunity for collaboration on this 

and other projects. We note, however, 

that in 2010, a Technical Expert Panel 

discussed the possibility of developing 

measures for phosphorus, and was 

unable to come to a consensus regarding 

a phosphorus measure that assesses 

appropriate levels of phosphorus due to 

a lack of evidence supporting a clinical 

threshold. A reporting measure was 

developed and originally endorsed by 

the NQF in 2007, and forms the basis of 

the Mineral Metabolism reporting 

measure implemented in the ESRD QIP. 

In 2011, NQF reviewed two phosphorus 

measures, establishing one with an 

upper limit (hyperphosphatemia) and 

one with a lower limit 

(hypophosphatemia). NQF did not 

endorse either measure. A recent 2013 

Technical Expert Panel recommended 

the development of a reporting measure 

for PTH, which we have specified, and 

are currently working to test prior to 

submitting it to NQF for endorsement. 

However, the panel concluded that 

there was insufficient evidence to 

develop a clinical measure. We are 

unaware of more recent evidence that 

makes it likely that consensus around 

such a clinical performance measure 

would be reached in new measure 

development efforts at this time, but we 

would be interested in discussing any 

such evidence with stakeholders. 

Comment: One commenter 

recommended aligning the dates used 

for calculating patient censuses under 

the Vascular Access Type measure topic 

and NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure to reduce administrative 

burden. Commenter stated that the 

Vascular Access Type measure topic is 

based on the last treatment of the 

month, while the NHSN census is based 

on the ESRD facility’s first two working 

days of the month. 

Response: We appreciate the 

recommendation. Because these 

measures serve different purposes, and 

because the methods used to calculate 

the measures have shown to be reliable, 

we do not believe there is sufficient 

technical rationale to justify aligning 

these administrative tasks at this time. 

Comment: One commenter 

recommended that CMS consider 

coordinating occupational therapy with 

dialysis treatments. 

Response: We thank the commenter 

for the input. 

Comment: One commenter stated 

their concern that the ESRD QIP does 

not adequately account for the 

challenges faced by acute hospital-based 

programs that occasionally treat chronic 

patients. Commenter recommended that 

CMS reevaluate the exclusion criteria 

for ESRD QIP measures and exclude 

these facilities, because patients are 

already sicker when entering care at 

these facilities and will not remain there 

long enough for the patient’s 

improvement to be attributed to the 

facility. 

Response: We thank commenters for 

the recommendation. Some of our 

proposed measures, such as the SRR 

and STrR, do seek to address patient 

comorbidities through risk-adjustment. 

Other measures, such as the Dialysis 

Adequacy and Vascular Access Type 

measures, identify the types of patients 

who should be excluded as determined 

by available evidence. We welcome 

specific recommendations regarding 

new exclusion criteria for our measures, 

which we can address through our 

ongoing measure re-evaluation process. 

Comment: One commenter 

recommended that when calculating all 

of the ESRD QIP measures, CMS should 

identify an alternative first ESRD service 

date for individuals who resume 

dialysis. 

Response: We thank commenters for 

the recommendation. All measures in 

the ESRD QIP only include patients on 

dialysis, so an alternate first service date 

for those resuming dialysis would only 

potentially affect measures that exclude 

patients for some initial period. The 

original 90-day rule following beginning 

of ESRD was implemented to allow time 

for patients to stabilize and to ensure 

that a patient is a chronic dialysis 

patient (that is, did not receive 

temporary dialysis therapy). Currently, 

we use the Medical Evidence Form 2728 

to capture the date of first dialysis in 

order to help determine patient 

exclusions for the Dialysis Adequacy 

and Hypercalcemia clinical measures. 

For future payment years, we will 

explore the appropriateness of using the 

date of return to regular dialysis for 

those individuals who resume dialysis 

after transplant for the Dialysis 


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Adequacy and hypercalcemia clinical 

measures. 

For the STrR measure, time at risk 

begins at the start of the facility 

treatment period (starting with day 91 

after onset of ESRD after a patient has 

been treated at the facility for 60 days) 

and continues until the earliest 

occurrence of the following: a Medicare 

claim indicating a diagnosis on the 

exclusions list, three days prior to a 

kidney transplant, death, end of facility 

treatment, or December 31 of the year. 

Upon discharge from a facility, the 

patient continues to be attributed to that 

facility for 60 days. Patients who resume 

dialysis after transplant resume time at 

risk once they have been back at a 

dialysis facility for 60 days. Therefore, 

we believe this recommendation may be 

of less concern for the STrR. 

The SRR, the vascular access 

measures, the NHSN Bloodstream 

Infection measure, the ICH CAHPS 

measure, and the reporting measures in 

the ESRD QIP measure set do not have 

exclusion criteria related to the first 

ESRD service date and so are unaffected 

by the first ESRD service date. 

Comment: Some commenters 

requested that CMS reevaluate the 

Hemodialysis Adequacy clinical 

measures’ inclusion of patients who are 

treated at a facility at least twice in a 

month, because facilities experience 

difficulties in obtaining Kt/V 

measurements for patients receiving a 

small number of treatments during the 

time they are at the facility. Specifically, 

commenters recommended that instead 

of excluding patients seen at a facility 

two times or fewer in a month, the 

measure should exclude patients seen 

fewer than seven times. Commenter 

stated that it may not be possible for a 

facility to draw the blood needed to 

determine a Kt/V value if a patient is 

seen fewer than seven times in a month. 

Commenter further stated that 9.99 is 

reported on Medicare claims for patients 

receiving less than six treatments at a 

facility in a month, because patients 

receiving so few treatments may have 

changed modalities, received 

transplantation, or undergone long 

hospitalizations. Commenters also 

stated that it would be inappropriate for 

a facility to change a patient’s 

hemodialysis prescription if the facility 

only treated the patient two times in a 

month. Commenter further stated that it 

is not possible to monitor patient 

conditions, modify treatment protocols, 

and evaluate the impact of such changes 

when patients are treated fewer than 

seven times in a month. Commenter 

recommended not including patientmonths in the denominator if the Kt/V 

value reported on Medicare claims is 

9.99, and that facilities should submit 

four months of claims for a patient 

before the patient is included in the 

measure. 

Response: We disagree with 

commenters’ assertion that that 9.99 is 

reported on claims for patients receiving 

six or fewer treatments per month. We 

note that this is inconsistent with the 

instructions in the Claims Processing 

Manual, which does not direct 

providers to use 9.99 for claims with 

fewer than seven treatments in the 

billing period, but instead provides the 

following guidance: 

‘‘Value Code D5—Result of last Kt/V 

reading. For in-center hemodialysis patients 

this is the last reading taken during the 

billing period. For peritoneal dialysis 

patients and home hemodialysis this may be 

before the current billing period but should 

be within 4 months of the claim date of 

service. 

Hemodialysis: For in-center and homehemodialysis patients prescribed for three or 

fewer treatments per week, the last Kt/V 

obtained during the month must be reported. 

Facilities must report single pool Kt/V using 

the preferred National Quality Forum (NQF) 

endorsed methods for deriving the single 

pool Kt/V value: Daugirdas II or Urea Kinetic 

Modeling (UKM). The reported Kt/V should 

not include residual renal function. 

A value of 8.88 shall be entered on the 

claim if the situation exists that a patient is 

prescribed and receiving greater than three 

hemodialysis treatments per week for a 

medically justified and documented clinical 

need. The 8.88 value is not to be used for 

patients who are receiving ‘‘extra’’ treatments 

for a temporary clinical need (for example, 

fluid overload). A medical justification must 

be submitted for patients receiving greater 

than 13 treatments per month. 

This code (D5) is effective and required on 

all ESRD claims with dates of service on or 

after July 1, 2010. In the event that no Kt/V 

reading was performed providers must report 

the D5 with a value of 9.99.’’ 

Despite the fact that Medicare claims 

do not require facilities to report a Kt/ 

V value of 9.99 on claims with fewer 

than seven times, we agree with 

commenters who stated that it is 

difficult to alter patients’ Kt/V values if 

they are seen infrequently during a 

month. We also agree with commenters 

who stated that it is inappropriate for a 

facility to change a patient’s 

hemodialysis prescription if the patient 

is typically treated at a different facility. 

For these reasons, beginning with the 

PY 2017 program, we will change the 

exclusion criteria of the Adult and 

Pediatric Hemodialysis Adequacy 

measures, such that patients treated at a 

facility fewer than seven times in a 

month are excluded from the measures 

for the month. This revision will appear 

in the finalized measure specifications 

for the PY 2017 and PY 2018 programs, 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We also disagree that requiring that a 

patient be treated at a facility for four 

months before the patient is included in 

the measure is appropriate. As noted 

above, we are now requiring that a 

patient receive at least seven treatments 

at a facility during a month before being 

included in the Hemodialysis Adequacy 

measures for that month. We believe 

this modification sufficiently addresses 

commenters’ concerns about facilities 

ability to impact patients’ Kt/V levels 

when they only treat the patient a 

limited number of times. 

C. Web Sites for Measure Specifications 

In an effort to ensure that facilities 

and the general public are able to 

continue accessing the specifications for 

the measures that were proposed for and 

have been adopted in the ESRD QIP, we 

are now posting these measure 

specifications on a CMS Web site, 

instead of posting them on 

www.dialysisreports.org as we have in 

the past. Measure specifications from 

previous years, as well as those for the 

PY 2017 and PY 2018 programs, can be 

found at: http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We did not receive any comments on 

this change. 

D. Updating the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

Clinical Measure for the PY 2016 ESRD 

QIP and Future Payment Years 

The NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure (that is, NHSN Bloodstream 

Infection clinical measure) that we 

adopted beginning with the PY 2016 

ESRD QIP is based on NQF #1460. At 

the time we adopted it, the measure 

included a risk adjustment for patients’ 

vascular access type but did not include 

any reliability adjustments to account 

for differences in the amount of 

exposure or opportunity for healthcare 

associated infections (HAIs) among 

patients. On April 4, 2014, in response 

to a measure update proposal submitted 

by CDC, NQF endorsed a reliability 

adjustment for volume of exposure and 

unmeasured variation across facilities to 

NQF #1460. This reliability adjustment 

is called the Reliability-Adjusted 

Standardized Infection Ratio or 

Adjusted Ranking Metric (ARM). As a 

result of this change to the NQFendorsed measure specifications, a 

facility’s performance on NQF #1460 

can be adjusted towards the mean (that 


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is, facilities with low exposure volume 

can be adjusted more than facilities with 

high exposure volume, and the 

performance rate can be adjusted up or 

down depending on the facility estimate 

and mean) to account for the differences 

in the reliability of the infection 

estimates based on the number of 

patient-months at a facility and any 

unmeasured variation across facilities. 

Because the adjustment can be based on 

the volume of exposure, facility scores 

can be adjusted more if there are fewer 

patient-months in the denominator, and 

facility scores can be adjusted less if 

there are many patient-months in the 

denominator. 

We proposed to adopt the same 

reliability adjustment for purposes of 

calculating facility performance on the 

NHSN Bloodstream Infection clinical 

measure, beginning with the PY 2016 

ESRD QIP. We believe that the inclusion 

of this reliability adjustment, in 

addition to the risk factor adjustment, 

will enable us to better differentiate 

among facility performance on this 

measure, because it accounts not only 

for the variation in patient risk by 

vascular access type, but also for 

variation in the number of patients a 

facility treats in a given month. The 

ARM will be incorporated into the 

existing risk-adjustment methodology, 

which will also continue to include a 

risk adjustment for patient vascular 

access type. Further information about 

the reliability adjustment, and the 

NHSN Bloodstream Infection measure 

specifications can be found at http://

www.cdc.gov/nhsn/PDFs/dialysis/

NHSN–ARM.pdf, http://www.cdc.gov/

nhsn/dialysis/dialysis-event.html, and 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below: 

Comment: One commenter supported 

the proposal to calculate the NHSN 

Bloodstream Infection measure with the 

Adjusted Ranking Metric because this 

adjustment ‘‘will provide a more 

reliable SIR, and better reflect the 

differences in opportunity for HAI 

prevention in ESRD facilities.’’ The 

commenter also recommended 

monitoring and ongoing assessment of 

this ranking. 

Response: We thank the commenter 

for their support. 

Comment: Some commenters did not 

support using the Adjusted Ranking 

Metric to calculate performance rates for 

the NHSN Bloodstream Infection 

measure because the public has not 

been provided with sufficient details 

about the adjustment’s methodology to 

offer informed comments on the 

proposal, so the proposal does not meet 

the requirements of the Administrative 

Procedures Act. The commenter also 

stated that although NQF #1460 (the 

measure upon which the NHSN 

Bloodstream Infection measure is based) 

remains endorsed, even with the revised 

specifications to include the ARM 

adjustment, an NQF Steering Committee 

still has yet to review the revised 

specifications, and this has limited 

public scrutiny. Another commenter did 

not support the use of the Adjusted 

Ranking Metric in the NHSN 

Bloodstream Infection measure, because 

the adjustment imposes a rank order on 

facilities that is not appropriate for 

quality improvement and is not 

mandated by the Act. 

Response: We have reviewed the 

information we made publicly available 

regarding the ARM methodology for the 

CY 2015 ESRD PPS comment period, 

and we agree with commenters that 

greater detail would have allowed 

commenters to more meaningfully 

analyze and comment on the proposed 

revision to the NHSN Bloodstream 

Infection clinical measure. Therefore, 

we are not finalizing the proposal to 

adopt the ARM reliability adjustment 

for purposes of calculating facility 

performance on the NHSN Bloodstream 

Infection clinical measure. Instead, 

facility performance on this measure 

will be calculated as finalized in the CY 

2014 ESRD PPS final rule, using the 

Standardized Infection Ratio (78 FR 

72204 through 72207). 

Comment: One commenter did not 

support the adoption of the NHSN 

Bloodstream Infection clinical measure 

in the ESRD QIP because apparent 

differences in performance are actually 

an artifact of reporting practices. 

Accordingly, facilities that diligently 

monitor and report infections receive 

lower scores than those that do not, and 

this creates a perverse incentive for 

facilities to not report dialysis events to 

NHSN. As an alternative to including 

the NHSN Bloodstream Infection 

measure as a clinical measure, another 

commenter recommended including it 

as a reporting measure. 

Response: We understand 

commenter’s concern regarding 

differences in performance as an artifact 

of reporting practices, and agree that 

reporting rates in the NHSN 

Bloodstream Infection measure are 

subject to detection bias. This is one of 

the concerns that prompted us to 

propose the NHSN data validation study 

for the NHSN Bloodstream Infection 

clinical measure in CY 2015. In 

addition, CDC is working to assist 

facilities and groups to evaluate the 

quality of their submitted data, and we 

recognize that support for a more 

systematic means of assessing and 

ensuring data quality and completeness 

is needed. Because including a clinical 

measure on bloodstream infections will 

provide stronger incentives for facilities 

to monitor and reduce these infections, 

as compared to a reporting measure on 

the same topic, we continue to believe 

that it is essential to maintain the 

measure as a clinical measure. 

Comment: Some commenters did not 

support the continuation of the NHSN 

Bloodstream Infection measure in the 

ESRD QIP, because sufficient 

information about how the measure is 

adjusted for access type is not available 

to the public. 

Response: The specifications for the 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients measure 

(NQF #1460) include the methodology 

used to stratify the NHSN Bloodstream 

Infection measure by vascular access 

type. These specifications include the 

following information about how the 

measure is adjusted for access type: 

‘‘Both the numerator and denominator 

are stratified by vascular access type 

since vascular access type is the single 

greatest risk factor for bloodstream 

infection in this population. The 

vascular access variables that are 

collected and included in this analysis 

are: Arteriovenous (AV) fistula, AV 

graft, other access device, tunneled 

central line, and nontunneled central 

line. If more than one access type is 

present in a patient, the bloodstream 

infection event is attributed to the 

access type with the greatest risk (that 

is, AV fistula < AV graft < other access 

device < tunneled central line < 

nontunneled central line). During 

denominator collection, the user is 

asked to count each patient as having 

only 1 vascular access type, following 

the algorithm described. During 

numerator collection, all vascular access 

types present at the time of the 

bloodstream infection event are reported 

and the algorithm is applied during 

analysis of the data. 

This information appears on the 

specifications, which were posted at 

http://www.cdc.gov/nhsn/nqf/ on 

August 12, 2014, have been available 

through the NQF Web site since the 

measure was endorsed in August 2011. 

Comment: One commenter 

recommended that CMS and CDC 

consider adjusting the patient counting 

methodology for the NHSN Bloodstream 

Infection clinical measure such that all 

patients treated in the facility in a 

month are included in the patient count 

for that month, rather than the current 


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method, which includes only counts of 

patients that are in the unit on the first 

two treatment days of the month. 

Response: CDC has conducted pilot 

validation work with a group of dialysis 

facilities and found that the census on 

the first two working days of the month 

was a satisfactory predictor of the entire 

month’s patient treatment count. The 

alternative of counting denominator 

data on a daily basis has been required 

in inpatient settings, but was 

determined by CDC to be unacceptably 

burdensome for dialysis facilities 

conducting manual data collection. 

Comment: Some commenters did not 

support the NSHN Bloodstream 

Infection measure as a clinical measure 

in PY 2016, because performance 

standards were not identified prior to 

the measure’s expansion to a clinical 

measure. 

Response: We appreciate the 

commenters’ concerns about 

establishing values for the NHSN 

Bloodstream Infection clinical measure 

performance standards before the 

beginning of the PY 2016 performance 

period. However, we stated in the CY 

2014 ESRD PPS Final Rule that we 

wanted to begin assessing facilities on 

the number of these events as soon as 

possible, rather than merely assessing 

whether facilities report these events, 

because of the abnormally large impact 

HAIs have upon patients and the 

healthcare industry. We believe these 

safety concerns justified the adoption of 

the NHSN Bloodstream Infection 

clinical measure before collecting all of 

the baseline data needed to apply the 

traditional achievement and 

improvement scoring methodologies. 

We also note that, in recognition of the 

fact that we would not initially be able 

to award improvement points to 

facilities, we set the minimum TPS low 

enough that a facility can meet it even 

if it receives zero achievement points on 

the NHSN Bloodstream Infection 

clinical measure, as long as it meets or 

exceeds the performance standard for 

each of the other finalized clinical 

measures. 

Comment: One commenter did not 

support the continuation of the NHSN 

Bloodstream Infection measure in the 

ESRD QIP, because determining 

whether a positive blood culture is a 

true bloodstream infection is a 

subjective exercise. 

Response: As stated in the CY 2015 

ESRD PPS final rule, ‘‘The NHSN 

Bloodstream Infection clinical measure 

is an objective measure based solely on 

the presence of a positive blood culture. 

Although NHSN collects information on 

access-relatedness to provide additional 

information that is of use for prevention 

purposes, the NHSN Bloodstream 

Infection clinical measure does not rely 

upon assessments of whether the 

bloodstream infection was accessrelated’’ (78 FR 72207). 

Comment: One commenter 

recommended modifying the NHSN 

Bloodstream Infection measure to focus 

on event-specific indicators, beginning 

with access-related bloodstream 

infections. Commenter stated that 

focusing on specific indicators would 

help facilities develop prevention plans 

and would be a more appropriate 

benchmark for assessing dialysis-related 

infections. 

Response: We thank the commenter 

for their recommendation. As discussed 

in the CY 2014 ESRD PPS Final Rule (78 

FR 72205), NQF endorsed a bloodstream 

infection measure (that is, NQF #1460, 

the measure upon which the NHSN 

Bloodstream Infection clinical measure 

is based) because positive blood 

cultures (the reported event under the 

bloodstream infection measure) can be 

objectively identified. Although the 

measure focuses on the presence of a 

positive blood culture, event-specific 

indicators (that is, counts and rates of 

access related bloodstream infections) 

are available in NHSN. Both CDC and 

CMS encourage facilities to review and 

utilize this data, together with overall 

bloodstream infection rates, for 

prevention purposes. As we continue to 

further develop and refine the measure, 

we may consider a greater focus on 

event-specific indicators (for example, 

access-relatedness) in the future. 

Comment: Commenter recommended 

that CMS should require facilities to 

implement CDC’s core interventions for 

dialysis bloodstream infection 

prevention, particularly interventions 7 

and 8, which the commenter stated 

should be made into a clinical measure. 

Response: We thank the commenter 

for their recommendation. As stated in 

the CY 2014 ESRD PPS final rule, ‘‘We 

continue to encourage facilities to adopt 

all of CDC’s core prevention 

interventions. However, they are not 

required under the ESRD QIP because 

we do not believe it is feasible at this 

time to design a performance measure 

that would accurately evaluate facility 

compliance’’ (78 FR 72206). 

For these reasons, we are not 

finalizing the proposal to adopt the 

ARM reliability adjustment for purposes 

of calculating facility performance on 

the NHSN Bloodstream Infection 

clinical measure. Instead, facility 

performance on this measure will be 

calculated as finalized in the CY 2014 

ESRD PPS final rule, using the 

Standardized Infection Ratio (78 FR 

72204–72207). The technical 

specifications for this finalized measure 

can be found at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

E. Oral-Only Drug Measures in the ESRD 

QIP 

Section 217(d) of the Protecting 

Access to Medicare Act of 2014 (Pub. L. 

113–93), enacted on April 1, 2014, 

amends section 1881(h)(2) of the Act to 

require the Secretary, for PY 2016 and 

subsequent years, to adopt measures 

(outcome-based, to the extent feasible) 

in the ESRD QIP that are specific to the 

conditions treated with oral-only drugs. 

We believe that the Hypercalcemia 

clinical measure adopted beginning 

with the PY 2016 program (78 FR 72200 

through 72203) meets this new statutory 

requirement because hypercalcemia is a 

condition that is treated with oral-only 

drugs. The Hypercalcemia clinical 

measure is not an outcome-based 

measure, and we have considered the 

possibility of adopting outcomes-based 

measures that pertain to conditions 

treated with oral-only drugs. However, 

we have determined that it is not 

feasible to propose to adopt an outcomebased measure on this topic at this time 

because we are not aware of any 

outcome measures developed on this 

topic. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

CMS’s interpretation of the 

requirements of the Protecting Access to 

Medicare Act of 2014 (PAMA) to delay 

the adoption of measures (preferably 

outcomes-based) related to conditions 

treated by oral-only drugs. 

Response: We appreciate the 

commenter’s support, but clarify that 

PAMA requires that for 2016 and 

subsequent years, the measures 

included in the ESRD QIP include 

measures that are specific to the 

conditions treated with oral-only drugs, 

and that such measures, to the extent 

feasible, be outcome-based. 

Comment: Some commenters stated 

that the Hypercalcemia measure does 

not meet the Protecting Access to 

Medicare Act of 2014 (PAMA) 

requirement for the ESRD QIP to 

include a measure ‘‘specific to 

conditions treated with oral-only 

drugs.’’ One commenter stated that it is 

not an effective measure for oral-only 

drugs because it is strongly influenced 

by parenteral vitamin D. Another 

commenter stated that current oral-only 

drugs are intended reduce elevated 

levels of parathyroid hormone and 

phosphorus, and that the Hypercalcemia 


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measure is not related to either 

condition. Commenters recommended 

that CMS adopt measures related to 

these conditions for adoption in the PY 

2018 program, not the PY 2016 program, 

in accordance with the requirements of 

PAMA. 

Response: While we do not agree with 

these comments, we recognize that we 

could, consistent with PAMA, adopt 

measures as late as for PY 2018 that are 

specific to the conditions treated with 

oral-only drugs. We will take these 

comments into account as we evaluate 

what measures, including the 

Hypercalcemia clinical measure, might 

satisfy this new statutory requirement in 

the future. 

F. Requirements for the PY 2017 ESRD 

QIP 

1. Revision to the Expanded ICH CAHPS 

Reporting Measure 

For the ICH CAHPS reporting 

measure, we proposed one change to the 

reporting requirements finalized in the 

CY 2014 ESRD PPS Final Rule for PY 

2017. In the CY 2014 ESRD PPS final 

rule, we finalized that facilities would 

be eligible to receive a score on the 

measure if they treated 30 or more 

survey-eligible patients during the 

performance period (78 FR 72220 

through 72221). Subsequently, we were 

made aware that facilities may not know 

whether they will have enough surveyeligible patients during the performance 

period to be eligible for the ICH CAHPS 

measure when they are making 

decisions about whether or not they will 

contract with a vendor to administer the 

survey. We agree that it would be 

preferable if facilities knew at the 

beginning of the performance period if 

they will be eligible to receive a score 

on the ICH CAHPS measure, because 

this would allow facilities to make 

informed decisions about whether they 

should contract with a vendor to 

administer the survey. For this reason, 

we proposed that beginning with the PY 

2017 program, facilities will be eligible 

to receive a score on the ICH CAHPS 

measure if they treat 30 or more surveyeligible patients during the ‘‘eligibility 

period,’’ which we define as the CY 

before the performance period. 

However, even if a facility is eligible to 

receive a score on the measure because 

it has treated at least 30 survey-eligible 

patients according to the ICH CAHPS 

Survey measure specifications during 

the calendar year prior to the 

performance period, we proposed that 

the facility will still not receive a score 

for performance during the performance 

period if it cannot collect 30 survey 

completes during the performance 

period. We believe that facilities should 

be able to determine quickly the number 

of survey-eligible patients that they 

treated during the eligibility period, and 

that reaching this determination should 

not impact facilities’ ability to contract 

with a vender in time to meet the 

semiannual survey administration 

requirements. Technical specifications 

for the ICH CAHPS reporting measure 

can be found at: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Many commenters did not 

support the requirement to conduct the 

ICH CAHPS survey on a semiannual 

basis, because it is an unfunded 

mandate and does not provide facilities 

with sufficient time to make changes to 

the facility environment based on 

survey responses. Commenters also 

requested further evidence that a 

semiannual survey administration 

improves patient outcomes. For these 

reasons, some commenters requested 

that CMS reduce the ICH CAHPS survey 

to one administration per year, until it 

can be determined that survey fatigue 

does not result in lower ICH CAHPS 

scores. Other commenters 

recommended allowing facilities to 

coordinate with the Networks, such that 

the facilities field the survey once 

during the performance period, and the 

Networks field the survey a second 

time. 

Response: Several options were 

considered for the frequency of 

administering the survey. A Technical 

Expert Panel that we convened 

suggested that quarterly administration 

was too frequent due to the low 

turnover in facilities. Annual collections 

might result in outdated information for 

public reporting and quality monitoring 

purposes as well as a decrease in 

respondent recall. By surveying twice a 

year, we capture a diverse range of 

patients within their care cycle, some 

fairly new patients along with others 

with more longevity on dialysis. With 

semiannual administration, facilities 

will learn first-hand about issues 

concerning the care offered and where 

there may be gaps in providing care to 

this vulnerable population. 

Semiannual administration of the 

survey improves reliability of results 

that will be useful for quality 

improvement interventions. These more 

reliable results will lead to quality 

improvement and improve the patient 

experience. 

Comment: Some commenters did not 

support the adoption of the ICH CAHPS 

measure in the ESRD QIP because the 

survey instrument consists of 58 core 

questions, and this is burdensome for 

patients, particularly if facilities are 

required to have the survey 

administered on a semiannual basis. In 

order to reduce the burden on patients, 

these commenters recommended 

allowing venders to administer only one 

of the survey’s three domains to each 

patient in the sample. 

Response: While we understand that 

the ICH CAHPS survey may be time 

consuming for some patients, we believe 

its value as a tool for assessing the 

patient’s experience of care outweighs 

this concern. In-center hemodialysis 

patients spend up to 12 hours a week in 

treatment, and are therefore the best 

source of information about the quality 

of care provided in the facility. 

Furthermore, the protocol for the ICH 

CAHPS survey allows patients to 

receive assistance on the survey from 

family members or a caregiver not 

associated with the dialysis facility. In 

addition, we note that a patient need 

only answer 29 of the 58 core questions 

for the survey to be considered 

complete. Looking at results from the 

recent CMS Mode Experiment, less than 

1 percent of the sampled patients 

submitted incomplete surveys. 

Anecdotally, we found that patients 

were eager to complete the survey, as 

evidenced by calls to the ICH CAHPS 

hotline upon receipt of the prenotification letter regarding the survey 

administration. 

Comment: Some commenters stated 

that the ICH CAHPS measure should not 

include homeless people, because 

vendors have trouble administering the 

survey to this population, and facilities 

are penalized for incomplete surveys. 

Response: We are aware that it might 

be difficult to contact homeless persons 

to perform the ICH CAHPS survey; 

however, we are interested in ensuring 

that all patients, regardless of housing 

status, receive high quality care from the 

multidisciplinary team at their facility. 

We are particularly concerned about the 

needs of homeless patients because they 

may have different concerns than other 

patients that need to be addressed by 

the facility. We further note that under 

the ICH CAHPS survey administration 

and ESRD QIP scoring methodology, 

facilities are not penalized if they are 

either (1) unable to contact a patient for 

the survey administration, or (2) receive 

incomplete survey responses, provided 

that the survey vendor followed the 

administration protocol. 

Comment: Some commenters stated 

that facilities should not be held 

accountable for low response rates when 

they do not have an opportunity to 


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review patient contact information used 

by survey vendors. One commenter also 

recommended increasing the minimum 

number of qualifying patients because 

small and rural facilities often have high 

non-response rates. 

Response: As noted above, facilities 

with high non-response rates, regardless 

of their location or population size, are 

not penalized on the basis of their 

survey response rate. Instead, scores on 

the ICH CAHPS reporting measure are 

based on whether the facility 

administers the survey on a twice-yearly 

basis using a third-party, CMS-approved 

vendor and submits these survey results 

to CMS via that third-party vendor. We 

therefore disagree that high nonresponse rates for small and rural 

facilities justify increasing the minimum 

number of qualifying patients for this 

measure, and we note that doing so 

would effectively discount (for the 

purposes of the ESRD QIP) the 

experiences of a substantial number of 

patients. In addition, the ICH CAHPS 

survey administration specifications 

include methods of confirming that 

patient contact information is as up-todate as possible. ICH CAHPS survey 

vendors are required to verify the 

contact information provided by the ICH 

CAHPS Coordination Team from 

CROWNWeb by using a commercial 

address update service. Survey vendors 

are permitted to ask facilities to provide 

updated addresses and telephone 

numbers for all patients they served 

during the sampling window. To 

maintain and protect the identity of the 

patients sampled, survey vendors 

cannot give the list of sample patients 

to the facility when they request 

updated patient addresses and contact 

information. 

Comment: Some commenters stated 

that versions of the survey used for 

patients who do not speak English as 

their first language are mistranslated, 

particularly the Chinese version. 

Response: We appreciate commenter’s 

input regarding the translated versions 

of the ICH CAHPS survey. Recent 

corrections to the Chinese language 

versions of the ICH CAHPS survey have 

been made to reflect changes to the 

English version of the instrument. Our 

language specialists assure us that we 

are using translations which the 

majority of people speaking a given 

language will understand, but we are 

open to concerns and feedback about 

the translated versions of the ICH 

CAHPS survey. Please send any 

questions or comments to 

ichcahps@rti.org. 

Comment: One commenter stated that 

the ICH CAHPS survey should be 

expanded to include all patients with 

ESRD, such as those who dialyze at 

home, instead of being restricted to incenter hemodialysis patients. 

Response: We appreciate the 

commenter’s recommendation that we 

develop additional questions or surveys 

intended to capture a larger proportion 

of the ESRD population. While the 

current survey is specific to in-center 

hemodialysis patients, we will look into 

opportunities to capture other patients, 

such as home hemodialysis and 

peritoneal dialysis patients, in the 

future. 

Comment: One commenter sought 

clarification as to how many times a 

patient must be treated at a facility 

before he or she becomes eligible for the 

ICH CAHPS measure. 

Response: Patient eligibility for the 

ICH CAHPS measure is not determined 

on the basis of a set number of 

treatments, but rather on the amount of 

time a patient is treated at a facility. 

Nevertheless, assuming that a typical 

hemodialysis patient receives three 

treatments per week, and given that a 

patient must be seen at a facility for 

three months to be eligible for the ICH 

CAHPS survey, an average surveyeligible patient will receive 36 

treatments before becoming eligible for 

the measure. 

Comment: One commenter was 

concerned that the ICH CAHPS survey 

is of limited use in the ESRD 

population, because its administration 

excludes patients who die or are too 

sick to complete the survey, and the 

survey does not ask patients about 

advance care planning. Commenter 

recommended CMS continue to work on 

the ICH CAHPS survey so that it 

provides more actionable information 

about whether the care patients receive 

is consistent with patients’ goals. 

Response: We understand 

commenter’s concerns about the ICH 

CAHPS survey excluding patients who 

are deceased or physically or mentally 

incapable of completing the survey. We 

believe that in a patient experience of 

care survey, patients are most qualified 

to evaluate their experience. While we 

agree that those who are capable of 

completing the survey but require 

assistance to do so should receive the 

necessary assistance, we do not believe 

that a survey administered to a family 

member or proxy on behalf of a patient 

is a satisfactory substitute for patient 

input. Therefore, we do not believe it is 

appropriate to include patients who are 

deceased or are mentally or physically 

incapable of completing the survey in 

the ICH CAHPS survey at this time. We 

appreciate commenter’s 

recommendation to modify or include 

new elements in the survey aimed at 

providing actionable information about 

whether a patient’s care is consistent 

with the patient’s goals for care, and 

will take this into consideration in the 

future. 

For these reasons, we are finalizing 

the expanded ICH CAHPS reporting 

measure as proposed for the PY 2017 

ESRD QIP and for future payment years. 

The technical specifications for this 

finalized measure can be found at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical

Specifications.html. 

2. Measures for the PY 2017 ESRD QIP 

a. PY 2016 Measures Continuing in PY 

2017 and Future Payment Years 

We previously finalized 11 measures 

in the CY 2014 ESRD PPS Final Rule for 

the PY 2016 ESRD QIP, and these 

measures are summarized in Table 19 

below. In accordance with our policy to 

continue using measures unless we 

propose to remove or replace them (77 

FR 67477), we will continue to use 10 

of these 11 measures in the PY 2017 

ESRD QIP. As we discuss in more detail 

below, we proposed to remove one 

measure, Hemoglobin Greater than 12 g/ 

dL, beginning with the PY 2017 measure 

set (see Table 20 below). 

TABLE 19—PY 2016 ESRD QIP MEASURES BEING CONTINUED IN PY 2017 

NQF # Measure title and description 

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

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

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

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

month study period. 

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

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


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TABLE 19—PY 2016 ESRD QIP MEASURES BEING CONTINUED IN PY 2017—Continued 

NQF # Measure title and description 

0257 ..................... Vascular Access Type: AV Fistula. 

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

fistula with two needles. 

0256 ..................... Vascular Access Type: Catheter ≥ 90 days. 

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

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

N/A1 ...................... National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Patients. 

Number of hemodialysis outpatients with positive blood cultures per 100 hemodialysis patient-months. 

1454 ..................... Hypercalcemia. 

Proportion of patient-months with 3-month rolling average of total uncorrected serum calcium greater than 10.2 mg/dL. 

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

Facility administers, using a third-party CMS-approved vendor, the ICH CAHPS survey in accordance with survey specifications and submits survey results to CMS. 

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

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

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

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

1We note that this measure is based on a current NQF-endorsed bloodstream infection measure (NQF #1460). 

2We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258). We are proposing to adopt NQF #0258 

in the PY 2018 program. 3We note that this measure is based upon a current NQF-endorsed serum phosphorus measure (NQF #0255). 

TABLE 20—MEASURE PROPOSED FOR REMOVAL BEGINNING WITH THE PY 2017 ESRD QIP 

NQF # Measure title 

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

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

b. Policy for Determining When a 

Measure Is ‘‘Topped-Out’’ in the ESRD 

QIP, and the Removal of a Topped-Out 

Measure From the ESRD QIP, Beginning 

With PY 2017 

In the CY 2013 ESRD PPS final rule 

(77 FR 67475), we finalized a list of 

seven criteria we would consider when 

making determinations about whether to 

remove or replace a measure: 

‘‘(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.’’ 

In the CY 2014 ESRD PPS final rule 

(78 FR 72192), we stated that we were 

in the process of evaluating all of the 

ESRD QIP measures against the criteria. 

Subsequent to the publication of the CY 

2014 ESRD PPS final rule, we 

completed our evaluation and 

determined that none of the measures 

finalized in the PY 2016 ESRD QIP met 

criteria 2 through 7, as listed above. 

With respect to the first criterion, we 

proposed to more specifically define 

when performance on a clinical measure 

is so high and unvarying that the 

measure no longer reflects meaningful 

distinctions in improvements or 

performance. The statistical definitions 

that we proposed to adopt will align our 

methodology with that used by the 

Hospital VBP program to determine 

when a measure is topped out (76 FR 

26496 through 26497). Under this 

methodology, a clinical measure is 

considered to be topped out if national 

measure data show (1) statistically 

indistinguishable performance levels at 

the 75th and 90th percentiles; and (2) a 

truncated coefficient of variation (CV) of 

less than or equal to 0.1. 

To determine whether a clinical 

measure is topped out, we initially 

focused on the top distribution of 

facility performance on each measure 

and noted if their 75th and 90th 

percentiles were statistically 

indistinguishable. Then, to ensure that 

we properly accounted for the entire 

distribution of scores, we analyzed the 

truncated coefficient of variation (CV) 

for each of the clinical measures. 

The CV is a common statistic that 

expresses the standard deviation as a 

percentage of the sample mean in a way 

that is independent of the units of 

observation. Applied to this analysis, a 

large CV would indicate a broad 

distribution of individual facility scores, 

with large and presumably meaningful 

differences between hospitals in relative 

performance. A small CV would 

indicate that the distribution of 

individual facility scores is clustered 

tightly around the mean value, 

suggesting that it is not useful to draw 

distinctions between individual facility 

performance scores. We used a modified 

version of the CV, namely a truncated 

CV, for each clinical measure, in which 

the 5 percent of facilities with the 

lowest scores, and the 5 percent of 

facilities with the highest scores were 

first truncated (set aside) before 

calculating the CV. This was done to 

avoid undue effects of the highest and 

lowest outlier facilities; if included, 

they would tend to greatly widen the 

dispersion of the distribution and make 

the clinical measure appear to be more 

reliable or discerning. For example, a 

clinical measure for which most facility 

scores are tightly clustered around the 

mean value (a small CV) might actually 

reflect a more robust dispersion if there 

were also a number of facilities with 

extreme outlier values, which would 

greatly increase the perceived variance 

in the measure. Accordingly, the 


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truncated CV of less than or equal to 

0.10 was added as a criterion for 

determining whether a clinical measure 

is topped out. 

We evaluated each of the clinical 

measures finalized in the PY 2016 ESRD 

QIP against these proposed statistical 

conditions. The full analysis is available 

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

Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. The 

results of that analysis appear below in 

Table 21. 

TABLE 21—PY 2016 CLINICAL MEASURES USING CROWNWEB AND MEDICARE CLAIMS DATA FROM JANUARY 2013– 

DECEMBER 2013 

Measure N 75th 

percentile 

90th 

percentile Std. error Statistically indistinguishable 

Truncated 

CV TCV <0.10 

Adult HD Kt/V .............................. 5665 96.1 97.4 0.13 No ........................ 0.04 Yes. 

Adult PD Kt/V ............................... 1176 92.9 94.8 0.55 No ........................ 0.15 No. 

Pediatric HD Kt/V ......................... 10 94.5 97.1 2.71 Yes ....................... 0.08 Yes. 

Hgb >12 ....................................... 5521 0.0 0.0 0.02 Yes ....................... <0.01 Yes. 

Fistula Use ................................... 5561 72.3 77.0 0.16 No ........................ 0.14 No. 

Catheter Use ................................ 5586 5.9 2.8 0.10 No ........................ ≤0.01 Yes. 

Hypercalcemia ............................. 5685 0.3 0.0 0.04 No ........................ ≤0.01 Yes. 

As the information presented in Table 

21 suggests, the Hemoglobin Greater 

than 12 g/dL measure meets the 

proposed criteria for determining when 

a clinical measure is topped-out in the 

ESRD QIP. Accordingly, we proposed to 

remove the Hemoglobin Greater than 

12 g/dL measure from the ESRD QIP, 

beginning with the PY 2017 program. 

We recognize that the Pediatric 

Hemodialysis Adequacy measure also 

meets the conditions for being a toppedout clinical measure in the ESRD QIP. 

However, we did not propose to remove 

the Pediatric Hemodialysis Adequacy 

measure from the ESRD QIP because we 

determined that removing the measure 

will not be useful for dialysis facilities. 

There are currently very few measures 

available that focus on the care 

furnished to pediatric patients with 

ESRD, and we are reticent to remove a 

measure that addresses the unique 

needs of this population. In addition, 

although only 10 facilities were eligible 

to receive a score on the Pediatric 

Hemodialysis Adequacy measure (based 

on CY 2013 data), we believe that the 

publicly reported performance of these 

facilities can influence the standard of 

care furnished by other facilities that 

treat pediatric patients, even if a facility 

does not treat a sufficient number of 

pediatric patients to be eligible to be 

scored on the measure. 

For these reasons, we believe that the 

drawbacks of removing a topped out 

clinical measure could be outweighed 

by the other benefits to retaining the 

measure. Accordingly, we proposed that 

even if we determine that a clinical 

measure is topped out according to the 

statistical criteria we apply, we would 

not remove or replace it if we determine 

that its continued inclusion in the ESRD 

QIP measure set will continue to set a 

high standard of care for dialysis 

facilities. 

We sought comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

removal of the Hemoglobin Greater than 

12 g/dL clinical measure, because there 

is little variation in facilities’ 

performance. The commenter 

additionally supported this proposal 

‘‘because under the PPS, facilities no 

longer have an incentive to overuse 

erythropoietin stimulating agents.’’ 

Several commenters recommended 

continuing to publicly report facility 

scores to ensure that patients’ 

hemoglobin levels are properly 

monitored. 

Response: We thank the commenters 

for the support. We further note that the 

Dialysis Facility Compare program will 

continue to publically report facility 

scores on the Hemoglobin Greater than 

12 g/dL measure, and that this will help 

ensure that patients’ hemoglobin levels 

are properly monitored. 

Comment: Some commenters did not 

support the proposal to remove the 

Hemoglobin >12 g/dL clinical measure 

from the ESRD QIP, because the 

measure is clinically important, and 

removing this measure could lead to a 

lapse in anemia monitoring in this 

patient population. One commenter 

recommended that CMS keep the 

Hemoglobin >12 g/dL clinical measure, 

but reduce its weight for QIP scoring 

purposes in order to maintain facilities’ 

focus on anemia management while 

decreasing this measure’s impact on 

facility scores. 

Response: We agree that maintaining 

patients’ hemoglobin levels below 12 g/ 

dL is clinically important. For this 

reason, the Dialysis Facility Compare 

program will continue to publically 

report facility scores on the Hemoglobin 

Greater than 12 g/dL measure, and we 

believe that this will help ensure that 

patients’ hemoglobin levels are properly 

monitored. Nevertheless, based on the 

statistical criteria for determining when 

a measure is topped out in the ESRD 

QIP, we have determined that 

performance on this measure is so high 

and unvarying that meaning distinctions 

in facility performance cannot be made. 

Accordingly, we do not believe it is 

appropriate to use the measure in a 

value-based purchasing program, such 

as the ESRD QIP, because the measure 

is not an effective tool for incentivizing 

facilities to further improve the quality 

of care provided to patients with ESRD. 

Comment: One commenter 

recommended that CMS reevaluate the 

Hemoglobin >12 g/dL clinical measure, 

because it does not account for the 

differences in ‘‘average’’ hemoglobin 

levels among dialysis patients of 

different ages, genders, and overall 

health. For example, the commenter 

stated that while a hemoglobin of 12–14 

g/dL is ‘‘normal’’ for women, the range 

for men is 14–18 g/dL, and that male 

patients may be denied access to 

treatments that would raise their 

hemoglobin levels to ‘‘normal’’ because 

their facility is concerned about its score 

on the hemoglobin >12 g/dL clinical 

measure. 

Response: We appreciate the 

commenter’s input and note that we are 

removing the Hemoglobin Greater than 

12 g/dL clinical measure from the ESRD 

QIP beginning in the PY 2017 program. 

However, we will consider the 

commenter’s recommendation as we 

continue to evaluate the use of the 

measure in other CMS ESRD quality 

programs, such as Dialysis Facility 

Compare. 

Comment: One commenter sought 

clarification as to whether the Anemia 

Management reporting measure is 

sufficient to meet CMS’s statutory 

requirements regarding measures on 


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anemia management if CMS chooses to 

remove the Hemoglobin >12 g/dL 

clinical measure from the ESRD QIP. 

Response: Based on the FDA’s 

evolving position on ESAs, we believe 

the Anemia Management reporting 

measure meets the statutory mandate to 

include such measures in the ESRD QIP. 

The FDA labeling for ESAs previously 

included a hemoglobin level target 

range of 10 to 12 g/dL for chronic 

kidney disease patients. In 2011, the 

FDA released a modified drug 

recommendation for the use of ESAs in 

chronic kidney disease patients, 

removing these hard cutoffs and 

replacing them with more generalized 

guidance to ‘‘individualize dosing and 

use the lowest dose of ESA sufficient to 

reduce the need for red blood cell 

transfusions.’’ We therefore believe the 

Anemia Management reporting 

measure’s requirement that providers 

report ESA dosages, rather than 

prescribing a course of action, aligns 

with the current FDA labeling regarding 

ESA usage. Additionally, we note that 

the STrR clinical measure, finalized for 

the PY 2018 ESRD QIP, meets the 

statutory requirement for measures on 

anemia management. 

Comment: One commenter did not 

support the proposal to remove the 

Hemoglobin >12 g/dL clinical measure 

from the ESRD QIP, because its removal 

and the inclusion of the proposed 

Standardized Transfusion Ratio may 

lead facilities to revert to higher ESA 

doses in an effort to avoid transfusions. 

Response: Evidence currently suggests 

that ESA doses have declined sharply 

since 2011, due in large part to the FDA 

label change for ESAs. Since that time, 

the Hemoglobin Greater than 12 g/dL 

clinical measure has become topped out 

as fewer patients have hemoglobin 

levels that exceed 12 g/dL, and we 

believe that current payment incentives 

(i.e., the inclusion of ESAs in the ESRD 

PPS) will minimize the risk of excessive 

utilization of ESAs. However, we intend 

to continue monitoring hemoglobin 

levels through the Anemia Management 

reporting measure and the Dialysis 

Facility Compare program. 

Comment: Many commenters 

supported the proposed statistical 

criteria for determining when a measure 

is topped-out in the ESRD QIP. 

However, one commenter recommended 

modifying the criteria used to determine 

when to remove a measure from the 

ESRD QIP, and further recommended 

that a measure should not be removed 

from the program if the measure 

uniquely ‘‘addresses the needs of a 

specific population within the ESRD 

program.’’ Another commenter 

supported the statistical criteria, but 

also recommended that CMS should 

consider lowering the thresholds for 

determining when a measure is topped 

out. 

Response: We agree with commenters 

that a measure should not be removed 

from the ESRD QIP if it uniquely 

addresses the needs of a specific 

population within the ESRD population. 

We are finalizing the proposed 

statistical criteria for determining that a 

measure is topped-out and should be 

removed from the ESRD QIP. However, 

for the reasons explained below, we are 

not finalizing our proposal to retain a 

clinical measure that is statistically 

topped-out if we determine that its 

continued inclusion in the ESRD QIP 

measure set will continue to set a high 

standard of care for dialysis facilities. 

Instead, based on comments received, 

we are finalizing a policy that allows us 

to retain a topped-out clinical measure 

if it addresses the unique needs of a 

subset of the ESRD population, because 

we believe that this criterion is clearer 

and more transparent than the one 

proposed. Additionally, we agree with 

the commenter that statistically topped 

out measures should be retained in the 

ESRD QIP measure set if they address 

the unique needs of a subset of the 

ESRD population, because we believe 

that the drawbacks associated with 

scoring a topped out measure are less 

significant than the benefits of including 

as many subsets of the ESRD population 

as possible. 

Comment: One commenter sought 

clarification as to why CMS is not 

proposing to remove the Pediatric 

Hemodialysis Adequacy measure, 

despite the fact that it meets the 

statistical criteria for being a topped-out 

measure in the ESRD QIP. 

Response: We originally proposed to 

retain the Pediatric Hemodialysis 

Adequacy clinical measure for two 

reasons: (1) There are few measures 

available that focus on the care 

furnished to pediatric patients; and (2) 

we believed that the small number of 

facilities that are eligible to receive a 

score on the measure should properly 

set a standard of care for all facilities 

treating pediatric hemodialysis patients, 

even if these other facilities are not 

eligible to a receive a score on the 

measure. As explained above, and based 

on public comments, we are not 

finalizing a policy that would allow us 

to retain a topped-out clinical measure 

on the basis that its continued inclusion 

in the ESRD QIP measure set will 

continue to set a high standard of care 

for dialysis facilities, because we agree 

with the commenter that this standard 

may be difficult to apply. 

Comment: Commenter did not 

support the use of the first statistical 

criterion for determining when a 

measure is topped out in the ESRD QIP, 

because in a sample size of roughly 

5600 facilities, measure scores will 

appear to be statistically 

indistinguishable, even though the 

truncated coefficient of variation is less 

than 0.1. 

Response: The two proposed 

statistical criteria were selected to create 

alignments between the ESRD QIP and 

other CMS quality-reporting and VBP 

programs, such as the Hospital Inpatient 

Quality Reporting program, the Hospital 

VBP program, and the Hospital 

Outpatient Quality Reporting program. 

We recognize that using both of the 

statistical criteria instead of just the 

second (that is, truncated coefficient of 

variation is less than 0.1) raises the 

threshold a measure must reach before 

it is considered topped out. 

Nevertheless, we believe that this 

elevated threshold appropriately 

differentiates topped-out measures from 

measures that reliably distinguish 

facility performance, whereas the use of 

only the second criterion would 

inaccurately classify reliable measures 

as being topped out. 

Comment: Commenter stated that 

there is little room for facilities to 

improve on the dialysis adequacy 

measures. For this reason, commenter 

recommended that the adequacy 

measures should be removed from the 

ESRD QIP, and that performance on 

these measures should be monitored 

through other means. 

Response: As illustrated in Table 21 

above, the Adult Hemodialysis and the 

Adult Peritoneal Adequacy measures do 

not meet the statistical criteria for being 

a topped out measure in the ESRD QIP. 

Although performance rates are high 

overall, there is still room for facility 

improvement on the measures, and we 

therefore do not think it is appropriate 

to remove the measures from the ESRD 

QIP. As explained above, even though 

the Pediatric Hemodialysis Adequacy 

measure meets the statistical criteria for 

being a topped out measure in the ESRD 

QIP, we have decided not to remove it 

because it addresses the unique needs of 

a specific subset of the ESRD 

population. 

For these reasons, we are finalizing 

the removal of the Hemoglobin Greater 

than 12 g/dL measure from the ESRD 

QIP, beginning with the PY 2017 

program. We are also finalizing as 

proposed the statistical criteria for 

determining when a measure is topped 

out in the ESRD QIP. We are not 

finalizing our proposal to retain a 

clinical measure that is statistically 


tkelley on DSK3SPTVN1PROD with RULES3
66174 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

5United States Renal Data System, USRDS 2013 

Annual Data Report: Atlas of Chronic Kidney 

Disease and End-Stage Renal Disease in the United 

States, National Institutes of Health, National 

Institute of Diabetes and Digestive and Kidney 

Diseases, Bethesda, MD, 2013. 

6 van Walraven C, Bennett C, Jennings A, Austin 

PC, Forster AJ. Proportion of hospital readmissions 

deemed avoidable: a systematic review. CMAJ. 

2011; 183(7): E391–E402. 

topped-out if we determine that its 

continued inclusion in the ESRD QIP 

measure set will continue to set a high 

standard of care for dialysis facilities. 

Instead, we are finalizing that we will 

not remove a statistically topped-out 

measure if the measure addresses the 

unique needs of a specific subset of the 

ESRD population. 

c. New Measures for PY 2017 and 

Future Payment Years 

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 2017 

ESRD QIP and future payment years, we 

proposed to adopt one new clinical 

measure that addresses care 

coordination (see Table 22). 

TABLE 22—NEW MEASURE PROPOSED FOR THE PY 2017 ESRD QIP 

NQF # Measure title 

N/A1 ..................... Standardized Readmission Ratio, a clinical measure. 

Risk-adjusted standardized hospital readmissions ratio. 

1We note that this measure is currently under review at NQF. 

i. Standardized Readmission Ratio 

(SRR) Clinical Measure 

Background 

At the end of 2011, 615,899 patients 

were being dialyzed, 115,643 of whom 

were new (incident) patients with 

ESRD.5 The SRR measure assesses the 

rate of unplanned readmissions of ESRD 

patients to an acute care hospital within 

30 days of an index discharge from an 

acute care hospital, thereby identifying 

potentially poor or incomplete quality 

of care in the dialysis facility. In 

addition, the SRR reflects an aspect of 

ESRD care that is especially resourceintensive. In 2011, the total amount paid 

by Medicare for the ESRD program was 

approximately $34.3 billion, a 5.4 

percent increase from 2010.2 In 

particular, Medicare paid more than 

$10.5 billion for costs associated with 

hospitalized ESRD patients in 2011. In 

2011, ESRD dialysis patients were 

admitted to the hospital twice on 

average, and spent an average of 12 total 

days in the hospital over the year, 

accounting for approximately 38 percent 

of Medicare expenditures for patients 

with ESRD.2 Furthermore, a substantial 

percentage (30 percent) of ESRD 

patients discharged from the hospital 

have an unplanned readmission within 

30 days.2 In the non-ESRD population, 

clinical studies have demonstrated that 

improved care coordination and 

discharge planning may reduce 

readmission rates. The literature also 

reports a wide range of estimates of the 

percentage of readmissions that may be 

preventable. One literature review of 

more than 30 studies found the median 

proportion of readmissions that may be 

preventable was 27%, with a range of 

5% to 79%.6 Preventability varied 

widely across diagnoses. Readmissions 

were more likely to be preventable in 

patients with more severe conditions. 

Therefore, a systematic measure on 

unplanned readmissions is essential for 

controlling escalating medical costs; it 

can identify where readmission rates are 

unusually high, and help facilities to 

provide cost-effective healthcare. 

Overview of Measure 

The SRR is a one-year riskstandardized measure of a facility’s 30- 

day, all-cause rate of unplanned 

hospital readmissions among Medicarecovered ESRD dialysis patients. The 

number of expected readmissions is 

determined by a risk-adjustment model 

that accounts for the hospital where the 

index discharge took place, certain 

patient characteristics (including age, 

sex, and comorbidities), and the 

national median expected performance 

for all dialysis facilities, given the same 

patient case mix. 

We proposed to adopt the SRR 

measure currently under review by NQF 

(NQF #2496). 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)(iv) of the 

Act must have been endorsed by the 

entity with a contract under section 

1890(a) of the Act (that entity currently 

is NQF). Under the exception set forth 

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

the case of a specified area or medical 

topic determined appropriate by the 

Secretary for which a feasible and 

practical measure has not been endorsed 

by the entity with a contract under 

section 1890(a) of the Act, the Secretary 

may specify a measure that is not so 

endorsed, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

We have given due consideration to 

endorsed measures, as well as those 

adopted by a consensus organization, 

and we are proposing this measure 

under the authority of 1881(h)(2)(B)(ii) 

of the Act. Although the NQF has 

endorsed an all-cause hospital 

readmission measure (NQF #1789), we 

did not believe it was feasible to adopt 

this measure in the ESRD QIP because 

NQF #1789 is specified for use in 

hospitals, not dialysis facilities. In 

addition, NQF #1789 is intended to 

evaluate readmissions across all patient 

types, whereas the proposed SRR 

measure is specified for the unique 

population of ESRD dialysis patients, 

which have a different risk profile than 

the general population captured in NQF 

#1789. Because the proposed SRR 

measure has been developed 

specifically for the dialysis-facility 

setting, and because the measure has the 

potential to improve clinical practice 

and decrease healthcare costs, we 

believe it is appropriate to adopt the 

SRR in the ESRD QIP at this time. 

We have analyzed the measure’s 

reliability, the results of which are 

provided below and in greater detail in 

the SRR Measure Methodology report, 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. The InterUnit Reliability (IUR) was calculated for 

the proposed SRR using data from 2012 

and a ‘‘bootstrap’’ approach, which uses 

a resampling scheme to estimate the 

within-facility variation that cannot be 

directly estimated by the analysis of 

variance (ANOVA). The SRRs that we 

calculated for purposes of this analysis 

were for dialysis facilities that had at 

least 11 patients who had been 

discharged from a hospital during 2012. 

A small IUR (near 0) reveals that most 

of the variation of the measures between 

facilities is driven by ‘‘random noise,’’ 

indicating the measure would not be a 


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reliable characterization of the 

differences among facilities, whereas a 

large IUR (near 1) indicates that most of 

the variation between facilities is due to 

the real differences between facilities. 

The IUR for the proposed SRR measure 

was found to be 0.49, indicating that 

about one-half of the variation in the 

SRR can be attributed to betweenfacility differences, and about half to 

within-facility variation. This value of 

IUR indicates that an average-size 

facility would achieve a moderate 

degree of reliability for this measure. 

This level of reliability is consistent 

with the reliability of other outcome 

measures in CMS quality-reporting and 

VBP programs, such as the 30-day RiskStandardized All-Cause Acute 

Myocardial Infarction, Heart Failure, 

and Pneumonia Readmission and 

Mortality measures used in the Hospital 

IQR and VBP Programs. We therefore 

believe that facilities can be reliably 

scored on the proposed SRR measure. 

We convened a technical expert panel 

(TEP) in May 2012 for the purpose of 

evaluating this measure, but the TEP did 

not reach a final consensus and 

declined to support the measure. Some 

members of the TEP were concerned 

that we did not risk-adjust for the 

nephrologist treating the patients, 

because actions taken by nephrologists 

can impact readmission rates. After 

reviewing the TEP’s arguments, we 

determined that the suggested risk 

adjustment for nephrologist care would 

constitute a reversal of CMS policy not 

to risk adjust for factors related to care 

for which the provider is responsible. 

We do not think that it is appropriate to 

risk-adjust the measure for the 

nephrologist because the nephrologist is 

part of the facility’s multi-disciplinary 

team, and medical directors, as 

employees of the dialysis facilities, are 

responsible for ensuring that 

appropriate care is provided by a multidisciplinary team. The Measures 

Application Partnership reviewed this 

measure in February 2013 and 

supported the direction of the measure, 

advising CMS that the measure would 

require additional development prior to 

implementation. Subsequently, we 

released draft specifications for the 

measure to the public for a 30-day 

comment period and, based on 

comments received, finalized measure 

specifications in September 2013. We 

also, on a voluntary basis, provided 

individual dialysis facilities with a 

facility-specific report that calculated 

their SRR measure results and compared 

those results to SRR measure results at 

the state and national level, as well as 

discharge-level data upon request. 

Facilities also had an opportunity to 

submit questions to CMS regarding the 

measure and their reports. We therefore 

believe that the proposed SRR measure 

risk-adjusts appropriately for patient 

condition and comorbidities at the start 

of care for which the facility is not 

responsible. We also believe that the 

measure is ready for adoption because, 

as explained above, it achieves a 

moderate degree of reliability. 

Data Sources 

The data we will use to calculate the 

proposed SRR measure come from 

various CMS-maintained data sources 

for ESRD patients including the 

CROWNWeb database, the CMS Annual 

Facility Survey (Form CMS–2744), 

Medicare claims, the CMS Medical 

Evidence Form (Form CMS–2728), 

transplant data from the Organ 

Procurement and Transplant Network 

(OPTN), the Death Notification Form 

(Form CMS–2746), the Nursing Home 

Minimum Dataset, and the Social 

Security Death Master File. These data 

sources include all Medicare-covered 

patients with ESRD. Information on 

hospitalizations is obtained from 

Medicare Inpatient Claims Standard 

Analysis Files (SAFs) and past-year 

comorbidity is obtained from Medicare 

Claims SAFs (inpatient, outpatient, 

physician/supplier, home health, 

hospice, and skilled nursing facility 

claims). 

Outcome 

The outcome for this measure is 30- 

day all-cause, unplanned readmission 

defined as a hospital readmission for 

any cause beginning within 30 days of 

the discharge date of an index 

discharge, with the exclusion of 

planned readmissions. This 30-day 

readmission period is consistent with 

other publicly reported readmission 

measures endorsed by NQF and 

currently implemented in the Hospital 

Inpatient Quality Reporting Program 

and Hospital Readmission Reduction 

Program, and reflects an industry 

standard. 

Cohort 

All discharges of Medicare ESRD 

dialysis patients from an acute care 

hospital in a calendar year are 

considered eligible for this measure, 

with the exception of the exclusions 

listed in the next section. 

Inclusion and Exclusion Criteria 

The proposed SRR measure excludes 

from the measure cohort 

hospitalizations: (1) Where the patient 

died during the index hospitalization; 

(2) where the patient dies within 30 

days of the index discharge with no 

readmission; (3) where the patient is 

discharged against medical advice; (4) 

where the patient was admitted with a 

primary diagnosis of certain conditions 

related to cancers, mental health 

conditions, or rehabilitation procedures 

(because these patients possess radically 

different risk profiles, and therefore 

cannot reasonably be compared to other 

patients discharged from hospitals); (5) 

where the patient is discharged from a 

PPS-exempt cancer hospital (because 

these hospitals care for a unique 

population of patients that cannot 

reasonably be compared to the patients 

admitted to other hospitals); (6) where 

the patient is transferred to another 

acute care hospital; and (7) where the 

patient has already been discharged 12 

times during the same calendar year (to 

respond to concerns raised by the TEP 

that patients who are hospitalized this 

frequently during a calendar year could 

unduly skew the measure rates for small 

facilities). 

Risk Adjustment 

The measure adjusts for differences 

across facilities with regard to their 

patient case mix. Consistent with NQF 

guidelines, the model does not adjust 

for socioeconomic status or race, 

because risk adjusting for these 

characteristics would hold facilities 

with a large proportion of patients who 

are minorities and/or who have low 

socioeconomic status to a different 

standard of care than other facilities. 

One goal of this measure is to illuminate 

quality differences that such risk 

adjustment would obscure. As with the 

Hospital-Wide Readmission measure 

employed by the Hospital Readmissions 

Reduction program, the SRR employs a 

hierarchical logistic regression model to 

estimate the expected number of 

readmissions to an acute care hospital, 

taking into account the performance of 

all dialysis facilities, the discharging 

hospital, and the facility’s patient casemix. 

Although the SRR risk-adjustment 

model is generally aligned with the 

Hospital-Wide Readmission measure 

risk-adjustment methodology, we 

proposed to modify it to account for 

comorbidities and patient 

characteristics relevant to the ESRD 

population. The proposed SRR measure 

includes the following patient 

characteristics as risk adjustors, which 

are obtained from the following data 

sources: 


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Risk adjustor Data source 

Sex ............................................................................................................ CMS Form 2728. 

Age ........................................................................................................... REMIS database. 

Years on ESRD ........................................................................................ CMS Form 2728. 

Diabetes as cause of ESRD .................................................................... CMS Form 2728. 

BMI at incidence of ESRD ....................................................................... CMS Form 2728. 

Days hospitalized during index admission ............................................... Part A Medicare Inpatient Claims SAFs. 

23 past-year comorbidities (for example, cardiorespiratory failure/shock; 

drug and alcohol disorders)..

Medicare Claims SAFs: Part A Inpatient, home health, hospice, and 

skilled nursing facility; and Part B Outpatient. 

Discharged with any of 11 high-risk conditions (for example, cystic fibrosis, and hepatitis).Part A Medicare Inpatient Claims SAFs. 

More details on the risk-adjustment 

calculations, and the rationale for 

selecting these risk adjustors and not 

others, can be found at: http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical

Specifications.html. We proposed to 

risk adjust the proposed SRR measure 

based on sex, because we have 

determined that patients’ sex affects the 

measure in ways that are beyond the 

control of dialysis facilities. We reached 

this determination by examining the 

effects of the risk adjusters, both 

independently and in combination, on 

rates of unplanned readmissions. This 

analysis yielded two conclusions. First, 

the analysis indicated that females are 

generally more likely than males to 

experience an unplanned readmission, 

even when accounting for the other risk 

adjustors. Second, the disparate effects 

of gender were substantially impacted 

by the effects of age: Females aged 15 to 

45 were much more likely to experience 

an unplanned readmission than males 

of the same age, but this disparity was 

significantly reduced for men and 

women younger than 15 and older than 

45. Based on these two conclusions, we 

believe that women in the 15–45 age 

range face a greater risk of experiencing 

an unplanned readmission, as compared 

to men of the same age with similar risk 

profiles. This does not appear to be a 

consequence of facility performance, 

however, because the disparity is not 

generally applicable to women, but only 

to a limited age group. We therefore 

believe it is essential to risk-adjust for 

sex to ensure that facilities with larger 

numbers of women aged 15 to 45 are not 

inappropriately disadvantaged, because 

not risk-adjusting for sex would 

potentially incentivize facilities to deny 

access to these individuals. 

As indicated in the table above, the 

measure is risk-adjusted, in part, based 

on 23 comorbidities that develop in the 

year prior to the index hospitalization, 

as well as 11 high-risk conditions that 

are present at the time of the index 

discharge. These data are taken from 

Medicare claims submitted by hospitals, 

dialysis facilities, and other types of 

long-term and post-acute care facilities. 

We believe that this proposed 

approach to risk-adjusting the SRR 

measure is consistent with NQF 

guidelines for measure developers. NQF 

evaluates measures on the basis of four 

criteria: Importance, scientific 

acceptability, feasibility, and usability. 

The validity and reliability of a 

measure’s risk-adjustment calculations 

fall under the ‘‘scientific acceptability’’ 

criterion, and Measure Evaluation 

Criterion 2b4 specifies NQF’s preferred 

approach for risk-adjusting outcome 

measures (http://www.qualityforum.org/ 

docs/measure_evaluation_

criteria.aspx#scientific). This criterion 

states that patient comorbidities should 

only be included in risk-adjustment 

calculations if they are (1) present at the 

start of care and (2) not indicative of 

disparities or deficiencies in the quality 

of care provided. As indicated in the 

‘‘Inclusion and Exclusion Criteria’’ 

subsection above, as well as the measure 

specifications that are currently under 

review at NQF, the start of care is 

defined as the index hospitalization. 

Accordingly, we believe that NQF 

Measure Evaluation Criterion 2b4 

supports risk adjusting the proposed 

SRR measure on the basis of patient 

comorbidity data collected in the year 

prior to the index hospitalization, 

because these comorbidities are likely 

present at the start of care (that is, the 

date(s) that the patient spends in the 

hospital during the index 

hospitalization). For these reasons, we 

believe that the risk-adjustment 

methodology for the proposed SRR 

measure is consistent with NQF 

guidelines for measure developers and 

is appropriate for this measure. 

Full documentation of the SRR riskadjustment methodology is available at: 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

Calculating the SRR Measure 

The SRR measure is calculated as the 

ratio of the number of observed 

unplanned readmissions to the number 

of expected unplanned readmissions. 

Facilities that have more unplanned 

readmissions than would be expected 

for an average facility with a similar 

case-mix would have a ratio greater than 

one. Facilities having fewer unplanned 

readmissions than would be expected 

for an average facility with a similar 

case mix would have a ratio less than 

one. This ratio calculation is consistent 

with that employed by one NQFendorsed outcome measure for ESRD, 

the Standardized Hospitalization Ratio 

(NQF #1463). 

Hospitalizations are counted as events 

in the numerator if they meet the 

definition of unplanned readmission— 

which is that they (a) occurred within 

30 days of the index discharge and (b) 

are not preceded by a ‘‘planned’’ 

readmission that also occurred within 

30 days of the index discharge. Planned 

readmissions are defined as 

readmissions that do not bear on the 

quality of care furnished by the dialysis 

facility, that occur as a part of ongoing 

appropriate care of patients, or that 

involve elective care. Building on the 

algorithm developed for the HospitalWide Readmission measure (NQF 

#1789), the proposed planned 

readmission list incorporates minor 

changes appropriate to the ESRD 

population as suggested by technical 

experts. The full planned readmission 

list and algorithm are available at: 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/ 

061_TechnicalSpecifications.html. In 

general, a readmission is considered 

‘‘planned’’ under two scenarios. 

1. The patient undergoes a procedure 

that is always considered planned 

(example, bone marrow transplant) or 

has a primary diagnosis that always 

indicates the hospitalization is planned 

(for example, maintenance 

chemotherapy). 

2. The patient undergoes a procedure 

that may be considered planned if it is 

not accompanied by an acute diagnosis. 

For example, a hospitalization involving 

a heart-valve procedure accompanied by 


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a primary diagnosis of acute myocardial 

infraction would be considered 

unplanned, whereas a hospitalization 

involving a heart-valve procedure 

accompanied by a primary diagnosis of 

diabetes would be considered planned 

(because acute myocardial infraction is 

a plausible alternative acute indication 

for hospitalization). 

The expected number of readmissions 

is calculated using hierarchical logistic 

modeling (HLM). This approach 

accounts for the hospital from which the 

patient was discharged and the patient 

case mix (as defined by factors such as 

age, sex, and patient comorbidities), as 

well as the national median 

performance of all dialysis facilities. 

The HLM is an appropriate statistical 

approach to measuring quality based on 

patient outcomes when patients are 

clustered within facilities (and therefore 

the patients’ outcomes are not 

statistically independent), and when the 

number of qualifying patients for the 

measure varies from facility to facility. 

The HLM approach is also currently 

used to calculate readmission and 

mortality measures that are used in 

several quality-reporting and VBP 

programs by CMS, such as the Heart 

Failure and Pneumonia Mortality 

measures in the Hospital IQR and 

Hospital VBP Programs. 

The proposed SRR measure is a point 

estimate—the best estimate of a facility’s 

readmission rate based on the facility’s 

case mix. For more information on the 

proposed calculation methodology, 

please refer to our Web site at: http:// 

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/ 

061_TechnicalSpecifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

the proposal to adopt the Standardized 

Readmission Ratio clinical measure, 

because ‘‘hospital readmissions may be 

an indicator of poor access to follow-up 

primary care or missed opportunities for 

inpatient and ambulatory care providers 

to better coordinate care.’’ 

Response: We thank the commenter 

for the support. 

Comment: Some commenters did not 

support the proposal to adopt the SRR 

measure because it could harm patients. 

Specifically, commenters stated that the 

measure could lead facilities to deny 

care to high-risk populations, 

particularly in urban settings where 

patients have more than one option for 

dialysis treatment. One commenter 

further stated that the measure’s riskadjustment methodology will not 

completely remove this incentive to 

‘‘cherry-pick’’ patients, which would be 

detrimental to patient health and waste 

healthcare resources. Commenter was 

also concerned that facilities may delay 

needed hospital admissions if the SRR 

measure were to be adopted in the ESRD 

QIP. 

Response: We agree that the concern 

for unintended consequences is a 

serious one with outcome measures. 

Access to care is particularly important 

and we continue to seek ways to ensure 

that access is unabated. This is part of 

the reason we proposed to adopt the 

SRR measure, which incorporates a riskadjustment methodology that levels the 

playing field for facilities with different 

case-mixes and counters the incentive 

for cherry-picking patients. We also 

have the capacity to monitor and 

evaluate for some types of unintended 

consequences. For example, we 

currently assess rates of mortality at the 

facility level in the Dialysis Facility 

Compare program. This is an approach 

similar to that used on Hospital 

Compare, which publicly reports both 

mortality and readmissions rates for 

hospitals. In general, we note that 

mortality and readmission rates are 

positively correlated among dialysis 

facilities and in other settings, 

suggesting that reducing readmissions 

does not create increased risk to patients 

through ‘‘cherry-picking’’. We also note 

that similar measures have been 

implemented in other post-acute care 

settings for quality reporting and valuebased purchasing, including long-term 

care hospitals, inpatient rehabilitation 

facilities, and nursing homes. The SRR 

risk adjustment is consistent with these 

measures. We intend to monitor 

whether the implementation of this 

measure leads to unintended 

consequences. 

Comment: Many commenters did not 

support the proposal to adopt the SRR 

measure because it is not a fair way to 

evaluate facility performance. 

Specifically, commenters stated that 

unplanned readmissions are beyond the 

control of dialysis facilities, and that 

cultural factors can make patients 

noncompliant with treatment protocols, 

leading to hospital admissions. 

Response: We disagree with assertion 

that unplanned readmissions are 

beyond the control of dialysis facilities. 

While the causes of readmissions are 

multifactorial, our analyses support that 

the facility exerts an influence on 

readmissions roughly equivalent to that 

exerted by the discharging acute care 

hospital. We believe that coordination 

of care requires interaction between 

multiple providers, including those 

discharging the patient, and those 

continuing patient care following 

discharge. While cultural factors and 

patient noncompliance can lead to 

hospital admissions, this is no less true 

for the acute care hospitals, long-term 

care hospitals, inpatient rehabilitation 

facilities, nursing homes, and home 

health agencies, and it does not negate 

the deleterious consequences 

readmissions can have for those 

patients. 

Comment: Some commenters stated 

that facilities are typically not notified 

when a patient is discharged from a 

hospital, that many patients are 

discharged from and readmitted to a 

hospital before they return to their 

dialysis facility. Commenters also stated 

that facilities cannot compel 

nephrologists to see patient immediately 

after the patients are discharged from a 

hospital. Commenters recommended 

that patients with a readmission within 

one to five days of an index discharge 

should be excluded from the measure, 

because facilities typically do not have 

a chance to see these patients before 

they are readmitted to a hospital, and 17 

percent of hospitalized patients with 

ESRD are readmitted to a hospital 

within three days of the index 

discharge. 

Response: We recognize that a 

disproportionate number of 

readmissions may occur during the days 

immediately following discharge. We 

believe this reflects an important 

opportunity for quality improvement 

that may be missed if these 

readmissions are excluded from the 

readmission measure. While it is true 

that several days may pass between 

discharge and a patient’s first regularly 

scheduled appointment at a dialysis 

facility, we submit that if this pattern of 

practice results in excessive levels of 

readmissions, then it represents a failure 

to successfully manage a patient’s care 

from the acute to non-acute setting. 

Additionally, under the Conditions for 

Coverage, a dialysis facility must have a 

medical director whose responsibilities 

include a quality assessment and 

improvement program (CfC § 494.150). 

Therefore, facilities can compel 

nephrologists to see a patient 

immediately after the patients are 

discharged from the hospital, because 

improving on quality issues, such as 

care coordination, is part of the medical 

director’s responsibilities. 

Comment: Many commenters stated 

that facilities should not be placed in 

the position of managing comorbid 

conditions that typically accompany 

ESRD, and commenters preferred a 

measure that was limited to 

readmissions that are related to ESRD 

and dialysis. Commenters stated that the 

measure should be limited to 


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readmissions associated with ESRD (as 

opposed to focusing on all 

readmissions, irrespective of cause), 

because the majority of readmissions for 

patients with ESRD are not attributable 

to diagnoses related to ESRD and 

dialysis, and this could penalize 

facilities for readmissions beyond their 

scope of control. One commenter stated 

it may be difficult to distinguish 

readmissions related to dialysis and 

ESRD from those that are not, so the 

commenter recommended addressing 

this issue with further adjustments to 

the measure’s statistical models, and by 

adding additional adjustments for case 

mix. 

Response: A Technical Expert Panel 

(TEP) that we convened for the purpose 

of developing this measure considered 

the issue of whether dialysis facility 

readmission measures should be allcause, or limited to a specific set of 

readmissions related to ESRD and 

dialysis. The TEP concluded that an allcause measure was appropriate for the 

SRR because it could not come to a 

consensus of what specific causes for 

readmissions did or did not fall within 

the control of dialysis facilities or could 

be considered to be related to ESRD and 

dialysis. This approach is consistent 

with readmission measures 

implemented for other quality programs, 

and is augmented using a planned 

readmissions algorithm that excludes 

readmissions identified as having been 

planned, with the rationale that such 

readmissions do not reflect poor quality 

of care. This algorithm was originally 

developed for hospital readmissions 

measures, and has been adapted for use 

in the dialysis facility setting, as well as 

nursing homes, home health agencies, 

inpatient rehabilitation facilities, and 

long-term care hospitals. 

Comment: Many commenters 

expressed a number of technical 

concerns with the specifications for the 

SRR measure. Specifically, commenters 

stated that using the 2728 form as the 

data source for determining patient 

comorbidities is inappropriate because 

the form is not used to track 

comorbidities that develop after the 

initiation of ESRD; commenters 

therefore recommend obtaining a 

reliable data source for comorbidities 

before adopting the measure. 

Commenters further stated that the 

measure relies on too many data sources 

to be specific to ESRD, and that facilities 

do not have ready access to hospital 

data, which they could use to design 

quality improvement programs. 

Response: Although we do 

incorporate some information from the 

2728 form in the risk adjustment model, 

the comorbidities are identified using 

Medicare Claims data. We use many 

data sources to construct our quality 

measures, but the data are derived from 

ESRD dialysis patients, and are 

therefore relevant to the care of this 

patient population. We recognize that 

dialysis facilities do not have access to 

hospital claims data, and that they 

believe they could benefit from such 

access in developing quality 

improvement programs. Providing such 

data is fraught with difficulty, such as 

logistical delays in the availability of the 

data, concerns about patient privacy 

across providers, and the lack of an 

effective delivery system for such data. 

While we continue to consider how 

such data may be provided in a way that 

is meaningful and as actionable as 

possible, we believe implementing a 

quality measure based on claims data is 

appropriate and consistent with the 

implementation of readmission 

measures in other settings. Additionally, 

we have implemented measures in the 

LTCH, IRF, and Home Health quality 

reporting programs even though 

hospital and other claims data are not 

currently available to these providers. 

Even if we could find a feasible way to 

make the hospital data available, there 

would be a substantial delay between 

the time we receive it and the time we 

could make it available to facilities. It is 

therefore not feasible for us to provide 

facilities hospital data in a short 

timeframe. 

Comment: Some commenters stated 

that sickle cell trait, angiodysplasia, 

myelodysplasia, diverticular bleeding, 

asthma and nursing home/rehab status 

should be included as risk-factors in the 

measure calculations. Some commenters 

did not support the proposal to adopt 

the SRR measure, because it does not 

risk-adjust for patients’ socioeconomic 

status. Commenters recommended that 

CMS incorporate this risk adjustment 

into the SRR measure, because 

otherwise facilities serving a high 

percentage of low-income patients may 

be subject to unnecessary and 

inappropriate payment reductions. One 

commenter further recommended that 

the SRR measure adjust for patient race, 

language, life circumstances, and 

environmental factors, because these 

factors have an impact on health 

outcomes and are beyond the control of 

the facility. One commenter also 

recommended that CMS institute a peergrouping system in order to compare 

dialysis facilities that are similarly 

situated and treat similar patient 

populations before incorporating any 

further outcome measures into the ESRD 

QIP. 

Response: The SRR already includes 

risk adjustment for the prior-year 

comorbidities as supported by a TEP 

and analysis of data. The suggested 

comorbidities were not included in the 

risk adjustment model following input 

from the TEP and a 30-day public 

comment period. We are aware that 

there are differing opinions regarding 

our current approach in risk-adjusting 

measures in the QIP for socioeconomic 

status (SES). We note that risk-adjusted 

outcome measures aim to reveal 

differences related to the quality of care 

provided. We believe that quality of care 

received by patients of lower SES 

contributes at least in part to the 

observed association between SES status 

and the readmissions rate. We continue 

to have concerns about holding dialysis 

facilities to different standards for the 

outcomes of their patients of low SES— 

we do not want to mask potential 

disparities or minimize incentives to 

improve the outcomes of disadvantaged 

populations. 

Concerns that facilities treating large 

numbers of low socioeconomic status 

patients are disproportionately 

penalized by quality measure 

performance may be addressed through 

risk adjustment, but other alternatives 

exist that would first need to be 

considered, such as peer grouping 

stratification. Peer group stratification 

involves stratifying hospitals by the 

hospital’s proportion of low-SES 

patients, as a method to correlate 

readmission rates and penalties with 

patient income. We may consider 

incorporating such a peer-grouping 

stratification or an alternate method of 

addressing socioeconomic status in the 

future, as we continue to revise and 

refine the SRR clinical measure. 

Comment: Some commenters stated 

that the measure’s specifications are 

inappropriate because the denominator 

is defined in terms of index discharges, 

as opposed to the number of eligible 

patients at a facility. Commenters 

recommended using the latter method 

because under the proposed method a 

facility’s score could be 

disproportionately reduced if one or two 

patients had high readmission rates, 

even if the facility had a low 

readmission rate overall. 

Response: The same issue was 

discussed by the TEP in the course of 

their evaluation of the SRR. As a 

consequence of those deliberations, we 

have structured the SRR measure to 

account for frequently hospitalized 

patients in two ways: first, it excludes 

all hospitalizations following a patient’s 

12th admission (note that 1 percent of 

all patients are admitted more than six 

times in a calendar year) and, second, 

the model that defines the expectation 

of readmission adjusts for 


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hospitalizations that involve high risk 

diagnoses that are rare but very likely to 

result in a 30-day readmission (for 

example, sickle-cell anemia, HIV/AIDS). 

The measure is focused on the process 

of readmission following a hospital 

discharge, and for this purpose the 

denominator is appropriate. Each 

hospital discharge is an opportunity for 

success or failure in managing the 

transition of a patient’s care from the 

acute care facility to the dialysis facility. 

Allowing for risk-adjustment, the SRR 

assesses the rate of success at a given 

dialysis facility, and compares it to the 

rate of success at other facilities. It is 

true that a facility that has relatively 

fewer hospitalizations will have a 

smaller denominator, but what portion 

of those hospitalizations are followed by 

a readmission within 30 days is still a 

valid indicator of the successful 

management of care transitions. If one 

took as the denominator the set of all 

patients at the facility, we might be led 

to conclude that this facility with 

relatively few hospital discharges had a 

reasonable rate of readmissions even 

though, for the condition of the patient 

being discharged, we would have 

expected significantly fewer 

readmissions. 

Furthermore, we proposed in the CY 

2015 ESRD PPS Proposed Rule to 

account for variability in small facilities’ 

SRR scores by excluding facilities with 

fewer than 11 discharges, and by 

applying a small facility adjustor (which 

‘‘gives facilities the benefit of the doubt 

when measure scores can be unduly 

influenced by a few outlier patients’’) 

for facilities with 11 to 41 index 

discharges. We believe that this aspect 

of the ESRD QIP scoring methodology 

will mitigate the impact of one or two 

outlier patients on a small facility’s SRR 

score. 

Comment: Some commenters sought 

clarification as to why the proposed 

SRR measure is not limited to patients 

on chronic dialysis for 90 days, when 

this exclusion is included in the 

Standardized Mortality Ratio and 

Standardized Hospitalization Ratio 

measures. One commenter stated that 

this specification should align across 

the three measures. 

Response: The original 90-day 

exclusion following the start of ESRD 

dialysis was implemented to allow time 

for patients to stabilize; as a result, 

hospitalizations and deaths in this 

period did not count against the dialysis 

facility when computing the SHR and 

the SMR. The SRR diverges on this 

point because the readmissions function 

differently. The SRR measure addresses 

the question as to how well the patient 

is managed once discharged from an 

acute-care hospital and assesses the 

outcome of the discharge. The start of 

dialysis defines the point in time when 

patients begin to be at risk for 

hospitalization or death while in the 

care of a dialysis facility (for the 

purposes of calculating the SMR and 

SHR measures). By contrast, risk for 

readmission begins upon discharge from 

an acute care hospital when calculating 

the SRR measure. As SRR is a measure 

of care coordination, there is no 

expected need for a stabilization period. 

Applying one would limit the measure’s 

efficacy at assessing coordination of care 

for the discharged patient. 

Comment: Some commenters were 

concerned that the proposal to exclude 

index hospitalizations that occur after a 

patient’s 12th readmission in a calendar 

year will unduly impact small facilities, 

because these facilities’ scores are 

disproportionately impacted by outliers. 

Commenters sought clarification as to 

why this criterion was raised from 6 

readmissions to 12 readmissions. 

Response: We initially considered 

allowing a maximum of six 

readmissions per patient-year (95th 

percentile of the 2009 test population). 

We made the change since we were 

concerned that there might be seasonal 

exclusions—that is, that this exclusion 

might disproportionately exclude 

hospitalizations occurring later in the 

reporting period and that these 

hospitalizations might, in some way, be 

different from hospitalizations occurring 

earlier in the reporting period (that is, 

in the calendar year).Variants of the 

measure that include either the cap of 

6 or 12 readmissions are highly 

correlated (97.8 percent). Since 

increasing the exclusion criteria to 12 

admissions made only a small 

difference, we felt comfortable applying 

this criterion in the hope of reducing the 

likelihood of bias. 

Comment: Some commenters stated 

that the Hospital-Wide All-Cause 

Unplanned 30-Day Readmission Ratio 

measure (NQF #1789) excludes patients 

who have an incomplete claims history 

from the past year. Commenters sought 

clarification as to why this criterion was 

not included in the proposed SRR 

measure. 

Response: We considered adopting 

this exclusion for the SRR measure but 

decided against doing so because it 

would exclude approximately one-third 

of ESRD dialysis patients who are 

discharged from the hospital during 

their first year of ESRD treatment. Many 

ESRD beneficiaries are not Medicare 

eligible at the initiation of dialysis but 

may still be likely to experience a 

hospitalization within the first year of 

dialysis treatment. As a consequence, 

the exclusion criterion would effectively 

eliminate accountability for 

readmissions within the first year of 

dialysis for patients who were not 

Medicare eligible prior to being 

diagnosed with ESRD, and we believe 

that the measure should assess all 

eligible unplanned readmissions of 

ESRD dialysis patients. 

Comment: Some commenters stated 

that risk-adjusting for the discharging 

hospital does not sufficiently account 

for geographic variability in admission 

and readmission rates. Commenters also 

recommended risk-adjusting for the 

admitting physician because physicians 

decide when to admit and re-admit 

patients to a hospital. 

Response: We decided not to propose 

a physician adjustment for three 

reasons—our general goal of 

encouraging the facility’s coordination 

with its physicians; harmonization with 

readmission measures implemented in 

quality programs for other settings; and 

issues with attribution of discharges and 

readmissions to specific nephrologists 

or other care providers. 

Variations in practice patterns may 

result in undesirable practices that this 

and other ESRD measures are seeking to 

improve. In view of the concept of 

shared accountability, adjusting for 

physician practice also removes a 

potential role for the dialysis facility in 

modifying physician practice. 

Under our regulations (42 CFR 

494.150(c)(2)(i)), dialysis facilities are 

responsible for overseeing the provision 

of care by a multi-disciplinary team, 

including the nephrologist treating the 

patient. Oversight of individual staff 

nephrologist care, including, ensuring 

adherence to facility policies and 

Medicare regulations, is primarily the 

responsibility of the site Medical 

Director, a paid employee of the dialysis 

facility, and, additionally, the 

responsibility of the facility governing 

body. Risk adjusting for physician 

would place CMS in the position of 

suggesting that a dialysis facility is not 

responsible for health consequences 

experienced by patients as the result of 

business or policy decisions by the 

facility administration. 

We designed the SRR measure to be 

aligned as closely as possible with the 

existing Hospital-Wide Readmission 

Measure (NQF# 1789). Adjusting for 

physician effects in this measure would 

be inconsistent with similar 

readmission measures in other care 

settings where we assume that like 

dialysis facilities, the physicians 

treating the patients fall under the 

facility’s responsibility. 

Risk-adjusting for the nephrologist 

would also create issues with 


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attribution. First, ESRD patients are 

often under the care of multiple 

physicians and attribution to a 

particular physician would be difficult. 

Second, it is not clear whether it is more 

appropriate to hold responsible the 

nephrologist seeing the patient 

immediately before the index 

admission, or the nephrologist seeing 

the patient immediately after the 

discharge, or both. 

We do not adjust our readmission 

measures to account for regional 

hospitalization practices. We believe 

that regional variation in hospital 

utilization that is related to that 

hospital’s case mix does not justify 

differences in dialysis facility 

readmission rates because this variation 

is modifiable by provider behavior. 

Comment: One commenter was 

concerned that the double random 

effects model used in stage 1 of the 

proposed SRR measure is biased against 

rural facilities, because these facilities 

are likely to be the only major ones 

available, and they are likely to be 

served by one major hospital. 

Commenter requested data on the 

measure’s differential impact before 

adopting the measure. Commenter also 

recommended adjusting the measure to 

account for the distance patients travel 

from their homes to their dialysis 

facility and to the admitting hospital, 

because this could influence patient 

choices to utilize health care resources. 

Response: The risk adjustment 

methodology uses a mixed model, with 

fixed effects estimated for the dialysis 

facilities’ contribution to readmissions, 

and random effects estimated for the 

hospitals’ contribution to risk for 

readmissions. In the event that a rural 

facility is paired only with a single 

hospital, the associated (random) 

hospital effect is estimated by borrowing 

information from all the other hospitals 

nationwide. There is no reason to 

believe that rural facilities (or any 

facilities) would be penalized with this 

approach. As in the case of care 

coordination measures for other 

settings, responsibility for outcomes is 

shared between the facility and the 

hospital. 

Comment: Commenter stated that 

using a fixed effects model in the 

proposed SRR measure is inconsistent 

with the use of a random effects model 

in the NHSN Bloodstream Infection’s 

Adjusted Ranking Metric. Commenter 

stated that the random effects model is 

more appropriate for the dialysis facility 

setting. 

Response: Using random effects and 

fixed effects requires different statistical 

assumptions when estimating the 

contribution of a risk factor to patient 

outcomes of care. While we recognize 

that using fixed effects, along with 

random effects, in the risk-adjustment 

methodology for the SRR measure is 

different than the model we use to riskadjust the Bloodstream Infection 

measure, our risk-adjustment 

methodology for the SRR measure is 

consistent with the use of fixed effects 

models developed for the SMR and 

SHR. We also note that the NQF has 

endorsed both approaches to riskadjustment. The SRR measure 

incorporates both fixed and random 

effects in its adjustment model for 

particular purposes. When there is only 

one hospital and one dialysis facility 

serving a community, the random 

effects approach basically assumes that 

the hospital is drawn at random from 

the population of hospitals, as is the 

underlying assumption in a random 

effects model. Thus, the adjustment for 

the hospital in that case would be 

essentially that of a randomly selected 

hospital. In other instances, where the 

same hospital is paired with two or 

more dialysis facilities, the overall rate 

of readmissions is used in the model to 

determine the hospital adjustment. In 

either case, the random variation due to 

the hospital contributes to the standard 

error of the estimated facility response. 

There are no additional assumptions in 

the fixed effects for facilities, as 

opposed to the additional statistical 

assumptions required of a random 

effect. 

Comment: One commenter stated that 

the validity of the SRR measure is called 

into question by the high number of 

risk-adjustments included. Specifically, 

commenter stated that risk-adjusting for 

BMI at incidence of chronic dialysis is 

inappropriate because the recorded 

values may have been incorrectly 

documented, and because a patient’s 

BMI is likely to change significantly 

between the initiation of chronic 

dialysis and an index hospitalization. 

Response: Our risk adjustment is 

intended to fairly compare a given 

facility to the national level of 

performance after properly adjusting for 

the case-mix in that facility. Thus, the 

adjustments were chosen to reflect 

important comorbidities and 

characteristics of patients in a given 

facility, and were assessed with respect 

to their association with the 

readmission outcome. We have, 

however, avoided risk-adjusting for 

facility practices that reflect choices in 

care provided and that may result in 

better or worse outcomes. We did this 

to avoid adjusting away care choices 

made by providers that may account for 

important differences in facility 

outcomes. We are not aware of a 

particular standard defining the number 

of risk adjustors in a model that would 

call its validity into question, but we 

carefully consider the risk model’s 

parsimony during its development, 

evaluating components for redundancy, 

and removing those that are either 

redundant or do not contribute to the 

model. We continuously re-evaluate our 

quality measures for appropriateness, 

and our analyses indicate that incident 

BMI is a significant and appropriate 

predictor of health outcomes in the 

ESRD dialysis population. 

Comment: One commenter stated that 

claims codes used in a non-ESRD 

population should not be used to 

determine planned readmissions in the 

ESRD population, as it the case for the 

proposed SRR measure. 

Response: The list of acute diagnoses 

and planned procedures—both of which 

were initially developed for the 

Hospital-Wide Readmission Measure 

(NQF #1789)—were reviewed by a 

nephrologist, by members of the 

Technical Expert Panel convened in 

April 2012, and by stakeholders during 

the CMS public comment period in May 

2013 for the purpose of determining 

whether they were appropriate for the 

SRR measure. This process resulted in 

the planned readmissions algorithm as 

it is currently specified for the SRR. We 

believe the systematically excluded 

claims codes identify readmissions that 

are planned, and therefore do not reflect 

a failure in the transition of care for the 

ESRD population. These codes are 

applicable to the ESRD population 

insofar as they are submitted by 

hospitals for ESRD and non-ESRD 

patients alike, and are therefore 

appropriate for exclusion from the SRR. 

Comment: One commenter stated that 

claims data is not sufficient to reliably 

estimate actual and expected 

readmission rates. Commenter 

recommended that the proposed SRR 

measure should use data from facilities’ 

electronic medical records. 

Response: A key advantage for claimsbased risk-adjustment is the availability 

of standardized data elements for all 

Medicare beneficiaries. There is 

currently no set standard of medical 

record compatibility and no national 

electronic medical record system across 

dialysis provider organizations. 

Comment: Some commenters did not 

support the adoption of the proposed 

SRR measure, because the measure only 

has a ‘‘moderate’’ degree of reliability. 

Response: We believe that the SRR 

clinical measure captures important 

quality data for the purposes of the 

ESRD QIP program. We believe the SRR 

is sufficiently reliable for inclusion in 

the ESRD QIP because it meets the 


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NQF’s moderate degree of reliability 

standard, and particularly in light of our 

policies to set the case minimum for this 

measure at 11 index discharges and 

apply the small-facility adjuster to 

facilities with between 11 and 41 index 

discharges. We provide detailed 

analysis of the reliability of the SRR at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/Downloads/

AnalysisoftheReliabilityoftheProposed

SRRandSTrRMeasures.pdf. From 2009 

through 2012, the SRR has an inter-unit 

reliability ranging from 0.49 to 0.54, 

which indicates a moderate degree of 

reliability. For context, the standard of 

an acceptable level of reliability is 0.40 

or higher. 

Comment: One commenter sought 

clarification as to how the proposed 

SRR measure will count hospital stays 

less than 24 hours, observation days, 

and same-day surgical procedures. 

Response: The SRR measure assesses 

the risk of readmission to an acute care 

hospital within 30 days of discharge 

from an acute care hospital. Patients 

who are not admitted to an acute care 

hospital within 30 days of discharge are 

not included in the measure. Patients 

who are admitted will be included in 

the measure, even in cases (such as 

same-day surgical procedures) where 

admission and discharge occur within a 

24-hour period. Such instances account 

for 1.3 percent of hospitalizations 

eligible to serve as index discharges in 

the SRR in 2012. 

Comment: One commenter sought 

clarification on how the proposed SRR 

measure will address unsuccessful 

kidney transplants in the six months 

following the transplant. Commenter 

recommended that the measure exclude 

these transplant failures. 

Response: As specified, the measure 

does not exclude patients who are 

hospitalized after a failed kidney 

transplant. We realize that this detail 

was not clear in the measure 

methodology report and we will edit the 

report to ensure clarity. As part of our 

ongoing quality measure re-evaluation 

process, we will examine this issue and 

consider how best to explicitly account 

for failed transplants in the SRR. 

Comment: One commenter sought 

clarification on whether ‘‘poisoning by 

nonmedical substances’’ encompasses 

chronic substance abuse. 

Response: We clarify that ‘‘poisoning 

by non-medicinal substances’’ does not 

include ICD–9 codes for ongoing alcohol 

or drug abuse. Please refer to the 

breakdown of this CCS group on 

AHRQ’s Web site: http://www.hcupus.ahrq.gov/toolssoftware/ccs/

AppendixASingleDX.txt. 

Comment: Some commenters stated 

that adopting the SRR measure would 

penalize two facilities for the same 

readmission: hospitals through the 

Hospital Readmissions Reduction 

Program and dialysis facilities through 

the ESRD QIP. Other commenters stated 

that readmissions measures are not an 

effective way to increase care 

coordination because different types of 

facilities (for example, dialysis facilities 

and hospitals) are paid separately. 

Response: We agree that it is possible 

that a hospital and a dialysis facility 

could be penalized simultaneously for 

the same readmission event. We believe 

that both the hospital and the facility 

should be held accountable for ensuring 

that ESRD patients transition 

successfully from the hospital to postacute care in the facility. Although 

different types of facilities are paid 

separately, we believe that all providers 

involved in the transition of care from 

acute to non-acute settings share 

responsibility for avoiding excessive 

rates of unplanned readmissions. 

Comment: One commenter stated that 

facilities will experience difficulty in 

explaining facility scores on the SRR 

clinical measure to patients, and that 

doing so may be ‘‘politically 

challenging’’ when the dialysis facility 

is affiliated with the admitting hospital 

system. 

Response: The CY 2015 ESRD PPS 

Proposed rule includes a link to a 

measure methodology report (http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html) which 

provides an extensive discussion of how 

to interpret scores on the SRR measure. 

Simply put, a readmission ratio of 

greater than 1.0 reflects that a facility’s 

patients are at higher risk for 

readmissions than they would be at an 

average facility. A score below 1.0 

reflects that a facility’s patients are at 

lower risk for readmissions than they 

would be at an average facility. A lower 

ratio is preferable because it indicates 

that a facility is doing a better job of 

managing patient transitions from a 

hospital back to the dialysis facility. 

Comment: Some commenters 

recommended that CMS should delay 

the adoption of this measure until it 

provides facilities with reports 

documenting their performance with 

patient-level data, so that facilities can 

identify root causes and implement 

improvement plans. Commenters also 

recommended delaying the adoption of 

the proposed SRR measure until it has 

been endorsed by NQF. 

Response: From March through April 

2014, we conducted a dry run of the 

SRR, in which facilities were given the 

opportunity to view a quality report that 

provided their readmission measure 

results. At facility request, we also made 

patient-level data available for their 

review and entertained facility 

comments regarding the measure and 

the reporting process. We acknowledge 

the desire to delay implementation until 

after endorsement by NQF, and the 

reasoning behind such a suggestion. 

However, we believe that readmissions 

represent an important outcome of care 

for dialysis patients, given the 

population has a readmission rate of 

around 36 percent, which is twice that 

of the Medicare population. 

Comment: One commenter 

recommended that CMS continue to 

exclude pediatric patients from the 

proposed SRR measure and any future 

readmission measures, because the 

pediatric population is so small that a 

single readmission can skew the unit’s 

results and may incentivize facilities to 

deny admission to pediatric patients. 

Response: We thank the commenter 

for the recommendation and will take it 

into account in future measure 

development work. 

Comment: One commenter stated that 

the SRR measure should exclude 

planned readmissions. 

Response: We appreciate the 

commenter’s support for the SRR’s 

exclusion of planned readmissions. This 

is an approach we have incorporated 

into measures of readmissions across 

multiple settings, and we agree that it is 

appropriate for this measure because 

planned readmissions do not reflect 

failures in care transitions and if not 

excluded, could bias SRR results for 

facilities that treat patients who receive 

certain kinds of in-patient hospital care. 

Comment: One commenter 

recommended that CMS require 

hospitals to provide facilities with data 

concerning a patient’s dry weight, 

dialysis prescription changes, and 

continuing antibiotics on the day a 

patient is discharged. Commenter stated 

that CMS could require hospitals to 

provide this data using the hospital 

Conditions for Coverage or the Hospital 

Value-Based Purchasing Program, and 

that this information is crucial for 

facilities to identify problems that lead 

to unplanned readmissions. 

Response: We thank commenters for 

the suggestions, which capture an 

important issue of care coordination. 

We believe all providers should 

communicate and coordinate the care of 

patients transitioning from one setting 

of care to another. We agree that 

effective communication of clinically 

relevant data is an important goal. We 

are exploring means by which to 


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encourage the transfer of relevant 

information between providers. 

For these reasons, we are finalizing 

the SRR clinical measure as proposed 

for the PY 2017 ESRD QIP and for future 

payment years. The technical 

specifications for this finalized measure 

can be found at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

BILLING CODE 4120–01–P 

BILLING CODE 4120–01–C 

3. Performance Period for the PY 2017 

ESRD QIP 

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

requires the Secretary to establish the 

performance period with respect to a 

payment year, and that the performance 

period occur prior to the beginning of 

such year. In the CY 2013 ESRD PPS 

Final Rule (77 FR 67500), we stated our 

belief that, for most measures, 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 these 

measures, and also provides adequate 

incentive and feedback for facilities and 

Medicare beneficiaries. CY 2015 is the 

latest period of time during which we 

can collect a full 12 months of data and 

still implement the PY 2017 payment 

reductions. Therefore, we proposed to 

establish CY 2015 as the performance 

period for PY 2017 ESRD QIP. 

We sought comments on this 

proposal. We did not receive any 

comments and are finalizing it as 

proposed. 

4. Performance Standards, Achievement 

Thresholds, and Benchmarks for the PY 

2017 ESRD QIP 

We proposed to adopt performance 

standards for the PY 2017 ESRD QIP 

measures similar to those we finalized 

for PY 2016 (78 FR 72211 through 

72213). Section 1881(h)(4)(A) of the Act 

provides that ‘‘the Secretary shall 

establish performance standards with 

respect to measures selected . . . for a 

performance period with respect to a 

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

further provides that the ‘‘performance 

standards . . . shall include levels of 

achievement and improvement, as 

determined appropriate by the 

Secretary.’’ We use the performance 

standards to establish the minimum 

score a facility must achieve to avoid a 

Medicare payment reduction. We use 

achievement thresholds and 

benchmarks to calculate scores on the 

clinical measures. 

a. Performance Standards, Achievement 

Thresholds, and Benchmarks for the 

Clinical Measures in the PY 2017 ESRD 

QIP 

With the exception of the NHSN 

Bloodstream Infection clinical measure, 

we proposed to set the performance 

standards, achievement thresholds, and 

benchmarks for the PY 2017 clinical 

measures at the 50th, 15th, and 90th 

percentile, respectively, of national 

performance in CY 2013, because this 

would give us enough time to calculate 

and assign numerical values to the 

proposed performance standards for the 

PY 2017 program prior to the beginning 

of the performance period. We continue 

to believe that these standards will 

provide an incentive for facilities to 

continuously improve their 

performance, while not reducing 

incentives to facilities that score at or 

above the national performance rate for 

the clinical measures. As stated in the 

CY 2014 ESRD PPS Final Rule (78 FR 

72213 through 72215), CY 2014 is the 

first year for which we will have data 


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for the NHSN Bloodstream Infection 

clinical measure. Accordingly, we 

proposed to set the performance 

standard, achievement threshold, and 

benchmark for the NHSN Bloodstream 

Infection clinical measure based on the 

50th, 15th, and 90th percentiles, 

respectively, of national performance in 

CY 2014. 

We sought comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

CMS’s use of benchmarks to drive 

quality improvement in the ESRD QIP, 

and the scoring methodology proposed 

for the PY 2017 program, because it 

aligns with the methodology used in the 

Hospital Value-Based Purchasing 

program. 

Response: We thank the commenter 

for the support. 

Comment: One commenter was 

concerned with the proposed 

benchmarks for PY 2017, stating that 

these benchmarks are ‘‘unrealistic’’ 

because the increasingly high thresholds 

for achievement are making it harder for 

facilities to score well, even though they 

may be delivering high-quality care to 

patients. Commenter stated that for 

some measures, circumstances beyond a 

facility’s control, such patient eligibility 

for a fistula and patient choice, will 

impact facility scores. 

Response: We disagree that the 

proposed benchmarks for PY 2017 are 

unrealistic or unachievable. 

Benchmarks for clinical measures are 

pegged to national performance rates, 

such that 15 percent of facilities met the 

benchmarks two years before the 

performance period. Accordingly, the 

benchmarks represent a high level of 

achievement, but they are not 

unrealistic because they have been met 

by 15 percent of facilities nationwide, 

and because they represent past (and 

typically lower) standards of practice. 

Comment: One commenter supported 

the use of benchmarks to drive quality 

improvement in the ESRD facility 

setting, but stated that pegging 

benchmarks to national performance 

rates creates a ‘‘continually moving 

target.’’ The commenter further stated 

that without an adjustment for facility 

location, population, or demographics, 

these benchmarks may penalize a 

facility that is performing well in 

comparison to its peers. The commenter 

recommended that CMS determine 

standards for each individual measure 

using evidence-based practices and 

provide these standards to facilities. 

Another commenter recommended CMS 

carefully evaluate established 

benchmarks to ensure that the high 

standards established do not create an 

incentive for facilities to deny care to 

sicker patients. 

Response: We thank the commenter 

for the support. We recognize that 

pegging benchmarks to national 

performance rates creates a continually 

moving target for facilities, because 

facility performance on clinical quality 

metrics typically improves over time. 

We believe it is appropriate for 

benchmarks to increase, in line with 

improvements in national performance 

rates, because not increasing the 

benchmarks would hold facilities to a 

lower standard of care and would 

diminish incentives for improvement. 

We discussed above the possibility of 

using a peer group stratification system 

for dialysis facilities as a feasible 

approach to risk adjustment. We 

welcome input on how such a system 

might function, and will consider its 

utility for future years of the ESRD QIP. 

Comment: One commenter stated that 

it is inappropriate for the ESRD QIP to 

base payment reductions on retroactive 

performance, and recommended that 

CMS should finalize measures and 

performance standards in a timely 

manner, in order to ensure facilities are 

made aware of appropriate standards. 

Response: The current achievement 

scoring methodology generally 

compares facility performance in the 

performance period to national 

performance two years before the 

performance period, except in cases 

where there is a compelling patient 

safety reason to accelerate the adoption 

of a clinical measures (for example, the 

NHSN measure in the PY 2016 ESRD 

QIP). If facility performance during the 

performance period were to be 

compared to national performance 

during the performance period, this 

would place facilities on a ‘‘forced 

curve’’ and ensure that fifty percent of 

facilities fell below the performance 

standard. Additionally, we appreciate 

that facilities want to learn as soon as 

possible what the ESRD QIP measure set 

will be for a given CY. For this reason, 

we are finalizing measures the PY 2018 

program in this final rule, 14 months 

before the beginning of the performance 

period for those measures. Finally we 

publish numerical values for 

performance standards as soon as data 

reflecting current national facility 

performance become available. 

Comment: Commenter stated that 

facilities should not be scored on a 

forced normal curve. Commenter stated 

that this practice is not mandated by the 

Act, that it has been dismissed as 

invalid in quality improvement 

initiatives used in other professions, 

and that this penalizes facilities for 

providing patient-centered care when it 

is inconsistent with measure goals and 

targets. 

Response: We appreciate commenter’s 

concerns; however, the ESRD QIP does 

not use a normal curve to score 

facilities, nor have we proposed to 

adopt such a methodology in the 

proposed rule. 

For these reasons, we are finalizing 

the performance standards for the PY 

2017 ESRD QIP as proposed. 

b. Finalized Performance Standards, 

Achievement Thresholds, and 

Benchmarks for the Clinical Measures in 

the PY 2017 ESRD QIP 

Upon the publication of the CY 2015 

ESRD PPS Proposed Rule, we did not 

have the necessary data to assign 

numerical values to the proposed 

performance standards, achievement 

thresholds, and benchmarks for the 

clinical measures, because we did not 

yet have complete data from CY 2013. 

Since that time, we have collected the 

data needed to calculate finalized 

performance standards for the PY 2017 

ESRD QIP. For all of the clinical 

measures, including the SRR clinical 

measure, this data comes from the 

period of January through December 

2013. Table 23 lists the finalized 

numerical values for all of the finalized 

PY 2017 ESRD QIP clinical measures 

except the NHSN Bloodstream Infection 

clinical measure. 

TABLE 23—NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2017 ESRD QIP CLINICAL MEASURES

USING THE MOST RECENTLY AVAILABLE DATA

Measure Performance standard Achievement threshold Benchmark 

Vascular Access Type: 

%Fistula .................................. 64.46 ............................................. 52.42 ............................................. 78.56 

%Catheter ............................... 9.92 ............................................... 18.36 ............................................. 3.23 

Kt/V: 

Adult Hemodialysis ................. 96.89 ............................................. 91.08 ............................................. 99.35 


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TABLE 23—NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2017 ESRD QIP CLINICAL MEASURES

USING THE MOST RECENTLY AVAILABLE DATA—Continued 

Measure Performance standard Achievement threshold Benchmark 

Adult Peritoneal Dialysis ......... 87.10 ............................................. 70.19 ............................................. 95.20 

Pediatric Hemodialysis ........... 94.44 ............................................. 84.15 ............................................. 99.06 

Hypercalcemia ............................... 1.30 ............................................... 4.78 ............................................... 0.00 

NHSN Bloodstream Infection ......... 50th percentile of eligible facilities’ 

performance during CY 2014.

15th percentile of eligible facilities’ 

performance during CY 2014.

90th percentile of eligible facilities’ 

performance during CY 2014 

Standardized Readmission Ratio .. 0.996 ............................................. 1.325 ............................................. 0.555 

We believe that the ESRD QIP should 

not have lower performance standards 

than in previous years. In accordance 

with our statements in the CY 2012 

ESRD PPS final rule (76 FR 70273), if 

the final numerical value for a 

performance standard, achievement 

threshold, and/or benchmark is worse 

than it was for that measure in the PY 

2016 ESRD QIP, then we proposed to 

substitute the PY 2016 performance 

standard, achievement threshold, and/or 

benchmark for that measure. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

the proposal to use performance 

standards from the previous year if the 

current year’s standards are lower. 

Response: We thank the commenter 

for the support. For this reason, 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 

have not declined. Therefore, for PY 

2017, we will use the performance 

standards in the above table. 

c. Performance Standards for the PY 

2017 Reporting Measures 

In the CY 2014 ESRD PPS Final Rule, 

we finalized performance standards for 

the Anemia Management, Mineral 

Metabolism, and ICH CAHPS reporting 

measures (78 FR 72213). We proposed 

to continue to use these performance 

standards for these measures in the PY 

2017 ESRD QIP. We sought comments 

on this proposal. We did not receive any 

comments on this proposal. 

5. Scoring the PY 2017 ESRD QIP 

Measures 

a. Scoring Facility Performance on 

Clinical Measures Based on 

Achievement 

In the CY 2014 ESRD PPS Final Rule, 

we finalized a policy for scoring 

performance on clinical measures based 

on achievement (78 FR 72215). In 

determining a facility’s achievement 

score for each measure under the PY 

2017 ESRD QIP, we proposed to 

continue using this methodology for all 

clinical measures. Under this 

methodology, facilities receive points 

along an achievement range based on 

their performance during the proposed 

performance period for each measure, 

which we define as a scale between the 

achievement threshold and the 

benchmark. 

b. Scoring Facility Performance on 

Clinical Measures Based on 

Improvement 

In the CY 2014 ESRD PPS Final Rule, 

we finalized a policy for scoring 

performance on clinical measures based 

on improvement (78 FR 72215 through 

72216). In determining a facility’s 

improvement score for each measure 

under the PY 2017 ESRD QIP, we 

proposed to continue using this 

methodology for all clinical measures. 

Under this methodology, facilities 

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 performance on the measure 

during CY 2014. The facility’s 

improvement score would be calculated 

by comparing its performance on the 

measure during CY 2015 (the proposed 

performance period) to its performance 

rate on the measure during CY 2014. 

We sought comments on this 

proposal. We did not receive any 

comments and are finalizing it as 

proposed. 

6. Weighting the Total Performance 

Score 

We continue to believe that while the 

reporting measures are valuable, the 

clinical measures evaluate actual patient 

care and therefore justify a higher 

combined weight (78 FR 72217). We 

therefore did not propose to change our 

policy, finalized most recently in the CY 

2014 ESRD PPS (78 FR 72217), to 

weight clinical measures as 75 percent 

and reporting measures as 25 percent of 

the TPS. We did not propose any 

changes to the policy that facilities must 

be eligible to receive a score on at least 

one reporting measure and at least one 

clinical measure to be eligible to receive 

a TPS, or the policy that a facility’s TPS 

will be rounded to the nearest integer, 

with half of an integer being rounded 

up. 

7. Minimum Data for Scoring Measures 

for the PY 2017 ESRD QIP and Changing 

the Attestation Process for Patient 

Minimums 

For the same reasons described in the 

CY 2013 ESRD PPS final rule (77 FR 

67510 through 67512), for PY 2017 we 

proposed to only score facilities on 

clinical and reporting measures for 

which they have a minimum number of 

qualifying patients during the 

performance period. Our current policy 

is that a facility must treat at least 11 

qualifying patients during the 

performance period in order to be 

scored on a clinical measure (77 FR 

67510 through 67511). We did not 

propose any changes to this policy. 

However, with respect to the 

proposed SRR measure, we proposed 

that facilities with fewer than 11 index 

discharges will not be eligible to receive 

a score on that measure. We considered 

proposing to adopt the 11 qualifying 

patient minimum that we use for the 

other clinical measures. We decided, 

however, to base facility eligibility for 

the measure on the number of index 

discharges attributed to a facility, 

because the measure calculations are 

determined by the number of index 

discharges, adjusted for patient casemix. We decided to set the minimum 

number of index discharges at 11 

because this is consistent with reporting 

for the proposed SRR measure during 

the dry run conducted earlier this year, 

as well as with the implementation of 

outcome measures in the Hospital 

Readmission Reduction Program, which 

base case minimums on the number of 

index discharges attributable to the 

facility. 

Additionally, for the proposed SRR 

measure, we proposed to apply the 

small-facility adjuster to facilities that 

treat 41 or fewer index discharges 

because we determined that this was the 

minimum number of index discharges 

needed to achieve an IUR of 0.4 (that is, 


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moderate reliability) for the proposed 

SRR measure. Because the small-facility 

adjuster gives facilities the benefit of the 

doubt when measure scores can be 

unduly influenced by a few outlier 

patients, we believe that setting the 

threshold at 41 index discharges will 

not unduly penalize facilities that treat 

small numbers of patients. 

In the CY 2014 ESRD PPS Final Rule, 

we finalized that the case minimum for 

the Mineral Metabolism and Anemia 

Management reporting measures is one, 

and that facilities that treat one 

qualifying patient could attest to this in 

CROWNWeb in order to avoid being 

scored on the measures (78 FR 72197 

through 72199 and 72220 through 

72221). In the process of responding to 

questions from facilities about the 

attestation requirements for the PY 2015 

program, however, we found that 

facilities were confused by this 

requirement. For this reason, we 

proposed to remove the option for 

facilities to attest that they did not meet 

the case minimum for these measures. 

Accordingly, facilities that meet the case 

minimum of one qualifying patient 

would be scored on these measures, 

facilities with between 2 and 11 

qualifying patients would be required to 

report data for all but one qualifying 

patient, and facilities with 11 or more 

qualifying patients would be required to 

report data for all patients. Due to 

facility confusion with the attestation 

process, we also proposed to remove the 

option for facilities to attest that they 

did not meet the case minimum for the 

ICH CAHPS survey reporting measure. 

As we stated above, we did not propose 

any further changes to the 30 surveyeligible case minimum for this measure. 

We proposed that the ESRD QIP 

program will determine facility 

eligibility for these measures based on 

available data submitted to 

CROWNWeb, in Medicare claims, and 

to other CMS administrative data 

sources. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Many commenters did not 

support the proposed data minimum 

requirements for the reporting measures 

because the commenters stated that the 

requirements unfairly penalize facilities 

that may not be able to legitimately 

report data for a few patients. As an 

alternative, the commenters 

recommended applying a consistent 

case minimum of 26 for all measures in 

the ESRD QIP. 

Response: We agree with commenters 

that requiring facilities with small 

patient populations to report data for all 

but one eligible patient may unfairly 

penalize small facilities, because failing 

to report data for two or more patients 

will have a greater impact on small 

facility than on larger facilities. 

However, we disagree that it is 

appropriate to set the case minimum at 

26 for these reporting measures, because 

doing so would not allow CMS to 

collect baseline data for a large 

percentage of patients. We believe that 

setting the case minimum at 11 for the 

Anemia Management and Mineral 

Metabolism reporting measures strikes 

the appropriate balance between the 

need to maximize data collection and 

the need to not unduly penalize small 

facilities that are unable, for legitimate 

reasons, to report data on all but one 

patient. We further believe that setting 

the case minimum at 11 is appropriate, 

because this would align with the case 

minimum policy for the clinical 

measures in the ESRD QIP. Therefore, 

we are finalizing a case minimum policy 

of 11 for the Anemia Management and 

Mineral Metabolism reporting measures. 

Comment: One commenter did not 

support the proposed minimum data 

requirements for the ICH CAHPS 

measure, because small facilities will 

have difficulty obtaining 30 completed 

surveys. Commenter recommended 

CMS use actual response rates from the 

CY 2014 survey to determine eligibility 

criteria for this measure in PY 2017 and 

PY 2018. 

Response: Under the minimum data 

requirements proposed for the ICH 

CAHPS reporting measure for PY 2017, 

a facility that (1) treats fewer than 30 

survey-eligible patients during the 

eligibility period (that is., CY 2014); or 

(2) receives fewer than 30 completed 

surveys during the performance period 

(that is., CY 2015) is not eligible to 

receive a score on the ICH CAHPS 

measure. We are finalizing below that 

these data minimum requirements also 

apply to the ICH CAHPS clinical 

measure for PY 2018. Therefore, if a 

small facility treats more than 30 ICH 

CAHPS eligible patients during the 

eligibility period but receives fewer than 

30 completed surveys total from the two 

survey administrations for the 

performance period, that facility will 

receive an ‘‘N/A’’ on the ICH CAHPS 

measure for that Payment Year. We 

disagree with commenter’s 

recommendation to use CY 2014 

response rates to determine survey 

eligibility criteria for the ICH CAHPS 

measure because actual response rates 

are susceptible to a number of biases, 

including facility case-mix, response 

propensity, and the mode of survey 

administration. We believe the current 

minimum data requirement avoids the 

possibility of unfairly penalizing 

facilities based on these response biases 

by relying solely on the number of 

patients treated and the number of 

surveys completed to determine ICH 

CAHPS scoring eligibility. 

Comment: One commenter did not 

support calculating clinical measure 

performance rates for facilities with 

between 11 and 25 eligible patients, and 

then applying the small facility adjuster 

to these facilities’ scores. One 

commenter stated that including 

facilities with small numbers of eligible 

patients, and compensating (via the 

small facility adjuster) for the random 

effects that inevitably appear, is not 

consistent with the NQS goal of 

applying consistent approaches to 

quality measurement. 

Response: We recognize that measures 

using a patient-minimum of 11 are 

somewhat less reliable than measures 

using a patient-minimum of 26. Despite 

this modest decline in the measures’ 

reliability, we continue to believe that it 

is essential to score facilities with 

between 11 to 25 eligible patients on the 

clinical measures. Based on data from 

CY 2013, we have determined that 

applying a 26-patient-minimum to all of 

the clinical measures (as compared with 

continuing the current 11-patientminimum) would result in the exclusion 

of an additional 562 facilities from the 

ESRD QIP, or 9.2 percent of facilities 

overall. Given the inherent tradeoff 

between a modest decline in measure 

reliability and including these 562 

facilities in the ESRD QIP, we believe 

that on balance it is more important to 

include these facilities. Additionally, 

we recognize that the small facility 

adjuster is an imperfect mechanism for 

accounting for the possibility that a 

small number of outlier patients will 

disproportionately diminish a facility’s 

score on a clinical measure. 

Nevertheless, given the program’s 

commitment to the 11-patient 

minimum, using the adjuster is 

preferable to not using any adjustment, 

because the adjuster gives small 

facilities the benefit of the doubt. We 

further believe that this methodology is 

consistent with the NQS goal of a 

consistent approach to quality 

measurement because it is applied to all 

clinical measures in the ESRD QIP. 

Comment: One commenter did not 

support the use of the small facility 

adjuster in the ESRD QIP, because 

adjustments are haphazardly applied to 

facilities with similar numbers of 

eligible patients and patient-months in 

the numerator. For example, and with 

respect to the Peritoneal Dialysis 

Adequacy clinical measure, a facility 

with 18 eligible patients that misses the 

threshold for 3 patients would not 


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receive an adjustment, whereas a facility 

with 17 eligible patients that misses the 

threshold for 3 patients would, as would 

a facility with 19 eligible patients that 

misses the threshold for 3 patients. If 

the small facility adjuster remains in the 

ESRD QIP, commenter recommended 

rounding the measure score after 

applying the adjustment, as opposed to 

beforehand, which the commenter states 

is the current practice. 

Response: The small facility 

adjustment is applied consistently to 

facilities’ performance rates (for 

example, 87.5 percent for the Adult 

Peritoneal Dialysis clinical measure), 

such that facilities with fewer eligible 

patients receive more of an adjustment 

than facilities with more eligible 

patients. With respect to the example 

provided by the commenter, we 

recognize that the impact of the small 

facility adjustment on measure scores 

can be different for facilities with the 

same or similar numbers of eligible 

patients for each facility. This variable 

impact on facility measure scores is 

attributable to the achievement and 

improvement scoring methodologies 

used in the ESRD QIP. Scores on the 

clinical measures are determined by 

selecting the higher of the facility’s 

achievement and improvement scores. 

The achievement score is determined by 

comparing the adjusted performance 

rate to the achievement threshold and 

benchmark, and the facility’s 

improvement score is determined by 

comparing the adjusted performance 

rate to the facility’s baseline rate. 

Accordingly, the impact of the small 

facility adjustment on a measure score 

(as opposed to a performance rate) will 

depend upon whether a measure is 

scored on the basis of achievement or 

improvement, as well as the facility’s 

improvement threshold. Therefore, the 

variable impact of the small facility 

adjustment is not inherent to the small 

facility adjuster, but rather an 

intentional artifact of the ESRD QIP 

scoring methodology. Finally, we note 

that the small facility adjustment is 

applied to the measure performance rate 

(as opposed to the measure score), with 

rounding performed at the 6th decimal 

place. Rounding to the nearest integer 

already occurs after the small facility 

adjustment is applied, and this is 

consistent with the commenters 

recommendation on this finalized 

policy. The following summarizes the 

rounding algorithm that is currently 

applied to the performance score 

calculation for facilities with 11–25 

eligible patients: 

• Calculate the measure performance 

rate (xi=(#patient-months numerator/

#patient-months denominator)*100), 

round to 6th decimal place 

• Calculate the facility weight (wi=1- 

ni/26), round to 6th decimal place 

• Calculate the Standard Error 

(SE(xi)), round to 6th decimal place 

• Calculate adjusted measure 

performance rate (ti = xi +wi * SE(xi)), 

round to nearest integer. 

For these reasons, we are finalizing 

the minimum data policies as proposed, 

with the exception of the patient 

minimum policies for the Anemia 

Management and Mineral Metabolism 

reporting measures. We are finalizing 

that a facility must treat at least 11 

qualifying patients to receive a score on 

the Anemia Management and Mineral 

Metabolism reporting measures. 

We proposed to continue our policies 

that govern when a newly opened 

facility would be eligible to be scored on 

measures as follows. 

• Facilities with a CCN open date on 

or after July 1 of the performance period 

(for PY 2017, this would be July 1, 2015) 

are not eligible to be scored on any 

reporting measures except the ICH 

CAHPS reporting measure. 

• Facilities with a CCN open date on 

or after January 1 of the performance 

period (for PY 2017, this would be 

January 1, 2015) are not eligible to 

receive a score on the ICH CAHPS 

reporting measure in the PY 2017 

program, due to the time it takes to 

contract with a CMS-approved thirdparty vendor to administer the survey. 

• Facilities are eligible to receive a 

score on all of the clinical measures 

except the NHSN Bloodstream Infection 

clinical measure if they have a CCN 

open date at any time before the end of 

the performance period. 

• Facilities with a CCN open date 

after January 1 of the performance 

period (for PY 2017, this would be 

January 1, 2015) are not eligible to 

receive a score on the NHSN 

Bloodstream Infection clinical measure, 

due to the need to collect 12 months of 

data to accurately score the measure. 

We also proposed to continue our 

policy that a facility will not receive a 

TPS unless it receives a score on at least 

one clinical measure and at least one 

reporting measure. We note that as a 

result, facilities will not be eligible for 

a payment reduction under the PY 2017 

ESRD QIP if they have a CCN open date 

on or after July 1, 2015. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

Table 24 displays the finalized patient 

minimum requirements for each of the 

reporting measures, as well as the CCN 

open dates after which a facility will not 

be eligible to receive a score on a 

reporting measure. 

TABLE 24—MINIMUM DATA REQUIREMENTS FOR THE PY 2017 ESRD QIP 

Measure Minimum data requirements CCN open date Small facility adjuster 

Adult Hemodialysis Adequacy 

(Clinical).

11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

Adult Peritoneal Dialysis Adequacy (Clinical).11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

Pediatric Hemodialysis Adequacy (Clinical).11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

Vascular Access Type: Catheter 

(Clinical).

11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

Vascular Access Type: Fistula 

(Clinical).

11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

Hypercalcemia (Clinical) ............ 11 qualifying patients .................................................................. N/A ........................................... 11–25 patients 

NHSN Bloodstream Infection 

(Clinical).

11 qualifying patients .................................................................. On or before January 1, 2015 11–25 patients 

SRR (Clinical) ............................ 11 index discharges .................................................................... N/A ........................................... 11–41 index discharges 

ICH CAHPS (Reporting) ............ Facilities with 30 or more survey-eligible patients during the 

calendar year preceding the performance period must submit survey results. Facilities will not receive a score if they 

do not obtain a total of at least 30 completed surveys during 

the performance period..

Before January 1, 2015 ........... N/A 

Anemia Management (Reporting).11 qualifying patients .................................................................. Before July 1, 2015 .................. N/A 

Mineral Metabolism (Reporting) 11 qualifying patients .................................................................. Before July 1, 2015 .................. N/A 


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8. Payment Reductions for the PY 2017 

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 

TPSs receive the largest payment 

reductions. For PY 2017, we proposed 

that a facility will not receive a payment 

reduction if it achieves a minimum TPS 

that is equal to or greater than the total 

of the points it would have received if: 

• It performed at the performance 

standard for each clinical measure; 

• It received zero points for each 

clinical measure that does not have a 

numerical value for the performance 

standard established through the 

rulemaking process before the beginning 

of the PY 2017 performance period; and 

• It received 10 points (which is the 

50th percentile of facility performance 

on the PY 2015 reporting measures) for 

each reporting measure. 

We recognize that these conditions 

are more stringent than the conditions 

used to establish the minimum TPS in 

the PY 2016 ESRD QIP, because this 

proposal increases the number of points 

a facility would have to receive on each 

reporting measure from 5 to 10. The PY 

2015 program is the most recent year for 

which we will have calculated final 

measure scores before the beginning of 

the performance period for PY 2017 

(that is., CY 2015). We note that facility 

performance on the Anemia 

Management, Mineral Metabolism, 

NHSN Dialysis Event, and ICH CAHPS 

reporting measures in the PY 2015 

program is so high that the median score 

on each of the measures was 10 points. 

We proposed to increase the number of 

points a facility would have to achieve 

for each reporting measure to the 50th 

percentile of facility performance on the 

PY 2015 reporting measures (that is, the 

average of the median scores for each 

reporting measure), because a score of 5 

on each of these reporting measures is 

indicative of a below-average 

performance, and we want to 

incentivize facilities to provide aboveaverage care. 

We sought comments on this 

proposal. We did not receive any 

comments and are finalizing it as 

proposed. 

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

requires that facilities achieving the 

lowest TPSs receive the largest payment 

reductions. In the CY 2014 ESRD PPS 

Final Rule (78 FR 72223 through 72224), 

we finalized a payment reduction scale 

for PY 2016 and future payment years, 

such that for every 10 points a facility 

falls below the minimum TPS, the 

facility would receive an additional 0.5 

percent reduction on its ESRD PPS 

payments, with a maximum reduction 

of 2.0 percent. We did not propose any 

changes to this policy. 

Based on the finalized performance 

standards listed above, we have 

determined that a facility must meet or 

exceed a minimum TPS of 60 for PY 

2017. For all of the clinical measures 

except the NHSN Bloodstream Infection 

clinical measure, these data come from 

CY 2013. For the NHSN Bloodstream 

Infection clinical measure, we set the 

performance standard to zero for 

purposes of determining this minimum 

TPS, because we are not able to 

establish a numerical value for the 

performance standard through the 

rulemaking process before the beginning 

of the PY 2017 performance period. We 

proposed that facilities failing to meet 

the minimum TPS, as established in the 

CY 2015 ESRD PPS Final Rule, will 

receive payment reductions based on 

the estimated TPS ranges indicated in 

Table 25 below. 

TABLE 25—PAYMENT REDUCTION

SCALE FOR PY 2017 BASED ON THE

MOST RECENTLY AVAILABLE DATA

FROM CY 2013 

Total performance 

score 

Reduction 

(%) 

100–60 .................. 0 

59–50 .................... 0.5 

49–40 .................... 1.0 

39–30 .................... 1.5 

29–0 ...................... 2.0 

9. Data Validation 

One of the critical elements of the 

ESRD QIP’s success is ensuring that the 

data submitted to calculate measure 

scores and TPSs are accurate. We began 

a pilot data-validation program in CY 

2013 for the ESRD QIP, and we have 

procured the services of a datavalidation contractor that is tasked with 

validating a national sample of facilities’ 

records as they report CY 2014 data to 

CROWNWeb. Our first priority was to 

develop a methodology for validating 

data submitted to CROWNWeb under 

the pilot data-validation program, and 

this continues to be our goal. Once this 

methodology has been fully developed, 

we will propose to adopt it through the 

rulemaking process. For the PY 2016 

ESRD QIP (78 FR 72223 through 72224), 

we finalized a requirement to sample 

approximately 10 records from 300 

randomly selected facilities; these 

facilities will have 60 days to comply 

once they receive requests for records. 

We proposed to continue this pilot for 

the PY 2017 ESRD QIP. Under this 

continued validation study, we will 

sample the same number of records 

(approximately 10 per facility) from the 

same number of facilities (that is, 300) 

during CY 2015. If a facility is randomly 

selected to participate in the pilot 

validation study but does not provide 

CMS with the requisite medical records 

within 60 days of receiving a request, 

then we proposed to deduct 10 points 

from the facility’s TPS. Once we have 

developed and adopted a methodology 

for validating the CROWNWeb data, we 

intend to consider whether payment 

reductions under the ESRD QIP should 

be based, in part, on whether a facility 

has met our standards for data 

validation. 

We also proposed a feasibility study 

for validating data reported to CDC’s 

NHSN Dialysis Event Module for the 

NHSN Bloodstream Infection clinical 

measure. HAIs are relatively rare, and 

we proposed that the feasibility study 

would target records with a higher 

probability of including a dialysis event, 

because this would enrich the 

validation sample while reducing the 

burden on facilities. The methodology 

for this proposed feasibility study 

would resemble the methodology used 

by the Hospital Inpatient Quality 

Reporting Program to validate the 

central line-associated bloodstream 

infection measure, the catheterassociated urinary tract infection 

measure, and the surgical site infection 

measure (77 FR 53539 through 535553). 

Specifically, we proposed to 

randomly select nine facilities to 

participate in the feasibility study. A 

CMS contractor will send these facilities 

quarterly requests for lists of all positive 

blood cultures drawn from its patients 

during the quarter, including any 

positive blood cultures that were 

collected from the facility’s patients on 

the day of, or the day following, their 

admission to a hospital. Facilities will 

have 60 days to respond to quarterly 

requests for lists of positive blood 

cultures. A CMS contractor will then 

develop a methodology for determining 

when a positive blood culture qualifies 

as a ‘‘candidate dialysis event,’’ and is 

therefore appropriate for further 

validation. Once the contractor 

determines a methodology for 

identifying candidate dialysis events, 

the contractor will analyze the records 

of patients who had a positive blood 

culture in order to determine if the 

facility reported dialysis events for 

those patients in accordance with the 

NHSN Dialysis Event Protocol. If the 

contractor determines that additional 

medical records are needed from a 

facility to validate whether the facility 


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accurately reported the dialysis events, 

then the contractor will send a request 

for additional information to the facility, 

and the facility will have 60 days from 

the date of the letter to respond to the 

request. Overall, we estimate that, on 

average, quarterly lists will include two 

positive blood cultures per facility, but 

we recognize these estimates may vary 

considerably from facility to facility. If 

a facility is randomly selected to 

participate in the feasibility study but 

does not provide CMS with the requisite 

lists of positive blood cultures or the 

requisite medical records within 60 

days of receiving a request, then we 

proposed to deduct 10 points from the 

facility’s TPS. 

The goals of the proposed feasibility 

study will be five-fold: (1) To estimate 

the burden and associated costs to 

facilities of validating the NHSN 

Bloodstream Infection clinical measure; 

(2) to assess the costs to CMS to validate 

this measure; (3) to develop a 

methodology for identifying candidate 

dialysis events from lists of positive 

blood cultures; (4) to develop a 

methodology for determining whether a 

facility accurately reported dialysis 

events under the NHSN Bloodstream 

Infection clinical measure; and (5) to 

reach some preliminary conclusions 

about whether facilities are accurately 

reporting data under the NHSN 

Bloodstream Infection clinical measure. 

Based on the results of this study, we 

will consider the feasibility of proposing 

in future rulemaking to validate the 

NHSN Bloodstream Infection clinical 

measure for all facilities. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposal to validate data 

submitted for the NHSN Bloodstream 

Infection measure, and stated that 

asking facilities to provide blood culture 

reports on a quarterly basis is 

appropriate. However, one commenter 

also recommended that the proposed 

feasibility study be more robust. In 

particular, the commenter stated that 

previous validation studies of NHSN 

data revealed that facilities were 

underreporting dialysis events, and that 

facilities did not understand when to 

report that an infection was a ‘‘dialysis 

event.’’ The commenter recommended 

that these findings should be 

incorporated into the proposed 

feasibility study. Commenters also 

recommended expanding the number of 

facilities undergoing validation beyond 

9, because the ‘‘proposed nine-facility 

feasibility study is not robust enough to 

evaluate true validation concerns.’’ 

Commenters recommended auditing the 

NHSN data of 10 percent of facilities, 

because this would create a strong 

incentive for facilities to accurately 

report dialysis events. Another 

commenter stated that the validation 

study should be expanded to NHSN 

data that is used directly used to score 

the NHSN Bloodstream Infection 

measure. 

Response: We thank the commenters 

for their support. We initially 

considered expanding the scope of the 

feasibility study to include more than 

nine facilities. We decided not to do so 

because we thought it was important to 

demonstrate the study’s feasibility, and 

to further develop the study’s 

methodology, before expanding the 

study to include more facilities. 

Expanding the study to include more 

facilities before demonstrating its 

feasibility and validity could lead to a 

waste of agency resources. Furthermore, 

we are aware of existing studies that call 

into question the validity of data 

entered into the NHSN system. The 

existence of these studies is one of the 

reasons why we proposed to conduct 

the feasibility study, and results from 

previous studies will be taken into 

account when developing the 

methodology for the feasibility study. 

Additionally, we appreciate the 

recommendation to use a validation 

study of NHSN data to audit ten percent 

of facilities, and we agree that such a 

process could improve the validity of 

NHSN data overall. We will consider 

expanding the scope of the study once 

we have reviewed the results of the 

feasibility study. 

Comment: Some commenters stated 

that the CROWNWeb validation pilot is 

actually an audit of facility data, and is 

not focused on testing a new payment 

or delivery model. Commenters were 

concerned that the pilot places facilities 

at risk for incurring a 2 percent payment 

reduction and recommended 

‘‘intermediate penalties’’ as an 

alternative. Commenters further 

recommended that CMS ensure that 

facilities have some means to dispute 

CMS claims that they reported invalid 

data. 

Response: We agree that one of the 

purposes of the validation pilot is to 

identify instances in which facilities 

reporting invalid data to CROWNWeb. 

However, we do not believe it is 

appropriate to designate the validation 

pilot as an ‘‘audit’’ of facility data, 

because the ultimate objective of the 

study is to improve the validity of data 

reported to CROWNWeb, rather than to 

penalize facilities for reporting invalid 

data. We further note that we did not 

propose to penalize facilities for 

reporting invalid data; if and when we 

propose to do so in future rulemaking, 

we will consider implementing an 

appeal process facilities can use to 

contest CMS determinations that invalid 

data was reported to CROWNWeb. 

Finally, we recognize that facility noncompliance with the requirements of the 

CROWNWeb validation pilot may result 

in payment reductions that would not 

otherwise be imposed. We believe this 

is warranted, because facility 

compliance is essential to the success of 

the validation pilot, and we wish to 

provide a strong incentive for facilities 

to transmit the requested medical 

records needed to validate CROWNWeb 

data. 

Comment: One commenter stated that 

CROWNWeb should be fully functional 

before assessing penalties for submitting 

invalid data. 

Response: We agree that is it essential 

to improve the functionality of 

CROWNWeb, and we believe that the 

pilot validation study will assist in 

identifying systematic issues with 

CROWNWeb that diminish the system’s 

functionality. We did not propose to 

impose penalties on facilities for 

reporting invalid data, and we will 

consider the functionality of 

CROWNWeb if we decide to propose to 

impose such penalties in future 

rulemaking. 

Comment: One commenter 

recommended that CMS should make 

the methodology for the proposed 

NHSN validation feasibility study 

transparent and seek input from 

nephrologists and dialysis professionals 

when developing the methodology. 

Response: We agree that it is 

important to make the methodology of 

the feasibility study transparent. We 

will make the methodology publically 

available on a CMS Web site and notify 

the public of its availability via a 

CROWN Memo or similar mode of 

formal communication. Additionally, 

we confirm that the CMS contractor 

conducting the validation feasibility 

study will consult nephrologists and 

dialysis professionals when developing 

the study’s methodology. 

Comment: Some commenters did not 

support the proposal to validate data 

used to calculate the NHSN 

Bloodstream Infection measure because 

the commenter stated that the measure 

should have been validated before it 

would adopted in the ESRD QIP. 

Response: NHSN provides detailed 

trainings, protocols, and guidance for 

users to follow to ensure that data are 

reported in a standardized manner and 

according to requirements. A small 

validation study was conducted prior to 

the adoption of the measure in the ESRD 

QIP. Information from this study is 


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described in the measure specifications. 

We recognize that continuous internal 

and external evaluation and quality 

checks of the reported data are 

important for accuracy and reliability. 

We further note that one of the purposes 

of the feasibility study is to improve the 

validity of data reported to NHSN, and 

we continue to believe that one of the 

outcomes of the study will be to 

improve the validity of the NHSN 

Bloodstream Infection measure. 

Comment: Some commenters did not 

support the proposal to impose a 10- 

point reduction on facilities that fail to 

send medical records to CMS within the 

60-day timeframe, because the 60-day 

time frame is too short, and the penalty 

discriminates against facilities selected 

to participate in the validation studies, 

particularly small facilities. 

Commenters also stated that the ESRD 

CfCs already require facilities to comply 

with such requests. Commenter further 

stated that CMS has not demonstrated 

that facilities do not comply with these 

requests, and therefore did not support 

a penalty for non-compliance until the 

problem has been demonstrated. One 

commenter also questioned whether the 

Act authorizes CMS to deduct points 

from a facility’s TPS if it does not 

comply with the requirements of data 

validation studies. 

Response: We disagree that the 60-day 

time frame is too short for facilities to 

respond to requests to validate medical 

records, because facilities should have 

these records on hand, and sampled 

facilities will only be required to submit 

a small number of medical records the 

CROWNWeb and NHSN Bloodstream 

Infection studies. We recognize that the 

ESRD CfCs already require facilities to 

comply with these requests for medical 

records, and we are not aware of any 

evidence suggesting that they are not 

already doing so. Nevertheless, we 

continue to believe that assessing 

penalties on a facility’s TPS is the surest 

way to ensure that facilities provide the 

medical records needed to complete the 

studies. This is because facilities are 

typically not surveyed for compliance 

with the ESRD CfCs on any given year, 

so deducting points from a facility’s TPS 

provides a more certain process for 

penalizing noncompliance with the 

requirements of the validation studies. 

Our proposal to deduct points from a 

facility’s TPS is consistent with section 

1881(h)(3)(A)(i) of the Act, because it is 

part of our a methodology for assessing 

the total performance of each provider 

of services and renal dialysis facility 

based on performance standards with 

respect to the measures selected. The 

main purpose of these studies is to 

assess whether facilities are reporting 

accurate data, and we have determined 

that review of medical records is 

integral to that determination. 

For these reasons, we are finalizing, as 

proposed, CROWNWeb pilot datavalidation program and the feasibility 

study for validating data reported to 

CDC’s NHSN Dialysis Event Module for 

the NHSN Bloodstream Infection 

clinical measure. 

10. Monitoring Access to Dialysis 

Facilities 

Public comments on the proposal to 

adopt the Standardized Hospitalization 

Ratio measure in the PY 2014 ESRD QIP 

(76 FR 70267) expressed concerns that 

‘‘the measure may lead to ‘cherrypicking’ of patients based on their risk 

of hospitalizations, causing access to 

care issues for patients with more severe 

illness.’’ We share commenters’ 

concerns about the SHR measure, and 

we believe that these concerns equally 

apply to other outcome measures 

proposed for the ESRD QIP. We 

recognize that, in general, inadequate 

risk adjustment in outcome measure 

calculations can create an incentive for 

facilities to deny services to sicker 

patients, because these patients’ 

illnesses would not be properly 

accounted for in the risk-adjustment 

calculations. We believe that outcome 

measures proposed and adopted for the 

ESRD QIP properly risk adjust for 

patients with severe illnesses, but we 

remain concerned that misperceptions 

to the contrary might negatively impact 

access to dialysis therapy. 

Because we proposed to adopt the 

SRR clinical measure for the PY 2017 

program, and also proposed to adopt the 

STrR clinical measure for the PY 2018 

program, we proposed to initiate a 

monitoring program focused on access 

to dialysis therapy. This program would 

compare dialysis data before and after 

the adoption of an outcome measure, 

looking for changes in admission and 

discharge practices, as well as changes 

in rates and patterns of involuntary 

discharges. Specifically, this program 

would assess and analyze the 

characteristics of beneficiaries admitted 

to dialysis centers (stratified by location, 

size, and setting) in order to determine 

when and if selective admission and 

discharge practices are coupled with 

negative patient attributes and trends 

over time. We believe this program will 

enable us to identify patterns that are 

indicative of diminished access to 

dialysis therapy. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposed access study 

because monitoring and remediating 

cases of cherry-picking are important for 

ensuring that patients receive high 

quality care. 

Response: We thank commenters for 

their support. 

Comment: One commenter requested 

more information from CMS regarding 

its proposal to monitor dialysis facility 

admission and discharge practices, 

because this proposal may lead to 

additional reporting (and burden) for 

facilities. 

Response: We are still in the process 

of finalizing the methodology for the 

proposed access study. Once we have 

developed the methodology, we will 

make it publically available on a CMS 

Web site and notify the public of its 

availability via a CROWN Memo or 

similar mode of formal communication. 

We clarify, however, that the study will 

make use of existing data and will not 

impose any additional burden on 

facilities. 

Comment: One commenter 

recommended that, instead of 

performing the proposed monitoring 

access study, CMS focus its efforts on 

developing a more comprehensive set of 

comorbidities for use in adjusting the 

standardized outcome measures. 

Response: We appreciate the 

recommendation to further develop the 

risk-adjustment methodologies 

associated with the SRR and STrR 

measures, and we will continue to do so 

as part of our ongoing measure reevaluation process. However, we 

disagree that efforts to develop riskadjustment methodologies should be 

pursued in lieu of the proposed access 

study. We believe both activities are 

important, and we intend to pursue 

them at the same time. 

For these reasons, and because we are 

finalizing the SRR clinical measure for 

PY 2017 (as discussed in more detail 

above), and the STrR measure for PY 

2018 (as discussed in more detail 

below), we are finalizing that we will 

conduct a study to determine the impact 

of adopting the SRR and STrR measures 

on access to care. Further details about 

the study and its methodology will be 

made available on a CMS Web site, and 

facilities will be notified via a CROWN 

Memo when this information is 

available. 

11. Extraordinary Circumstances 

Exception 

Many comments on the CY 2014 

ESRD PPS proposed rule included the 

recommendation to exempt a facility 

from all the requirements of the ESRD 

QIP clinical and reporting measures 

during the time the facility was forced 

to close temporarily due to a natural 


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disaster or other extraordinary 

circumstances. In response to these 

comments, we agreed that ‘‘there are 

times when facilities are unable to 

submit required quality data due to 

extraordinary circumstances that are not 

within their control, and we do not wish 

to penalize facilities for such 

circumstances or unduly increase their 

burden during these times’’ (78 FR 

72209). 

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

states, ‘‘[T]he Secretary shall develop a 

methodology for assessing the total 

performance of each provider of services 

and renal dialysis facility based on 

performance standards with respect to 

the measures selected under paragraph 

(2) for a performance period established 

under paragraph (4)(D).’’ Given the 

possibility that facilities could be 

unfairly penalized for circumstances 

that are beyond their control, we believe 

the best way to implement an 

extraordinary circumstances exception 

is under the authority of this section. 

We therefore proposed to interpret 

section 1881(h)(3)(A)(i) of the Act to 

enable us to configure the methodology 

for assessing facilities’ total performance 

such that we will not require a facility 

to submit, nor penalize a facility for 

failing to submit, data on any ESRD QIP 

quality measure data from any month in 

which a facility is granted an 

extraordinary circumstances exception. 

Under this policy, we proposed that, 

in the event of extraordinary 

circumstances not within the control of 

the facility (such as a natural disaster), 

for the facility to receive consideration 

for an exception from all ESRD QIP 

requirements during the period in 

which the facility was closed, the 

facility would need to submit a CMS 

Disaster Extension/Exception Request 

Form through www.qualitynet.org 

within 90 calendar days of the date of 

the disaster or extraordinary 

circumstance. We proposed that the 

facility would need to provide the 

following information on the form: 

• Facility CCN; 

• Facility name; 

• CEO name and contact information; 

• Additional contact name and 

contact information; 

• Reason for requesting an exception; 

• Dates affected; 

• Date facility will start submitting 

data again, with justification for this 

date; and 

• Evidence of the impact of the 

extraordinary circumstances, including 

but not limited to photographs, 

newspaper, and other media articles. 

Incomplete forms will be returned to 

the facility without further review of 

their content. We will evaluate the 

request and provide the facility with a 

response. If we determine that the 

facility was, in fact, closed for a period 

of time due to extraordinary 

circumstances, then we will exempt the 

facility from the ESRD QIP requirements 

for any month during which the facility 

was closed due to the extraordinary 

circumstances. As such, a facility 

granted a temporary exception will be 

scored on each measure only for the 

months during a performance period not 

covered by the exception. For example, 

if a facility is granted an extraordinary 

circumstances exception for the time 

period between January 15 and February 

15, 2015, then the facility will not be 

required to report, and will not be 

penalized for not reporting, data on any 

ESRD QIP measure data for January and 

February of CY 2015. The effect of this 

proposal is that if a facility, because it 

has been granted an exception, cannot 

meet the reporting requirements that 

apply to a measure, the facility will not 

receive a score on the measure. For 

example, if a facility is granted an 

extraordinary circumstances exception 

for February 2015, then that facility 

would not be scored on the NHSN 

Bloodstream Infection clinical measure 

for the applicable payment year, 

because this measure requires facilities 

to submit 12 months of data in order to 

avoid receiving zero points on the 

measure. 

We stated that this policy would not 

preclude us from granting exceptions to 

facilities that have not requested them 

when we determine that an 

extraordinary circumstance (for 

example, a hurricane or other act of 

nature) affects an entire region or locale. 

If we made the determination to grant 

an exception to facilities in a region or 

locale, then we proposed to 

communicate this decision through 

routine communication channels to 

facilities, vendors, and Networks, 

including but not limited to issuing 

memoranda, emails, and notices on a 

CMS-approved Web site. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposal to add an 

Extraordinary Circumstances Exception 

to the ESRD QIP, because facilities 

should not be required to meet the 

program’s requirements when they are 

forced to close. 

Response: We thank commenters for 

their support. 

Comment: Some commenters 

supported the proposal to add an 

Extraordinary Circumstance Exception 

but sought clarification as to what 

constitutes an ‘‘extraordinary 

circumstance.’’ Commenters 

recommended that events such as fires 

and explosions, which are not typically 

considered ‘‘natural disasters’’ should 

be considered ‘‘extraordinary 

circumstances.’’ Commenters also 

recommended granting exceptions for 

facilities that temporarily close for 

renovation or relocate. 

Response: The Extraordinary 

Circumstances Exception is intended to 

address facility closures beyond the 

control of the facility, and is not limited 

to natural disasters. We note that 

eligibility determinations for this 

exception will be made on a case-bycase basis and based entirely on 

evidence and documentation that 

facilities present. 

Comment: One commenter 

recommended that camps and shortterm dialysis units should have an 

opportunity to take advantage of the 

extraordinary circumstances exception, 

because they operate under unique 

circumstances that do not apply to most 

facilities. 

Response: We appreciate that camps 

and short-term dialysis units operate 

under unique circumstances. However, 

these circumstances are categorically 

different than the types of 

circumstances covered by the 

Extraordinary Circumstances Exception, 

because their closure is within the 

facility’s control and is generally 

planned in advance. Accordingly, 

operating for a short period of time will 

not be grounds for granting an 

Extraordinary Circumstances Exception. 

For these reasons, we are finalizing 

the proposal to adopt an Extraordinary 

Circumstance Exception in the ESRD 

QIP, beginning with the PY 2017 

program. 

F. Requirements for the PY 2018 ESRD 

QIP 

1. Modification of the Mineral 

Metabolism Reporting Measure 

Beginning in PY 2018 

In the CY 2013 ESRD QIP, we adopted 

a reporting measure focused on mineral 

metabolism, which was based in part on 

NQF #0255 (77 FR 67487 through 

67487). In the CY 2014 ESRD PPS, we 

finalized two revisions to the Mineral 

Metabolism reporting measure: (1) To 

include home peritoneal dialysis 

patients in the measure; and (2) to 

remove serum calcium reporting from 

the measure because of its reporting 

under the Hypercalcemia clinical 

measure (78 FR 72197 through 72198). 

Accordingly, in order to meet the 

requirements for the Mineral 

Metabolism reporting measure, facilities 

currently must report serum phosphorus 


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values for each qualifying patient 

treated at the facility on a monthly 

basis. 

Since the publication of the CY 2014 

ESRD PPS final rule, members of the 

renal community requested an ad hoc 

NQF review of measure #0255, focusing 

in particular on whether the measure 

should be updated to allow for the 

reporting of plasma phosphorus data. 

The NQF Consensus Standards 

Approval Committee (CSAC) reviewed 

the measure and recommended that the 

phosphorus reporting measure (NQF 

#0255) be modified to allow for the 

reporting of plasma phosphorus data as 

an alternative to serum phosphorus 

data. Although our TEP reviewed this 

issue and concluded that measure #0255 

should remain unchanged, we concur 

with the CSAC’s recommendation due 

to the CSAC’s ad hoc review of lab data 

demonstrating the equivalency of 

plasma and serum measurements of 

phosphorus, as well as an additional 

concurrent internal review of the data 

by CMS and our measure development 

contractor. We are in agreement with 

the CSAC that readings of phosphorus 

using either plasma or serum are 

appropriate for the measure. As the 

measure developer for NQF#255, we are 

also in the process of revising the 

specifications for that measure and plan 

to submit the revised measure 

specifications to the NQF for 

endorsement. We believe the change to 

these specifications is non-substantive 

because plasma readings are an 

alternative method of reporting on 

phosphorus data and, as we state above, 

are roughly equivalent to serum 

phosphorus readings. 

We considered proposing to allow 

facilities to report plasma phosphorus 

data for the Mineral Metabolism 

reporting measure in the PY 2017 

program, but we have determined that it 

is not operationally feasible to configure 

the relevant data fields in CROWNWeb 

to accept plasma phosphorus readings 

prior to January 1, 2015, the beginning 

of the performance period for that 

program year. For this reason, we 

proposed to modify the measure 

specifications for the Mineral 

Metabolism reporting measure to allow 

facilities to report either serum 

phosphorus data or plasma phosphorus 

data, beginning with the PY 2018 

program. We further clarified that we 

were not proposing any other changes to 

the measure specifications for the 

Mineral Metabolism reporting measure. 

We sought comments on this 

proposal. The comments and responses 

are set forth below. 

Comment: One commenter supported 

the proposal to allow facilities to report 

both plasma and serum phosphorous 

under the Mineral Metabolism reporting 

measure, beginning in PY 2018. 

Response: We thank the commenter 

for the support. 

Comment: Many commenters 

supported the proposal to modify that 

Mineral Metabolism reporting measure, 

but sought clarification as to why it is 

not feasible to do so starting in PY 2017, 

and urged CMS to adopt the change for 

PY 2017. 

Response: We thank commenters for 

their support. We have already begun 

working to incorporate this modification 

into the CROWNWeb system. However, 

we do not expect to be able to fully 

implement the modification by January 

1, 2015 (that is, the beginning of the PY 

2017 performance period), so it is not 

possible to collect plasma phosphorus 

data for the PY 2017 program. 

For these reasons, we are finalizing 

the proposed modifications to the 

Mineral Metabolism reporting measure, 

beginning with the PY 2018 program. 

The technical specifications for this 

finalized measure can be found at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

2. New Measures for the PY 2018 ESRD 

QIP and Future Payment Years 

For the PY 2018 ESRD QIP, we 

proposed to continue to use all of the 

measures proposed for the PY 2017 

ESRD QIP, with the exception of the 

ICH CAHPS reporting measure, which 

we proposed to convert to a clinical 

measure. We also proposed to adopt five 

new measures. The proposed new 

measures include one new outcome 

measure evaluating transfusions in the 

ESRD population, one measure on 

pediatric peritoneal dialysis adequacy, 

one measure on pain assessment, one 

measure on clinical depression 

screening, and one measure on 

healthcare personnel influenza 

vaccination (see Table 26). 

TABLE 26—NEW MEASURES PROPOSED FOR THE PY 2018 ESRD QIP 

NQF# Measure title 

N/A ............................. Pediatric Peritoneal Dialysis Adequacy, a clinical measure. 

Percentage of pediatric peritoneal dialysis patient-months with spKt/V greater than or equal to 1.8 (dialytic + residual). 

0258 ........................... In-Center Hemodialysis Consumer Assessment of Providers and Systems Survey,1 a clinical measure. 

Proportion of responses to rating items grouped into three composite measures and three global ratings. 

N/A ............................. Standardized Transfusion Ratio, a clinical measure. 

Risk-adjusted standardized transfusion ratio for dialysis facility patients. 

N/A2 ........................... Pain Assessment and Follow-Up, a reporting measure. 

Percentage of adult patients with documentation of pain assessment through discussion with the patient including the 

use of a standardized tool(s) on each visit and documentation of a follow-up place when pain is present. 

N/A3 ........................... Depression Screening and Follow-Up, a reporting measure. 

Percentage of adult patients screened for clinical depression using a standardized tool and follow-up plan is documented. 

N/A4 ........................... NHSN Healthcare Personnel Influenza Vaccination, a reporting measure. 

1The proposed dimensions of the ICH CAHPS survey for use in the PY 2018 ESRD QIP are: Nephrologists’ Communication and Caring, Quality of Dialysis Center Care and Operations, Providing Information to Patients, Overall Rating of the Nephrologists, Overall Rating of the Dialysis 

Center Staff, and Overall Rating of the Dialysis Facility. 2We note that the NQF has previously endorsed a pain measure (NQF #0420) upon which this measure is based. 

3We note that the NQF has previously endorsed a depression measure (NQF #0418) upon which this measure is based. 

4We note that the NQF has previously endorsed a vaccination measure (NQF #0431) upon which this measure is based. 


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a. Standardized Transfusion Ratio 

(STrR) Clinical Measure 

Background 

We are concerned that the inclusion 

of erythropoiesis-stimulating agents 

(ESAs) in the ESRD PPS and the 

removal of the Hemoglobin Less than 10 

g/dL clinical measure from the ESRD 

QIP measure set could result in the 

underutilization of ESAs to manage 

anemia in ESRD patients, with the result 

that these patients have lower achieved 

hemoglobin levels and more frequently 

need red-blood-cell transfusions. 

In addition, patients with ESRD who 

are eligible to receive a kidney 

transplant and are transfused risk 

becoming sensitized to the donor pool, 

thereby making it less likely that a 

transplant will be successful. Blood 

transfusions also carry a small risk of 

transmitting blood-borne infections to 

the patient, and the patient could 

additionally develop a transfusion 

reaction. Furthermore, using infusion 

centers or hospitals to transfuse patients 

is expensive, inconvenient, and could 

compromise future vascular access. 

Overview of Measure 

The Standardized Transfusion Ratio 

(STrR) for all adult Medicare ESRD 

patients is a ratio of the number of 

observed eligible blood transfusion 

events occurring in patients dialyzing at 

a facility to the number of eligible 

transfusions that would be expected 

from a predictive model that accounts 

for patient characteristics within each 

facility. Eligible transfusions are those 

that do not have any claims pertaining 

to the comorbidities identified for 

exclusion in the 12 months immediately 

prior to the transfusion date. 

We plan to submit the STrR measure 

to NQF for review at the next available 

call for measures. 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)(iv) of the 

Act must have been endorsed by the 

entity with a contract under section 

1890(a) of the Act (which is currently 

NQF). Under the exception set forth in 

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

the case of a specified area or medical 

topic determined appropriate by the 

Secretary for which a feasible and 

practical measure has not been endorsed 

by the entity with a contract under 

section 1890(a) of the Act, the Secretary 

may specify a measure that is not so 

endorsed, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

We have given due consideration to 

endorsed measures, as well as those 

adopted by a consensus organization, 

and we proposed this measure under 

the authority of 1881(h)(2)(B)(ii) of the 

Act. NQF has not endorsed and a 

consensus organization has not adopted 

a measure on transfusions. Because the 

proposed STrR measure has the 

potential to decrease transfusions 

resulting from underutilization of 

anemia medications, we believe it is 

appropriate to adopt the STrR in the PY 

2018 ESRD QIP. We considered 

proposing to adopt the measure for the 

PY 2017, but we recognized that this is 

a new measure, and wanted to give 

facilities more time to familiarize 

themselves with it. The Measure 

Application Partnership, in its February 

1, 2013 Pre-Rulemaking Report, 

supported the direction of the measure, 

stating that it ‘‘addresses an important 

concept, but the establishment of 

guidelines for hemoglobin range is 

needed.’’ We have received public 

comments and input from a TEP that we 

convened on a prototype STrR measure, 

and finalized development of the 

proposed STrR measure in September 

2013. The resulting measure 

specifications did not include 

hemoglobin thresholds, as no input 

from the TEP or public comments 

supported moving forward with 

thresholds included in the measure. We 

therefore believe these efforts meet the 

requirements for further development of 

the STrR prior to implementation in the 

ESRD QIP. 

In the process of preparing to submit 

the measure for NQF review, we 

conducted analyses on the reliability of 

the STrR measure. The full analysis is 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. The STrR 

is not a simple average; instead, we 

estimate the IUR using a bootstrap 

approach, which uses a resampling 

scheme to estimate the within facility 

variation that cannot be directly 

estimated by ANOVA. A small IUR 

(near 0) reveals that most of the 

variation of the measures between 

facilities is driven by ‘‘random noise,’’ 

indicating the measure would not be a 

reliable characterization of the 

differences among facilities, whereas a 

large IUR (near 1) indicates that most of 

the variation between facilities is due to 

the real difference between facilities. 

We have determined that the average 

IUR for the STrR measure is 0.54, 

meaning that about half of the variation 

in the measure can be attributed to 

between-facility differences, and about 

half to within-facility variation. This 

value of IUR indicates a moderate 

degree of reliability and is consistent 

with the reliability of other outcome 

measures in CMS quality reporting and 

VBP programs. We therefore believe that 

facilities can be reliably scored on the 

proposed STrR measure. 

Data Sources 

Data for the measure come from 

various CMS-maintained data sources 

for ESRD patients including Program 

Medical Management and Information 

System (PMMIS/REMIS), Medicare 

claims, the CROWNWeb database, the 

CMS Annual Facility Survey (Form 

CMS–2744), Medicare dialysis and 

hospital payment records, the CMS 

Medical Evidence Form (Form CMS– 

2728), transplant data from the OPTN, 

the Death Notification Form (Form 

CMS–2746), the Nursing Home 

Minimum Dataset, and the Social 

Security Death Master File. These data 

sources include all Medicare patients. 

Information on transfusions is obtained 

from Medicare Inpatient and Outpatient 

Claims SAFs. 

Outcome 

The outcome of interest for the STrR 

is blood transfusion events (defined as 

the transfer of one or more units of 

blood or blood products into the 

recipient’s blood stream) among 

Medicare ESRD patients dialyzing at the 

facility during the inclusion time 

periods. 

Cohort 

The cohort for the STrR includes all 

adult Medicare ESRD dialysis patients 

who have been documented as having 

had ESRD for at least 90 days. 

Inclusion and Exclusion Criteria 

Patients will not be included in the 

STrR during the first 90 days of ESRD 

dialysis treatment. Starting with day 91 

after onset of ESRD, a patient is 

attributed to a facility once he or she has 

been receiving dialysis there for 60 

days. When a patient transfers from one 

facility to another, we are proposing that 

the patient would continue to be 

attributed to the original facility for 60 

days from the date of the transfer. 

Starting on day 61, the patient would be 

attributed to the transferee facility. 

Patients would be excluded from the 

measure for three days prior to the date 

they receive a transplant to avoid 

including transfusions associated with 

the transplant hospitalization. 

We also proposed to require that 

patients reach a certain level of 

Medicare-paid dialysis bills to be 

included in the STrR, or that patients 


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have Medicare-paid inpatient claims 

during the period. This requirement was 

intended to assure completeness of 

transfusion information for all patients 

included in the measure calculation by 

excluding non-Medicare patients and 

patients for whom Medicare is a 

secondary payer, because they are not 

expected to have complete information 

on transfusion available in the claims 

data. For each patient, a month is 

included as a month at risk for 

transfusion if that month in the period 

is considered ‘‘eligible.’’ A month is 

considered eligible if it is within two 

months of a month in which a patient 

has $900 of Medicare-paid claims or at 

least one Medicare-paid inpatient claim. 

The $900 amount represents 

approximately the tenth percentile of 

monthly dialysis claims per patient. 

In addition, a transfusion event is 

eligible for inclusion in the STrR 

measure if the patient did not present 

with certain comorbid conditions 

during the 12 month period 

immediately prior to the date of the 

transfusion event. We proposed to 

exclude these transfusion events 

because the identified comorbid 

conditions are associated with a higher 

risk of transfusion and require different 

anemia management practices that the 

measure is not intended to address. 

Specifically, we proposed that a 

transfusion event will be excluded from 

the measure if the patient, during the 12 

month look back period, had a Medicare 

claim for: Hemolytic and aplastic 

anemia; solid organ cancer (breast, 

prostate, lung, digestive tract and 

others); lymphoma; carcinoma in situ; 

coagulation disorders; multiple 

myeloma; myelodysplastic syndrome 

and myelofibrosis; leukemia; head and 

neck cancer; other cancers (connective 

tissue, skin, and others); metastatic 

cancer; or sickle cell anemia. The 

specific diagnoses used to identify each 

of these conditions are listed in the 

proposed measure specifications, which 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

Risk Adjustment 

The denominator of the STrR uses 

expected transfusions calculated from a 

Cox model that is extended to handle 

repeated events. For computational 

purposes, the proposed STrR measure 

adopts a model with piecewise-constant 

baseline rates. A stage 1 model is fitted 

to the national data with piecewiseconstant baseline rates across facilities. 

Transfusion rates are adjusted for: 

Patient age; diabetes as a cause of ESRD; 

duration of ESRD; nursing home status; 

BMI at incidence; comorbidity index at 

incidence; and calendar year. This 

model allows baseline transfusion rates 

to vary between facilities, and applies 

the regression coefficients for the riskadjustment model to each facility 

identically. This approach is robust to 

possible differences between facilities in 

the patient mix being treated. The 

second stage uses the risk-adjustment 

factor from the first stage as an offset. 

The stage 2 model then calculates the 

national baseline transfusion rate. 

The STrR measure includes the 

following risk adjustors, which are 

obtained from the following data 

sources: 

Risk adjustor Data source 

Age ...................................................................................................................................................................... REMIS database. 

Diabetes as cause of ESRD ............................................................................................................................... CMS Form 2728. 

BMI at incidence of ESRD .................................................................................................................................. CMS Form 2728. 

Comorbidity index ................................................................................................................................................ CMS Form 2728. 

Nursing home status ........................................................................................................................................... Nursing Home Minimum Dataset. 

Duration of ESRD ................................................................................................................................................ CMS Form 2728. 

More details on the risk-adjustment 

calculations, and the rationale for 

selecting these risk adjustors and not 

others, can be found at: http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

As indicated in the table above, the 

proposed STrR measure risk adjusts 

predominantly on the basis of patient 

characteristics collected on CMS Form 

2728, and we believe that this riskadjustment methodology is reliable and 

valid. 

NQF evaluates measures on the basis 

of four criteria: Importance, scientific 

acceptability, feasibility, and usability. 

The validity and reliability of a 

measure’s risk-adjustment calculations 

fall under the ‘‘scientific acceptability’’ 

criterion, and Measure Evaluation 

Criterion 2b4 specifies NQF’s preferred 

approach for risk adjusting outcome 

measures (http://www.qualityforum.org/ 

docs/measure_evaluation_

criteria.aspx#scientific). This criterion 

states that patient comorbidities should 

only be included in risk-adjustment 

calculations if they are (1) present at the 

start of care and (2) not indicative of 

disparities or deficiencies in the quality 

of care provided. As indicated in the 

‘‘Inclusion and Exclusion Criteria’’ 

subsection above, the proposed STrR 

clinical measure includes Medicare 

patients who have been documented as 

having had ESRD for at least 90 days 

and are not excluded for other reasons. 

Accordingly, we believe that NQF 

Measure Evaluation Criterion 2b4 

supports risk-adjusting the proposed 

STrR measure on the basis of incident 

patient comorbidity data collected on 

CMS Form 2728, because these 

comorbidities are likely present at the 

start of care. Moreover, comorbidities 

that develop after the 90th day of 

chronic dialysis treatment, and are 

statistically associated with 

transfusions, can be reflective of the 

quality of care provided by the facility. 

Therefore, we do not believe that NQF 

Measure Evaluation Criterion 2b4 

supports risk adjusting the proposed 

STrR measure on the basis of updated 

comorbidity data, because doing so may 

mask disparities or deficiencies in the 

quality of care provided, thereby 

obscuring assessments of facility 

performance. For these reasons, we 

believe that the risk-adjustment 

methodology for the proposed STrR 

measure is consistent with NQF 

guidelines for measure developers. 

Testing that we have undertaken has 

confirmed the validity and reliability of 

the proposed STrR measure using these 

data. We anticipate submitting the 

measure to the NQF for endorsement in 

CY 2015. 

Full documentation of the STrR riskadjustment methodology is available at: 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

Calculating the STrR Measure 

The STrR measure is calculated as the 

ratio of the number of observed 

transfusions to the number of expected 

transfusions. The ratio is greater than 

one for facilities that have more 


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7Collins et al., ‘‘Effect of Facility-Level 

Hemoglobin Concentration on Dialysis Patient Risk 

of Transfusion’’, Am J Kidney Dis. 2014;63(6):997– 

1006; Hirth RA, Turenne T, Wheeler JRC et al., 

(November 2012) ‘‘Did the dialysis Prospective 

Payment System result in more patients receiving 

transfusions?’’ Poster presentation at ASN Renal 

Week in San Diego, CA; Sibbel S, Bond C, Wilfehrt 

H et al. (2013 April) ‘‘Decreased Population 

Hemoglobin (HB) Levels and Increased Transfusion 

(TFN) Rates Under New ESA Guidelines in Patients 

(PTS) with ESRD at a Large Dialysis Organization 

(LDO). Poster to be presented at the National 

Kidney Foundation (NKF) Spring Clinical Meeting 

in Orlando, FL. Abstract retrieved from http://

ww3.aievolution.com/nkf1301/

index.cfm?do=abs.pubSearchAbstracts; Hirth, et al. 

2014. 

8 (Foley 2008). 

9 Ibrahim HN, Ishani A, Foley RN et al. 

‘‘Temporal Trends in red blood transfusion among 

US dialysis patients, 1992–2005’’. American Journal 

of Kidney Disease. 2008; 52: 1115. 

transfusions than would be expected for 

an average facility with similar cases, 

and less than one if the facility has 

fewer transfusions than would be 

expected for an average facility with 

similar cases. This ratio is calculated in 

terms of patient-years at risk. ‘‘Patientyear at risk’’ means that the 

denominator of the rate calculation is 

obtained by adding exposure times of all 

patients until a censoring event (that is, 

death, transplant, or end of the time 

period) because each patient’s time at 

risk varies based on these censoring 

events. Time at risk is the time period 

in which each patient is eligible to have 

the transfusion event occur for the 

purposes of the measure calculation, 

exclusive of all days that have claims 

pertaining to the exclusionary 

comorbidities identified within the 

previous 12 months. 

The predicted value from stage 1 of 

the model and the baseline rate from 

stage 2 of the model, as described above, 

are then used to calculate the expected 

number of transfusion events for each 

patient over the period during which 

the patient is seen to be at risk for a 

transfusion event. 

The STrR is a point estimate—the best 

estimate of a facility’s transfusion rate 

based on the facility’s case mix. For 

more detailed information on the 

calculation methodology, please refer to 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this proposal 

to adopt the proposed STrR clinical 

measure. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposal to adopt the 

Standardized Transfusion Ratio clinical 

measure because the measure ‘‘assesses 

the poor outcomes related to anemia in 

the ESRD QIP.’’ 

Response: We thank commenters for 

their support. 

Comment: Many commenters did not 

support the proposal to adopt the STrR 

measure because it is not a fair way to 

evaluate facility performance. 

Specifically, commenters stated that 

transfusion events are beyond the 

control of facilities, that physicians 

outside of the facility may order a 

transfusion (which would unduly 

detriment the facility’s score on the 

measure) or fail to continue a patient’s 

ESA doses during the patient’s 

hospitalization, and that hospital 

physicians’ misunderstanding about 

hemoglobin levels is often the source of 

unnecessary transfusions. One 

commenter recommended stratifying the 

STrR measure according to patient 

comorbidities to capture only blood 

transfusions that could be prevented by 

the dialysis facility. Commenters further 

stated that the measure does not reliably 

differentiate facility performance 

because a transfusion event could be 

attributed to a chronic condition or an 

acute problem during hospitalization, as 

opposed to poor anemia management on 

the part of facilities. 

Response: We recognize that most 

transfusions occur outside the dialysis 

facility. We further recognize that blood 

transfusions are often ordered in 

response to acute events, such as 

gastrointestinal bleeding or other 

trauma, that happen during the 

hospitalization. However, peer-reviewed 

research identifies a strong association 

between achieved hemoglobin and 

subsequent transfusion events.7 Our 

analysis of patient and facility level 

risk-adjusted models supports the 

literature. These observational analyses 

are consistent with the findings of an 

earlier randomized controlled trial that 

identified marked differences in rates of 

transfusion related to targeted 

hemoglobin.8 Because dialysis facilities 

have a direct role in determining 

achieved hemoglobin as a result of their 

anemia management practices, we 

believe there is a shared responsibility 

in subsequent transfusion events. The 

attribution of responsibility to the 

dialysis facility for achieved 

hemoglobin outcomes (and transfusion 

risk related to achieved hemoglobin) as 

measured by the STrR is strengthened 

by applying an extensive list of 

exclusions for comorbid conditions that 

are associated with decreased ESA 

responsiveness, increased transfusion 

risk, and increased risk of ESA 

complication. These exclusion comorbidities are obtained from Medicare 

Claims, based on recommendations of 

the Anemia Technical Expert Panel 

convened in 2012, as well as recent peer 

reviewed publications evaluating 

transfusions.9 We believe that the 

salient quality issue is not that a clinical 

decision to order a transfusion was 

made, but that the management of a 

patient’s anemia resulted in 

circumstances that necessitated such a 

transfusion. 

We also believe that the 

discontinuation of a patient’s ESA dose 

during an acute hospitalization is very 

unlikely to affect the patient’s 

hemoglobin levels unless the 

hospitalization is of very long duration, 

given the several weeks long half-life of 

red blood cells in the patient’s 

circulation after being release from the 

bone marrow. Therefore, ESA dosing 

and achieved hemoglobin present on 

admission, which are the responsibility 

of the dialysis facility, are much 

stronger drivers of the need for 

transfusion than whether or not an ESA 

is given during an average length 

hospitalization for any given admission 

diagnosis. 

Further, we are not aware of peerreviewed evidence that would support a 

concern that hospital-based physicians 

do not understand the significance of 

hemoglobin levels and, therefore, order 

unnecessary transfusions. Although 

transfusion decisions are individualized 

based on a patient’s clinical condition, 

many acute care hospitals use national 

guidelines to determine when a blood 

transfusion is appropriate. The 

guidelines that we are aware of do not 

differentiate between chronic dialysis 

patients and the general population. 

Additionally, if this type of 

misunderstanding does exist, we believe 

that proper communication and 

coordination of care between the 

dialysis facility and hospital physicians 

could help reduce the possibility that an 

unnecessary transfusion is ordered. 

Comment: Many commenters 

expressed a number of technical 

concerns with the specifications for the 

STrR measure. Specifically, commenters 

stated that using the 2728 form as the 

data source for determining patient 

comorbidities is inappropriate because 

the form is not used to track 

comorbidities that develop after the 

initiation of ESRD, the form is often 

filled out incorrectly, and the form 

systematically underestimates the 

number of patient comorbidities. 

Commenter therefore recommends 

obtaining a reliable data source (such as 

the Common Working File) for 

comorbidities before adopting the 

measure. Commenters further stated that 

facilities do not have ready access to 

transfusion data, which they could use 


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10 Ibrahim HN, Ishani A, Foley RN et al. 

‘‘Temporal Trends in red blood transfusion among 

US dialysis patients, 1992–2005’’. American Journal 

of Kidney Disease. 2008; 52: 1115. 

11Segal JB1, Ness PM, Powe NR. Validating 

billing data for RBC transfusions: A brief report. 

Transfusion. 2001 Apr;41(4):530–3. 

12Collins et al., ‘‘Effect of Facility-Level 

Hemoglobin Concentration on Dialysis Patient Risk 

of Transfusion,’’ Am J Kidney Dis. 2014;63(6):997– 

1006; and Hirth et al, Blood Transfusion Practices 

in Dialysis Patients in a Dynamic Regulatory 

Environment, Am J Kidney Dis. 2014 (in-press). 

to design quality improvement 

programs. 

Response: The STrR uses both Form 

2728-derived incident comorbidities 

and patient demographics as well as 

Medicare Claims derived prevalent 

comorbidities for its risk-adjustment 

and exclusions. The responsibility of 

the dialysis facility for achieved 

hemoglobin outcomes (and transfusion 

risk related to achieved hemoglobin) is 

strengthened by applying an extensive 

list of exclusions for comorbid 

conditions that are associated with 

decreased ESA responsiveness, 

increased transfusion risk, and 

increased risk of ESA complication, and 

may develop after initiation of dialysis. 

It is important, however, that we be 

circumspect in risk-adjusting for 

conditions that appear after the 

initiation of dialysis, to avoid adjusting 

for conditions that resulted from the 

care decisions made by the provider. 

These exclusion co-morbidities are 

obtained from Medicare Claims, based 

on recommendations of the Anemia 

Technical Expert Panel convened in 

2012, as well as recent peer reviewed 

publications evaluating transfusions.10

Comment: Some commenters were 

concerned about validity of claims data 

used to identify qualifying transfusion 

events, because hospital coding for 

transfusions is inconsistent, and 

sometimes codes do not distinguish 

between preparing for a transfusion and 

the transfusion itself. Commenters also 

stated that the claims data used to score 

the measure is incapable of 

differentiating among the various 

reasons for a blood transfusion. As such, 

the measure does not accurately predict 

or identify when a patient actually 

receives a transfusion. 

Response: Prior research has 

supported the validity of billing codes 

for identifying red blood cell 

transfusions.11 Additionally, other 

recent articles accepted and published 

in peer reviewed journals support the 

review and acceptance of this method of 

identification of transfusions from 

administrative data.12 Specifically, we 

used multiple sources (procedure codes, 

revenue center codes, and value codes) 

to improve the ability to detect actual 

transfusion events during a 

hospitalization. Red blood cell 

transfusions are identified by in-patient 

records with revenue center codes in 

(0380, 0381, 0382, 0389, 0390, 0391, 

0392, 0399) or value code = 37 or 

procedure code in (9903, 9904) and with 

out-patient records with revenue center 

codes in (0380, 0381, 0382, 0389, 0390, 

0391, 0392, 0399) and HCPCS code in 

(P9010, P9011, P9016, P9021, P9022, 

P9038, P9039, P9040, P9051, P9054, 

P9056, P9058, 36430). The measure 

does not attempt to address the 

particular reason for a transfusion event, 

only that one occurred. One 

‘‘transfusion event’’ is counted per 

inpatient claim if one or more 

transfusion-related revenue center or 

value codes are present. This is the way 

most inpatient transfusion events are 

reported on claims (that is, using 

revenue center or value codes, not 

procedure codes). We only count a 

single transfusion event for an inpatient 

claim regardless of the number of 

transfusion revenue center and value 

codes reported so that the number of 

discrete events counted is the same 

whether the claim indicates 1 unit of 

blood or multiple units of blood. 

Comment: Some commenters did not 

support the proposed STrR measure 

because it has not been endorsed by 

NQF, and one commenter was 

concerned about the measure’s validity 

and reliability. Commenter 

recommended delaying the adoption of 

the measure until it has been endorsed 

by NQF. 

Response: The STrR measure has 

undergone rigorous review by a TEP and 

the CMS measure development 

contractor, and for the reasons detailed 

in the proposed rule and this final rule, 

we believe that the measure reliably 

assesses facility performance. Because 

unexpected transfusions in the ESRD 

population are responsible for 

considerable and unnecessary 

morbidities and healthcare costs, and 

because no NQF-endorsed measures of 

anemia management are currently 

available for use in the ESRD QIP, we 

believe that the benefits of adopting the 

measure for the PY 2018 ESRD QIP 

outweigh the costs of waiting to adopt 

the measure until it has been endorsed 

by NQF. 

Comment: One commenter 

recommended that CMS develop a 

hemoglobin-adjusted STrR rather than 

the STrR proposed in the proposed rule. 

Commenter stated that facilities should 

only be held responsible for 

transfusions related to chronically low 

hemoglobin levels, and that this 

adjustment would better differentiate 

between patients with chronically and 

acutely low hemoglobin levels. 

Response: We thank commenters for 

the recommendation. We agree that 

achieved hemoglobin is a significant 

facility-associated component of 

transfusion risk. Since dialysis facilities 

do have a direct role in determining 

achieved hemoglobin as a result of their 

anemia management practices, there is a 

shared responsibility in subsequent 

transfusion events. The responsibility of 

the dialysis facility for achieved 

hemoglobin outcomes (and transfusion 

risk related to achieved hemoglobin) is 

strengthened by applying an extensive 

list of exclusions for comorbid 

conditions that are associated with 

decreased ESA responsiveness, 

increased transfusion risk, and 

increased risk of ESA complication. 

Applying a hemoglobin target would not 

be consistent with the FDA label, which 

does not support hemoglobin targets. 

Comment: One commenter 

recommended that CMS use calendar 

year (CY) 2010 to set permanent 

performance standards for the STrR 

measure. Because transfusion rates have 

increased since CY 2010, commenter 

stated that the proposed performance 

standard would set an inappropriately 

low threshold for expected transfusion 

events. 

Response: We do not believe it would 

be appropriate to use CY 2010 to set 

permanent performance standards for 

the STrR measure. The measure was 

designed to assess relative rates of 

transfusion, not to hold facilities 

accountable to a historical rate of 

transfusion. Furthermore, setting the 

performance standard at CY 2010 rates 

would not allow us to respond to 

fluctuations in transfusion rates in the 

future, and we believe it is appropriate 

to do so, particularly in the event that 

future national transfusion rates fall 

below levels achieved in CY 2010. 

Comment: Some commenters stated 

that the risk-adjustment methodology 

for the proposed STrR measure should 

not be based on the risk-adjustment 

methodology for the Standardized 

Hospitalization measure, because 

hospitalizations and transfusions 

involve different types of risk factors. 

Commenters stated that adjusting for 

risks that are more proximately 

associated with transfusions would 

require the use of claims data for 

determining patient comorbidities. 

Response: We agree with commenters’ 

assertion that more proximate claimsbased risk factors are appropriate for use 

in the risk adjustment strategy for STrR. 

We also believe that this has already 

been accomplished using our measure 

methodology. The responsibility of the 


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13 Ibrahim HN, Ishani A, Foley RN et al. 

‘‘Temporal Trends in red blood transfusion among 

U.S. dialysis patients, 1992–2005,’’ American 

Journal of Kidney Disease. 2008; 52: 1115. 

14 Ibrahim HN, Ishani A, Foley RN et al. 

‘‘Temporal Trends in red blood transfusion among 

U.S. dialysis patients, 1992–2005.’’ American 

Journal of Kidney Disease. 2008; 52: 1115. 

dialysis facility for achieved 

hemoglobin outcomes (and transfusion 

risk related to achieved hemoglobin) is 

strengthened by applying an extensive 

list of exclusions for comorbid 

conditions that are associated with 

decreased ESA responsiveness, 

increased transfusion risk, and 

increased risk of ESA complication. By 

excluding transfusions not associated 

with anemia management, we are able 

to assess the rate of transfusions most 

subject to influence by the quality of 

care provided by dialysis facilities. 

Exclusion comorbidities must have 

occurred within the last year, and have 

a similar, but stronger impact for the 

measure, than risk-adjustment. As a 

consequence, transfusions that are 

occurring are not attributable to these 

non-anemia management-based causes. 

These exclusion co-morbidities are 

obtained from Medicare Claims, based 

on recommendations of the Anemia TEP 

convened in 2012, as well as recent peer 

reviewed publications evaluating 

transfusions.13

Comment: One commenter 

recommended that CMS limit the 

number of transfusion events that a 

single patient can contribute to this 

measure, because very frequent 

transfusions may be required due to 

conditions that the dialysis facility 

cannot control, such as chemotherapy 

treatment, presence of bone marrow 

malignancies, or sickle cell anemia, 

which may not be captured in the past 

year on Medicare claims. 

Response: We thank commenters for 

the recommendation. Because of the 

way transfusion information is reported 

in claims, there are different rules for 

counting transfusion events depending 

on whether or not they occur in 

inpatient or (less commonly) in 

outpatient settings. 

For the STrR, transfusion events are 

counted differently depending on 

whether they are identified based on a 

procedure code, a revenue center code, 

or a value code. The transfusion 

procedure may only be billed only once 

per day per visit. For the STrR, unique 

‘‘transfusion events’’ are counted for 

each transfusion procedure code listed 

on an inpatient claim, with one event 

counted for any of those codes on a 

given day. Additionally, one 

‘‘transfusion event’’ is counted per 

inpatient claim if one or more 

transfusion-related revenue center or 

value code is present. The vast majority 

of inpatient claims we identify as 

having evidence of a transfusion (92 

percent) do not include a transfusion 

related procedure code. Therefore, most 

inpatient transfusion events are 

identified based on revenue center or 

value codes. As noted above, we count 

a single transfusion event for the 

inpatient claim regardless of the number 

of transfusion revenue center and value 

codes reported on the claim, resulting in 

a very conservative estimate of blood 

transfusions from inpatient claims. In 

all cases, the number of events counted 

is the same whether the claim indicates 

1 unit of blood or multiple units of 

blood, again favoring a conservative 

estimate of number of transfusion events 

from inpatient claims. 

Transfusion events are not common in 

outpatient settings, but similar rules 

apply. Multiple HCPCS codes reported 

for the same Revenue Center Date are 

counted as a single transfusion event 

regardless of the number of units of 

blood recorded. In other words, three 

pints of blood reported with the same 

Revenue Center Date would be counted 

as a single transfusion event. 

Therefore, the algorithm for 

identifying blood transfusion events 

described here results in a very 

conservative estimate of transfusion 

rates, limiting the impact of individual 

patients who receive multiple units of 

blood or multiple transfusions during 

any one episode of care. We agree that 

there are many conditions, including 

acute malignancy diagnoses and 

hereditary anemias (for example, sickle 

cell anemia) that influence transfusion 

risk. The STrR uses Form 2728-derived 

incident comorbidities and patient 

demographics as well as Medicare 

Claims derived prevalent comorbidities 

in the risk-adjustment strategy for STrR. 

The responsibility of the dialysis facility 

for achieved hemoglobin outcomes (and 

transfusion risk related to achieved 

hemoglobin) is strengthened by 

applying an extensive list of exclusions 

described in the technical report at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html for 

comorbid conditions that are associated 

with decreased ESA responsiveness, 

increased transfusion risk, and 

increased risk of ESA complication. 

These exclusion co-morbidities are 

obtained from Medicare Claims, based 

on recommendations of the Anemia 

Technical Expert Panel convened in 

2012, as well as recent peer reviewed 

publications evaluating transfusions.14

The list of comorbid exclusions 

includes acute cancer diagnoses and 

Sickle Cell Anemia, as well as other 

conditions that are associated with 

increased transfusion risk beyond the 

dialysis facilities’ control. 

Comment: Some commenters stated 

that transfusions related to ‘‘nonactionable conditions,’’ such as chronic 

gastrointestinal bleeding, motor vehicle 

accidents, and transfusions related to 

surgical procedures, should be excluded 

from the measure. Accordingly, 

commenters recommended that CMS 

should develop a comprehensive list of 

exclusions before adopting the measure. 

Response: The STrR incorporates a 

list of exclusions based on patient 

conditions identified through claims 

data. These exclusions help to ensure 

that transfusions for which the facility 

may not reasonably be held accountable 

are not incorporated in the measure 

numerator. A full list of exclusions may 

be read at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. However, 

for any given admission diagnosis such 

as a motor vehicle accident, or a 

hospital event such as a surgical 

procedure, the achieved hemoglobin 

present on admission, which is a 

function of ESA dosing and the 

responsibility of the dialysis facility, is 

a strong predictor of a transfusion event 

during the hospitalization. 

Comment: One commenter sought 

clarification on how transfusions will be 

attributed to facilities, particularly when 

a patient receives a transfusion and 

temporarily relocates to a new facility 

before returning to their home facility. 

Response: The STrR Methodology 

Report, which was published 

concomitantly with the CY 2015 ESRD 

PPS Proposed Rule, provides the 

detailed algorithm used by the STrR 

measure to attribute patients to a 

facility. Briefly, if a patient undergoes a 

transfusion event, the facility to which 

this patient is assigned at the time is 

responsible for it irrespective of where 

the event takes place or whether the 

patient is temporarily receiving dialysis 

at another facility. 

Comment: One commenter did not 

support the STrR measure as proposed, 

because it is not sufficient on its own 

right to discourage under-treatment of 

anemia. Commenter also recommended 

that the measure should be stratified to 

capture only those transfusions that 

could have been prevented by the 

dialysis facility. 


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15U.S. Renal Data System, USRDS 2012 Annual 

Data report: Atlas of Chronic Kidney Disease and 

End-stage Renal Disease in the United States, 

National Institutes of Health, National Institute of 

Diabetes and Digestive and Kidney Diseases, 

Bethesda, MD, 2012. 

16U.S. Renal Data System, USRDS 2012 Annual 

Data report: Atlas of Chronic Kidney Disease and 

End-stage Renal Disease in the United States, 

National Institutes of Health, National Institute of 

Diabetes and Digestive and Kidney Diseases, 

Bethesda, MD, 2012. 

17Paniagua R, Amato D, Vonesh E, et al. ‘‘Effects 

of increased peritoneal clearance on mortality rates 

in peritoneal dialysis: ADEMEX, a prospective, 

randomized, controlled trial.’’ Journal of the 

American Society of Nephrology: JASN (2002) 

13:1307–1320. PMID: 11961019; See also Lo WK, 

Lui SL, Chan TM, et al. ‘‘Minimal and optimal 

peritoneal Kt/V targets: Results of anuric peritoneal 

dialysis patient’s survival analysis.’’ Kidney 

international (2005) 67:2032–2038. PMID: 

15840054. 

Response: The STrR is intended to 

monitor facility-level, risk-adjusted 

blood transfusion use, which is one 

important consequence of undertreatment of anemia in chronic dialysis 

patients, and it is the most appropriate 

measure of which we are aware that is 

available for this purpose. 

Comment: One commenter stated that 

facilities will experience difficulty in 

explaining facility scores on the STrR 

clinical measure to patients, and that 

doing so may be ‘‘politically 

challenging’’ when the dialysis facility 

is affiliated with the admitting hospital 

system. 

Response: We have produced a 

technical report that describes the 

measure methodology and provided a 

Web link in the proposed rule (http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html). A 

transfusion ratio of greater than 1.0 

reflects that a facility’s patients are at 

higher risk for transfusions than they 

would be at an average facility. A score 

below 1.0 reflects that a facility’s 

patients are at lower risk for 

transfusions than they would be at an 

average facility. A lower ratio is 

preferable because it indicates that a 

facility is doing a better job of managing 

patient anemia, as assessed through the 

occurrence of transfusions. 

For these reasons, we are finalizing 

the STrR measure as proposed for the 

PY 2018 program and future payment 

years. The technical specifications for 

this finalized measure can be found at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

b. Adoption of the Pediatric Peritoneal 

Dialysis Adequacy Clinical Measure in 

the Dialysis Adequacy Measure Topic 

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

ESRD QIP must evaluate facilities based 

on measures of dialysis adequacy. 

Beginning with the PY 2018 ESRD QIP, 

we proposed to add a new measure of 

pediatric peritoneal dialysis adequacy to 

the Dialysis Adequacy measure topic. 

We stated that if this proposal is 

finalized, then the modified Dialysis 

Adequacy measure topic would include 

four clinical measures on dialysis 

adequacy—(1) Adult Hemodialysis 

Adequacy; (2) Adult Peritoneal Dialysis 

Adequacy; and (3) Pediatric 

Hemodialysis Adequacy; and (4) 

Pediatric Peritoneal Dialysis Adequacy. 

Approximately 900 pediatric patients 

in the United States receive peritoneal 

dialysis.15 Although recent studies 

suggest improvement in mortality rates 

among pediatric patients receiving 

maintenance dialysis over time, 

mortality in this patient population 

remains high.16 Despite a lack of longterm outcome studies on pediatric 

peritoneal dialysis patients, outcome 

studies performed in the adult ESRD 

population have shown an association 

between the dose of peritoneal dialysis 

and clinical outcomes,17 which could 

suggest that improved quality of dialysis 

care in the fragile pediatric patient 

population may further improve 

survival in those patients. 

Section 1881(h)(2)(A)(iv) gives the 

Secretary authority to adopt measures 

for the ESRD QIP that cover a wide 

variety of topics. Section 

1881(h)(2)(B)(ii) of the Act states that 

‘‘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 Act [in this case 

NQF], 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.’’ We have 

given due consideration to endorsed 

measures, as well as those adopted by 

a consensus organization. Because no 

NQF-endorsed measures or measures 

adopted by a consensus organization on 

pediatric peritoneal dialysis adequacy 

currently exist, we proposed to adopt 

the Pediatric Peritoneal Dialysis 

Adequacy clinical measure under the 

authority of section 1881(h)(2)(B)(ii) of 

the Act. 

The Measure Application Partnership 

expressed conditional support for 

measure XCBMM, ‘‘Pediatric Peritoneal 

Dialysis Adequacy: Achievement of 

Target Kt/V’’ in its January 2014 PreRulemaking Report, noting it would 

‘‘consider this measure for inclusion in 

the program once it has been reviewed 

for endorsement.’’ However, we believe 

the measure is ready for adoption in the 

ESRD QIP because it has been fully 

tested for reliability and has received 

consensus support from the TEP that 

was tasked with developing it. We 

intend to submit this measure to the 

NQF for endorsement in late 2014 or 

early 2015. 

For PY 2018 and future payment 

years, we proposed to adopt the 

Pediatric Peritoneal Dialysis Adequacy 

clinical measure, which assesses the 

percentage of eligible pediatric 

peritoneal dialysis patient-months in 

which a Kt/V of greater than or equal to 

1.8 was achieved during the 

performance period. Qualifying patientmonths are defined as months in which 

a peritoneal dialysis patient is under the 

age of 18 and has been receiving 

peritoneal dialysis treatment for 90 days 

or longer. Performance on this measure 

will be expressed as a proportion of 

patient-months meeting the measure 

threshold of 1.8, and the measure will 

be scored based on Kt/V data entered on 

Medicare 72x claims. The measure is a 

complement to the existing Kt/V 

dialysis adequacy measures previously 

adopted in the ESRD QIP. Technical 

specifications for the proposed pediatric 

peritoneal dialysis adequacy clinical 

measure can be found at: http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this proposal 

to adopt the Pediatric Peritoneal 

Dialysis Adequacy measure. The 

comments and our responses are set 

forth below. 

Comment: Many commenters 

supported the adoption of the Pediatric 

Peritoneal Dialysis Adequacy measure, 

because it is important to ensure that 

this patient population is adequately 

dialyzed. 

Response: We thank the commenters 

for their support. 

Comment: One commenter supported 

adoption of the Pediatric Peritoneal 

Dialysis Adequacy clinical measure, but 

recommended CMS change the Kt/V 

target to a range, because it is harder to 

reach the proposed threshold for a 

pediatric patient than it is to reach the 

threshold for adult patients. 

Response: The proposed minimum 

target of Kt/V–1.8 is consistent with 

clinical guidelines and also the 

recommendations of a TEP which we 

convened for this purpose. The TEP 

recommended using a target of 1.8 while 

recognizing that although limited 


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evidence in the pediatric population 

exists, clinical practice guidelines and 

clinical opinion support the 

recommendation that target clearance in 

pediatric patients should meet or exceed 

adult standards. Studies of adult 

peritoneal dialysis patients identified 

better survival at Kt/V 1.8/week, and not 

1.7 (Paniagua 2002, JASN 2002, Lo, KI 

2005). We also believe that a target 

range could have the effect of 

substituting the current target with the 

lower boundary of any specified range. 

Comment: One commenter did not 

support the adoption of the Pediatric 

Peritoneal Dialysis Adequacy clinical 

measure because it exposes pediatric 

patients to unnecessary risk. Commenter 

stated that ‘‘residual’’ Kt/V requires 24- 

hour urine collection, and that young 

children who are not toilet trained 

would need to be hospitalized and have 

a Foley catheter placed, which would 

put them at risk for infections and 

illness. 

Response: We appreciate commenters’ 

concerns for the safety of pediatric 

patients, and for the opportunity to 

clarify this point. The commenters 

statement about the potential difficulties 

inherent in collecting a 24 hour urine on 

young children on peritoneal dialysis 

have been previously addressed in both 

the KDOQI recommendations as well as 

the recommendations of the TEP. Both 

KDOQI and the TEP members 

recommend addition of 24 hour urine if 

available. They acknowledge that the 24 

hour urine is usually not available for 

use in the Kt/V calculation for very 

young PD patients. In that case, they 

recommend that the Kt/V collection be 

based solely on the dialysate collection. 

The commenter’s concern that patients 

would have to be hospitalized to 

complete a 24 hour collection in order 

to perform the calculation is not 

consistent with the clinical guidelines 

upon which the measure was based. 

For these reasons, we are finalizing 

the Pediatric Peritoneal Dialysis 

Adequacy measure as proposed for the 

PY 2018 program and future payment 

years and adding this measure to the 

Dialysis Adequacy Measure Topic. The 

technical specifications for this 

finalized measure can be found at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

c. ICH CAHPS Clinical Measure 

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

states that the Secretary shall specify, to 

the extent feasible, measures of patient 

satisfaction. Patients with ESRD are an 

extremely vulnerable population: They 

are completely reliant on ESRD facilities 

for life-saving care, and they are often 

reluctant to express concerns about the 

care they receive from an array of staff, 

both professional and non-professional. 

Patient-centered experience is an 

important measure of the quality of 

patient care, and it is a component of 

the 2013 NQS, which emphasizes 

patient-centered care by rating patient 

experience as a means for empowering 

patients and improving the quality of 

their care. 

Following a rigorous process, the ICH 

CAHPS Survey was developed to 

capture the experience of in-center 

hemodialysis patients. The NQF 

endorsed and the Measures Application 

Partnership supported this quality 

measure (NQF #0258: CAHPS In-Center 

Hemodialysis Survey). The ICH CAHPS 

Survey captures the experience of incenter hemodialysis patients on three 

dimensions: ‘‘Nephrologists’ 

communication and caring;’’ ‘‘quality of 

dialysis center care and operations;’’ 

and ‘‘providing information to 

patients.’’ Three global ratings are also 

part of the standardized ICH CAHPS 

Survey: Rating of the nephrologist; 

rating of the staff; and rating of the 

facility. 

We believe that this measure enables 

patients to rate their experience of incenter dialysis treatment without fear of 

retribution. Public reporting of results 

from the ICH CAHPS survey, once 

enough data are available, will satisfy 

requests to provide consumers (patients 

and family members alike) with desired 

information on viewpoints from 

patients. In addition, collecting and 

reporting ICH CAHPS survey results 

assists facilities with their internal 

quality improvement efforts and 

external benchmarking with other 

facilities, and it provides CMS with 

information that can be used to monitor 

the experience of patients with ESRD. 

Starting with the PY 2014 program, 

we have taken steps to develop the 

baseline data necessary to propose and 

implement NQF #0258 as a clinical 

measure in PY 2018. In the PY 2014 and 

PY 2015 programs, we adopted a 

reporting measure related to the ICH 

CAHPS survey, which required that 

facilities attest they had administered 

the survey according to the 

specifications set by the Agency for 

Healthcare Research and Quality 

(AHRQ). In the CY 2014 ESRD PPS final 

rule, we: (1) Expanded the ICH CAHPS 

reporting measure to require facilities to 

submit (via CMS-approved vendors) 

their survey results to CMS; (2) 

increased the patient minimum for the 

measure from 11 to 30 survey-eligible 

patients; (3) required that facilities (via 

CMS-approved vendors) administer the 

survey according to specifications set by 

CMS; and (4) required facilities (via 

CMS-approved vendors) to administer 

the survey twice during each 

performance period, and to report both 

sets of survey results by the date 

specified on http://ichcahps.org, 

starting in PY 2017 (78 FR 72193 

through 72196). 

By CY 2016 (the proposed 

performance period for the PY 2018 

ESRD QIP), we will have worked with 

dialysis facilities for four years to help 

them become familiar with the ICH 

CAHPS survey. By that time, we believe 

that facilities will be sufficiently versed 

in the survey administration process to 

be reliably evaluated on the NQFendorsed ICH CAHPS measure (NQF 

#0258). Because facilities (and CMSapproved vendors) will be familiar 

enough with the ICH CAHPS survey 

instrument to be reliably scored on the 

basis of their survey results, we believe 

it is reasonable to expand the ICH 

CAHPS reporting measure into a clinical 

measure for the PY 2018 ESRD QIP. 

For these reasons, and because a 

clinical measure would have a greater 

impact on clinical practice by holding 

facilities accountable for their actual 

performance, we proposed to replace 

the ICH CAHPS reporting measure that 

we adopted in the CY 2014 ESRD PPS 

Final Rule with a new clinical measure 

for PY 2018 and future payment years. 

This proposed ICH CAHPS clinical 

measure is NQF #0258: CAHPS InCenter Hemodialysis Survey. We did 

not propose to change the semiannual 

survey administration and reporting 

requirements. The proposed scoring 

methodology for the ICH CAHPS 

clinical measure is discussed below in 

section III.G.4.c. Technical 

specifications for the ICH CAHPS 

clinical measure can be found at: 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposal to convert the 

ICH CAHPS reporting measure into a 

clinical measure, because a clinical 

measure would hold facilities 

responsible for their ability to provide 

patients with a positive experience of 

care, adopting the clinical measure 

would strengthen the significance of 

patient input in the ESRD QIP, and 

facilities have had sufficient experience 

with the survey instrument for them to 

be reliably scored on the measure. One 

commenter stated that, in the hospital 

setting, scoring CAHPS survey results 


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has led to positive changes in the 

treatment environment. 

Response: We thank commenters for 

their support. 

Comment: One commenter did not 

support the adoption of an ICH CAHPS 

clinical measure because the measure 

would be based on patient perceptions 

(as opposed to clinical data). 

Commenter further stated that the ICH 

CAHPS clinical measure unfairly 

penalizes facilities, because providers 

have to contend with a number of 

obstacles (including reductions in 

payments under the ESRD PPS) and 

clinical variables, of which patients may 

not be aware. Commenter also stated 

that the ‘‘efficacy of the survey 

administration’’ may impact results, so 

the proposed clinical measure would 

evaluate facilities, in part, based on the 

competencies of survey vendors. 

Response: We understand 

commenters’ concerns about the ICH 

CAHPS measure and its patientcentered assessment of care. We further 

understand that patients may not be 

aware of the multiple influences on 

facilities, such as the ESRD PPS bundle 

and other clinical variables. However, 

we believe that patients are qualified to 

assess their perceptions of their 

individual care, because the quality of 

care provided to patients should not be 

impacted by reimbursement rates or the 

severity of a patient’s illness. The ICH 

CAHPS survey provides patients with 

an opportunity to assess the care they 

receive as in-center hemodialysis 

patients, and the results from this 

survey will give facilities the 

opportunity to develop plans for quality 

improvement on this aspect of care. All 

ICH CAHPS survey vendors must be 

approved by CMS to ensure that the 

survey is administered consistently 

across facilities, and vendors are 

required to undergo annual training 

sessions and submit a Quality 

Assurance Plan to us. Furthermore, the 

ICH CAHPS Coordination Team intends 

to carry out oversight activities, 

including site cities and data reviews for 

anomalies, to ensure that the survey is 

being administered according to the ICH 

CAHPS survey protocol. We note that, 

ultimately, the choice of survey vendor 

is within the control of the facility. If a 

facility believes its vendor is not 

properly administering the survey, then 

the facility should report to this to CMS 

and seek the services of another 

qualified survey vendor. 

Comment: Some commenters did not 

support the proposal to convert the ICH 

CAHPS reporting measure into a clinical 

measure, because the clinical measure 

includes questions pertaining to 

nephrologists’ care in the ICH CAHPS 

survey. Commenters stated that most 

dialysis facilities have little to no 

control over the nephrologists who are 

working in facilities, as well as over 

physicians seen outside the facility, and 

that both types of physicians are 

implicated in the survey question used 

to determine facility scores on the global 

rating for Nephrologists’ 

Communication and Caring. Commenter 

further stated that this limits the 

facility’s opportunity improve patient 

experience in this area. 

Response: We disagree that facilities 

should not be held accountable for the 

quality of care provided by 

nephrologists treating patients at their 

facility. Dialysis facilities are required 

under our regulations (42 CFR 

494.150(c)(2)(i)), to oversee the 

provision of care by a multi-disciplinary 

team, including the nephrologist 

treating the patient. Oversight of 

individual staff nephrologist care, 

ensuring adherence to facility policies 

and Medicare regulations, is primarily 

the responsibility of the site Medical 

Director, a paid employee of the dialysis 

facility, and, additionally, the 

responsibility of the facility governing 

body. We understand and agree that 

facilities should not make or unduly 

influence treatment decisions made by a 

patient and his or her nephrologist. 

However, the facility can ensure that the 

treatment environment is one in which 

patients feel empowered and informed 

enough to participate in their care by 

enacting policies regarding patient 

engagement, and selecting medical 

professionals whose behavior aligns 

with these principles. As a result, we 

believe facilities are capable of 

improving patients’ experiences with 

their nephrologists and may share 

information received with physicians 

outside of the facility. 

Comment: Some commenters did not 

support the adoption of the proposed 

ICH CAHPS clinical measure because 

patients typically dialyze at the same 

facility for long periods of time, and it 

is difficult for facilities and 

nephrologists to always meet patients’ 

expectations. As an alternative to basing 

measure scores on ‘‘top-box’’ responses, 

one commenter recommended that 

facilities should receive credit for 

responses that indicate satisfactory (as 

opposed to exemplary) experience. 

Response: While we understand 

commenters’ concerns about being able 

to consistently meet patients’ 

expectations regarding their care, we 

believe that patient satisfaction and 

involvement in their treatment is a key 

element of successful ESRD treatment. 

The scoring methodology does not 

require facilities to get 100 percent on 

a particular measure, but it evaluates 

overall how the facility does. 

Comment: Some commenters did not 

support the proposal to convert the ICH 

CAHPS reporting measure into a clinical 

measure. Commenters stated that the 

ICH CAHPS survey was originally 

developed for hospitals, and that 

transitioning the survey to the dialysis 

facility setting may encourage facilities 

to provide substandard care (for 

example, inappropriately shortening the 

length of dialysis sessions) in order to 

please patients. Commenters further 

stated that it is often impossible for 

facilities to meet patient expectations 

when treating a chronic condition such 

as ESRD, and that patients might 

inappropriately direct their frustrations 

towards facilities and their staff. 

Response: We understand that 

facilities are concerned about a potential 

conflict between ‘‘pleasing patients’’ 

and providing clinically adequate care. 

The ICH CAHPS survey was developed 

through literature reviews; focus groups 

of in-center hemodialysis patients and 

their families, nephrologists and facility 

staff; a review of existing surveys for 

ESRD patients; and a Technical Expert 

Panel. We therefore believe the survey 

adequately accounts for many 

perspectives of dialysis care and will 

allow patients to provide their opinions 

of the care they receive without fear of 

retribution. At this point, we lack any 

evidence to substantiate concerns that 

facilities will provide substandard care 

‘‘in order to please patients’’ or that ‘‘it 

is often impossible for facilities to meet 

patient expectations when treating a 

chronic condition’’; should such 

evidence arise, we will reevaluate the 

use of the ICH CAHPS survey in the 

ESRD QIP for future payment years. 

Comment: One commenter stated that 

the ICH CAHPS survey instrument is 

unreliable, because only 53 percent of 

patients with ESRD are able to complete 

forms for patient-reported outcomes, 

and basing facility scores on responses 

from the remaining patients cannot be 

generalized to reflect the true 

experience of all patients at a facility. 

Response: We acknowledge 

commenter’s concern regarding the 

overall response rate, but note that a 53 

percent response rate is considered 

better than average, particularly for a 

vulnerable, chronically ill patient 

population. However, response rates are 

not a measure of reliability because 

response rates are subject to a variety of 

factors. As part of the process of 

submitting NQF #0258 to NQF for reendorsement, we conducted reliability 

testing for the measure. Specifically, we 

found that the item total correlations for 

Kidney Doctor Communication were all 


tkelley on DSK3SPTVN1PROD with RULES3
66200 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

18Weidmer BA, Cleary PD, Keller S, Evensen C, 

Hurtado MP, Kosiak B, Gallagher PM, Levine R, 

Hays RD (2014). Development and Evaluation of the 

CAHPS (Consumer Assessment of Healthcare 

Providers and Systems) Survey for In-Center 

Hemodialysis Patients. Am J Kidney Diseases. [Epub 

ahead of print]. 

19 Kimmel PL, Cuckor D, Cohen SD, Peterson RA. 

Depression in end-stage renal disease patients: a 

critical review. Advances in Chronic Kidney 

Disease. 2007:14(4):328–34. 

20Feroze, U., Martin, D., Reina-Patton, A., 

Kalantar-Zadeh, K., & Kopple, J. D. (2010). Mental 

health, depression, and anxiety in patients on 

maintenance dialysis. Iranian Journal of Kidney 

Diseases, 4(3), 173–80. 

21Cukor, D., Cohen, S. D., Peterson, R. A., & 

Kimmel, P. L. (2007). Psychosocial aspects of 

chronic disease: ESRD as a paradigmatic illness. 

Journal of the American Society of Nephrology, 

18(12), 3042–3055; and Kimmel, P. L., Peterson, R. 

A., Weihs, K. L., Simmens, S. J., Alleyne, S., Cruz, 

I., & Veis, J. H. (2000). Multiple measurements of 

depression predict mortality in a longitudinal study 

of chronic hemodialysis outpatients. Kidney 

International, 57(5), 2093–2098. 

22Preljevic, V. T., ;sthus, T. B. H., Sandvik, L., 

Opjordsmoen, S., Nordhus, I. H., Os, I., & Dammen, 

T. (2012). Screening for anxiety and depression in 

dialysis patients: Comparison of the Hospital 

Anxiety and Depression Scale and the Beck 

Depression Inventory. Journal of Psychosomatic 

Research, 73(2), 139–144. 

above 0.40. Nineteen of the 22 item-total 

correlations for Dialysis Facility Care 

and Operations were above 0.40. Six of 

11 item-total correlations for Patient 

Empowerment were above 0.40. Internal 

consistency reliabilities for the three 

scales ranged from 0.75 to 0.93. We 

believe the measure is reliable because 

the item total correlations for the 

measure’s three composite measures all 

exceeded 0.40, which indicates a 

moderate level of reliability. 

Comment: Some commenters did not 

support the expansion of the ICH 

CAHPS reporting measure into a clinical 

measure, because published research 

demonstrates that several items on the 

survey are unreliable. 

Response: We are aware of some 

studies that have questioned the 

reliability of the ICH CAHPS survey 

questions. However, a recent study in 

which we have been involved found 

that psychometric analyses strongly 

support the internal consistency, 

reliability, and validity of the ICH 

CAHPS survey scales.18 This study 

further showed that these scales can be 

used to discriminate variation in quality 

of care among dialysis facilities, and 

that scale scores were strongly related to 

patients’ global ratings of nephrologists, 

dialysis center, and dialysis center staff. 

We therefore believe that the survey 

questions are reliable. 

For reasons, we are finalizing the ICH 

CAHPS clinical measure as proposed for 

the PY 2018 program and future 

payment years. Technical specifications 

for the ICH CAHPS clinical measure can 

be found at: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

d. Screening for Clinical Depression and 

Follow-Up Reporting Measure 

Depression is the most common 

psychological disorder in patients with 

ESRD. Depression causes suffering, a 

decrease in quality of life, and 

impairment in social and occupational 

functions; it is also associated with 

increased health care costs. Current 

estimates put the depression prevalence 

rate as high as 20 percent to 25 percent 

in patients with ESRD.19 Studies have 

also shown that depression and anxiety 

are the most common comorbid 

illnesses in patients with ESRD.20

Moreover, depressive affect and 

decreased perception of social support 

have been associated with higher rates 

of mortality in the ESRD population, 

and some studies suggest that this 

association is as strong as that between 

medical risk factors and mortality.21

Nevertheless, depression and anxiety 

remain under-recognized and undertreated, despite the availability of 

reliable screening instruments.22

Therefore, a measure that assesses 

whether facilities screen patients for 

depression, and develop follow-up 

plans when appropriate, offers an 

opportunity to improve the health of 

patients with ESRD. 

We proposed to adopt a depression 

measure that is based on an NQFendorsed measure (NQF #0418: 

Screening for Clinical Depression). NQF 

#0418 assesses the percentage of 

patients screened for clinical depression 

using an age-appropriate standardized 

tool and documentation of a follow-up 

plan where necessary. The Measures 

Application Partnership supported the 

use of NQF #0418 in the ESRD QIP in 

its January 2014 Pre-Rulemaking Report, 

because the measure ‘‘addresses a 

National Quality Strategy [NQS] aim not 

adequately addressed in the program 

measure set’’ and promotes person- and 

family-centered care. We proposed to 

adopt a reporting measure based on this 

NQF-endorsed measure so that we can 

collect data that we can use in the future 

to calculate both achievement and 

improvement scores, should we propose 

to adopt the clinical version of this 

measure in future rulemaking. Although 

we recognize that we recently adopted 

the NHSN Bloodstream Infection 

clinical measure despite a lack of 

baseline data to calculate achievement 

and improvement scores, we believe 

that measure warranted special 

treatment in light of the fact that it 

addresses patient safety. Because the 

proposed screening for clinical 

depression measure addresses quality of 

life and patient well-being, and not 

patient safety, we think it is appropriate 

to adopt it as a reporting measure until 

such time that we can collect the 

baseline data needed to score it as a 

clinical measure. 

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

states that ‘‘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) [in this 

case NQF], the Secretary may specify a 

measure that is not so endorsed as long 

as due consideration is given to 

measures that have been endorsed or 

adopted by a consensus organization 

identified by the Secretary.’’ Because we 

have given due consideration to 

endorsed measures as well as those 

adopted by a consensus organization 

and determined it is not practical or 

feasible to adopt NQF #0418 as a 

clinical measure in the ESRD QIP at this 

time, we proposed to adopt the 

Screening for Clinical Depression and 

Follow-Up Plan reporting measure 

under the authority of section 

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

For PY 2018 and future payment 

years, we proposed that facilities must 

report one of the following conditions in 

CROWNWeb, at least once per 

performance period, for each qualifying 

patient (defined below): 

1. Screening for clinical depression is 

documented as being positive, and a 

follow-up plan is documented 

2. Screening for clinical depression 

documented as positive, and a followup plan not documented, and the 

facility possess documentation stating 

the patient is not eligible 

3. Screening for clinical depression 

documented as positive, the facility 

possesses no documentation of a followup plan, and no reason is given 

4. Screening for clinical depression is 

documented as negative, and a followup plan is not required 

5. Screening for clinical depression 

not documented, but the facility 

possesses documentation stating the 

patient is not eligible 

6. Clinical depression screening not 

documented, and no reason is given 

For this proposed measure, qualifying 

patients are defined as patients 12 years 

or older who have been treated at the 

facility for 90 days or longer. This 

proposed measure will collect the same 

data described in NQF #0418, but we 

are proposing to score facilities based on 

whether they successfully report the 

data, and not the measure results. More 

specifically, facilities will be scored on 


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whether they report one of the above 

conditions for each qualifying patient 

once before February 1 of the year 

directly following the performance 

period. Technical specifications for the 

Screening for Clinical Depression and 

Follow-Up reporting measure can be 

found at: http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the Screening for Clinical 

Depression and Follow-Up reporting 

measure, and recommended that CMS 

either require facilities to use the same 

screening for depression, or require 

facilities to report the methodology 

used. Commenters also recommended 

that CMS require facilities to provide 

documentation of referral for treatment 

of depression beyond the abilities of the 

renal social worker. 

Response: We appreciate commenters’ 

support, and will consider incorporating 

these recommendations in future 

rulemaking. 

Comment: Many commenters did not 

support adoption of the Screening for 

Clinical Depression and Follow-Up 

reporting measure. Commenters stated 

that the Screening for Clinical 

Depression and Follow-Up reporting 

measure is outside the dialysis facility’s 

scope of practice, and that staff social 

workers are not qualified to provide 

treatment for depression. Commenters 

also stated that a measure on depression 

screening and follow-up is not covered 

within the statutory authorities of the 

ESRD QIP, since Section 1881 (h)(1)(A) 

of the Act limits the program to ‘‘renal 

dialysis services.’’ Commenters also 

stated that while facilities can do 

depression screenings, they are not 

equipped to provide psychotherapy 

services, and that requiring facilities to 

conduct the assessment is a disservice 

to patients, who would be better served 

by pyschotherapists. Comments further 

stated that depression unrelated to 

dialysis should not fall under the 

purview of the dialysis facility, and that 

conducting the annual assessment is 

unduly burdensome (particularly with 

respect to hiring staff to provide the 

assessment and training staff to enter 

data correctly). Commenters further 

stated that a future clinical version of 

this measure would require dialysis 

facilities to provide these services. 

Commenter stated that the measure 

would be more appropriate for the 

Comprehensive ESRD Care Initiative, 

because that initiative includes 

physicians as well as dialysis facilities. 

Response: We appreciate commenters’ 

input on this measure. First, we disagree 

that screening patients for clinical 

depression is outside the scope of 

practice for dialysis facilities. Patient 

assessments, including screenings for 

clinical depression, are a critical aspect 

of renal dialysis services, because they 

enable facilities to assess whether a 

patient needs additional care. We 

further note that the ESRD CfCs requires 

that facilities perform a ‘‘comprehensive 

assessment [for each patient that] must 

include, but is not limited to . . . [an] 

evaluation of psychosocial needs by a 

social worker’’ (42 CFR 494.80(a)(7)). 

We maintain that performing depression 

assessments is covered by this section 

(and, by extension, fall within the scope 

of work for dialysis facilities), because 

screening for clinical depression is an 

evaluation of the patient’s psychosocial 

needs. We further disagree that 

requiring facilities to report whether 

they screen patients for clinical 

depression is unduly burdensome 

because depression screening is a type 

of a psychosocial evaluation, which, as 

stated above, facilities are already 

required to perform as a condition for 

coverage under the Medicare program. 

We also note that this measure does not, 

and will not, require facilities to provide 

psychotherapy services to patients. We 

believe that this measure will 

incentivize facilities to perform a 

clinical depression screening for each 

qualifying patient and develop a followup plan in order to ensure that the 

patient receives appropriate treatment. 

Although we agree that facilities are not 

equipped to actually treat the 

depression, we believe that the 

screenings can be performed by the 

individuals already in the 

multidisciplinary care team, such as a 

staff social worker. We appreciate that 

the Comprehensive ESRD Care model 

seeks to directly address coordination of 

care issues in the dialysis facility 

setting, but do not believe this precludes 

us from adopting a measure on this 

issue for the ESRD QIP, and we believe 

that information gained as a result of 

this measure can be used to better 

inform policy decisions in both the 

ESRD QIP and the CEC model. 

Comment: Some commenters did not 

support the proposal to adopt the 

Screening for Clinical Depression and 

Follow-Up reporting measure because 

facilities are already performing these 

screenings, and because screening for 

depression overlaps with the Medicare 

Conditions for Coverage for ESRD 

facilities. One commenter recommended 

CMS instead consider using a measure 

such as the Standardized 

Hospitalization Ratio to capture the 

effective management of the dialysis 

patient. 

Response: We appreciate that some 

facilities may already be performing 

these screenings. However, we do not 

believe that all facilities are doing so, 

and we believe that the Screening for 

Clinical Depression and Follow-Up 

reporting measure will incentivize all 

facilities to conduct depression 

screening and initiate follow-up plans 

when necessary. We also recognize that 

some facilities that are already screening 

patients for depression in order to meet 

the requirements of the ESRD CfCs will 

experience significant additional 

burdens associated with reporting data 

for the reporting measure. Nevertheless, 

depression is a highly prevalent 

condition in patients with ESRD, which 

impacts many aspects of a patient’s life 

and is associated with higher rates of 

mortality in the ESRD population. We 

therefore believe the benefits of 

incentivizing facilities that are not 

already doing so to regularly screen 

their patients for depression outweigh 

the data reporting burdens for facilities 

that are already conducting these 

screening to meet the requirements of 

the ESRD CfCs. 

Comment: Some commenters sought 

clarification as to what characteristics a 

screening instrument must have to 

qualify as an ‘‘age appropriate tool’’ and 

what constitutes a ‘‘follow-up plan’’ in 

the context of the proposed Clinical 

Depression and Follow-Up reporting 

measure. The commenters also sought 

clarification as to whether facilities are 

required to screen all patients for 

depression, or whether only patients 

‘‘identified as potentially having a 

problem’’ should be screened. 

Commenters sought clarification as to 

whether the facility would be required 

to perform the screening, or whether 

another provider would be required to 

do so. 

Response: The measure does not 

require facilities to select any particular 

screening tool because we believe that 

each facility should be able to select the 

tool that is most appropriate for each of 

their patients. However, examples of 

screening tools that we would consider 

to be age-appropriate include, but are 

not limited to: 

Adolescent Screening Tools (12–17 

years): Patient Health Questionnaire for 

Adolescents (PHQ–A), Beck Depression 

Inventory-Primary Care Version (BDI– 

PC), Mood Feeling Questionnaire 

(MFQ), Center for Epidemiologic 

Studies Depression Scale (CES–D), and 

PRIME MD–PHQ2 

Adult Screening Tools (18 years and 

older): Patient Health Questionnaire 


tkelley on DSK3SPTVN1PROD with RULES3
66202 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

(PHQ–9), Beck Depression Inventory 

(BDI or BDI–II), Center for 

Epidemiologic Studies Depression Scale 

(CES–D), Depression Scale (DEPS), Duke 

Anxiety-Depression Scale (DADS), 

Geriatric Depression Scale (GDS), 

Cornell Scale Screening, and PRIME 

MD–PHQ2 

We further note that we would 

consider an appropriate follow-up plan 

to be one that outlines a proposed 

course of action, including at least one 

of the following: (1) Additional 

evaluation for depression; (2) suicide 

risk assessment; (3) referral to a 

practitioner who is qualified to diagnose 

and treat depression; (4) 

pharmacological interventions; and/or 

(4) other interventions or follow-up for 

the diagnosis or treatment of depression. 

Under this measure, facilities are 

required to report whether they 

screened qualifying patients for 

depression, and whether they developed 

a follow-up plan. 

Comment: One commenter 

recommended increasing the minimum 

age for qualifying patients from 12 to 18, 

because pediatric patients present 

unique challenges for depression 

assessment. 

Response: Although we recognize that 

patients between the ages of 12 and 17 

present unique challenges for 

depression assessment, we believe it is 

critically important to include these 

patients because adolescent-onset 

depression is associated with multiple 

negative health outcomes, including an 

increased sick of death by suicide, 

suicide attempts, and recurrence of 

depression in young adulthood. In 

addition, the measure specifications for 

NQF #0418, the measure upon which 

this reporting measure is based, 

provides that the measure is appropriate 

for patients ages 12 to 17, and we agree 

with NQF’s assessment because there 

are age-appropriate screening tools for 

this population, and requiring facilities 

to report data on whether these 

depression screenings were provided 

could prevent the negative outcomes 

listed above. 

Comment: Some commenters did not 

support the proposal to adopt the 

Depression Screening and Follow-Up 

reporting measure, because the measure 

upon which it is based (NQF #0418) is 

specified for physicians, not dialysis 

facilities. Because the follow-up 

component of the measure requires a 

physician referral, commenter stated 

that the measure is not appropriate for 

dialysis facilities. 

Response: We recognize that the NQFendorsed version of this measure is 

specified for physicians, but we 

continue to believe that it is an 

appropriate measure for the dialysis 

facility setting. Dialysis facilities see 

patients with ESRD far more frequently 

than nephrologists and primary care 

physicians. Accordingly, dialysis 

facilities are in a better position to 

detect when their patients are in need 

of treatment for depression. 

Furthermore, under the ESRD CfCs, the 

nephrologist is considered part of the 

multidisciplinary team that provides 

dialysis treatment. As a result, we 

believe nephrologists should be capable 

of referring patients in need of further 

treatment. 

Comment: Some commenters did not 

support the adoption of the Depression 

Screening and Follow-Up reporting 

measure because it is a ‘‘check-box’’ 

measure (that is, facilities receive credit 

on the basis of attestations), there is no 

depression screening tool specific to 

patients with ESRD, and there is limited 

data on the effectiveness of 

pharmacotherapies for depression in 

ESRD patients. One commenter was 

concerned that adopting the measure 

could lead to increased utilization of 

pharmacotherapies without a 

concomitant decline in rates of 

depression, because this effect has been 

seen in studies of the general 

population. One commenter also 

recommended that CMS develop 

alternative measures on depression that 

would be more valid for the dialysis 

setting. 

Response: We recognize that scores on 

this measure are based on whether the 

facility reported one of six conditions 

for each qualifying patient. Depression 

is a significant concern for patients with 

ESRD, but it remains underdiagnosed 

and undertreated. We believe that 

facilities will more vigilantly monitor 

and screen for depression because the 

measure requires facilities to report 

whether they performed the screening. 

Additionally, we appreciate 

commenters’ concerns that this measure 

could lead to an overutilization of 

pharmacotherapies for depression in 

patients with ESRD. However, we are 

not aware of any evidence indicating 

pharmacotherapies are overused in the 

ESRD population; absent such evidence, 

we do not believe that this concern is 

sufficient to delay adoption of this 

measure. Finally, we appreciate 

commenters’ recommendation that we 

develop a measure specific to 

depression in the dialysis setting. We 

will continue to evaluate the measure’s 

specifications, and if we conclude that 

modifications are needed, we intend to 

propose to adopt them in the future. 

Comment: One commenter did not 

support the adoption of the Screening 

for Depression and Follow-Up reporting 

measure because patients risk being 

denied transplants if they are diagnosed 

with depression. Commenter was also 

concerned that adopting the measure 

may result in an over-reliance on 

pharmacotherapies without encouraging 

the types of emotional and social 

support that are needed to treat patients 

suffering from depression and ESRD. 

Response: We appreciate commenters’ 

concerns regarding the impact of 

depression on transplant eligibility and 

the possibility that this measure may 

result in increased use of 

pharmacotherapies the treatment of 

depression. However, absent evidence 

of transplant denials resulting from 

depression treatment or overuse of 

pharmacotherapies to treat patients’ 

depression, we do not believe these 

concerns are sufficient to support 

delaying adoption of the Clinical 

Depression Screening and Follow-Up 

reporting measure. We believe that a 

patient’s psychosocial wellbeing is a 

critical aspect of an ESRD patient’s 

overall health and quality of life. 

Comment: One commenter did not 

support the Depression Screening and 

Follow-Up measure because a patient’s 

status can change considerably during 

the year, and the commenter 

recommended requiring more frequent 

assessments. 

Response: We agree that patients’ 

depression status may change over the 

course of a year, and we encourage 

facilities to conduct more frequent 

screenings. Nevertheless, because PY 

2018 will be the first time this measure 

will be included in the ESRD QIP, we 

think it is appropriate to ask facilities to 

report whether they performed the 

screening at least once per performance 

period. We may consider revising this 

requirement in future years as we learn 

more information, based on the data we 

receive. 

Comment: One commenter did not 

support the Depression Screening and 

Follow-Up measure because it does not 

require facilities to assess the 

underlying psychosocial causes of 

depression, and because the measure 

does not require facilities to ensure that 

patients are engaged in their care, 

including the setting of patient-centric 

goals for treatment. 

Response: This measure is intended to 

ensure ESRD patients who may be 

experiencing depression are identified 

and referred, if necessary, for follow-up 

treatment. It does not require the 

dialysis facility to diagnose the nature 

and causes of depression because these 

tasks are not suitable for a dialysis 

facility. Rather, we recognize that 

treatment for clinical depression should 

be furnished by appropriately trained 


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23Cohen, S. D., Patel, S. S., Khetpal, P., Peterson, 

R. A., & Kimmel, P. L. (2007). Pain, sleep 

disturbance, and quality of life in patients with 

chronic kidney disease. Clinical Journal of the 

American Society of Nephrology, 2(5), 919–925. 

24 Davison SN. Pain in hemodialysis patients: 

prevalence, cause, severity, and management. 

American Journal of Kidney Disease. 2003; 

42:1239–1247 

25 Davison, S. N. (2007). The prevalence and 

management of chronic pain in end-stage renal 

disease. Journal of Palliative Medicine, 10(6), 1277– 

1287. 

26 De Castro C. (2013). Pain assessment and 

management in hemodialysis patients. CANNT 

Journal; 23(3):29–32; Weisbord SD, Fried LF, 

Arnold RM, Fine MJ, Levenson DJ, et al. Prevalence, 

severity, and importance of physical and emotional 

symptoms in chronic hemodialysis patients. (2005) 

Journal of the American Society of Nephrology; 

16(8):2487–2494. 

27 De Castro C. (2013). Pain assessment and 

management in hemodialysis patients. CANNT 

Journal; 23(3):29–32; Wyne A, Rai R, Cuerden M, 

Clark WF, Suri RS. (2011). Opioid and 

benzodiazepine use in end-stage renal disease: a 

systematic review. Clinical Journal of the American 

Society of Nephrology. 6(2):326–333. 

practitioners and other mental health 

professionals, and it is our hope that 

these professionals will evaluate 

psychosocial causes and engage patients 

in the selection of treatment goals. 

Comment: Some commenters did not 

support the Screening for Clinical 

Depression and Follow-Up reporting 

measure, because there is a lack of 

concrete information about the causes of 

depression and optimal screening 

methods and referral practices in the 

ESRD population. One commenter also 

stated that applying the principles 

underlying this measure to both adult 

and pediatric patients is not valid, 

because adult and pediatric present the 

different symptoms of depression and 

require different types of follow-up 

treatment. 

Response: The measure specifications 

for NQF #0418 (the measure upon 

which this reporting measure is based) 

provide guidance about what constitutes 

screening and follow-up within the 

context of the measure. Furthermore, 

the NQF-endorsed specifications do not 

include an exclusion for patients with 

ESRD, and we are not aware of any 

studies demonstrating that the 

particular causes of depression for 

patients with ESRD invalidate the 

measure’s prescriptions for screening 

and follow-up. We therefore believe that 

the Screening for Clinical Depression 

and Follow-Up reporting measure is 

appropriate for patients with ESRD. 

Finally, as stated above, we note that 

NQF #0418 was specified for patients 

aged 12 and older, and we agree with 

NQF that it is appropriate to include 

pediatric patients who are 12 years or 

older. 

Comment: Some commenters did not 

support the proposal to adopt the 

Depression Screening and Follow-Up 

measure, because meeting the 

requirements of the measure will create 

costs for the facility that will not be 

covered by comparable increases in 

payments under the ESRD PPS. Another 

commenter stated that Medicare fee-forservice does not allow or reimburse 

facilities for taking actions to address 

depression. 

Response: We recognize that 

depression screenings are not 

specifically reimbursed under the ESRD 

PPS. However, psychosocial evaluations 

are included in the ESRD CfCs and are 

required for Medicare participation, and 

depression screening is a type of 

psychosocial evaluation. Although we 

understand facilities may incur 

additional costs for complying with the 

measure’s requirements (because 

facilities cannot bill Medicare separately 

for these assessments and referrals), on 

balance we believe that these costs are 

outweighed by potential improvements 

for patients’ well-being. 

For these reasons, we are finalizing 

the Clinical Depression Screening and 

Follow-Up reporting measure as 

proposed. Technical specifications for 

the measure can be found at: http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical

Specifications.html 

e. Pain Assessment and Follow-Up 

Reporting Measure 

Pain is one of the most common 

symptoms in patients with ESRD.23

Studies have shown that pain is a 

significant problem for more than 50 

percent of patients with ESRD, and up 

to 82 percent of those patients report 

moderate to severe chronic pain.24 Pain 

is commonly associated with quality of 

life in early- and late-stage chronic 

kidney disease patients, but it is not 

effectively managed in the ESRD patient 

population and chronic pain often goes 

untreated.25 Observational studies 

suggest that under-managed pain has 

the potential to induce or exacerbate 

comorbid conditions in ESRD, which 

may in turn adversely affect dialysis 

treatment.26 Patients with ESRD 

frequently experience pain that has a 

debilitating impact on their daily lives, 

and research has shown a lack of 

effective pain management strategies 

currently in place in dialysis facilities.27

Therefore, a measure that assesses 

whether facilities regularly assess their 

patients’ pain, and develop follow-up 

plans as necessary, offers the possibility 

of improving the health and well-being 

of patients with ESRD. 

We proposed to adopt a pain measure 

that is based on an NQF-endorsed 

measure (NQF #0420: Pain Assessment 

and Follow-Up). NQF #0420 assesses 

the percentage of patients with 

documentation of a pain assessment 

using a standardized tool, and 

documentation of a follow-up plan 

when pain is present. The Measures 

Application Partnership supported the 

use of NQF #0420 in the ESRD QIP in 

its January 2014 Pre-Rulemaking Report, 

because the measure ‘‘addresses a 

National Quality Strategy [NQS] aim not 

adequately addressed in the program 

measure set’’ and promotes person- and 

family-centered care. We proposed to 

adopt a reporting measure based on this 

NQF-endorsed measure so that we can 

collect data that we can use in the future 

to calculate both achievement and 

improvement scores, should we propose 

to adopt the clinical version of this 

measure in future rulemaking. Although 

we recognize that we recently adopted 

the NHSN Bloodstream Infection 

clinical measure despite a lack of 

baseline data to calculate achievement 

and improvement scores, we believe 

that measure warranted special 

treatment in light of the fact that it 

addresses patient safety. Because the 

proposed screening for pain measure 

addresses quality of life and patient 

well-being, and not patient safety, we 

think it is appropriate to adopt it as a 

reporting measure until such time that 

we can collect the baseline data needed 

to score it as a clinical measure. 

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

states that ‘‘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 [in this case NQF], 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.’’ Because we have given due 

consideration to endorsed measures, as 

well as those adopted by a consensus 

organization, and determined it is not 

practical or feasible to adopt those 

measures in the ESRD QIP, we proposed 

to adopt the Pain Assessment and 

Follow-Up reporting measure under the 

authority of section 1881(h)(2)(B)(ii) of 

the Act. 

For PY 2018 and future payment 

years, we proposed that facilities must 

report one of the following conditions in 

CROWNWeb, once every six months per 

performance period, for each qualifying 

patient (defined below): 

1. Pain assessment using a 

standardized tool is documented as 


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positive, and a follow-up plan is 

documented 

2. Pain assessment documented as 

positive, a follow-up plan is not 

documented, and the facility possesses 

documentation that the patient is not 

eligible 

3. Pain assessment documented as 

positive using a standardized tool, a 

follow-up plan is not documented, and 

no reason is given 

4. Pain assessment using a 

standardized tool is documented as 

negative, and no follow-up plan 

required 

5. No documentation of pain 

assessment, and the facility possesses 

documentation the patient is not eligible 

for a pain assessment using a 

standardized tool 

6. No documentation of pain 

assessment, and no reason is given 

For this measure, a qualifying patient 

is defined as a patient age 18 years or 

older who has been treated at the 

facility for 90 days or longer. This 

proposed measure will collect the same 

data described in NQF #0420, but we 

are proposing a few modifications to the 

NQF-endorsed version. First, we 

proposed that facilities must report data 

for each patient once every six months, 

whereas NQF #0420 requires facilities to 

report the data based on each visit. We 

proposed this modification because we 

agree with public comments reflected 

on the Measures Application 

Partnership’s January 2014 PreRulemaking Report, which stated that 

conducting a pain assessment every 

time a patient receives dialysis would 

be unduly burdensome for facilities. 

Second, we proposed that conditions 

covering the first 6 months of the 

performance period must be reported in 

CROWNWeb before August 1 of the 

performance period, and that conditions 

covering the second 6 months of the 

performance period must be reported in 

CROWNWeb before February 1 of the 

year directly following the performance 

period. We believe this reporting 

schedule will ensure regular monitoring 

and follow-up of patients’ pain without 

imposing an undue burden on facilities. 

Third, we proposed to score facilities 

based on whether they successfully 

report the data, and not based on the 

measure results. Technical 

specifications for the Pain Assessment 

and Follow-Up reporting measure can 

be found at: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

adoption of the Pain Assessment and 

Follow-Up reporting measure because 

the measure can help reduce the pain 

associated with dialysis needles, and 

also encourage facility staff to undergo 

training in pain management and 

cannulation techniques. Commenters 

also supported the measure because 

pain is an underdiagnosed and 

undertreated condition in patients with 

ESRD that can inhibit individual 

function and change the ability of 

patients to fulfill their desired and 

required roles in life. 

Response: We thank the commenters 

for the support. 

Comment: Some commenters 

supported adopting the proposed Pain 

Assessment and Follow-Up reporting 

measure, because pain is an important 

concern among the ESRD population. 

Commenters recommended that CMS 

also require facilities to use the same 

screening tool, or collect information 

from facilities about the validated pain 

assessment tool used. 

Response: We thank commenters for 

their support. We did not propose to 

collect information about the pain 

assessment tool used or to require 

facilities to use the same tool. However, 

we will take these recommendations 

into consideration as we reevaluate the 

measure for future payment years. 

Comment: Many commenters did not 

support adoption of the Pain 

Assessment and Follow-Up reporting 

measure. Commenters stated that the 

Pain Assessment and Follow-Up 

reporting measure is outside the dialysis 

facility’s scope of practice. Commenters 

also noted that while facilities can do 

pain screenings, they are not equipped 

to provide pain treatment services, and 

that requiring facilities to conduct the 

assessment is a disservice for patients, 

who would be better served by pain 

centers. Comments further stated that 

pain unrelated to dialysis should not 

fall under the purview of the dialysis 

facility, and that conducting the 

semiannual assessment is unduly 

burdensome. Commenters further stated 

that a future clinical version of this 

measure would require dialysis facilities 

to provide these services. Commenter 

stated that the measure would be more 

appropriate for the Coordinated ESRD 

Care model, because that initiative 

includes physicians as well as dialysis 

facilities. 

Response: We appreciate commenters’ 

input on this measure. First, we disagree 

that screening patients for pain is 

outside the scope of work for dialysis 

facilities. Patient assessments are a 

critical aspect of renal dialysis services 

because they enable facilities to provide 

care that is directly responsive to 

patient needs. The ESRD CfCs require 

that facilities perform a ‘‘comprehensive 

assessment [for each patient that] must 

include, but is not limited to . . . [an] 

evaluation of current health status and 

medical condition, including co-morbid 

conditions’’ (42 CFR 494.80(a)(7)). 

Because screening for pain is an 

assessment of patients’ current health 

status, this screening falls within the 

ESRD CfCs and, by extension, the scope 

of work for dialysis facilities. We further 

disagree that the requirement for twice 

annual pain assessments is unduly 

burdensome because facilities are 

already required to perform an 

assessment of their patients’ current 

health status, and pain assessments are 

an example of such as assessment. We 

also note that this measure does not, 

and will not, require facilities to provide 

chronic pain treatment services to 

patients. This measure requires facilities 

to report whether or not they performed 

a pain assessment for each qualifying 

patient, including whether or not they 

documented a follow-up plan. Although 

we agree that facilities are not the 

appropriate parties to actually treat 

pain, we do think the assessment can be 

performed by members of the 

multidisciplinary care team, such as a 

staff nurse. We recognize that the 

Coordinated ESRD Care model seeks to 

directly address coordination of care 

issues in the dialysis facility setting, but 

do not believe this precludes us from 

adopting a measure on the same issue 

for the ESRD QIP, and we believe that 

information collected as a result of this 

measure can be used to better inform 

policy decisions in the ESRD QIP and 

the CEC model. 

Comment: Some commenters did not 

support adoption of the Pain 

Assessment and Follow-Up reporting 

measure because facilities are already 

performing these screenings, screening 

for pain overlaps with the Medicare 

Conditions for Coverage for ESRD 

facilities, and the ICH CAHPS survey 

already asks patients about the presence 

of pain. One commenter recommended 

CMS instead consider using a measure 

such as the Standardized 

Hospitalization Ratio to capture the 

effective management of the dialysis 

patient. Another commenter also stated 

that uremia is typically responsible for 

pain in patients with ESRD, and 

recommended delaying the adoption of 

the measure until research identifies an 

effective way to relieve pain associated 

with uremia. 

Response: We appreciate that some 

facilities may already be performing 

these screenings. However, we do not 

believe that all facilities are doing so, 


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and we believe that the Pain Assessment 

and Follow-Up reporting measure will 

incentivize all facilities to conduct pain 

assessments and initiate follow-up plans 

when necessary. Additionally, one of 

the reasons we believe this measure is 

appropriate for dialysis facilities is that 

the actions required to comply with the 

reporting requirements are covered, as 

discussed above, by the ESRD CfCs. 

Comment: One commenter 

recommended increasing the number of 

pain assessments patients receive each 

year beyond two and notes that the Joint 

Commission recommends assessing 

pain on an on-going basis. 

Response: We agree that patients’ pain 

status may change over the course of a 

year, and we encourage facilities to 

conduct more frequent assessments. 

Nevertheless, because PY 2018 will be 

the first time this measure is adopted in 

the ESRD QIP, we think it is appropriate 

to require facilities to report whether or 

not they performed a pain assessment 

once every six months. We may 

consider asking facilities to report more 

frequently in future years, after we have 

had an opportunity to evaluate the data 

that facilities report on this measure. 

Comment: One commenter sought 

clarification as to whether facilities are 

required to screen all patients for pain, 

or whether only patients ‘‘identified as 

potentially having a problem’’ should be 

screened. 

Response: Under this measure, 

facilities are required to report whether 

they performed pain assessments for 

qualifying patients, and whether they 

developed a follow-up plan based on 

that assessment. As stated in the CY 

2015 ESRD PPS Proposed Rule, 

qualifying patients for this measure are 

patients aged 18 years or older who 

have been treated at the facility for 90 

days or longer (79 FR 40261). 

Comment: Commenter did not 

support the proposal to adopt the Pain 

Assessment and Follow-Up reporting 

measure, because the measure upon 

which it is based (NQF #0420) is 

specified for physicians, not dialysis 

facilities. Because the follow-up 

component of the measure requires a 

physician referral, commenter stated 

that the measure is not appropriate for 

dialysis facilities. 

Response: We recognize that the NQFendorsed version of this measure is 

specified for physicians, but we 

continue to believe that it is an 

appropriate measure for the dialysis 

facility setting. Dialysis facilities see 

patients with ESRD far more frequently 

than nephrologists and primary care 

physicians. Accordingly, dialysis 

facilities are in a better position to 

detect when their patients are in need 

of treatment for pain. Furthermore, 

under the ESRD CfCs, the nephrologist 

is considered part of the 

multidisciplinary team that provides 

dialysis treatment. We therefore believe 

that nephrologists should be capable of 

referring patients for follow-up care 

following an initial pain assessment, if 

necessary. 

Comment: One commenter did not 

support the adoption of the Pain 

Assessment and Follow-Up reporting 

measure because it focuses on chronic, 

not acute, pain, and chronic pain is best 

managed by physicians, not dialysis 

facilities. Commenter also stated that 

the measure is not appropriate because 

significant pain is not typically 

associated with dialysis, and facilities 

are already addressing acute pain 

associated with dialysis, when it occurs. 

Response: The purpose of this 

measure is to incentivize facilities to 

assess both chronic and acute pain. 

Although some facilities may already 

have in place robust processes to 

address acute pain, we believe there is 

still considerable room for improvement 

in the assessment and management of 

acute pain. Although chronic pain is 

best treated by a qualified physician, 

dialysis facilities see patients far more 

frequently than nephrologists or other 

physicians, so dialysis facilities are in 

the best position to conduct regular 

assessments and refer patients to 

appropriate practitioners as needed. We 

further note that the reporting measure 

does not require facilities to treat 

chronic pain, or to report whether they 

have done so. 

Comment: One commenter did not 

support adoption of the Pain 

Assessment and Follow-Up reporting 

measure, because it is unclear whether 

the measure seeks to assess acute or 

chronic pain, and the commenter does 

not understand how this measure will 

improve patient care. For example, a 

pain assessment performed at one point 

in time may not be relevant to the 

patient’s experience of pain at a 

different time. 

Response: As stated above, this 

measure is intended to assess overall 

pain—both acute and chronic. We 

further believe that this measure will 

improve patients’ quality of life because 

it will increase the likelihood that 

patients who suffer from pain will be 

identified and referred to an appropriate 

practitioner. Finally, as stated above, we 

agree that patients’ pain status may 

change over the course of a year, and we 

encourage facilities to conduct more 

frequent assessments. 

Comment: Some commenters did not 

support the adoption of the Pain 

Assessment and Follow-Up reporting 

measure because it is a ‘‘check-box’’ 

measure (that is, facilities receive credit 

on the basis of attestations), and because 

there is no pain assessment tool specific 

for patients with ESRD. 

Response: We recognize that scores on 

this measure are based on whether a 

facility reports one of six conditions for 

each qualifying patient once every six 

months. However, we disagree that the 

measure will not make an impact on 

patients’ quality of life. Pain—both 

chronic and acute—is a significant 

concern for patients with ESRD, but it 

remains underdiagnosed and 

undertreated. We believe this measure 

will incentivize facilities to more 

vigilantly monitor and address patients’ 

pain, and that as a result patients with 

pain issues will be identified more 

quickly and receive the follow-up care 

necessary to improve and maintain their 

quality of life. 

We understand that there is no firm 

consensus on what pain assessment tool 

is best for patients with ESRD; however, 

there are a number of standardized tools 

available. We believe that facilities are 

in the best position to choose an 

appropriate screening tool for use with 

their patients. Examples of standardized 

assessment tools that we believe would 

be appropriate include but are not 

limited to the following: the Brief Pain 

Inventory (BPI); Faces Pain Scale (FPS); 

McGill Pain Questionnaire (MPQ); 

Multidimensional Pain Inventory (MPI); 

Neuropathic Pain Scale (NPS); Numeric 

Rating Scale (NRS); Oswestry Disability 

Index (ODI); Roland Morris Disability 

Questionnaire (RMDQ); Verbal 

Descriptor Scale (VDS); Verbal Numeric 

Rating Scale (VNRS); and Visual Analog 

Scale (VAS). 

Comment: One commenter did not 

support the proposal to adopt the Pain 

Assessment and Follow-Up measure 

because the commenter is concerned 

that facilities will simply conduct a 

straightforward assessment (for 

example, a numerical pain scale) and 

prescribe analgesics. Commenter stated 

that it would be preferable to identify 

the underlying causes of chronic and 

acute pain, and to develop care plans 

that address these causes. 

Response: As stated above, we believe 

that facilities have many options when 

selecting an appropriate pain 

assessment tool, and we believe that 

facilities should be able to select the 

tool that is most appropriate for their 

patients. We further believe that 

decisions to prescribe analgesics are 

best left to the prescribing clinician, 

though it is our hope that clinicians will 

take into account the underlying causes 

of pain, as well as patients’ treatment 

goals, when prescribing therapies. 


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66206 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

28Soni R, Horowitz B, Unruh M. Immunization in 

end-stage renal disease: opportunity to improve 

outcomes. Semin, Dial. 2013 Jul–Aug;26(4):416–26. 

29Fiore AE, Shay DK, Haber P, et al. Prevention 

and control of influenza. Recommendations of the 

Advisory Committee on Immunization Practices 

(ACIP). MMWR Recomm Rep. 2007;56:1–54. 

30Pearson ML, Bridges CM, Harper SA. Influenza 

vaccination of health-care personnel: 

Recommendations of the Healthcare Infection 

Control Practices Advisory Committee (HICPAC) 

and the Advisory Committee on Immunization 

Practices (ACIP). MMWR. 2006:55:1–16. 

31Talbot TR, Bradley SE., Cosgrove SE., et al. 

Influenza vaccination of healthcare workers and 

vaccine allocation for healthcare workers during 

vaccine shortages. Infect Control Hosp Epidemiol. 

2005;26(11):882–90. 

32Carman WF, Elder AG, Wallace LA, et al. 

Effects of influenza vaccination of health-care 

workers on mortality of elderly people in long-term 

care: a randomized controlled trial. Lancet. 

2000;355(9198):93–7; see also Potter J, Stott DJ, 

Roberts MA, et al. Influenza vaccination of health 

care workers in long-term-care hospitals reduces the 

mortality of elderly patients. J infect Dis. 

1997;175(1):1–6. 

Comment: One commenter did not 

support the proposal to adopt the Pain 

Assessment and Follow-Up measure, 

because meeting the requirements of the 

measure will create costs for the facility 

that will not be covered by comparable 

increases in payments under the ESRD 

PPS. Another commenter stated that 

Medicare fee-for-service does not allow 

or reimburse facilities for taking actions 

to address pain management. 

Response: We recognize that pain 

assessments are not covered under the 

ESRD PPS. However, evaluations of 

current health status and medical 

condition are included in the ESRD 

CfCs and required for participation in 

the Medicare program, and pain 

assessment is an example of such an 

evaluation. Although we understand 

that facilities may incur additional costs 

for complying with the measure’s 

requirements, on balance we believe 

that these costs are outweighed by 

potential improvements in patients’ 

quality of life. 

Comment: One commenter did not 

support the proposed Pain Assessment 

and Follow-Up reporting measure, 

because adopting the measure may lead 

to prescription of narcotics and other 

pain medications, which can cause 

iatrogenic effects. 

Response: We understand the 

commenter’s concern that a measure 

assessing pain may lead to prescription 

of narcotics and other pain medications, 

which can carry the risk of negative side 

effects when used or prescribed 

inappropriately. However, absent 

evidence indicating that pain 

medication utilization rates among 

ESRD patients are unnecessarily high, 

we do not believe this concern is 

sufficient to delay adoption of the Pain 

Assessment and Follow-Up reporting 

measure because of the prevalence and 

severity of pain-related health issues in 

the ESRD population. 

For these reasons, we are finalizing 

the Pain Assessment and Follow-Up 

reporting measure as proposed. 

Technical specifications for the measure 

can be found at: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html 

f. NHSN Healthcare Personnel Influenza 

Vaccination Reporting Measure 

Infection is the second most common 

cause of death in patients with ESRD, 

following cardiovascular causes,28 and 

influenza accounts for significant 

morbidity and mortality in patients 

receiving hemodialysis.29 Healthcare 

personnel (HCP) can acquire influenza 

from patients and transmit influenza to 

patients and other HCP; decreasing 

transmission of influenza from HCP to 

persons at high risk likely reduces 

influenza-related deaths among persons 

at high risk for complications from 

influenza, including patients with 

ESRD.30 Vaccination is an effective 

preventive measure against influenza 

that can prevent many illnesses, deaths, 

and losses in productivity.31 In 

addition, HCP are considered high 

priorities for vaccine use. Achieving and 

sustaining high influenza vaccination 

coverage among HCP is intended to help 

protect HCP and their patients, and to 

reduce disease burden and healthcare 

costs. Results of studies in post-acute 

care settings similar to the ESRD facility 

setting indicate that higher vaccination 

coverage among HCP is associated with 

lower all-cause mortality.32 We 

therefore proposed to adopt an NHSN 

HCP Influenza Vaccination reporting 

measure for PY 2018 and future 

payment years. 

We proposed to use a measure that is 

based on an NQF-endorsed measure 

(NQF #0431: Influenza Vaccination 

Coverage Among Healthcare Personnel) 

of the percentage of qualifying HCP 

who: (a) Received an influenza 

vaccination; (b) were determined to 

have a medical contraindication; (c) 

declined influenza vaccination; or (d) 

were of an unknown vaccination status. 

A ‘‘qualifying HCP’’ is defined as an 

employee, licensed independent 

practitioner, or adult student/trainee/

volunteer who works in a facility for at 

least one day between October 1 and 

March 31. The Measures Application 

Partnership supported the use of NQF 

#0431 in the ESRD QIP in its January 

2014 Pre-Rulemaking Report because 

the measure is NQF-endorsed for use in 

the dialysis facility care setting. We 

proposed to adopt a reporting measure 

based on this NQF-endorsed measure so 

that we can collect data that we can use 

in the future to calculate both 

achievement and improvement scores, 

should we propose to adopt the clinical 

version of this measure in future 

rulemaking. Although we recognize that 

we recently adopted the NHSN 

Bloodstream Infection clinical measure 

despite a lack of baseline data to 

calculate achievement and improvement 

scores, we believe that measure 

warranted special treatment in light of 

the fact that it addresses patient safety. 

Because the proposed NHSN HCP 

Influenza Vaccination reporting 

measure addresses population health, 

and not patient safety, we think it is 

appropriate to adopt it as a reporting 

measure until such time that we can 

collect the baseline data needed to score 

it as a clinical measure. 

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

states that ‘‘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) [in this 

case, NQF], the Secretary may specify a 

measure that is not so endorsed as long 

as due consideration is given to 

measures that have been endorsed or 

adopted by a consensus organization 

identified by the Secretary.’’ Because we 

have given due consideration to 

endorsed measures as well as those 

adopted by a consensus organization, 

and determined it is not practical or 

feasible to adopt this measure in the 

ESRD QIP, we proposed to adopt the 

NHSN Healthcare Personnel Influenza 

Vaccination reporting measure under 

the authority of section 1881(h)(2)(B)(ii) 

of the Act. 

For PY 2018 and future payment 

years, we proposed that facilities must 

submit, on an annual basis, an HCP 

Influenza Vaccination Summary Form 

to CDC’s NHSN system, according to the 

specifications available in the NHSN 

Healthcare Personnel Safety Component 

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

PDFs/HPS-manual/vaccination/HPSflu-vaccine-protocol.pdf). This proposed 

measure differs from NQF #0431 in that 

we are proposing to collect the same 

data but will score facilities on the basis 

of whether they submit this data, rather 

than on the percentage of HCP 

vaccinated. We proposed that the 

deadline for reporting this information 

to NHSN be May 15th of each year. This 

date is consistent with the reporting 

deadline established by CMS for other 

provider types reporting HCP 

vaccination data to NHSN. Because the 


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flu season typically spans from October 

to April, NHSN protocols submitted by 

May 15 would document vaccinations 

received during the preceding flu 

season. For example, NHSN HCP 

Influenza Vaccination Summary Forms 

submitted by May 15, 2016, would 

contain data from October 1, 2015 to 

March 31, 2016, and would be used for 

the PY 2018 ESRD QIP; NHSN protocols 

submitted by May 15, 2017, would 

contain data from October 1, 2016 to 

March 31, 2017, and would be used for 

the PY 2019 ESRD QIP, and so on. 

Technical specifications for this 

measure can be found at: http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical

Specifications.html. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below. 

Comment: Some commenters 

supported the proposal to adopt the 

NHSN HCP Influenza Vaccination 

reporting measure because HCP can 

expose patients to influenza if they have 

not been vaccinated, and because the 

measure will help improve patient 

safety. 

Response: We thank the commenters 

for their support. 

Comment: One commenter did not 

support the adoption of the NHSN HCP 

Influenza Vaccination reporting 

measure, because its definition of HCP 

is overly inclusive and reporting 

vaccination status for short-term HCP is 

overly burdensome. Commenter was 

concerned about facilities’ ability to 

comply with the requirement to provide 

written documentation of each HCP’s 

vaccination during the influenza season, 

and that if this measure is expanded to 

a clinical measure in the future it may 

limit access to temporary workers 

(including students and volunteers) due 

to the requirement that HCPs are 

included in the measure even if they 

only work at the facility for a single day. 

Response: We disagree that the 

definition of ‘‘qualified healthcare 

personnel’’ is overly inclusive. The 

NHSN HCP Influenza vaccination 

measure was pilot-tested at over 300 

healthcare facilities in the United States; 

based on the results of this pilot test, 

CDC restricted the types of nonemployee healthcare personnel 

included in the measure in order to 

balance inclusiveness and feasibility of 

reporting for healthcare facilities. It is 

important to measure influenza 

vaccination among non-employee 

healthcare personnel as many of these 

personnel provide care to or interact 

directly with patients and employee 

healthcare personnel, placing them at 

risk of acquiring or transmitting 

influenza. We therefore believe the 

inclusion of non-employee healthcare 

personnel in this measure is 

appropriate. We also note that this 

measure does not require facilities to 

report documentation regarding HCP 

immunization status when vaccinations 

are obtained within their own 

healthcare facility. Under the NHSN 

HCP Influenza Vaccination reporting 

measure and associated NHSN module, 

facilities should obtain written 

documentation of influenza 

vaccinations obtained outside of the 

healthcare facility, but need only report 

the total number of those vaccinations 

received outside of the healthcare 

facility. 

Comment: One commenter supported 

CMS’s effort to ensure HCPs are 

vaccinated, but was concerned about the 

administrative aspects of the proposed 

NHSN HCP Influenza Vaccination 

reporting measure. The commenter 

specifically sought clarification as to 

whether written documentation would 

be required to establish an HCP’s 

vaccination status, and whether 

vaccinations received before October 1 

would qualify under this proposed 

measure. 

Response: Written documentation of 

an HCP’s vaccination status is only 

required for HCP receiving the influenza 

vaccination outside of the healthcare 

facility. Acceptable forms of 

documentation of influenza vaccination 

received outside of the healthcare 

facility include a signed statement or 

form, or an electronic form or email 

from the healthcare worker indicating 

when and where he/she has received 

the influenza vaccine, or a note, receipt, 

vaccination card, or similar form of 

documentation from the outside 

vaccinating entity stating that the 

healthcare worker received the 

influenza vaccine at that location. 

Facilities should maintain this 

documentation for their own record; 

however, only summary count of 

number reported within this category 

should be reported. 

Under the NHSN HCP Influenza 

Vaccination reporting measure, the 

performance period for the denominator 

(the number of healthcare personnel 

working in a facility) is from October 1 

through March 31. However, the 

numerator measurement (vaccination 

status) includes vaccines obtained ‘‘as 

soon as vaccine is available.’’ As a 

result, an HCP working at the facility as 

of October 1 who was vaccinated in 

September would be considered 

vaccinated for the performance period 

under this measure. 

Comment: One commenter supported 

the NHSN HCP Influenza reporting 

measure, but stated that the NQFendorsed measure ‘‘only includes 

personnel working at a facility for 30 

days or more.’’ Commenter 

recommended that CMS exclude HCP 

working at a facility for less than 30 

days from this measure. 

Response: The NHSN HCP Influenza 

Vaccination module’s requirement to 

include only healthcare personnel 

working in the healthcare facility for 30 

days or more was in place during the 

2012–2013 influenza season. Beginning 

with the 2013–2014 influenza season, 

facilities are required to report 

healthcare personnel working in the 

facility for one day or more from 

October 1 through March 31, because 

this more accurately captures healthcare 

personnel in the facility at risk of 

acquiring or transmitting influenza 

virus. The National Quality Forum 

(NQF) accepted CDC’s proposal to make 

the change to one day or more in May 

2013, and the current NQF-endorsed 

measure available at http://

www.qualityforum.org/QPS/0431 

reflects this revised specification. 

Comment: Some commenters did not 

support the proposal to adopt the NHSN 

HCP Influenza Vaccination reporting 

measure because influenza vaccination 

is already a requirement for 

employment in dialysis facilities, and 

that adopting this measure will dilute 

the scores of other measures in the 

ESRD QIP. 

Response: Although influenza 

vaccinations for healthcare 

professionals may be a condition of 

employment for some facilities, this is 

not a condition for all facilities, and 

some facilities do not require volunteers 

or short-term employees to have current 

influenza vaccinations. Accordingly, we 

believe that potential improvements to 

patients’ health warrant the adoption of 

the measure. We further clarify that 

adopting this measure in the ESRD QIP 

will not dilute the weights of the 

clinical measures in the program. The 

scoring methodology we are adopting 

for PY 2018 weights the reporting 

measure scores equally to comprise 10 

percent of a facility’s TPS. Although this 

methodology reduces the significance of 

the other reporting measures it does not 

impact weight of the clinical measures, 

and it allows us to collect the baseline 

data needed to expand the NHSN HCP 

measure into a clinical measure in the 

future. We therefore believe that the 

benefits of adopting this measure 

outweigh the drawbacks of diluting the 

weight of the other reporting measures 

in the ESRD QIP measure set. 


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Comment: Some commenters did not 

support the proposal to adopt the NHSN 

HCP Influenza Vaccination measure, 

because meeting the requirements of the 

measure will create costs for the facility 

that will not be covered by comparable 

increases in payments under the ESRD 

PPS. 

Response: We understand that this 

measure may result in additional cost to 

dialysis facilities from having to 

compile and report the vaccination 

status of their health care professionals; 

however, we believe that these costs are 

outweighed by improvements in 

community health resulting from an 

immunized workforce. 

Comment: Some commenters stated 

that reporting data to NHSN HCP 

Influenza Module for dialysis facilities 

within a hospital will result in 

duplicative reporting because these 

entities are already included in the 

hospital’s reporting. One commenter 

recommended that facilities receive full 

credit on the measure if they indicate 

their hospital submitted the data on 

their behalf. 

Response: Dialysis facility reporting 

will be completely separate from acute 

care reporting regardless of whether a 

dialysis facility is affiliated with acute 

care. It is important that all eligible 

healthcare personnel be counted by 

each facility where they work so that 

each facility’s reporting to NHSN under 

this measure presents an accurate 

picture of the vaccination coverage 

among healthcare personnel at that 

specific facility or location. The 

concerns regarding duplicative 

reporting are unfounded, because 

reporting for the same individual’s 

vaccination status will only occur in 

instances where that individual worked 

in both facilities during the reporting 

period. In these cases, it is appropriate 

to include the HCP in both facilities’ 

counts because they meet the eligibility 

criteria for both facilities’ reporting. 

Comment: One commenter 

recommended that CMS consider 

collecting data for the NHSN HCP 

Influenza Vaccination reporting 

measure as actual numbers of HCPs 

vaccinated rather than percentages, 

because small facilities may appear to 

be noncompliant based on a small 

number of HCP not receiving a 

vaccination. The commenter further 

recommended that this information be 

reported annually rather than monthly, 

because this is consistent with the way 

data is entered into CROWNWeb. 

Response: Under the proposed NHSN 

HCP Influenza Vaccination reporting 

measure, facilities are required to report 

the number of HCP working in the 

facility (denominator data) and the 

number of those individuals with a 

certain vaccination status (numerator 

data). Accordingly, in the process of 

calculating the percentage of HCPs who 

receive an influenza vaccination, the 

measure collects data on the actual 

number of HCPs vaccinated. We also 

note that for the PY 2018 program 

NHSN HCP Influenza Vaccination is a 

reporting measure, meaning that 

facilities will receive a score on this 

measure based on the successful 

reporting of data, not on the values 

actually reported. In addition, monthly 

reporting is not required of facilities 

under this measure. Instead, facilities 

are required to submit a single summary 

report of final HCP influenza 

vaccination data for the specified 

influenza season by the annual 

reporting deadline. 

For these reasons, we are finalizing 

the NHSN HCP Influenza Vaccination 

measure as proposed. Technical 

specifications for the measure can be 

found at: http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_

TechnicalSpecifications.html. 

Figure 2: Summary of Finalized PY 2018 

Measures 


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BILLING CODE 4120–01–C 

2. Performance Period for the PY 2018 

ESRD QIP 

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

requires the Secretary to establish the 

performance period with respect to a 

year, and that the performance period 

occur prior to the beginning of such 

year. In accordance with our proposal to 

adopt CY 2015 as the performance 

period for the PY 2017 ESRD QIP, as 

well as our policy goal to collect 12 

months of data on each measure when 

feasible, we proposed to adopt CY 2016 

as the performance period for the PY 

2018 ESRD QIP. With respect to the 

NHSN Healthcare Personnel Influenza 

Vaccination Reporting measure, we 

proposed that the performance period 

will be from October 1, 2015 through 

March 31, 2016, which is consistent 

with the length of the 2015–2016 

influenza season. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

3. Performance Standards, Achievement 

Thresholds, and Benchmarks for the PY 

2018 ESRD QIP 

a. Performance Standards, Achievement 

Thresholds, and Benchmarks for the 

Clinical Measures in the PY 2018 ESRD 

QIP 

For the same reasons stated in the CY 

2013 ESRD PPS final rule (77 FR 67500 

through 76502), we proposed for PY 

2018 to set the performance standards, 

achievement thresholds, and 

benchmarks based on the 50th, 15th, 

and 90th percentile, respectively, of 

national performance in CY 2014 for all 

the clinical measures except for the 

proposed ICH CAHPS clinical measure. 

As finalized in the CY 2014 ESRD PPS 

Final Rule (78 FR 72213), facilities are 

not required to administer the ICH 

CAHPS survey (via a CMS-approved 

third-party vendor) on a semiannual 

basis until CY 2015, the proposed 

performance period for the PY 2017 

ESRD QIP. We believe that ICH CAHPS 

data collected during CY 2014 will not 

be reliable enough to use for the 

purposes of establishing performance 

standards, achievement thresholds, and 

benchmarks, because facilities are only 

required to administer the survey once 

in CY 2014. Therefore, we proposed to 

set the performance standards, 

achievement thresholds, and 

benchmarks based on the 50th, 15th, 

and 90th percentile, respectively, of 

national performance in CY 2015 for the 

proposed ICH CAHPS clinical measure. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

b. Estimated Performance Standards, 

Achievement Thresholds, and 

Benchmarks for the Clinical Measures 

for the PY 2018 ESRD QIP 

At this time, we do not have the 

necessary data to assign numerical 

values to the performance standards for 

the clinical measures, because we do 

not yet have data from CY 2014 or the 

first portion of CY 2015. We will 

publish values for the clinical measures, 

using data from CY 2014 and the first 

portion of CY 2015, in the CY 2016 

ESRD PPS Final Rule. 

c. Performance Standards for the PY 

2018 Reporting Measures 

In the CY 2014 ESRD PPS Final Rule, 

we finalized performance standards for 

the Anemia Management and Mineral 

Metabolism reporting measures (78 FR 

72213). We did not propose any changes 

to this policy beyond the proposal to 

modify the reporting requirements for 

the Mineral Metabolism reporting 

measure, which appears above in 

Section III.G.1. 

For the Screening for Clinical 

Depression and Follow-Up reporting 

measure, we proposed to set the 

performance standard as successfully 

reporting one of the above-listed clinical 

depression and follow-up screening 

conditions for each qualifying patient in 

CROWNWeb before the February 1st 

directly following the performance 

period. 

For the Pain Assessment and FollowUp reporting measure, we proposed to 

set the performance standard as 

successfully reporting one of the abovelisted pain assessment and follow-up 

conditions for each qualifying patient in 

CROWNWeb twice annually: once 

before August 1st for the first 6 months 

of the performance period, and once 

before the February 1st directly 

following the performance period for 

the last six months of the performance 

period. 

For the NHSN Healthcare Provider 

Influenza Vaccination reporting 

measure, we proposed to set the 

performance standard as successfully 

submitting the HCP Influenza 

Vaccination Summary Form to CDC’s 

NHSN system by May 15, 2017. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

4. Scoring the PY 2018 ESRD QIP 

Measures 

a. Scoring Facility Performance on 

Clinical Measures Based on 

Achievement 

In the CY 2014 ESRD PPS Final Rule, 

we finalized a policy for scoring 

performance on clinical measures based 

on achievement (78 FR 72215). In 

determining a facility’s achievement 

score for each measure under the PY 

2018 ESRD QIP, we proposed to 

continue using this methodology for all 

clinical measures except the ICH 

CAHPS clinical measure. Under this 

methodology, facilities receive points 

along an achievement range based on 

their performance during the proposed 

performance period for each measure, 

which we define as a scale between the 

achievement threshold and the 

benchmark. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

b. Scoring Facility Performance on 

Clinical Measures Based on 

Improvement 

In the CY 2014 ESRD PPS Final Rule, 

we finalized a policy for scoring 

performance on clinical measures based 

on improvement (78 FR 72215 through 

72216). In determining a facility’s 

improvement score for each measure 

under the PY 2018 ESRD QIP, we 

proposed to continue using this 

methodology for all clinical measures 

except the ICH CAHPS clinical measure. 

Under this methodology, facilities 

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 performance on the measure 

during CY 2015. The facility’s 

improvement score would be calculated 

by comparing its performance on the 

measure during CY 2016 (the proposed 

performance period) to its performance 

rate on the measure during CY 2015. 

We sought comments on these 

proposals. We did not receive any 

comments and are finalizing them as 

proposed. 

c. Scoring the ICH CAHPS Clinical 

Measure 

For PY 2018 and future payment 

years, we proposed the following 

scoring methodology for the ICH CAHPS 

clinical measure. We proposed to score 

the measure on the basis of three 

composite measures and three global 

ratings. 

Composite Measures: 


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• Nephrologists’ Communication and 

Caring; 

• Quality of Dialysis Center Care and 

Operations; and 

• Providing Information to Patients. 

Global Ratings: 

• Overall rating of the nephrologists 

(Question 8) 

• Overall rating of the dialysis center 

staff (Question 32) 

• Overall rating of the dialysis facility 

(Question 35) 

The composite measures are 

groupings of questions that measure the 

same dimension of healthcare. 

(Groupings of questions and composite 

measures can be found at https://

ichcahps.org/Portals/0/ICH_

Composites_English.pdf.) Global ratings 

questions employ a scale of 0 to 10, 

worst to best; each of the questions 

within a composite measure use either 

‘‘Yes’’ or ‘‘No’’ responses, or response 

categories ranging from ‘‘Never’’ to 

‘‘Always,’’ to assess the patient’s 

experience of care at a facility. Facility 

performance on each composite 

measure will be determined by the 

percent of patients who choose ‘‘topbox’’ responses (that is, most positive or 

‘‘Always’’) to the ICH CAHPS survey 

questions in each domain. Examples of 

questions and top-box responses are 

displayed below: 

Q11: In the last 3 months, how often did 

the dialysis center staff explain things in a 

way that was easy for you to understand? 

Top-box response: ‘‘Always’’ 

Q19: The dialysis center staff can connect 

you to the dialysis machine through a graft, 

fistula, or catheter. 

Do you know how to take care of your 

graft, fistula or catheter? 

Top-box response: ‘‘Yes’’ 

We proposed that a facility will 

receive an achievement score and an 

improvement score for each of the 

composite measures and global ratings 

in the ICH CAHPS survey instrument. 

For purposes of calculating achievement 

scores for the ICH CAHPS clinical 

measure, we proposed to base the score 

on where a facility’s performance rate 

falls relative to the achievement 

threshold and the benchmark for that 

measure. We proposed that facilities 

will earn between 0 to 10 points for 

achievement based on where its 

performance for the measure falls 

relative to the achievement threshold. If 

a facility’s performance rate during the 

performance period is: 

• Equal to or greater than the 

benchmark, then the facility would 

receive 10 points for achievement; 

• Less than the achievement 

threshold, then the facility would 

receive 0 points for achievement; or 

• Equal to or greater than the 

achievement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

achievement score: 

[9 * ((Facility’s performance period 

rate¥achievement threshold)/

(benchmark¥achievement threshold))] 

+ .5, with all scores rounded to the 

nearest integer, with half rounded up. 

For the purposes of calculating 

improvement scores for the ICH CAHPS 

clinical measure, we proposed that the 

improvement threshold will be defined 

as facility performance in CY 2015, and 

further proposed to base the score on 

where a facility’s performance rate falls 

relative to the improvement threshold 

and the benchmark for that measure. We 

proposed that a facility can earn 

between 0 to 9 points based on how 

much its performance on the measure 

during the performance period improves 

from its performance on the measure 

during the baseline period. If a facility’s 

performance rate during the 

performance period is: 

• Less than the improvement 

threshold, then the facility would 

receive 0 points for improvement; or 

• Equal to or greater than the 

improvement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

improvement score: 

[10 * ((Facility performance period 

rate¥Improvement threshold)/

(Benchmark¥Improvement 

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

to the nearest integer, with half rounded 

up. 

We further proposed that a facility’s 

ICH CAHPS score will be based on the 

higher of the facility’s achievement or 

improvement score for each of the 

composite measures and global ratings. 

Additionally, we proposed that 

achievement and/or improvement 

scores on the three composite measures 

and the three global ratings will be 

averaged together to yield an overall 

score on the ICH CAHPS clinical 

measure. 

The timing and frequency of 

administering the ICH CAHPS survey is 

critical to obtaining reliable results. For 

example, if a facility did not conduct 

two semiannual surveys during a given 

performance period, then patient 

experiences during the 6-month 

period(s) covered by the missed 

survey(s) would not be captured. 

Additionally, if facilities (via CMSapproved vendors) do not report their 

ICH CAHPS survey results to CMS, then 

these results cannot be taken into 

account when establishing national 

performance standards for the measure, 

thereby diminishing the measure’s 

reliability. Because timely survey 

administration and data reporting is 

critical to reliably scoring ICH CAHPS 

as a clinical measure in the ESRD QIP, 

we proposed that a facility will receive 

a score of 0 on the measure if it does not 

meet the survey administration and 

reporting requirements finalized in the 

CY 2014 ESRD PPS Final Rule (78 FR 

72193 through 72196). 

We sought comments on these 

proposals to score the ICH CAHPS 

clinical measure. The comment and our 

response are set forth below. 

Comment: One commenter sought 

clarification as to how multiple 

administrations of the ICH CAHPS 

survey in a single performance period 

will factor into facilities’ ICH CAHPS 

clinical measure scores if the ICH 

CAHPS clinical measure proposal is 

finalized. 

Response: We clarify that survey 

responses from the two survey 

administrations will be compiled 

together into a single dataset, which will 

then be used to calculate facility scores 

on the ICH CAHPS clinical measure. In 

other words, responses to the first and 

second survey administrations will be 

combined to produce a facility’s ICH 

CAHPS score. Each of the three 

composite measures consists of six or 

more questions from the survey that are 

reported as one composite score. Scores 

are created by first determining the 

proportion of answers to each response 

option for all questions in the 

composite. The final composite score 

averages the proportion of those 

responding to each answer choice in all 

questions. Only questions that are 

answered by survey respondents will be 

included in the calculation of composite 

scores. 

For these reasons, we are finalizing 

the scoring methodology for the ICH 

CAHPS clinical measure as proposed for 

the PY 2018 program and future 

payment years. 

d. Calculating Facility Performance on 

Reporting Measures 

In the CY 2014 ESRD PPS Final Rule, 

we finalized policies for scoring 

performance on the Anemia 

Management and Mineral Metabolism 

reporting measures in the ESRD QIP (78 

FR 72216). We did not propose any 

changes to these policies beyond the 

proposals that were made beginning 

with the PY 2017 program, which 

appear in section III.F.7 above. 

With respect to the Screening for 

Clinical Depression and Follow-up, Pain 

Assessment and Follow-Up, and NHSN 

Healthcare Provider Influenza 

Vaccination reporting measures, we 

proposed that facilities will receive a 

score of 10 on the measures if they meet 


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the proposed performance standards for 

the measures, and a score of 0 on the 

measure if they do not. We proposed to 

score these reporting measures 

differently than the Anemia 

Management and Mineral Metabolism 

reporting measures because they require 

annual or semiannual reporting, and 

therefore scoring based on monthly 

reporting rates is not feasible. 

We sought comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: One commenter did not 

support the proposal to allocate zero 

points on the proposed Pain Assessment 

and Follow-Up measure if a facility does 

not report one of the six specified 

conditions for each patient. Commenter 

recommended using a scoring system 

that awards partial points for partial 

compliance. 

Response: We agree with the 

commenter that an all-or-nothing 

methodology will not incentivize 

facilities to provide pain assessments 

and follow-ups if they are unable meet 

the requirements of the Pain Assessment 

and Follow-Up measure for a single 

qualifying patient. We also believe that 

this same concern applies equally to the 

Screening for Clinical Depression and 

Follow-Up reporting measure, because 

the proposed scoring methodology for 

both reporting measures is identical. In 

order to respond to the commenter’s 

recommendation to award partial 

points, we finalize that the two 

measures will be scored as follows: 

We selected the above scoring 

methodology for the Screening for 

Clinical Depression and Follow-Up 

reporting measure because it evaluates 

the percentage of eligible patients for 

whom a facility reports the data 

required for the measure. In contrast to 

the proposed scoring methodology, 

which would have assigned zero points 

on the measure if a facility failed to 

report data for a single patient, this 

methodology allows facilities to receive 

a high score on the measure even if they 

fail to report data for a small number of 

patients. We selected the above scoring 

methodology for the Pain Assessment 

and Follow-Up measure for the same 

reasons. However, in this case we 

calculated separate percentages for first 

and second six months and averaged the 

two percentages together. We did this 

because the Pain Assessment and 

Follow-Up measure requires facilities to 

report data on a semiannual basis, and 

we believe that taking the average of the 

two percentages provides a fair way to 

evaluate facilities’ overall performance 

during the performance period. 

For these reasons, we are finalizing 

that we will calculate facility 

performance on the Screening for 

Clinical Depression and Follow-Up, 

Pain Assessment and Follow-Up, and 

NHSN HCP Influenza Vaccination 

reporting measures as described above. 

5. Minimum Data for Scoring Measures 

for the PY 2018 ESRD QIP 

With the following exceptions 

discussed below, we did not propose to 

change the minimum data policies for 

the PY 2018 ESRD QIP from those 

proposed above for the PY 2017 ESRD 

QIP. We also proposed that the 30 

survey-eligible patient minimum during 

the eligibility period and 30 survey 

complete minimum during the 

performance period that we proposed to 

adopt for the ICH CAHPS reporting 

measure will also apply to the ICH 

CAHPS clinical measure. We have 

determined that the ICH CAHPS survey 

is satisfactorily reliable when a facility 

obtains a total of at least 30 completed 

surveys during the performance period. 

Therefore, even if a facility meets the 30 

survey-eligible patient minimum during 

the eligibility period and the survey 

administration and reporting 

requirements, if the facility is only able 

to obtain 29 or fewer survey completes 

during the performance period, the 

facility will not be eligible to receive a 

score on the ICH CAHPS clinical 

measure. 

We further proposed that facilities 

with fewer than 10 patient-years at risk 

will not be eligible to receive a score on 

the proposed STrR clinical measure. We 

considered adopting the 11-patient 

minimum requirement that we use for 

the other clinical measures. We decided, 

however, to base facilities’ eligibility for 

the measure in terms of the number of 

patient-years at risk, because facility 

performance rates are based on the 

number of patient-years at risk, not the 

number of patients. Additionally, we 

decided to set the minimum data 

requirements at 10 patient-years at risk 

because, based on national average 

event rates, this is the time required to 

achieve an average of 5 transfusion 

events. The 5 expected transfusion 

events requirement translates to a 

standard deviation of approximately 


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0.45 if the facility has rates exactly 

corresponding to the national average. 

In addition, 10 patient-years at risk is 

the threshold used in the Dialysis 

Facility Compare program, and we 

believe that public-reporting and VBP 

programs for ESRD should adopt 

consistent measure specifications where 

feasible. 

For the proposed STrR measure, we 

proposed to apply the small-facility 

adjuster to facilities with 21 or fewer 

patient-years at risk. We decided to base 

the threshold for applying the smallfacility adjuster on the number of 

patient-years at risk, because facility 

performance rates are based on the 

number of patient-years at risk, not the 

number of patients. We proposed to set 

the threshold at 21 patient-years at risk, 

because we determined that this was the 

minimum number of patient-years at 

risk needed to achieve an IUR of 0.4 

(that is, moderate reliability) for the 

proposed STrR measure. Because the 

small-facility adjuster gives facilities the 

benefit of the doubt when measure 

scores can be unduly influenced by a 

few outlier patients, we believe that 

setting the threshold at 21 qualifying 

patient-years at risk will not unduly 

penalize facilities that treat small 

numbers of patients on the proposed 

STrR clinical measure. 

With these exceptions, we did not 

propose to change the policy, finalized 

most recently in the CY 2014 ESRD PPS 

Final Rule (78 FR 72220 through 72221), 

that facilities must have at least 11 

qualifying patients for the entire 

performance period in order to be 

scored on a clinical measure. 

We currently have a policy, most 

recently finalized in the CY 2014 ESRD 

PPS final rule (78 FR 72197 through 

72198 and 72220 through 72221), to 

score facilities on reporting measures 

only if they have a minimum number of 

qualifying patients during the 

performance period. As discussed in 

Section III.F.7 above, we proposed to 

modify the case minimum requirements 

for the Anemia Management and 

Mineral Metabolism reporting measures 

beginning with the PY 2017 ESRD QIP. 

We did not propose any additional 

changes in the patient minimum 

requirements for the Anemia 

Management and Mineral Metabolism 

reporting measures in the PY 2018 

program. 

For the Screening for Clinical 

Depression and Follow-Up and the Pain 

Assessment and Follow-Up reporting 

measures, we proposed a case minimum 

of one qualifying patient. We believe 

this patient minimum requirement will 

enable us to gather a sufficient amount 

of data to calculate future performance 

standards, benchmarks, and 

achievement thresholds, should we 

propose to adopt clinical versions of 

these measures in the future. 

As discussed in Section III.G.2.f, we 

did not propose that a facility will have 

to meet a patient minimum in order to 

receive a score on the NHSN Healthcare 

Provider Influenza Vaccination 

reporting measure. We believe it is 

standard practice for all HCP to receive 

influenza vaccinations and, as discussed 

above, HCP vaccination is likely to 

reduce influenza-related deaths and 

complications among the ESRD 

population. Accordingly, we proposed 

that all facilities, regardless of patient 

population size, will be scored on the 

influenza vaccination measure. 

We sought comments on this 

proposal. The comments and our 

responses are set forth below: 

Comment: Some commenters 

supported the proposal to determine 

facility eligibility for scoring on the ICH 

CAHPS reporting measure based on the 

number of patients treated in the 

eligibility period, because it will allow 

providers to better anticipate their 

eligibility in a given year. 

Response: We thank commenters for 

their support. 

Comment: Many commenters did not 

support the proposed data minimum 

requirements for the reporting measures 

because the commenters stated that the 

requirements unfairly penalize facilities 

that may not be able to legitimately 

report data for a few patients. As an 

alternative, the commenters 

recommended applying a consistent 

case minimum of 26 for all measures in 

the ESRD QIP. 

Response: We agree with commenters 

that setting the patient minimum for the 

Screening for Clinical Depression and 

Follow-Up, and Pain Assessment and 

Follow-Up reporting measures at one 

qualifying patient may unfairly penalize 

small facilities, because a failing to 

report data for two or more patients will 

have a greater impact on small facility 

than on larger facilities. However, we 

disagree that it is appropriate to set the 

case minimum at 26 for these reporting 

measures, because doing so would not 

allow CMS to collect baseline data for 

a large percentage of patients. We 

believe that setting the case minimum at 

11 for the Screening for Depression and 

Follow-Up and Pain Assessment and 

Follow-Up reporting measures strikes 

the appropriate balance between the 

need to maximize data collection and 

the need to not unduly penalize small 

facilities that are unable, for legitimate 

reasons, to report data on all but one 

patient. We further believe that setting 

the case minimum at 11 is appropriate, 

because this would align with the case 

minimum policy for the clinical 

measures in the ESRD QIP. Therefore, 

we are finalizing a case minimum policy 

of 11 for the Screening for Clinical 

Depression and Follow-Up and Pain 

Assessment and Follow-Up reporting 

measures. 

Under our current policy, we begin 

counting the number of months for 

which a facility is open on the first day 

of the month after the facility’s CCN 

open date. Only facilities with a CCN 

open date before July 1, 2016, are 

eligible to be scored on the Anemia 

Management and Mineral Metabolism 

reporting measures in the PY 2018 

program. We proposed to apply this 

finalized policy to the Screening for 

Clinical Depression and Follow-Up and 

the Pain Assessment and Follow-Up 

reporting measures. We further 

proposed that facilities with a CCN open 

date after January 1, 2016, will not be 

eligible to receive a score on the NHSN 

Healthcare Personnel Influenza 

Vaccination reporting measure in the PY 

2018 program. Due to the time it takes 

for facilities to register with NHSN and 

become familiar with the NHSN 

Healthcare Personnel Safety Component 

Protocol, we do not believe it is 

reasonable to expect facilities with CCN 

open dates after January 1, 2016, to 

submit an HCP Influenza Vaccination 

Summary Form to CDC’s NHSN system 

before the May 15, 2016, deadline. 

As finalized in the CY 2014 ESRD PPS 

Final Rule (78 FR 72220), facilities are 

generally eligible to receive a score on 

the clinical measures if their CCN open 

date occurs before the end of the 

performance period. However, facilities 

with a CCN open date after January 1 of 

the performance period are not eligible 

to receive a score on the NHSN 

Bloodstream Infection clinical measure, 

due to the need to collect 12 months of 

data to accurately score the measure. We 

proposed that facilities with a CCN open 

date after January 1, 2016, will also not 

be eligible to receive a score on the ICH 

CAHPS clinical measure in the PY 2018 

program. Due to the additional time 

needed to arrange to contract with CMSapproved third-party vendors, and for 

vendors to administer the survey twice 

and report the results to CMS, we do not 

believe facilities with CCN open dates 

after January 1, 2016, can reasonably be 

expected to meet the requirements 

associated with the proposed ICH 

CAHPS clinical measure for that 

performance period. 

As discussed in Section III.G.7 below, 

we are continuing our policy that a 

facility will not receive a TPS unless it 

receives a score on at least one clinical 

measure and at least one reporting 


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measure. We note that finalizing the 

above proposals would result in 

facilities not being eligible for a 

payment reduction for the PY 2018 

ESRD QIP if they have a CCN open date 

on or after July 1, 2016. 

We sought comments on these 

proposals but did not receive any 

comments. 

For these reasons, we are finalizing 

the minimum data policies for the PY 

2018 program as proposed, with the 

exception of the patient minimum 

policies for the Screening for Clinical 

Depression and Follow-Up and Pain 

Assessment and Follow-Up reporting 

measures. For the reasons discussed 

above, we are finalizing the policy that 

a facility must treat at least 11 

qualifying patients during the 

performance period to receive a score on 

the Screening for Clinical Depression 

and Follow-Up and Pain Assessment 

and Follow-Up reporting measures. 

Table 27 displays the finalized patient 

minimum requirements for each of the 

measures, as well as the CCN open dates 

after which a facility will not be eligible 

to receive a score on a reporting 

measure. 

TABLE 27—MINIMUM DATA REQUIREMENTS FOR THE PY 2018 ESRD QIP 

Measure Minimum data requirements CCN open date Small facility adjuster 

Adult Hemodialysis Adequacy (Clinical).11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Adult Peritoneal Dialysis Adequacy 

(Clinical).

11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Pediatric Hemodialysis Adequacy 

(Clinical).

11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Pediatric Peritoneal Dialysis Adequacy (Clinical).11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Vascular Access Type: Catheter 

(Clinical).

11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Vascular Access Type: Fistula 

(Clinical).

11 qualifying patients ................... N/A ............................................... 11–25 patients. 

Hypercalcemia (Clinical) ................. 11 qualifying patients ................... N/A ............................................... 11–25 patients. 

NHSN Bloodstream Infection (Clinical).11 qualifying patients ................... Before January 1, 2016 ............... 11–25 patients. 

SRR (Clinical) .................................. 11 index discharges ..................... N/A ............................................... 11–41 index discharges. 

STrR (Clinical) ................................. 10 patient-years at risk ................ N/A ............................................... 10–21 patient-years at risk. 

ICH CAHPS (Clinical) ..................... Facilities with 30 or more surveyeligible patients during the calendar year preceding the performance period must submit 

survey results. Facilities will not 

receive a score if they do not 

obtain a total of at least 30 

completed surveys during the 

performance period..

Before January 1, 2016 ............... N/A. 

Anemia Management (Reporting) ... 11 qualifying patients ................... Before July 1, 2016 ...................... N/A. 

Mineral Metabolism (Reporting) ...... 11 qualifying patients ................... Before July 1, 2016 ...................... N/A. 

Depression Screening and FollowUp (Reporting).11 qualifying patients ................... Before July 1, 2016 ...................... N/A. 

Pain Assessment and Follow-Up 

(Reporting).

11 qualifying patients ................... Before July 1, 2016 ...................... N/A. 

NHSN HCP Influenza Vaccination 

(Reporting).

N/A ............................................... Before January 1, 2016 ............... N/A. 

6. Calculating the Clinical Measure 

Domain Score 

As the ESRD QIP evolves and we 

continue to adopt new clinical measures 

that track the goals of the NQS, we do 

not believe that the current scoring 

methodology provides the program with 

enough flexibility to strengthen 

incentives for quality improvement in 

areas where quality gaps continue to 

exist. Therefore, under the authority of 

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

proposed to revise the scoring 

methodology beginning with the PY 

2018 ESRD QIP so that we assign 

measure scores on the basis of two 

domains: A Clinical Measure Domain 

and a Reporting Measure Domain. 

First, we proposed to establish a 

Clinical Measure Domain, which we 

define as an aggregated metric of facility 

performance on the clinical measures 

and measure topics in the ESRD QIP. 

Under this proposed approach, we 

would score individual clinical 

measures and measure topics using the 

methodology we finalize for that 

measure or measure topic. Clinical 

measures and measure topics would 

then be grouped into subdomains 

within the Clinical Measure Domain, 

according to quality categories. Within 

these subdomains, measure scores 

would be multiplied by a weighting 

coefficient, weighted measure scores 

would be summed together to determine 

subdomain scores, and then subdomain 

scores would be summed together to 

determine a facility’s Clinical Measure 

Domain score. This scoring 

methodology provides more flexibility 

to focus on quality improvement efforts, 

because it makes it possible to group 

measures according to quality categories 

and to weight each category according 

to opportunities for quality 

improvement. 

We further proposed to divide the 

clinical measure domain into three 

subdomains for the purposes of 

calculating the Clinical Measure 

Domain score: 

• Safety 

• Patient and Family Engagement/

Care Coordination 

• Clinical Care 

We took several considerations into 

account when selecting these particular 


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subdomains. First, safety, patient 

engagement, care coordination, and 

clinical care are all NQS goals for which 

the ESRD QIP has proposed and/or 

finalized measures. We are attempting 

to align all CMS quality improvement 

efforts with the NQS because its patientcentered approach prioritizes measures 

across our quality reporting and pay-forperformance programs to ensure that the 

measurement approaches in these 

programs, as a whole, can make 

meaningful improvements in the quality 

of care furnished in a variety of settings. 

We also believe that adopting an NQSbased subdomain structure for the 

clinical measures in the ESRD QIP is 

responsive to stakeholder requests that 

we align our measurement approaches 

across HHS programs. 

Second, we proposed to combine the 

NQS goals of Care Coordination and 

Patient- and Caregiver-Centered 

Experience of Care into one subdomain 

because we believe the two goals 

complement each other. ‘‘Care 

Coordination’’ refers to the NQS goal of 

promoting effective communication and 

coordination of care. ‘‘Patient- and 

Caregiver- Centered Experience of Care’’ 

refers to the NQS goal of ensuring that 

each patient and family is engaged as a 

partner in care. In order to engage 

patients and families as partners, we 

believe that effective communication 

and coordination of care must coexist, 

and that patient and family engagement 

cannot occur independently of effective 

communication and care coordination. 

We therefore believe that it is 

appropriate to combine measures of care 

coordination with those of patient and 

family engagement for the purposes of 

calculating a facility’s clinical measure 

domain score. 

For PY 2018 and future payment 

years, we proposed to include the 

following measures in the following 

subdomains of the proposed clinical 

measure domain (see Table 28): 

TABLE 28—PROPOSED SUBDOMAINS IN THE CLINICAL MEASURE DOMAIN

Subdomain Measures and measure topics 

Safety Subdomain ............................................................................................................ NHSN Bloodstream Infection measure. 

Patient and Family Engagement/Care Coordination Subdomain .................................... ICH CAHPS measure. 

SRR measure. 

Clinical Care Subdomain ................................................................................................. STrR measure. 

Dialysis Adequacy measure topic. 

Vascular Access Type measure topic. 

Hypercalcemia measure. 

We sought comments on these 

proposals to adopt a Clinical Measure 

Domain that includes three subdomains 

(safety, patient and family engagement/ 

care coordination, and clinical care) for 

the purpose of calculating a facility’s 

clinical measure domain score for PY 

2018. 

In deciding how to weight the 

proposed subdomains that comprise the 

clinical measure domain score, we took 

the following considerations into 

account: (1) The number of measures 

and measure topics in a proposed 

subdomain; (2) how much experience 

facilities have had with the measures 

and measure topics in a proposed 

subdomain; and (3) how well the 

measures align with CMS’s highest 

priorities for quality improvement for 

patients with ESRD. Because the 

proposed Clinical Care subdomain 

contains the largest number of 

measures, and facilities have the most 

experience with the measures in this 

subdomain, we proposed to weight the 

Clinical Care subdomain significantly 

higher than the other subdomains. 

Facilities have more experience with the 

NHSN Bloodstream Infection measure 

in the proposed Safety subdomain than 

they do with the SRR measure in the 

proposed Patient and Family 

Engagement/Care Coordination 

subdomain, but we proposed to include 

a larger number of measures in the 

Patient and Family Engagement/Care 

Coordination subdomain. We proposed 

to give the Patient and Family 

Engagement/Care Coordination 

subdomain slightly more weight than 

the Safety subdomain, because it 

includes two measures, whereas only 

one measure appears in the proposed 

Safety subdomain. In future rulemaking, 

we will consider revising these weights 

based on facility experience with the 

measures contained within these 

proposed subdomains. 

For these reasons, we proposed the 

following weights for the three 

subdomains in the clinical measure 

domain score for PY 2018: 

Subdomain 

Weight in the 

clinical measure domain 

percent score 

Safety .................................... 20 

Patient and Family Engagement/Care Coordination .... 30 

Clinical Care ......................... 50 

In deciding how to weight measures 

and measure topics within a proposed 

subdomain, we took into account the 

same considerations we considered 

when deciding how to weight the 

proposed subdomains. Because the 

NHSN Bloodstream Infection clinical 

measure is the only measure in the 

proposed Safety subdomain, we 

proposed to assign the entire subdomain 

weight to that measure. We additionally 

noted that improving patient safety and 

reducing bloodstream infections in 

patients with ESRD are two of our 

highest priorities for quality 

improvement, so we believe it is 

appropriate to weight the NHSN 

Bloodstream Infection clinical measure 

at 20 percent of a facility’s Clinical 

Measure Domain Score. Because 

facilities have substantially more 

experience with the ICH CAHPS clinical 

measure, as compared with the SRR 

clinical measure, we proposed to give 

the proposed ICH CAHPS measure twice 

as much weight as the proposed SRR 

measure. Additionally, we noted that 

improving patients’ experience of care is 

as high a priority for CMS quality 

improvement efforts as improving 

patient safety, so we believe it is 

appropriate to assign the ICH CAHPS 

clinical measure the same weight as the 

NHSN Bloodstream Infection clinical 

measure. We proposed to give the 

Dialysis Adequacy and Vascular Access 

Type measure topics the most weight in 

the Clinical Care subdomain because 

facilities have substantially more 

experience with these measure topics, 

as compared to the other measures in 

the Clinical Care subdomain. We 

proposed to assign equal weights to the 

STrR and Hypercalcemia measures 

because PY 2018 would be the first 

program year in which facilities are 

measured on the STrR measure, and 

because the clinical significance of the 

Hypercalcemia measure is diminished 

in the absence of other information 

about mineral metabolism (for example, 


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a patient’s phosphorus and plasma 

parathyroid hormone levels), which 

would provide a more comprehensive 

assessment of mineral metabolism (78 

FR 72217). For these reasons, we 

proposed to use the following weighting 

system for calculating a facility’s 

Clinical Measure domain score: 

Measures/measure topics by 

subdomain 

Measure 

weight in the 

clinical measure domain 

score 

(percent) 

Safety Subdomain ................ 20 

NHSN Bloodstream Infection measure ......... 20 

Patient and Family Engagement/Care Coordination 

Subdomain ........................ 30 

ICH CAHPS measure .... 20 

SRR measure ................ 10 

Clinical Care Subdomain ...... 50 

STrR measure ............... 7 

Dialysis Adequacy 

measure topic ............ 18 

Vascular Access Type 

measure topic ............ 18 

Hypercalcemia measure ....... 7 

We sought comments on this proposal 

for weighting individual measures 

within the Clinical Measure Domain. 

The comments and our responses are set 

forth below. 

Comment: One commenter supported 

the proposal to create a Clinical 

Measure Domain, and the weightings 

applied therein, because the proposed 

domain appropriately prioritizes 

outcome measures, and compared to 

process measures, outcome measures 

provide a better indication of quality 

care. 

Response: We thank the commenter 

for the support. 

Comment: One commenter supported 

ICH CAHPS clinical measure’s proposed 

weight in the Clinical Measure Domain 

and recommended that CMS consider 

giving the measure greater weight in the 

future, because CAHPS is weighted 

slightly higher in other value-based 

purchasing programs. 

Response: We thank the commenter 

for the support and we will consider 

increasing the weight of the ICH CAHPS 

clinical measure in future payment 

years. 

Comment: Commenter supported 

placing the NHSN Bloodstream 

Infection measure alone in the Safety 

subdomain because reducing 

bloodstream infections is one of the 

highest priorities for patients with 

ESRD. 

Response: We thank the commenter 

for the support. 

Comment: One commenter did not 

support the proposed weighting for the 

subdomains within the clinical measure 

domain. Commenter stated that the 

proposed weighting places too much 

emphasis on the Patient and Family 

Engagement/Care Coordination 

subdomain which contains clinical 

measures over which the facility has the 

least control, and places too little 

emphasis on safety. Commenter 

recommended that CMS revise the 

weights of the subdomains to weight the 

Safety and Clinical Care subdomains 

equally, and assign less weight to the 

Patient and Family Engagement/Care 

Coordination subdomain. 

Response: We disagree with the 

commenter that the proposed 

subdomain weighting places too much 

emphasis on Patient and Family 

Engagement/Care Coordination, as 

compared to the Safety subdomain. As 

discussed in the CY 2015 ESRD PPS 

Proposed Rule (79 FR 40267), we 

proposed to assign the Patient and 

Family Engagement/Care Coordination 

subdomain slightly more weight than 

the Safety subdomain, because the 

former subdomain includes two 

measures and the latter subdomain only 

includes one measure. We continue to 

believe that these weights are 

appropriate for the PY 2018 ESRD QIP 

measure set, but we will reconsider the 

weighting system in its entirety, in light 

of the three criteria listed above (that is., 

the number of measures and measure 

topics in a proposed subdomain; how 

much experience facilities have had 

with the measures and measure topics 

in a proposed subdomain; and how well 

the measures align with CMS’s highest 

priorities for quality improvement for 

patients with ESRD) in future 

rulemaking. 

Comment: One commenter 

recommended reducing the weight of 

the ICH CAHPS clinical measure in the 

Clinical Measure Domain ‘‘to avoid 

penalizing dialysis units that provide 

safe, high quality care’’ but do not score 

as highly on the ICH CAHPS measure. 

Response: We agree that safety is a 

paramount concern in dialysis 

treatment, but also believe that patient 

experience is a crucial element of the 

overall care provided by the dialysis 

facility. As stated in the CY 2015 ESRD 

PPS Proposed Rule, we based decisions 

about subdomain and measure 

weighting on three criteria, and we 

continue to believe that the weight of 

the ICH CAHPS clinical measure is 

consistent with these criteria. We 

further note that it is possible for a 

facility that does not perform well on 

the ICH CAHPS clinical measure to 

avoid a payment reduction if it performs 

well on the other clinical measures. 

Comment: One commenter did not 

support weighting the ICH CAHPS 

clinical measure at 20 percent of a 

facility’s TPS, because small facilities 

will have trouble meeting the eligibility 

requirements for this measure, which 

will result in a 20 percent reduction in 

their TPS. 

Response: If a facility does not meet 

the eligibility requirements for the ICH 

CAHPS clinical measure, the facility 

will not be scored on the measure and 

the corresponding measure weight will 

be reallocated equally across the clinical 

measures for which the facility received 

a score. 

Comment: Some commenters 

recommended lowering the weight of 

the ICH CAHPS clinical measure, 

because no studies have demonstrated a 

positive association between scores on 

the measure and positive patient 

outcomes. 

Response: While it is premature to 

know for certain in this provider setting, 

measuring patient experience can lead 

to quality improvement. In other 

settings, better patient experience can 

lead to better outcomes. Patient 

experience and clinical measures may 

be related, but they are distinct 

measures of quality. ICH CAHPS 

supports the National Quality Forum’s 

strategy priorities of Effective 

Communication and Care Coordination 

and Person and Family-centered Care as 

well as the Institute of Medicine’s six 

specific aims for improvement. 

Comment: One commenter did not 

support the proposed weighting for the 

Safety subdomain because there is only 

one measure in the domain. Commenter 

recommended that CMS not include 

subdomains with only one measure, or 

in the alternative, reduce that 

subdomain’s weight so that the one 

measure is weighted similar to measures 

in the other subdomains. 

Response: As stated in the proposed 

rule, we decided how to weight the 

Clinical Measure Domain subdomains 

and individual measures using three 

criteria: ‘‘(1) The number of measures 

and measure topics in a proposed 

subdomain; (2) how much experience 

facilities have had with the measures 

and measure topics in a proposed 

subdomain; and (3) how well the 

measures align with CMS’s highest 

priorities for quality improvement for 

patients with ESRD’’ (79 FR 40267). We 

further stated that facilities have more 

experience with the NHSN Bloodstream 

Infection clinical measure than they do 

with the measures in the Patient and 

Family Engagement/Care Coordination 

subdomain, and that ‘‘improving patient 

safety and reducing bloodstream 

infections in patients with ESRD is one 


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of our highest priorities for quality 

improvement, so we believe it is 

appropriate to weight the NHSN 

Bloodstream Infection clinical measure 

at 20 percent of a facility’s Clinical 

Measure Domain score’’ (79 FR 40268). 

We continue to believe that the weight 

assigned to the Safety subdomain and 

the NHSN Bloodstream Infection 

clinical measure is appropriate for these 

reasons. 

Comment: Some commenters 

recommended lowering the weight of 

the NHSN Bloodstream Infection 

measure, because facilities do not 

reliably report the data used to calculate 

performance rates on the measure. 

Response: NHSN provides detailed 

trainings, protocols, and guidance for 

users to follow to ensure that data are 

reported in a standardized manner and 

according to requirements. We 

recognize that continuous internal and 

external evaluation and quality checks 

of the reported data are important for 

accuracy and reliability. We further note 

that one of the purposes of the 

feasibility study is to improve the 

validity of data reported to NHSN, and 

we continue to believe that one of the 

outcomes of the study will be to 

improve the validity and reliability of 

the NHSN Bloodstream Infection 

measure. For this reason, and the 

reasons stated in the CY 2015 ESRD PPS 

Proposed Rule, we continue to believe 

that the NHSN Bloodstream Infection 

measure is weighted appropriately. 

Comment: Some commenters 

recommended increasing the weight of 

the Vascular Access Type measure 

topic, because high scores on the 

measure topic are strongly associated 

with positive patient outcomes. 

Response: We agree that the Vascular 

Access Type measures are strongly 

associated with positive patient 

outcomes. For this reason, and for the 

reasons described in the CY 2015 ESRD 

PPS Proposed Rule, the Vascular Access 

Type received the second highest 

weighting (that is, 18 percent) in the 

Clinical Measure Domain, lower only 

than the ICH CAHPS clinical measure 

(20 percent) and the NHSN Bloodstream 

Infection measure (20 percent). 

Accordingly, we believe that the 

Vascular Access Type measure topic is 

weighted appropriately. 

Comment: One commenter supported 

CMS’s inclusion of a Patient and Family 

Engagement/Care Coordination 

subdomain, but feels the measures 

within this domain are not meaningful 

to patients because the ICH CAHPS 

clinical measure excludes home dialysis 

patients, and the Standardized 

Readmission Ratio does not assess 

patients’ quality of life. 

Response: We disagree that the 

measures in the Patient and Family 

Engagement/Care Coordination 

subdomain are not meaningful to 

patients. We are continuing to 

investigate the possibility of expanding 

the ICH CAHPS survey to include a 

greater proportion of the ESRD 

population. Nevertheless, the measure 

as it is currently specified assesses the 

experience of care for the majority of 

patients with ESRD. In addition, we 

believe the Standardized Readmission 

Ratio does assess patients’ quality of life 

because preventing unplanned hospital 

readmissions significantly improves 

patients’ quality of life. 

Comment: One commenter did not 

think facilities’ experience with a 

clinical measure should affect the 

weight assigned to the measure. For 

example, the proposed weight for the 

STrR clinical measure was reduced 

because facilities have not had a large 

amount of experience with this 

measure. 

Response: We consider facility 

experience with a clinical measure in 

how we weight that measure in order to 

give facilities time to become familiar 

with the reporting requirements and put 

into place the necessary tools to 

maximize their potential to score highly. 

We therefore believe it is appropriate to 

increase a measure’s weight as facilities 

gain familiarity with the measure. 

Comment: Some commenters 

supported the proposed criteria for 

assigning weights to measures and 

subdomains, but commenters 

recommended adding three additional 

criteria when assigning weights. 

Specifically, the commenters 

recommended the following three 

criteria: 1) Strength of evidence; 2) 

Opportunity for improvement; and 3) 

Clinical significance. 

Response: We agree with commenters 

that these criteria encompass important 

considerations for evaluating measures. 

We clarify that these are criteria that are 

taken into account when making 

decisions about whether to adopt a 

measure in the ESRD QIP, because it 

would be inappropriate to adopt a 

measure that did not meet these criteria. 

For this reason, we do not believe it 

would be appropriate to also factor 

these criteria into decisions about how 

much weight to give measures in a 

facility’s Clinical Domain score. 

Comment: One commenter stated that 

the Clinical Domain scoring 

methodology does not provide more 

flexibility than the current scoring 

methodology because the current 

scoring methodology makes it possible 

to redistribute weights between clinical 

and reporting measures, and to 

distribute weights for individual 

measures within the two categories. 

Response: We recognize that under 

the current scoring methodology it is 

possible to assign weights to individual 

measures without grouping them in 

subdomains, as proposed for the new 

scoring methodology. We nevertheless 

believe that assigning weights to 

subdomains (as opposed to just the 

measures contained therein) simplifies 

the process of prioritizing quality 

improvement goals as the program 

evolves, and in light of the NQS. We 

further believe that assigning weights to 

subdomains provides for greater 

transparency, because it directly 

communicates CMS’s priorities for 

measure areas. For these reasons, we 

believe that the merits of grouping 

measures into subdomains, and 

explicitly articulating weights for the 

various subdomains, outweighs the 

merits of continuing to weight measures 

individually. 

Comment: One commenter was 

concerned that some measures span 

multiple subdomains. For example, SRR 

could be attributed to Patient and 

Family Engagement/Care Coordination 

subdomain as well as the Clinical Care 

subdomain. 

Response: We recognize that some 

measures could reasonably be placed in 

multiple subdomains. In such cases, we 

need to make a judgment regarding 

which subdomain we think will be most 

appropriate. In the case of SRR, we 

believe that it is appropriate to place the 

measure in the Patient and Family 

Engagement/Care Coordination 

subdomain because the measure is 

primarily intended to evaluate care 

coordination, not the quality of clinical 

care provided by facilities. 

For these reasons, we are finalizing 

that we will calculate facilities’ Clinical 

Measure Domain scores beginning in PY 

2018 as proposed. 

7. Calculating the Reporting Measure 

Domain Score and the TPS for the PY 

2018 ESRD QIP 

Starting with the PY 2014 program, 

the ESRD QIP has used a scoring 

methodology in which the clinical 

measures receive substantially more 

weight than the reporting measures in 

the TPS, and the weighting coefficients 

for the two types of measures total 100 

percent of the TPS. We continue to 

believe it is appropriate to incorporate 

reporting measure scores in the TPS 

calculations because ‘‘reporting is an 

important component in quality 

improvement’’ (76 FR 70274); we also 

continue to believe that clinical 

measures should carry substantially 

more weight than reporting measures 


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because clinical measures ‘‘score 

providers/facilities based upon actual 

outcomes’’ (76 FR 70275). These 

statements reflect the fact that clinical 

and reporting measures serve different 

functions in the ESRD QIP. Clinical 

measures provide a direct assessment of 

the quality of care a facility provides, 

relative to either the facility’s past 

performance or standards of care 

nationwide. Reporting measures create 

an incentive for facilities to monitor 

significant indicators of health and 

illness, and they help facilities become 

familiar with CMS data systems. In 

addition, they allow the ESRD QIP to 

collect the robust clinical data needed to 

establish performance standards for 

clinical measures. 

As we continue to add reporting 

measures to the ESRD QIP measure set, 

it becomes increasingly challenging to 

not weight them so heavily that they 

dilute the significance of the clinical 

measures, while still ensuring that we 

do not weight the reporting measures so 

lightly that facilities are not 

incentivized to meet the reporting 

measure requirements. 

Although we considered the 

possibility of abandoning the use of 

reporting measures, we determined that 

this is not feasible because doing so 

would make it impossible to calculate 

performance standards for many clinical 

measures that promise to promote highquality care. We also considered the 

possibility of weighting the reporting 

measures such that each reporting 

measure comprised a smaller percentage 

of the TPS. We believe, however, that 

doing so would result in the reporting 

measures not carrying enough weight to 

provide facilities with an incentive to 

meet the reporting requirements, 

particularly if additional reporting 

measures were added to the program. 

For example, if 5 reporting measures 

were adopted in the ESRD QIP, and the 

reporting measures collectively were 

weighted at 5 percent of a facility’s TPS 

(in order to preserve the significance of 

the clinical measures), then each 

reporting measure would only comprise 

1 percent of a facility’s TPS. Under such 

conditions, we believe that facilities 

may choose not to meet the reporting 

measure requirements, because not 

doing so would have a negligible impact 

on their overall TPS. If enough facilities 

reached this determination, then we 

would not be able to establish reliable 

baselines, should we propose to adopt 

clinical measure versions of the 

reporting measures. For these reasons, 

we proposed the following scoring 

methodology for determining the impact 

of reporting measure scores on a 

facility’s payment reductions. 

For PY 2018 and future payment 

years, we proposed to establish a new 

Reporting Measure Domain. We further 

proposed that a facility’s reporting 

measure domain score will be the sum 

of all the reporting measure scores that 

the facility receives. We strive to expand 

reporting measures into clinical 

measures in the ESRD QIP as quickly as 

measure development and 

administrative processes permit. 

Therefore, unlike the case with clinical 

measures in the Clinical Domain Score, 

we do not intend to continue to use any 

particular reporting measure in the 

ESRD QIP for an indefinite period of 

time. For this reason, we believe that it 

would be unnecessarily opaque and 

confusing to group reporting measures 

into subdomains, as we are proposing 

for the clinical measures in the Clinical 

Measure Domain. 

Additionally, we proposed to 

establish a Reporting Measure Adjuster 

(RMA), which will provide the ESRD 

QIP with an index of facility 

performance on reporting measures 

within the Reporting Measure Domain. 

We proposed to use the following 

general formula to determine a facility’s 

RMA, based on its reporting measure 

domain score: 

This formula is constructed such that 

a high RMA is indicative of low 

performance on the reporting measures, 

and a low RMA is indicative of high 

performance. A facility’s Reporting 

Measure Domain score (that is, the sum 

of its scores on the reporting measures) 

is subtracted from the total number of 

points a facility could earn on the 

reporting measures for which it was 

eligible. This result is then multiplied 

by ‘‘C,’’ which is a coefficient used to 

translate reporting measure points into 

TPS points. As C increases, so too does 

the TPS ‘‘value’’ of a reporting measure 

point. For example, if C is set to 2, then 

1 reporting measure point is worth 2 

TPS points. If C is set to 0.5, then 1 

reporting measure point is worth onehalf of a TPS point. The value of C is 

in not tied to the number of reporting 

measures in the ESRD QIP; rather, it 

represents how much value we place on 

the reporting measures’ contribution to 

the quality goals of the ESRD QIP. We 

will use the rulemaking process to set 

the value for C for each program year. 

For the PY 2018 ESRD QIP, we 

proposed to use the following formula 

to determine a facility’s RMA: 

We set coefficient C at five-sixths for 

the PY 2018 program because each 

reporting measure point in the PY 2016 

program, and the proposed PY 2017 

program, is equivalent to five-sixths of 

a TPS point (that is, 30 points for three 

reporting measures comprised 25 TPS 

points). We believe it is important to 

maintain as much consistency as 

possible in the transition to the 

proposed scoring methodology. 

Therefore, we proposed that the ‘‘value’’ 

of a reporting measure point in the TPS, 

as finalized in the PY 2016 program and 

proposed for the PY 2017 program, will 

remain constant in PY 2018. 

For the reasons described above, we 

continue to believe that the clinical 

measures are considerably more 

important than the reporting measures 

in the ESRD QIP. We therefore believe 

that a facility’s TPS should be 

predominantly determined by its 

Clinical Measure Domain score, and that 


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66218 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

a facility’s TPS should be downwardly 

adjusted in the case of noncompliance 

with the reporting measure 

requirements. The RMA, as described 

above, is constructed such that a high 

RMA value indicates low reporting 

measure scores and a low RMA value 

indicate high reporting measure scores. 

As a result, a facility’s TPS would be 

entirely determined by its Clinical 

Measure Domain score if it receives full 

credit on the reporting measures; the 

TPS would be slightly decreased if the 

facility received high (but not perfect) 

scores on the reporting measures; and 

the TPS would be significantly 

decreased if it performed poorly on the 

reporting measures. For these reasons, 

we proposed to calculate a facility’s TPS 

by subtracting the facility’s RMA from 

its Clinical Measure Domain score. 

Additionally, we proposed to continue 

our policy to require a facility to be 

eligible for a score on at least one 

reporting and one clinical measure in 

order to receive a TPS (78 FR 72217). 

In an effort to estimate the impact of 

this proposed change for the ESRD QIP’s 

scoring methodology, we conducted an 

analysis of how the proposed scoring 

methodology affected payment 

reduction distributions, based on data 

from CY 2012 and CY 2013. This 

analysis compared the scoring 

methodology proposed in this section 

and the previous section to the scoring 

methodology finalized for the PY 2016 

program. In order to ensure that the 

analysis reliably estimated the impact 

on facilities’ payment reductions, the 

proposed scoring methodology and the 

methodology finalized for the PY 2016 

program were each applied to the PY 

2016 measure set. The full analysis is 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_

TechnicalSpecifications.html. The 

results of this analysis are presented 

below in Table 29. 

TABLE 29—EXPECTED IMPACT OF PROPOSED SCORING METHODOLOGY ON THE DISTRIBUTION OF PAYMENT REDUCTIONS, 

USING MEASURES AND MEASURE WEIGHTS FINALIZED FOR THE PY 2016 ESRD QIP AND DATA FROM CY 2012 AND

CY 2013 

Payment reduction 

(percent) 

Finalized scoring methodology 

for PY 2016, applied to 

measures and measure 

weights finalized in the 

PY 2016 program 

Proposed scoring methodology 

for PY 2018, applied to measures and measure weights finalized in the PY 2016 

program 

Number of 

facilities Percent Number of facilities Percent 

0 ....................................................................................................................... 4,828 79.4 4,606 75.7 

0.5 .................................................................................................................... 884 14.5 739 12.2 

1.0 .................................................................................................................... 242 4.0 306 5.0 

1.5 .................................................................................................................... 69 1.1 108 1.8 

2.0 .................................................................................................................... 59 1.0 323 5.3 

As illustrated in Table 29, we expect 

that 4.3 percent more facilities (222 

overall) would receive a two percent 

payment reduction under the proposed 

methodology for PY 2018, as compared 

with the scoring methodology that we 

will use for the PY 2016 program. We 

therefore believe that adopting the 

scoring methodology proposed in this 

section and the previous section will 

not appreciably change the distribution 

of facility payment reductions, as is our 

intention. 

We sought comments on these 

proposals for calculating a facility’s 

reporting measure domain score, to 

calculate the RMA, and to determine the 

TPS. 

Although we believe advantages are 

afforded by adopting the scoring 

methodology proposed in this section 

and the previous section, we also 

recognize that there may be advantages 

associated with maintaining consistency 

with previous years’ scoring 

methodology. Accordingly, as an 

alternative to the scoring methodology 

proposed in this section and the 

previous section, we also sought public 

comments on whether we should 

continue to use the same methodology 

we currently use to weight measures in 

the ESRD QIP and calculate a facility’s 

TPS, with the exception that the clinical 

and reporting measures would be 

weighted at 90 percent and 10 percent, 

respectively, of a facility’s TPS. 

We sought public comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: One commenter supported 

the proposed scoring methodology for 

PY 2018, because it appropriately 

balances the importance of reporting 

and clinical measures in a facility’s TPS. 

Another commenter recommended that 

CMS consider reallocating measure 

weights within the domains if a facility 

does not meet minimum data 

requirements for a measure. 

Response: We thank the commenters 

for their support and recommendations. 

Comment: Some commenters did not 

support the proposed RMA 

methodology for the ESRD QIP, because 

it is too complex and likely difficult to 

explain to patients. Commenters stated 

that the ESRD QIP should maintain a 

consistent scoring methodology from 

year to year. Commenters also stated 

that using more complicated scoring 

formulas makes the ESRD QIP less 

transparent, and limits facilities’ ability 

to participate. Commenters 

recommended that CMS delay finalizing 

any change in scoring methodology to 

allow for more time to analyze the 

proposed changes and how facilities 

would perform under the new scoring 

system. Commenters recommended that 

CMS continue to use the current 

weighting system, because it assigns 

greater weight to the clinical measures, 

as compared to the reporting measures. 

Another commenter stated that the 

weight of the clinical measures should 

be increased in the ESRD QIP, and 

expressed concerns that the proposed 

scoring methodology will result in less 

weight for the clinical measures. 

Specifically, commenters recommended 

adopting the alternative scoring 

methodology, in which clinical 

measures and reporting measures are 

weighted at 90 percent and 10 percent, 

respectively. 

Response: We appreciate the 

numerous comments we received on the 

RMA methodology. As a result of the 

significant concerns expressed about the 

RMA methodology, we have decided 

not to finalize the methodology at this 

time. We will further review the RMA 

methodology, and we may decide to 

propose to adopt it in future 

rulemaking. In its stead, we will retain 


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the current scoring methodology used in 

the ESRD QIP to weight measures and, 

as proposed, increase the weight 

assigned to clinical measures. Under 

this methodology, clinical measures will 

be weighted as finalized for the Clinical 

Domain score, and the Clinical Domain 

Score will comprise 90 percent of a 

facility’s TPS. Reporting measures will 

be weighted equally to form 10 percent 

of the facility’s TPS. 

For these reasons we are not finalizing 

the RMA scoring methodology as 

proposed. Instead, we are finalizing the 

alternative scoring methodology, under 

which clinical measures will we 

weighted as finalized for the Clinical 

Domain score, and the Clinical Domain 

score will comprise 90 percent of a 

facility’s TPS, with the reporting 

measures weighted equally to form the 

remaining 10 percent of a facility’s TPS. 

8. Example of the PY 2018 ESRD QIP 

Scoring Methodology 

In this section, we provide an 

example to illustrate the scoring 

methodology for PY 2018 and future 

payment years. Figures 3—7 illustrate 

how to calculate the clinical measure 

domain score, the reporting measure 

domain score, the RMA, and the TPS. 

Note that for this example, Facility A, a 

hypothetical facility, has performed 

very well. Figure 3 illustrates the 

general methodology used to calculate 

domain scores for the clinical measure 

domain, as well as the example 

calculations for Facility A. 

BILLING CODE 4120–01–P 


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66220 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

Figure 4 illustrates the general 

methodology for weighting subdomains 

in the clinical measure domain, as well 

as the example calculations for Facility 

A’s clinical measure domain score. 

Figures 5 and 6 illustrate the general 

methodology for calculating a facility’s 

reporting measure domain score and 

TPS, as well as the example calculations 

for Facility A. 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66221 

BILLING CODE 4120–01–C 

9. Payment Reductions for the PY 2018 

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 

TPSs receive the largest payment 

reductions. For the same reasons 

described in Section III.F.8 above, we 

proposed that a facility would not 

receive a payment reduction for PY 

2018 if it achieves a minimum TPS that 

is equal to or greater than the total of the 

points it would have received if: 

• It performed at the performance 

standard for each clinical measure; 

• It received the number of points for 

each reporting measure that corresponds 

to the 50th percentile of facility 

performance on each of the PY 2016 

reporting measures. 

The PY 2016 program is the most 

recent year for which we will have 

calculated final measure scores before 

the beginning of the proposed 

performance period for PY 2018 (that is, 


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Figure 5 

Scoring Example: Facility A 

dinical Measure Measure Score 

NHSN Bloodstream Infection 8 

ICHCAHPS 9 

SRR 9 

STrR 10 

Dialysis Adequacy measure topic 10 

vascular Access measure topic 9 

Hypercalcemia 10 

Mintrai1Vletabolismse9r:••· 

+ 

1\n,miaManesement··s~re 

... · Pain.~essm~ntstof'e 

+ 

Reportln1 Measure 

Mineral Metabolism Measure Sco': PE!pressij)nStr~E!ntrasseore 

Anemia Management 8 f 

Pain Assessment and Follow-Up 

Clinical Depression Screeninc and Follow-Up ~~--=-----\"""__.._, NHSN\laceinationscortl 

NHSN HCP Influenza Vaccination 10 

Figure 6 

Reporti .. Measure Domain Score example for Fadlity A 

8 +8+10+ 10+ 10=46/50or92" 

TPSformula 

TPS example for Facility A 

100 X [(91.2 X .9) + (92 )( .1)] = 92 
66222 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

CY 2016). Because we have not yet 

calculated final measure scores, we are 

unable to determine the 50th percentile 

of facility performance on the PY 2016 

reporting measures. We will publish 

that value in the CY 2016 ESRD PPS 

final rule once we have calculated final 

measure scores for the PY 2016 

program. 

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

requires that facilities achieving the 

lowest TPSs receive the largest payment 

reductions. In the CY 2014 ESRD PPS 

Final Rule (78 FR 72223 through 72224), 

we finalized a payment reduction scale 

for PY 2016 and future payment years: 

For every 10 points a facility falls below 

the minimum TPS, the facility would 

receive an additional 0.5 percent 

reduction on its ESRD PPS payments for 

PY 2016 and future payment years, with 

a maximum reduction of 2.0 percent. 

We did not propose any changes to this 

policy. 

Because we are not yet able to 

calculate the performance standards for 

each of the clinical measures, we are 

also not able to calculate a minimum 

TPS at this time. We will publish the 

minimum TPS, based on data from CY 

2014 and the first part of CY 2015, in 

the CY 2016 ESRD PPS Final Rule. 

We sought comments on this 

proposal. We did not receive any 

comments and are finalizing it as 

proposed. 

H. Future Considerations for Stratifying 

ESRD QIP Measures for Dual-Eligible 

Beneficiaries 

CMS recognizes that individuals with 

both Medicare and Medicaid (also 

known as ‘‘dual-eligible beneficiaries’’), 

comprise a relatively large proportion of 

Medicare enrollees with ESRD. Because 

ESRD programs have a long history of 

performance measurement linked with 

public reporting, and because there are 

a large number of dual-eligible 

beneficiaries receiving ESRD care, we 

are considering stratifying ESRD QIP 

measures for Medicare-Medicaid 

enrollees. 

Measure reporting under the ESRD 

QIP does not currently allow us to 

separately review results for dualeligible beneficiaries or compare those 

results with results achieved by other 

patients with ESRD, so it is not 

currently known if their experiences are 

better, worse, or the same as other 

patients. Even the basic demographics 

of dual-eligible beneficiaries receiving 

ESRD care are not well understood. 

After discussion of the pros and cons 

that included input from the ESRD 

provider community, the Measures 

Application Partnership’s dual-eligible 

workgroup recommended that CMS take 

the first step in exploring the feasibility 

of requiring facilities to separately 

report ESRD QIP measures for MedicareMedicaid enrollees by analyzing the 

composition of the dual-eligible 

beneficiary population receiving ESRD 

care and determining potential ways in 

which stratified reporting may further 

quality improvement efforts. 

Furthermore, the Measures Application 

Partnership recommended, in the 

context of measure development, that 

CMS explore whether other risk factors 

unique to the dual-eligible population 

receiving ESRD care would present 

significant hurdles to measure 

stratification along these lines. We 

therefore sought comments on whether 

it would be feasible to stratify ESRD QIP 

measures based on whether the 

beneficiary is a dual eligible. We were 

interested in whether stakeholders 

recommend stratification and, if so, for 

what specific measures stakeholders 

would find stratification most 

compelling. 

We were particularly interested in 

public comments on whether MedicareMedicaid stratified quality measures 

under the ESRD QIP should be reported 

publicly, and how we should factor 

those measures into our scoring 

methodology. We sought comments on 

the meaningfulness of stratifying 

measures, and the feasibility and burden 

associated with reporting stratified 

measures. 

The comments and our responses are 

set forth below. 

Comment: Some commenters did not 

support stratifying ESRD QIP measures 

based on whether the beneficiary is 

dually eligible for Medicare and 

Medicaid, because the commenter feels 

this constitutes risk adjusting for 

patients’ socioeconomic status, which 

may obscure differences in facilities’ 

risk-adjusted quality scores and mask 

potential disparities in care. One 

commenter recommended that CMS 

instead consider evaluating facilities in 

relation to their peers by comparing 

facilities serving similar shares of dualeligible beneficiaries, because ‘‘such an 

approach adjusts for socioeconomic 

status without masking differences in 

quality.’’ The commenter further 

recommended that CMS compare 

facilities using only ESRD QIP measures 

that are claims-based, in order to 

minimize administrative burden to 

facilities and the agency resulting from 

the comparison. Another commenter 

stated that stratifying ESRD QIP scores 

on the basis of dual-eligibles is an 

‘‘interesting idea,’’ but one that is 

complex and would require 

considerable collaboration with the 

ESRD community. Some commenters 

did not support stratifying ESRD QIP 

measures based on whether the 

beneficiary is dually eligible. 

Commenters stated it is not 

operationally feasible for facilities to 

separately report ESRD QIP measures 

for dual eligible beneficiaries, because 

dual eligibility status can change on a 

monthly basis. Another commenter also 

stated its belief that this stratification 

would include dual eligible patients in 

the facility’s Medicare patient 

population and the dual eligible 

population, raising the possibility that a 

facility could be penalized twice for the 

same patient. Another commenter 

recommended stratifying ESRD QIP 

measures solely for investigative 

purposes, and not using these scores to 

determine payment reductions. Another 

commenter expressed reservations about 

the effects of stratifying for dual eligible 

patients, but recommended that CMS 

place greater emphasis on the role of 

socioeconomic status and demographic 

factors when assessing facility 

performance under the ESRD QIP. 

Response: We appreciate commenters’ 

input and we will take it into 

consideration as we continue to 

evaluate how to account for dualeligibles in the ESRD QIP and other 

CMS ESRD quality initiatives. 

IV. Technical Corrections for 42 Part 

405 

A. Background 

In the April 15, 2008, final rule 

‘‘Conditions for Coverage for End-Stage 

Renal Disease Facilities,’’ (73 FR 20370) 

we revised the health and safety 

standards for Medicare-participating 

End-Stage Renal Disease (ESRD) 

facilities. This rule made the first 

comprehensive revisions to the ESRD 

Conditions for Coverage (CfCs) since 

they were adopted in 1976. The original 

ESRD CfCs at 42 CFR Part 405 Subpart 

U were deleted and new conditions 

were issued at 42 CFR Part 494. Subpart 

U now only addresses certain 

requirements for ESRD networks. 

As a part of these revisions, we 

intended to delete most of the terms and 

definitions set out in Part 405 Subpart 

U, and create new definitions in Part 

494. This is discussed in the 2008 final 

rule and in the corresponding proposed 

rule (70 FR 6184), and is laid out in the 

final rule crosswalk (comparing the old 

CfCs with the new ones) at 73 FR 20451. 

While we intended to delete most of 

the definitions at Part 405 Subpart U, 

we inadvertently omitted the 

regulations text that would have made 

those changes. Subpart U, at § 405.2102, 

still has 32 definitions, most of them 

unnecessary and several of them 


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obsolete. This creates confusion for 

ESRD stakeholders, patients, and 

suppliers. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2015 ESRD PPS 

In the CY 2015 ESRD PPS proposed 

rule, we proposed to make a technical 

correction that deletes the outdated 

terms and definitions at § 405.2102. 

Specifically, we proposed to delete 

these terms and definitions: agreement, 

arrangement, dialysis, end-stage renal 

disease (ESRD), ESRD facility, renal 

dialysis center, renal dialysis facility, 

self-dialysis unit, special purpose renal 

dialysis facility, ESRD service, dialysis 

service, inpatient dialysis, outpatient 

dialysis, staff-assisted dialysis, selfdialysis, home dialysis, self-dialysis and 

home dialysis training, furnishes 

directly, furnishes on the premises, 

medical care criteria, medical care 

norms, medical care standards, medical 

care evaluation study, qualified 

personnel, chief executive officer, 

dietitian, medical record practitioner, 

nurse responsible for nursing service, 

physician-director, and social worker. 

We also proposed to delete the term and 

definition for ‘‘ESRD network 

organization,’’ as it is duplicated within 

§ 405.2102 as ‘‘network organization.’’ 

We would retain the terms and 

definitions for ‘‘network, ESRD,’’ and 

‘‘network organization.’’ These changes 

are also outlined in Table 30 below.’’ 

TABLE 30—TECHNICAL CORRECTIONS TO § 405.2102 

Term Proposed action Other CFR 

location 

Agreement .................................................................................................................... Delete ........................................................ — 

Arrangement ................................................................................................................. Delete ........................................................ — 

Dialysis ......................................................................................................................... Delete ........................................................ — 

End-Stage Renal Disease (ESRD) .............................................................................. Delete ........................................................ 406.13(b) 

ESRD facility introductory text ..................................................................................... Delete ........................................................ — 

Renal dialysis center ............................................................................................. Delete ........................................................ — 

Renal dialysis facility ............................................................................................. Delete ........................................................ 494.10 

Self-dialysis unit .................................................................................................... Delete ........................................................ — 

Special purpose renal dialysis facility ................................................................... Delete ........................................................ 494.120 

ESRD Network organization ........................................................................................ Delete ........................................................ — 

ESRD service introductory text .................................................................................... Delete ........................................................ — 

Dialysis service ..................................................................................................... Delete ........................................................ — 

Inpatient dialysis .................................................................................................... Delete ........................................................ — 

Outpatient dialysis ................................................................................................. Delete ........................................................ — 

Staff-assisted dialysis ............................................................................................ Delete ........................................................ — 

Self-dialysis ........................................................................................................... Delete ........................................................ 494.10 

Home dialysis ........................................................................................................ Delete ........................................................ 494.10 

Self-dialysis and home dialysis training ................................................................ Delete ........................................................ — 

Furnishes directly ......................................................................................................... Delete ........................................................ 494.10 

Furnishes on the premises ........................................................................................... Delete ........................................................ 494.180(d) 

Medical care criteria ..................................................................................................... Delete ........................................................ — 

Medical care norms ...................................................................................................... Delete ........................................................ — 

Medical care standards ................................................................................................ Delete ........................................................ — 

Medical care evaluation study (MCE) .......................................................................... Delete ........................................................ — 

Network, ESRD ............................................................................................................ Retain ........................................................ N/A 

Network organization .................................................................................................... Retain ........................................................ N/A 

Qualified personnel ...................................................................................................... Delete ........................................................ — 

Chief executive officer ........................................................................................... Delete ........................................................ — 

Dietitian ................................................................................................................. Delete ........................................................ 494.140(c) 

Medical record practitioner .................................................................................... Delete ........................................................ — 

Nurse responsible for nursing service .................................................................. Delete ........................................................ 494.140(b) 

Physician-director .................................................................................................. Delete ........................................................ 494.140(a) 

Social worker ......................................................................................................... Delete ........................................................ 494.140(d) 

We did not receive any public 

comments addressing this technical 

correction. Therefore, we are finalizing 

the deletion of obsolete definitions in 

§ 405.2102 as proposed. 

V. Methodology for Adjusting DMEPOS 

Payment Amounts Using Information 

From Competitive Bidding Programs 

A. Background 

1. Fee Schedule Payment Basis for 

Certain DMEPOS 

Section 1834(a) of the Act governs 

payment for durable medical equipment 

(DME) covered under Part B and under 

Part A for a home health agency and 

provides for the implementation of a fee 

schedule payment methodology for 

DME furnished on or after January 1, 

1989. Sections 1834(a)(2) through (a)(7) 

of the Act set forth separate payment 

categories of DME and describe how the 

fee schedule for each of the following 

categories is established: 

• Inexpensive or other routinely 

purchased items, 

• Items requiring frequent and 

substantial servicing, 

• Customized items, 

• Oxygen and oxygen equipment, 

• Other covered items (other than 

DME), and 

• Other items of DME (capped rental 

items). 

Section 1834(h) of the Act governs 

payment for prosthetic devices, 

prosthetics, and orthotics (P&O) and sets 

forth fee schedule payment rules for 

P&O. Effective for items furnished on or 

after January 1, 2002, payment is also 

made on a national fee schedule basis 

for parenteral and enteral nutrition 

(PEN) in accordance with the authority 

under section 1842(s) of the Act. The 

term ‘‘enteral nutrition’’ will be used 

throughout this document to describe 

enteral nutrients supplies and 

equipment covered as prosthetic devices 

in accordance with section 1861(s)(8) of 

the Act and paid for on a fee schedule 

basis and enteral nutrients under the 

Medicare DMEPOS Competitive Bidding 


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Program (CBP), as authorized under 

section 1847(a)(2)(B) of the Act. 

Additional background discussion about 

DMEPOS items subject to section 1834 

of the Act, rules for calculating 

reasonable charges, and fee schedule 

payment methodologies for PENs and 

for DME prosthetic devices, prosthetics, 

orthotics, and surgical dressings, was 

provided in the proposed rule (79 FR 

40275 through 40277). 

2. DMEPOS Competitive Bidding 

Programs Payment Rules 

Section 1847(a) of the Act, as 

amended by section 302(b)(1) of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173), requires 

the Secretary to establish and 

implement CBPs in competitive bidding 

areas (CBAs) throughout the United 

States for contract award purposes for 

the furnishing of certain competitively 

priced DMEPOS items and services. The 

programs mandated by section 1847(a) 

of the Act are collectively referred to as 

the ‘‘Medicare DMEPOS Competitive 

Bidding Program.’’ Section 1847(a)(2) of 

the Act provides that the items and 

services to which competitive bidding 

applies are: 

• Off-the-shelf (OTS) orthotics for 

which payment would otherwise be 

made under section 1834(h) of the Act; 

• Enteral nutrients, equipment and 

supplies described in section 

1842(s)(2)(D) of the Act; and 

• Certain DME and medical supplies, 

which are covered items (as defined in 

section 1834(a)(13) of the Act) for which 

payment would otherwise be made 

under section 1834(a) of the Act. 

The DME and medical supplies 

category includes items used in infusion 

and drugs (other than inhalation drugs) 

and supplies used in conjunction with 

DME, but excludes class III devices 

under the Federal Food, Drug, and 

Cosmetics Act and Group 3 or higher 

complex rehabilitative power 

wheelchairs and related accessories 

when furnished with such wheelchairs. 

Sections 1847(a) and (b) of the Act 

specify certain requirements and 

conditions for implementation of the 

Medicare DMEPOS CBP. 

3. Adjusting Payment Amounts Using 

Information From the DMEPOS 

Competitive Bidding Program 

Section 1834(a)(1)(F)(ii) of the Act 

provides authority for using information 

from the DMEPOS CBPs to adjust the 

DME payment amounts for covered 

items furnished on or after January 1, 

2011, in areas where competitive 

bidding is not implemented for the 

items. Similar authority exists at section 

1834(h)(1)(H)(ii) of the Act for OTS 

orthotics, and at section 1842(s)(3)(B) of 

the Act for enteral nutrition. Section 

1834(a)(1)(F) also requires adjustments 

to the payment amounts for all DME 

items subject to competitive bidding 

furnished in areas where CBPs have not 

been implemented on or after January 1, 

2016. 

For items furnished on or after 

January 1, 2016, section 

1834(a)(1)(F)(iii) requires us to continue 

to make such adjustments to DME 

payment amounts where CBPs have not 

been implemented, as additional 

covered items are phased in or 

information is updated as contracts are 

recompeted. 

Section 1834(a)(1)(G) of the Act 

requires that the methodology used to 

adjust payment amounts for DME and 

OTS orthotics using information from 

the CBPs be promulgated through notice 

and comment rulemaking. Section 

1834(a)(1)(G) of the Act also requires 

that we consider the ‘‘costs of items and 

services in areas in which such 

provisions [sections 1834(a)(1)(F)(ii) and 

1834(h)(1)(H)(ii)] would be applied 

compared to the payment rates for such 

items and services in competitive 

acquisition [competitive bidding] 

areas.’’ 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Methodology for Adjusting DMEPOS 

Payment Amounts Using Information 

From Competitive Bidding Programs 

The proposed rule for implementing 

section 1834(a)(1)(G) of the Act to 

establish a methodology for using 

information from CBPs to adjust the fee 

schedule amounts in accordance with 

sections 1834(a)(1)(F)(ii) and 

1834(h)(1)(H)(ii) of the Act was 

published on July 1, 2014 (79 FR 

40208). We proposed applying the 

methodology proposed in this rule in 

making adjustments to the payment 

amounts for enteral nutrition as 

authorized by section 1842(s)(3)(B) of 

the Act (79 FR 40281). We received 89 

public comments on the proposed rule, 

including comments from patient 

organizations, patients, manufacturers, 

health care systems, and DME suppliers. 

In this final rule, we provide a summary 

of each proposed provision, a summary 

of the public comments received, our 

responses to the comments, and the 

policies we are finalizing for DMEPOS 

furnished under section 1834 of the Act. 

Comments related to the paperwork 

burden are addressed in the ‘‘Collection 

of Information Requirements’’ section in 

this final rule. Comments related to the 

impact analysis are addressed in the 

‘‘Economic Analyses’’ section in this 

final rule. 

We proposed establishing three 

methodologies for adjusting DMEPOS 

fee schedule amounts in areas where 

CBPs have not been established for 

these items and services based on single 

payment amounts SPAs established in 

accordance with the payment rules at 

§ 414.408 (79 FR 40281). We stated that 

the use of SPAs that may be established 

in accordance with the payment rules 

proposed in section VI of the proposed 

rule to adjust DMEPOS fee schedule 

amounts in areas where CBPs have not 

been established for these items and 

services would be addressed in future 

notice and comment rulemaking. The 

first methodology we proposed is 

summarized in subsection V. B. 1 below 

and would utilize regional adjustments 

limited by national parameters for items 

bid in more than 10 CBAs throughout 

the country. The second methodology 

we proposed is summarized in 

subsection 2 below and would be used 

for lower volume items or other items 

that were bid in no more than 10 CBAs 

for various reasons. The third 

methodology we proposed is 

summarized in subsection 5 and would 

be used for mail order items furnished 

in the Northern Mariana Islands. We 

also proposed rules that would apply to 

all of these proposed methodologies, 

which are discussed in sections V.B.3, 

V.B.4, and V.B.6 below. 

1. Proposed Regional Adjustments 

Limited by National Parameters 

CBPs are currently in place in 100 of 

the largest metropolitan statistical areas 

(MSAs) in the country for items and 

services that make up over 80 percent of 

the total allowed charges for items 

subject to the DMEPOS CBP. SPAs are 

currently used in 109 CBAs that include 

areas in every state throughout the 

country except for Alaska, Maine, 

Montana, North Dakota, South Dakota, 

Vermont, and Wyoming. The number of 

CBAs that are fully or partially located 

within a given state range from one to 

twelve. One CBA is for a noncontiguous area of the United States 

(Honolulu, Hawaii) and was phased in 

under Round 2 of the program. 

Suppliers submitting bids for furnishing 

items and services in these areas have 

received extensive education that they 

should factor all costs of furnishing 

items and services in an area as well as 

overhead and profit into their bids. 

For items and services that are subject 

to competitive bidding and have been 

included in more than 10 CBAs 

throughout the country, we proposed to 

adjust the fee schedule payment 

amounts for these items and services 


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using a methodology that is modeled 

closely after the regional fee schedule 

payment methodology in effect for P&O 

to allow for variations in payment based 

on bids for furnishing items and 

services in different parts of the country 

(79 FR 40281). Under the proposed 

methodology, adjusted fee schedule 

amounts for areas within the contiguous 

United States would be determined 

based on regional SPAs or regional 

single payment amounts (RSPAs) 

limited by a national floor and ceiling. 

The RSPA would be established using 

the average of the SPAs for an item from 

all CBAs that are fully or partially 

located in the region. The adjusted 

payment amount for the item would be 

equal to its RSPA but not less than 90 

percent and not more than 110 percent 

of the average of the RSPAs established 

for all states. This limits the range in the 

regional fee schedule amounts from 

highest to lowest to no more than 20 

percent, 10 percent above the national 

average and 10 percent below the 

national average. By contrast, the fee 

schedule payment methodology for 

DME only allows for a variation in 

statewide fees of 15 percent below the 

median of statewide fees for all the 

states. The national limits to the fee 

schedule amounts for P&O and DME 

have not resulted in a barrier to access 

to items and services in any part of the 

country. We believe this reflects the fact 

that the costs of furnishing DMEPOS 

items and services do not vary 

significantly from one part of the 

country to another and that national 

limits on regional prices is warranted. 

We therefore proposed to limit the 

variation in the RSPAs using a national 

ceiling and floor in order to prevent 

unnecessarily high or low regional 

amounts that vary significantly from the 

national average prices for the items and 

services (79 FR 40284). The national 

ceiling and floor limits would be based 

on 110 percent and 90 percent, 

respectively, of the average of the 

RSPAs applicable to each of the 48 

contiguous states and the District of 

Columbia (that is, the average of RSPAs 

is weighted by the number of 

contiguous states including the District 

of Columbia per region). We proposed 

that any RSPA above the national 

ceiling would be brought down to the 

ceiling and any RSPA below the 

national floor would be brought up to 

the floor. We proposed that the national 

ceiling would exceed the average of the 

RSPAs by the same percentage that the 

national floor would be under the 

average of the RSPAs. This allows for a 

maximum variation of 20 percent from 

the lowest RSPA to the highest RSPA. 

We believe that a variation in payment 

amounts both above and below the 

national average price should be 

allowed, and we believe that allowing 

for the same degree of variation (10 

percent) above and below the national 

average price is more equitable and less 

arbitrary than allowing a higher degree 

of variation (20 percent) above the 

national average price than below (10 

percent), as in the case of the national 

ceiling and floor for the P&O fee 

schedule, or allowing for only 15 

percent variation below the national 

average price, as in the case of the 

national ceiling and floor for the DME 

fee schedule. 

Under the DMEPOS CBP, the statute 

prohibits competitions before 2015 in 

new CBAs that are rural areas or MSAs 

with a population of less than 250,000. 

Even if competitions were to begin in 

these areas in 2015, it is very unlikely 

that the SPAs from these areas would be 

computed and finalized by January 1, 

2016. Therefore, we proposed that the 

proposed RSPAs initially be based 

solely on information from existing 

programs implemented in 100 MSAs, 

which are generally comprised of more 

densely populated, urban areas than 

areas outside MSAs (79 FR 40284). We 

therefore believe that the initial RSPAs 

would not directly account for unique 

costs that may be associated with 

furnishing DMEPOS in states that have 

few MSAs and are predominantly rural 

or cover large geographic areas and are 

sparsely populated. However, in 

keeping with the discussion above, we 

do not believe that the cost of furnishing 

DMEPOS in these areas should deviate 

significantly from the national average 

price established based on supplier bids 

for furnishing items and services in 

different areas throughout the country. 

The DMEPOS fee schedule amounts 

are based primarily on supplier charges 

for furnishing items and services in 

urban areas and this has not resulted in 

problems associated with access to these 

items and services in rural areas or 

large, sparsely populated areas. 

Nonetheless, for the purpose of ensuring 

access to necessary items and services 

in states that are more rural or sparsely 

populated than others, we proposed that 

the adjusted fee schedule amounts for 

states that are more rural than urban and 

defined as ‘‘rural states’’ or states where 

a majority of the counties are sparsely 

populated and defined as ‘‘frontier 

states’’ would be no lower than the 

national ceiling amount discussed 

above. 

We proposed in § 414.202 that a rural 

state be defined as a state where more 

than 50 percent of the population lives 

in rural areas within the state as 

determined through census data, since a 

majority of the general population of the 

state lives in rural areas, it is likely that 

a majority of DMEPOS items and 

services are furnished in rural settings 

in the state (79 FR 40284). This is in 

contrast to other states where the 

majority of the general population of the 

state lives in urban areas, making it 

more likely that a majority of DMEPOS 

items and services are furnished in 

urban settings or in MSAs. We believe 

that for states where a majority of the 

general population lives in rural areas, 

adjustments to the fee schedule amounts 

should be based on the national ceiling 

amount if the RSPA is lower than the 

national ceiling amount. This higher 

level of payment would provide more 

assurance that access to items and 

services in states within a region that 

are more rural than urban is preserved 

in the event that costs of furnishing 

DMEPOS items and services in rural 

areas is higher than the costs of 

furnishing DMEPOS items and services 

in urban areas. 

We proposed in § 414.202 that a 

frontier state, would be defined as a 

state where at least 50 percent of 

counties in the state have a population 

density of 6 people or less per square 

mile (79 FR 40284). In such states, the 

majority of counties where DMEPOS 

items and services may be needed are 

very sparsely populated and suppliers 

may therefore have to drive 

considerably longer distances in 

furnishing these items and services as 

opposed to other states where the 

beneficiaries live closer to one another. 

The designation of states as frontier 

states or frontier areas is currently used 

under Medicare Part A to make 

adjustments to the wage index for 

hospitals in these remote areas in order 

to ensure access to services in these 

areas. The definition of frontier state 

that we proposed for the purpose of 

implementing section 1834(a)(1)(F) and 

(G) of the Act is consistent with the 

current definition in section 

1886(d)(3)(E)(iii)(II) and (III) of the Act 

and 42 CFR 412.64(m) of the regulations 

related to implementation of the 

hospital wage index adjustments and 

prospective payment system for 

hospitals under Part A. We believe that 

states designated as frontier states have 

a significant amount of area that is 

sparsely populated and are more likely 

to be geographically removed from (that 

is, a considerable driving distance from) 

areas where population is more 

concentrated. However, we solicited 

comments on alternative definitions of 

frontier states. 

Based on the 2010 Census data, states 

designated as rural would include 


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Vermont, Maine, West Virginia, and 

Mississippi. Other than one CBA that is 

fully located in Mississippi, one CBA 

that is partially located in Mississippi, 

and two CBAs that are partially located 

in West Virginia, the RSPAs would not 

include SPAs that reflect the costs of 

furnishing items and services in these 

states based on where the CBAs are 

currently located. Current frontier states 

include North Dakota, South Dakota, 

Montana, and Wyoming, and the RSPAs 

would not include SPAs that reflect the 

costs of furnishing items and services in 

any of these states based on where the 

CBAs are currently located. We 

proposed that the designation of rural 

and frontier states could change as the 

U.S. Census information changes. We 

proposed that when a state that is not 

designated as a rural state or frontier 

becomes a rural state or frontier state 

based on new, updated information 

from the U.S. Census Bureau, that 

adjustments to the fee schedule amounts 

in accordance with the proposed 

provision of this section would take 

effect as soon as such changes can be 

implemented. Likewise, we proposed 

that at any time a state that is designated 

as a rural state or frontier no longer 

meets the proposed definition in this 

section for rural state or frontier state 

based on new, updated information 

from the U.S. Census Bureau, that 

adjustments to the fee schedule amounts 

in accordance with the proposed 

provision of this section would take 

effect as soon as such changes can be 

implemented (79 FR 40285). We 

proposed that the changes to the state 

designation would occur based on the 

decennial Census. The decennial 

Census uses total population of the state 

to determine whether the state is 

predominately rural or frontier. The 

U.S. Census Bureau also uses current 

population estimates every 1, 3, and 5 

years through the American Community 

Survey but only samples a small 

percentage of the population every year, 

not the total population. Therefore, we 

proposed that the designation of a rural 

or frontier state occur approximately 

every 10 years when the total 

population data is available. For the 

current proposed fee schedule 

adjustments, we proposed to use the 

2010 Census Data. The next update 

would reflect the 2020 Census Data and 

any changes in the designation of a rural 

or frontier state and corresponding fee 

schedule changes would be 

implemented after the 2020 Census Data 

becomes available. For this and 

subsequent updates, we proposed to 

include a listing of the qualifying rural 

and frontier States in program guidance 

that is issued quarterly and to provide 

at least 6 months advance notice of any 

adjustments. 

We indicated in the proposed rule (79 

FR 40285) that some of the comments 

received on the advance notice of 

proposed rulemaking indicated that the 

costs of furnishing DMEPOS items and 

services in rural areas is significantly 

higher than the costs of furnishing 

DMEPOS items and services in urban 

areas. Other commenters suggested that 

the adjustments to the payment amounts 

based on information from CBPs be 

phased in to give suppliers time to 

adjust to the new payment levels. 

Although we believe that the costs of 

furnishing items and services in rural 

areas are different than the costs of 

furnishing items and services in urban 

areas, there is no evidence to support a 

statement that the difference in costs is 

significant. In summary, we proposed 

that adjustments to payment amounts 

for areas within different regions of the 

contiguous United States would be 

based on the un-weighted average of 

SPAs from CBAs that are fully or 

partially located within these regions. 

The regional amounts would be limited 

by a national ceiling and floor and the 

adjusted payment amounts for all states 

designated as rural or frontier states 

would be equal to the national ceiling. 

In addition, we solicited public 

comments on whether payment in rural 

areas of states that are not designated as 

rural or frontier states should be set 

differently. For the purpose of ensuring 

access to necessary items and services 

in states that are more rural or sparsely 

populated than others, we proposed that 

the adjusted fee schedule amounts for 

states that are more rural than urban and 

defined as ‘‘rural states’’ or states where 

a majority of the counties are sparsely 

populated and defined as ‘‘frontier 

states’’ would be no lower than the 

national ceiling amount. 

In addition, we proposed that the 

adjustments to the fee schedule amounts 

for areas outside the contiguous United 

States would not be based on the 

RSPAs. Rather, we proposed that the 

adjustments to the fee schedule amounts 

for these areas be based on the higher of 

the average of SPAs for CBAs in areas 

outside the contiguous United States 

(for example, Honolulu) or the national 

ceiling limit applied to the payment 

adjustments for areas within the 

contiguous United States (79 FR 40285). 

These proposals were made in 

consideration of the unique costs of 

furnishing DMEPOS items and services 

in remote, isolated areas outside the 

contiguous United States such as 

Alaska, Guam, Hawaii, Puerto Rico, the 

United States Virgin Islands and other 

areas. We proposed that any SPAs from 

programs in these areas be excluded 

from the calculation of the RSPAs in 

section a. In addition, we proposed that 

the adjustments to the fee schedule 

amounts for areas outside the 

contiguous United States would not be 

based on the RSPAs. Rather, we 

proposed that the adjustments to the fee 

schedule amounts for these areas be 

based on the higher of the average of 

SPAs for CBAs in areas outside the 

contiguous United States (for example, 

Honolulu) or the national ceiling limit 

applied to the payment adjustments for 

areas within the contiguous United 

States. We believe that, to the extent 

that SPAs from non-contiguous areas are 

available, these amounts should be used 

in making adjustments to the payment 

amounts for other areas outside the 

contiguous United States since the 

challenges and costs of furnishing 

DMEPOS items and services in all 

remote, isolated areas is similar. We also 

believe that the payment adjustments 

for these areas, like those for the 

proposed rural and frontier states, 

should not be lower than the national 

ceiling established for items and 

services furnished in the contiguous 

United States. Areas outside the 

contiguous United States generally have 

higher shipping fees and other costs. We 

believe the SPAs in Honolulu and other 

areas outside the contiguous United 

States reflect these costs and could be 

used to adjust the fee schedule amounts 

for these areas without limiting access 

to DMEPOS items and services. 

However, in the event that the national 

ceiling limit described in section b 

above is greater than the average of the 

SPAs for CBPs in areas outside the 

contiguous United States, we proposed 

that the higher national ceiling amount 

be used in adjusting the fee schedule 

amounts for areas outside the 

contiguous United States in order to 

better ensure access to DMEPOS items 

and services (79 FR 40285). 

For the purpose of establishing the 

boundaries for the regions, we proposed 

using 8 regions developed for economic 

analysis purposes by the Bureau of 

Economic Analysis (BEA) within the 

Department of Commerce (79 FR 40282). 

Research and analysis conducted by the 

BEA indicated that the states in each 

region share economic ties. Further 

information can be obtained at: https:// 

www.bea.gov/regional/definitions/

nextpage.cfm?key=Regions. The 

information provided at this link states 

that: 

BEA Regions are a set of Geographic Areas 

that are aggregations of the states. The 

following eight regions are defined: Far West, 


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Great Lakes, Mideast, New England, Plains, 

Rocky Mountain, Southeast, and Southwest. 

The regional classifications, which were 

developed in the mid-1950s, are based on the 

homogeneity of the states in terms of 

economic characteristics, such as the 

industrial composition of the labor force, and 

in terms of demographic, social, and cultural 

characteristics. For a brief description of the 

regional classification of states used by BEA, 

see U.S. Department of Commerce, Census 

Bureau, Geographic Areas Reference Manual, 

Washington, DC, U.S. Government Printing 

Office, November 1994, pp. 6–18; 6–19. 

Therefore, we proposed to revise the 

definition of region in § 414.202 to mean 

a region developed for economic 

analysis purposes by the BEA within the 

Department of Commerce for the 

purpose of calculating regional single 

payment amounts (RSPAs); the 

definition of region for the purposes of 

the P&O regional fee schedule would 

also continue to apply for those items 

and services not adjusted based on 

prices in competitively bid areas. 

According to the BEA, the regional 

classifications are based on the 

homogeneity of the states in terms of 

economic characteristics, such as the 

industrial composition of the labor 

force, and in terms of demographic, 

social, and cultural characteristics. The 

contiguous areas of the United States 

that fall under the 8 BEA regions under 

our proposal the proposed rule are 

listed in Table 31 below. Further 

information can be obtained at http://

www.bea.gov/. 

TABLE 31—BUREAU OF ECONOMIC ANALYSIS REGIONS

Region Name States/areas 

(count) 

1 .......... New England ................................................ Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (6). 

2 .......... Mideast ......................................................... Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania 

(6). 

3 .......... Great Lakes .................................................. Illinois, Indiana, Michigan, Ohio, and Wisconsin (5). 

4 .......... Plains ............................................................ Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota (7). 

5 .......... Southeast ..................................................... Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, 

South Carolina, Tennessee, Virginia, and West Virginia (12). 

6 .......... Southwest ..................................................... Arizona, New Mexico, Oklahoma, and Texas (4). 

7 .......... Rocky Mountain ............................................ Colorado, Idaho, Montana, Utah, and Wyoming (5). 

8 .......... Far West ....................................................... California, Nevada, Oregon, and Washington (4). 

We solicited public comments on 

whether different regional boundaries 

should be considered that would better 

reflect potential regional differences in 

the costs of furnishing items and 

services subject to the DMEPOS CBP. 

The comments on these proposals and 

our responses are set forth below. 

Comment: Many commenters stated 

that the DMEPOS CBP and the SPAs 

established under the program are 

flawed because the bids they are based 

on are not binding and therefore result 

in the submission of non-bona fide bids 

and because the SPA is based on the 

median of supplier bids for an item 

rather than the maximum bid resulting 

in some suppliers being paid less than 

the amount they bid. The commenters 

therefore believe that the SPAs should 

not be used to adjust payment amounts 

for items and services furnished in other 

areas of the country. A few commenters 

said that no decisions should be made 

before future Office of the Inspector 

General (OIG) reports on competitive 

bidding are published because these 

reports might validate their claims that 

the SPAs are flawed. 

Response: We do not agree that the 

DMEPOS CBP and the SPAs established 

under the program are flawed because 

the bids they are based on are not 

binding and therefore result in the 

submission of non-bona fide bids or 

because the SPA is based on the median 

of supplier bids for an item rather than 

the maximum bid resulting in some 

suppliers being paid less than the 

amount they bid. Bids are screened to 

ensure that they are bona fide. Suppliers 

that submit the lowest bids are required 

to provide invoices and other 

information to validate the bid and bids 

that are not validated are rejected. 

Regarding calculation of the SPA using 

the median rather than maximum bid, 

suppliers offered contracts under the 

program do not have to accept these 

amounts, but if they do, they are 

accepting the payment amounts in the 

contract and suppliers have successfully 

furnished items at these amounts with 

no impact on access. Over 90 percent of 

suppliers accept contracts they are 

offered, indicating that the SPAs are 

appropriate. We therefore do not agree 

with the commenters that the SPAs 

should not be used to adjust payment 

amounts for items and services 

furnished in other areas of the country 

and we do not agree that waiting for an 

OIG evaluation of this issue is 

necessary. Section 1834(a)(1)(F)(ii) of 

the Act mandates use of information on 

the payment determined under CBPs to 

adjust the payment amount that would 

otherwise be made for DME for an area 

that is not a CBA by no later than 

January 1, 2016, therefore, we believe it 

is appropriate to establish the 

methodology in rulemaking so that it 

takes effect on January 1, 2015, allowing 

time for calculation and implementation 

of the adjusted fee schedule amounts on 

January 1, 2016. 

Comment: Some commenters 

suggested that a survey of supplier costs 

in areas outside of CBAs should be 

conducted to determine whether the 

costs in these areas are greater than the 

costs in CBAs or to otherwise provide 

information on how the payment 

amounts in areas outside CBAs should 

be adjusted. 

Response: We disagree with this 

comment. The statute requires CMS to 

use CBP information (as opposed to 

survey data of supplier costs as the 

commenters suggest). 

Comment: Many commenters 

suggested that as an alternative to using 

SPAs to adjust payment amounts, the 

methodology should use either the 

highest bid submitted for each item 

under the competition or the highest bid 

submitted for the item by the suppliers 

in the winning range. 

Response: We disagree with this 

suggestion. We believe that the median 

bid is a better reflection of the costs of 

furnishing items by suppliers as whole 

as reflected in their bids than either the 

lowest bid or the highest bid. Medicare 

payment methods at 42 CFR 405.502 

used in the past for DME have relied on 

customary charges from suppliers based 

on the median of their charges as well 

as fee schedule amounts based on 

average reasonable charges. In no case 

have the highest supplier charges or 

highest reasonable charges been used to 

establish Medicare allowed amounts for 

DME in the past, and in no case has use 

of median or average charges in 

establishing Medicare allowed payment 

amounts resulted in significant 


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problems related to obtaining access to 

items and services in the past. 

Comment: Some commenters stated 

that bids submitted by suppliers unable 

to fulfill the terms of their contract, for 

example, due to problems associated 

with meeting State licensure 

requirements, should be excluded and 

SPAs should be recalculated before they 

are used to determine the adjusted fee 

schedule amounts. 

Response: We disagree with this 

comment. We have observed no 

significant negative impacts on access to 

items and services under the CBPs since 

they were initially phased in on January 

1, 2011. In the limited situations where 

bids used in the calculation of the SPAs 

were from suppliers that later were 

determined to be ineligible, these bids 

did not impact access to items and 

service. 

Comment: One commenter indicated 

that the boundaries for the regions based 

on the 8 regions developed for economic 

analysis purposes by the Bureau of 

Economic Analysis (BEA) within the 

Department of Commerce are too broad 

and are not representative of current 

regional economic characteristics. 

Response: We disagree. The BEA 

regional designations have been 

evaluated and have evolved over the 

years to continue to encompass socioeconomic patterns. 

Comment: Many commenters stated 

that the proposed methodology does not 

adequately address the costs of 

furnishing items and services in areas of 

the country where CBPs have not been 

established, particularly for rural areas, 

non-contiguous areas, or remote areas 

where suppliers must incur 

extraordinary delivery expenses. Some 

commented that the SPA-based pricing 

is too low for a supplier to stay in 

business and for the beneficiaries to 

receive equipment. Some commenters 

believe that the quality of items and 

services furnished will be compromised 

by the proposed methodology for 

adjusting payment amounts. Many 

commenters did not agree with the 

proposed methodology for using the 

national ceiling or 110 percent of the 

average of the RSPAs as a payment floor 

for rural states and frontier states and 

suggested varied ways to adjust prices 

in rural areas, including raising the 

national ceiling to 120 or 150 percent, 

or having rural and low population 

density areas add-on payments at the 

ZIP code or county level similar to the 

add-on payments allowed for rural areas 

under the ambulance fee schedule. 

Commenters believe that considerations 

should be made for all rural areas 

within states regardless of whether the 

state meets the proposed definitions of 

rural or frontier state. Some commenters 

stated that the SPAs do not account for 

unique costs of delivering items to 

extremely remote locations and should 

not be used to adjust payments in these 

areas. 

Response: We agree that the proposed 

methodology for using the national 

ceiling or 110 percent of the average of 

the RSPAs as a payment floor for rural 

states and frontier states should be 

applied to all rural areas and on a 

statewide basis depending on whether 

or not the state meets the proposed 

definitions for rural or frontier state. We 

believe the proposed methodology for 

using the national ceiling or 110 percent 

of the average of the RSPAs as a 

payment floor should be applied, at 

least initially, in other areas within a 

state that are designated as rural areas 

rather than entire states in order to 

ensure access to items and services in 

these areas. Although we do not have 

direct evidence that cost in rural areas 

are higher than costs in urban areas or 

vice versa or that the SPAs do not cover 

costs in rural areas, we believe it is 

prudent for the sake of ensuring access 

to items and services in these areas to 

proceed cautiously in adjusting fee 

schedule amounts in these areas. 

Therefore, in response to comments that 

considerations should be made for all 

rural areas within states regardless of 

whether the state meets the proposed 

definitions of rural or frontier state, we 

are finalizing a definition for rural area 

at § 414.202 to mean a geographic area 

represented by a postal zip code of at 

least 50 percent of the total geographic 

area of the area included in the zip code 

is estimated to be outside any 

metropolitan area (MSA). The definition 

of rural area also includes a geographic 

area represented by a postal zip code 

that is a low population density area 

excluded from a competitive bidding 

area in accordance with the authority 

provided by section 1847(a)(3)(A) of the 

Act at the time the rules at § 414.210(g) 

are applied. As part of the methodology 

we are finalizing for adjusting fee 

schedule amounts using information 

from CBPs, we are finalizing a provision 

that the adjusted fee schedule amounts 

for any area meeting the definition of 

rural area will be no lower than the 

national ceiling amount. We are not 

finalizing the proposed definitions of 

rural state and frontier state because we 

have decided to apply provisions 

proposed for these areas (79 FR 40284) 

to all rural areas based on comments 

received and as explained in more detail 

below. Lastly, we note that Medicare 

program guidance at section 60 of 

chapter 20 of the Medicare Claims 

Processing Manual (Pub. 100–04) allows 

for payment of separate charges for 

delivery expenses in rare and unusual 

circumstances in order to meet the 

needs of beneficiaries living remote 

areas that are not served by a local 

supplier. 

Comment: Some commenters 

recommended a 4 year phase-in of the 

adjusted fees by payment amounts or 

regions so suppliers have time to adjust 

to the change in payment amounts. 

Response: We agree that phasing in 

the adjustments to the payment amounts 

would allow time for suppliers to adjust 

to the new payment rates and would 

allow time to monitor the impact of the 

change in payment rates on access to 

items and services; however, we do not 

believe that a phase in period of 4 years 

is necessary. We believe that time frame 

is excessive. Therefore, we are finalizing 

a phase in of 6 months, which we 

believe provides suppliers with an 

adequate amount of time to make 

adjustments to their businesses in light 

of the reduced payment amounts and is 

more than enough time to determine if 

the payment amounts are impacting 

access to items and services in any part 

of the country. CMS will monitor access 

and health outcomes using real time 

claims data and analysis. Therefore, in 

this final rule at § 414.210(g)(9), we 

finalizing the adjustments to the fee 

schedule amounts for use in paying 

claims with dates of service from 

January 1, 2016, thru June 30, 2016, 

based on 50 percent of the un-adjusted 

fee schedule amount and 50 percent of 

the adjusted fee schedule amount. For 

example, if the fee schedule amount that 

would have gone into effect on January 

1, 2016, without any adjustments would 

have been $100.00, and the amount 

resulting from the methodology 

established in this rule would have been 

$75.00, the fee schedule amount taking 

effect on January 1, 2016, will be $87.50. 

Beginning on July 1, 2016, the fully 

adjusted fees will apply. 

Comment: Many commenters urged 

CMS to monitor patient access, 

utilization, and satisfaction levels after 

the implementation of the adjusted fees. 

Commenters also recommended adding 

a methodology to adjust prices if access 

problems develop. 

Response: We concur with the 

recommendation to closely monitor the 

impact of the reductions in payment on 

access to items and services and health 

outcomes. We do not believe that the 

reductions in payment will negatively 

impact access to items and services, so 

we do not find it necessary to adopt an 

additional methodology to account for 

access problems; however, we can 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66229 

address the matter in future rulemaking, 

if necessary. 

After consideration of the public 

comments, and for the reasons we 

discussed in the proposed rule and 

above, we are finalizing the proposed 

provisions summarized above and in the 

proposed rule (79 FR 40208), with the 

exception of the proposed definitions 

for rural state and frontier state and the 

proposed provision to use the national 

ceiling or 110 percent of the average of 

the RSPAs as a payment floor for 

adjusting the fee schedule amounts for 

these states. We are finalizing a 

definition of rural area and revising the 

definition of ‘‘Region’’ as described 

above at § 414.02. We are finalizing the 

proposed § 414.210(a) and (g), except we 

have amended 42 CFR 414.210(g) to 

note the application of competitive 

bidding information and limitation of 

inherent reasonableness authority, and 

the payment adjustments for areas 

within and outside the contiguous 

United States using information from 

CBPs. 

2. Methodology for Items and Services 

Included in Limited Number of 

Competitive Bidding Programs 

In some cases, there may not be a 

sufficient number of CBAs and SPAs 

available for use in computing RSPAs, 

and therefore, a different methodology 

for implementing section 

1834(a)(1)(F)(ii) of the Act would be 

necessary. For items and services that 

are subject to competitive bidding and 

have been included in CBP in no more 

than 10 CBAs, we proposed that 

payment amounts for these items in all 

non-competitive bidding areas be 

adjusted based on 110 percent of the 

average of the SPAs for the areas where 

CBPs are implemented (79 FR 40285). 

Using a straight average of the SPAs 

rather than a weighted average of the 

SPAs gives SPAs for the various CBAs 

equal weight regardless of the size of the 

CBA. We believe this avoids giving 

undo weight to SPAs for more heavily 

populated areas. We proposed the 

additional 10 percent adjustment to the 

average of the SPAs to account for 

unique costs such as delivering items in 

remote, isolated locations, but would 

make this a uniform adjustment for 

program simplification purposes. 

Under the DMEPOS CBP, there may 

be items and services for which 

implementation of CBPs could generate 

significant savings for the beneficiary 

and/or program, but which are 

furnished infrequently in most MSAs. In 

some cases, such items and services 

could be combined with other items and 

services under larger PCs or included in 

mail order competitions, to the extent 

that these are feasible options. For 

example, combining infrequently used 

traction equipment and frequently used 

hospital beds in the same product for 

bidding purposes would ensure that any 

beneficiary that needs traction 

equipment in the CBA would have 

access to the item from the suppliers 

also contracted to furnish hospital beds 

in the area. This would make it feasible 

to include traction equipment in 

numerous MSAs throughout the country 

and would allow use of the RSPA 

methodology described above. However, 

if a PC was established just for traction 

equipment for bidding purposes, the 

volume of items furnished in certain 

MSAs may not be sufficient to generate 

viable competitions under the program 

because there may be a limited number 

of suppliers interested in competing to 

furnish the items in local areas. 

Nonetheless, if savings for the 

beneficiary and/or program are possible 

for the equipment, we are mandated to 

phase the items in under the DMEPOS 

CBP. 

In addition, for lower volume items 

within large PCs, such as wheelchair 

accessories, we proposed to include 

these items in a limited number of local 

competitions rather than in all CBAs to 

reduce the burden for suppliers 

submitting bids under the programs as 

a whole. In these cases, for the purposes 

of implementing section 1834(a)(1)(G) of 

the Act, we proposed that payment 

amounts for these items in all areas 

where CBPs are not implemented be 

adjusted based on 110 percent of the 

average of the SPAs for the areas where 

CBPs are implemented. We proposed 

the additional 10 percent adjustment to 

the national average price to account for 

unique costs in certain areas of the 

country such as delivering items in 

remote, isolated locations. For example, 

the PC for standard mobility in the 9 

Round 1 CBAs includes 25 HCPCS 

codes for low volume wheelchair 

accessories that are not included in the 

PC for standard wheelchairs, scooters, 

and related accessories in the 100 

Round 2 CBAs. We proposed that 

payment amounts for these items in 

areas where CBPs are not implemented 

be adjusted based on 110 percent of the 

average of the SPAs for the 9 Round 1 

areas where CBPs are implemented (79 

FR 40285). Alternatively, we could 

include these low volume items in all 

PCs in all 109 CBAs and suppliers 

would need to develop bid amounts and 

enter bids for these 25 codes for low 

volume items such as toe loop holders, 

shock absorbers and IV hangers. 

Including these 25 Healthcare Common 

Procedure Coding System (HCPCS) 

codes for low volume wheelchair 

accessories in the PCs under the 9 

Round 1CBAs means that suppliers 

submitting bids for wheelchairs have 25 

bid amounts to develop and enter per 

CBA for these items, or a total of 225 bid 

amounts to develop and enter for these 

low volume items if bidding for 

wheelchairs in all 9 Round 1 CBAs. In 

contrast, including these codes in the 

PCs under all 109 CBAs means that 

suppliers submitting bids for 

wheelchairs have 2,725 bid amounts to 

develop and enter for these low volume 

items, if biding for wheelchairs in all 

109 CBAs. We believe that adjusting fee 

schedule amounts based on SPAs from 

10 or fewer CBAs achieve the savings 

mandated by the statute for these items 

while greatly reducing the burden on 

suppliers and the program in holding 

competitions for these items in all 109 

CBAs across the country. 

Finally, if contracts and SPAs for low 

volume items included in a limited 

number of CBAs expire and the items 

are not included in future CBPs, we 

proposed to use the information from 

the past competitions to adjust the 

payment amounts for these items 

nationally based on 110 percent of the 

average of the SPAs for the areas where 

CBPs were implemented (79 FR 40286). 

Even though the SPAs may no longer be 

in effect, we believe it is reasonable to 

use the information to reduce excessive 

payment amounts for items and services 

as long as the SPAs did not result in a 

negative impact on access to quality 

items and services while they were in 

effect and as long as the amounts are 

adjusted to account for increases in 

costs over time. For example, 4 codes 

for adjustable wheelchair seat cushions 

were included in the Round 1 Rebid, 

with SPAs that were approximately 25 

percent below the fee schedule amounts 

being in effect in 9 CBAs from January 

2011 thru December 2013. These items 

were not bid in future rounds due to the 

low volume of use relative to other 

wheelchair seat cushions. During the 

course of the 3-year contract period 

when the SPAs were in effect in the 9 

areas, there were no reports of access 

problems and there were no negative 

health outcomes as a result of including 

these items under CBPs. For the future, 

savings for these items could be 

achieved by including them in future 

competitions or by using the previous 

SPAs, updated by an economic update 

factor to account for increases in costs. 

If the decision is made not to include 

these items in future competitions, we 

believe savings can and should still be 

obtained based on information from the 


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previous competitions. The comments 

and our responses are set forth below. 

Comment: Several commenters 

suggested that in the instances where 

the items and services included in 

limited number of CBPs, the adjusted 

fee schedule amounts for rural, frontier 

and non-contiguous areas should be 

greater than 110 percent of the average 

of the SPAs because the commenters 

believe that the cost of furnishing 

DMEPOS items in these areas are more 

than 10 percent higher than the cost of 

furnishing DMEPOS items in the CBAs. 

The commenters suggested using greater 

than 110 percent of the average of the 

SPAs to adjust the fee schedule amounts 

for rural, frontier, and non-contiguous 

areas. 

Response: We disagree with this 

comment because we do not have direct 

evidence that the cost of furnishing 

DMEPOS items in rural, frontier, or noncontiguous areas is greater than the 

costs of furnishing the items in CBAs. In 

some cases, the cost of furnishing 

DMEPOS items in the CBAs may be 

greater than the costs of furnishing the 

items in rural, frontier, or noncontiguous areas, but we have no direct 

evidence of this either. Our proposal 

struck a balance by using 110 percent of 

the average of the SPAs rather than 100 

percent of the average of the SPAs to 

account for the possibility that there 

may be slightly higher costs for 

furnishing items and services in certain 

areas than the cost of furnishing the 

items in the CBAs. Absent additional 

evidence, we believe that paying more 

than 110 percent of the average of the 

SPAs for the CBAs is not appropriate. 

However, we can consider making 

changes in the future if new information 

is made available. 

Comment: Some commenters stated 

that that items that were excluded from 

CBP after initially being in the program 

should be excluded from the adjustment 

of fees One commenter argued that the 

SPAs for items only included in CBPs 

during the Round 1 Rebid are no longer 

reflective of the true and current cost of 

the items. Also, one commenter argued 

that if CMS included items in CBPs and 

then decides not to include the items in 

subsequent CBPs, this is an indication 

that CMS believes the items are not 

well-suited for competitive bidding. 

Other commenters stated that data from 

less than 10 CBPs is not enough data to 

determine what the payment amounts 

should be for the items on a national 

basis. 

Response: We disagree with these 

comments. We believe that SPAs based 

on supplier bids from CBPs established 

in recent years are far more reflective of 

the true and current cost of the items 

than fee schedule amounts based on 

supplier charges from 1986 and/or 1987. 

There may be reasons why items are not 

included in subsequent CBPs, such as 

the fact that the item is a low volume 

item such as one of the hundreds of 

HCPCS codes for wheelchair options 

and accessories that is not included in 

subsequent CBPs to reduce the burden 

and cost of suppliers submitting bids for 

a product category (for example, 

wheelchairs) that already includes over 

a hundred higher volume items (HCPCS 

codes). It does not mean that CMS 

believes that the item is not suitable for 

competitive bidding. We believe that 

recent data from less than 10 CBPs is 

enough data to determine what the 

payment amounts should be for the 

items on a national basis, especially for 

those items that are furnished on a 

limited basis to a small number of 

beneficiaries throughout the United 

States yet are items for which 

implementation of CBPs or adjustments 

to payment amounts using information 

from CBPs is mandated by the statute. 

Using pricing from 10 or fewer CBPs 

allows for implementation of the 

statutory requirement to implement 

competitive bidding for the item. 

After consideration of the public 

comments, we are finalizing the rule in 

§ 414.210(g)(3) to include payment 

adjustments for items and services 

included in no more than ten 

competitive bidding programs reduced 

to 110 percent of the unweighted 

average of the single payment amounts. 

We added technical changes to the final 

regulation text from the proposed 

regulation text by adding the term ‘‘ten 

or fewer’’ for added clarification. We are 

also finalizing the rule in § 414.210(g)(4) 

for payment adjustments using data on 

items and services included in 

competitive bidding programs no longer 

in effect and specify that we will be 

updating the payment amounts prior to 

adjusting the fee schedule amounts as 

described above. 

3. Adjusted Payment Amounts for 

Accessories Used With Different Types 

of Base Equipment 

There may be situations where the 

same accessory or supply identified by 

a HCPCS code is used with different 

types of base equipment, and the item 

(HCPCS code) is included in one or 

more PCs under competitive bidding for 

use with some, but not all of the 

different types of base equipment it is 

used with. For these situations, we 

proposed (79 FR 40286) to use the 

weighted average of the SPAs from CBPs 

and PCs where the item is included for 

use in adjusting the payment amounts 

for the item (HCPCS code). We believe 

that it would be unnecessarily 

burdensome to have different fee 

schedule amounts for the same item 

(HCPCS code) when it is used with 

similar, but different types of base 

equipment. We believe that the costs of 

furnishing the accessory or supply 

should not vary significantly based on 

the type of base equipment it is used 

with. Therefore, we sought public 

comments on addressing situations 

where an accessory or supply identified 

by a HCPCS code is included in one or 

more PCs under competitive bidding for 

use with more than one type of base 

equipment. In these situations, we 

proposed to calculate the SPA for each 

CBA by weighting the SPAs from each 

PC in that CBA by national allowed 

services. This would result in the 

calculation of a single SPA for the item 

for each CBA. The single SPA per code 

per CBA would then be used in 

applying the payment adjustment 

methodologies proposed above. For 

example, HCPCS code Exxx1 describes 

a tray used on a wheelchair. Exxx1 was 

included in a PC for manual 

wheelchairs in all CBAs and in a 

separate, second PC for power 

wheelchairs in all CBAs. SPAs for 

Exxx1 under the manual wheelchair PC 

are different than the SPAs for Exxx1 

under the power wheelchair PC. Under 

the proposed methodology, national 

allowed services would be used to 

compute a weighted average of the SPAs 

for code Exxx1 in each of the CBAs. So, 

rather than having 2 different SPAs for 

the same HCPCS code in the same CBA, 

we would have 1 SPA for the code for 

the CBA. If the item is included in only 

one PC, we proposed to use the SPAs for 

the item from that PC in applying the 

payment adjustment methodologies 

proposed above (79 FR 40287). The 

comments and our responses are set 

forth below. 

Comment: Several commenters argued 

that accessories used with different base 

equipment have higher service costs. 

They pointed out cases where CMS 

established different SPAs for the same 

accessories when used with different 

base equipment included in different 

PCs. The commenters do not believe 

that SPAs established for a HCPCS code 

describing an accessory used with one 

type of base item (for example, standard 

power wheelchair) should be used to 

adjust the fee schedule amounts for the 

HCPCS code that would govern 

payment for the accessory when it is 

used with a different type of base item 

(for example, complex rehabilitative 

power wheelchair). 

Response: We disagree. We believe 

that using the weighted average of the 

SPAs established for accessories used 


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with different base equipment takes into 

account any difference in the cost of 

furnishing the accessories with different 

types of base equipment in setting the 

overall rate for the accessories. We 

believe it is administratively 

burdensome and unnecessary to have 

more than one fee for the same item. 

Comment: Some commenters 

suggested that composite bids and items 

weights make some accessories underbid when they have a low weight 

relative to other items in the PC or 

relative to the same item in a different 

PC. For example, a HCPCS code 

describing a wheelchair accessory 

included in two different PCs, one for 

power wheelchairs and one for manual 

wheelchairs might be underbid in one 

PC if the item weight for the item is very 

low relative to the item weight for the 

item in the other PC. The commenter 

argued that, creating a weighted 

payment amount from the SPAs for the 

item from the manual and power 

wheelchair PCs distorts the true cost of 

the item if the item was under-bid in 

one PC because it had a low weight. 

Response: We disagree. Suppliers are 

required to submit a bona fide bid for 

every item in every product category 

and the bids are screened to ensure that 

they are all bona fide. In addition, we 

believe that the costs of the accessories 

described by a single HCPCS code do 

not vary depending on what type of base 

equipment the item is used with. To the 

extent that the costs do vary, combining 

the SPAs for the accessories from 

different product categories results in 

payment amounts that reflect the 

average costs of the accessory when 

used in conjunction with various types 

of base equipment. If an item was 

underbid due to its low volume, that bid 

would not be considered for a contract. 

After consideration of the public 

comments, we are finalizing the rule as 

proposed in § 414.210(g)(5) for adjusted 

payment amounts for accessories used 

with different types of base equipment, 

when included in more than one 

product category in a CBA under 

competitive bidding, a weighted average 

of the single payment amounts for the 

code is computed for each CBA based 

on the total number of allowed services 

for the item on a national basis for the 

code from each product category prior 

to applying the payment adjustment 

methodologies under the section. We 

also made an additional change to the 

regulation from the proposed rule for 

added clarification by specifying that 

‘‘the total number of allowed services 

for the item on a national basis for the 

code from each product category’’ is 

completed ‘‘prior to applying the 

payment adjustment methodologies 

under the section.’’ 

4. Adjustments to Single Payment 

Amounts That Result From Unbalanced 

Bidding 

Within the HCPCS there are instances 

where there are multiple codes for an 

item that are distinguished by the 

addition of a hierarchal feature(s). 

Under competitive bidding, the code 

with the higher utilization would 

receive a higher weight and the bid for 

this item would have a greater impact 

on the composite bid and 

competitiveness of the supplier’s overall 

bid for the product category (PC) within 

the CBP than the bid for the less 

frequently used alternative. This can 

result in unbalanced bidding where the 

bids and SPAs for the item without the 

additional features is higher than the 

bids and SPAs for the item with the 

additional features due to the fact that 

the item with the features is utilized 

more than the item without the features 

and therefore receives a higher weight. 

In the proposed rule (79 FR 40287), we 

identified the case where unbalanced 

bidding resulted in higher SPAs for 

enteral infusion pumps without alarms 

than enteral infusion pumps with 

alarms, even though pumps without 

alarms have become virtually obsolete. 

In this case, the alarm is the hierarchal 

feature. Only 0.3 percent of beneficiaries 

using enteral infusion pumps received a 

pump without an alarm in 2012 

according to Medicare claims data. 

Clearly, separately identifying pumps 

with alarms and pumps without alarms 

is no longer necessary, yet the codes for 

both types were included in the CBPs, 

resulting in a case of unbalanced 

bidding that could have been avoided if 

only one code for enteral infusion 

pumps existed. Likewise, in 2006, codes 

were added for portable power 

wheelchairs and power wheelchairs 

with less functionality (Group 1) than 

those commonly used by beneficiaries 

(Group 2). All of the codes for standard 

power wheelchairs meet the same needs 

for power wheelchairs used in the 

patient’s home. The features of being 

more expensive, sturdier non-portable 

power wheelchairs or higher performing 

power wheelchairs are the hierarchal 

features for the standard power 

wheelchairs. Although the codes for 

portable power wheelchairs and Group 

1 power wheelchairs were added in 

order to provide a less expensive 

alternative for power wheelchairs used 

in the home, beneficiaries did not take 

advantage of the lower priced, 

alternative equipment. Only 0.9 percent 

of beneficiaries using standard power 

wheelchairs received a portable or 

Group 1 power wheelchair in 2012 

according to Medicare claims data. The 

goal of creating savings for beneficiaries 

by having codes for economy power 

wheelchairs did not materialize, yet the 

codes for these types of power 

wheelchairs were included in the CBPs, 

resulting in a case of unbalanced 

bidding that could have been avoided if 

the codes for the economy power 

wheelchairs did not exist. For the 

purpose of implementing section 

1834(a)(1)(G) of the Act, and in making 

adjustments to payment amounts under 

sections 1834(a)(1)(F)(ii), 

1834(h)(1)(H)(ii), and 1842(s)(3)(B) of 

the Act, we proposed that the payment 

amounts for infrequently used codes 

that describe items and services with 

fewer features than codes with more 

features be adjusted so that they are no 

higher than the payment amounts for 

the more frequently used codes with 

more features (79 FR 40287). We sought 

public comments on this issue and our 

proposed provision to address this 

issue. The comments and our responses 

are set forth below. 

Comment: A commenter suggested 

that ‘‘hierarchal feature’’ be better 

defined. Another commenter suggested 

that weighing based on utilization rates 

ignores whether there were supply 

issues that affected the utilization rates. 

One commenter also suggested that 

balanced bidding does not reflect SPA 

cost differences based on the features of 

equipment. 

Response: We agree that hierarchal 

features should be clearly identified for 

the purpose of implementing the 

proposed rule. We will limit the final 

policy by identifying two specific 

scenarios where the hierarchal features 

involved are additional features or 

features with additional functionality. 

In the future, we will either add other 

scenarios or develop a definition of 

‘‘hierarchal features.’’ Therefore, the 

final policy will only apply to the 

specific cases of unbalanced bidding 

that were identified in the proposed rule 

that clearly show that certain equipment 

has features that exceed that of other 

equipment. 

After consideration of the public 

comments, we will limit the final policy 

by identifying two specific scenarios 

where the hierarchal features involved 

are additional features or features with 

additional functionality. In the future, 

we will either add other scenarios or 

develop a way to define ‘‘hierarchal 

features’’ in general, or in a way that 

would identify various scenarios, which 

we expect to address in future 

rulemaking. Therefore, the final policy 

will only apply to the specific cases of 

unbalanced bidding that were identified 


tkelley on DSK3SPTVN1PROD with RULES3
66232 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

in the proposed rule (79 FR 40287) that 

clearly show that certain equipment has 

features that exceed that of other 

equipment. Specifically, we are adding 

§ 414.210(g)(6) and requiring that 

adjusted fee schedule amounts for 

Group 1 power wheelchairs or Group 2 

portable power wheelchairs cannot 

exceed the adjusted fee schedule 

amounts for Group 2, non-portable 

power wheelchairs in order to avoid 

situations where Medicare allowed 

payment amounts for power 

wheelchairs with less functionality are 

established that are higher than fee 

schedule amounts for power 

wheelchairs with more functionality. 

We are also finalizing a rule at 

§ 414.210(g)(6) that adjusted fee 

schedule amounts for enteral infusion 

pumps without alarm cannot exceed the 

adjusted fee schedule amounts for 

enteral infusion pumps with alarm. We 

believe that wheelchairs that can go 

farther, faster, can climb over higher 

obstacles, or are not portable and more 

sturdy have features that exceed 

wheelchairs that travel shorter 

distances, go slower, climb over lower 

obstacles, or are portable and less 

sturdy. Payment amounts for shorter 

distance, slower, smaller obstacle 

climbing, less sturdy, power 

wheelchairs should not be higher than 

the payment amounts for longer 

distance, faster, higher obstacle 

climbing, sturdy, power wheelchairs. 

An enteral feeding pump with a safety 

alarm includes additional features than 

a pump without such an alarm. Payment 

amounts for enteral feeding infusion 

pumps without an alarm should not be 

higher than the payment amounts for 

pumps with an alarm. We will consider 

whether to add a definition of hierarchal 

feature, or to apply the rule we 

proposed to other items not identified 

above through future notice and 

comment rulemaking. 

5. National Mail Order Program— 

Northern Mariana Islands 

While Section 1847(a)(1)(A) of the Act 

provides that CPBs be established 

throughout the United States, the 

definition of United States at section 

210(i) of the Act does not include the 

Northern Mariana Islands. We therefore 

previously determined that the Northern 

Mariana Islands are not considered an 

area eligible for inclusion under a 

national mail order CBP. For the 

purpose of implementing the 

requirements of section 1834(a)(1)(F)(ii) 

of the Act, we proposed that the 

payment amounts established under a 

national mail order CBP would be used 

to adjust the fee schedule amounts for 

mail order items furnished to 

beneficiaries in the Northern Mariana 

Islands (79 FR 40287). We proposed that 

the adjusted fee schedule amounts 

would be equal to 100 percent of the 

amounts established under the national 

mail order CBP (79 FR 40287). 

We solicited comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: A few commenters 

recommended waiting for the second 

round of bidding for the national mailorder CBP before applying the payment 

amount in order to allow more time to 

determine if the competitive bidding 

payment amounts allow access to items 

and services and acquire more pricing 

points over an extended period of time. 

They further recommended increasing 

payment amounts for the national mail 

order SPA for the Northern Mariana 

Islands to limit any access or pricing 

complications. 

Response: We disagree with these 

suggestions. The national mail order 

SPAs currently apply to items shipped 

to various remote areas of the United 

States and have not resulted in any 

problems with access to mail order 

items in these areas. Therefore, we 

believe these amounts can be used to 

adjust the mail order fee schedule 

amounts for the Northern Mariana 

Islands effective January 1, 2016. 

After consideration of the public 

comments and for the reasons we 

previously articulated, we are finalizing 

the proposal regarding the National Mail 

Order Program and the Northern 

Mariana Islands at § 414.210(7) to 

provide that the fee schedule amounts 

for mail order items furnished in the 

Northern Mariana Islands are adjusted 

so that they are equal to 100 percent of 

the single payment amounts established 

under a national mail order program. 

6. Updating Adjusted Payment Amounts 

In accordance with section 

1834(a)(1)(F)(iii) of the Act, the adjusted 

payment amounts for DME must be 

updated as additional items are phased 

in or information is updated. We 

proposed to add regulation text 

indicating that we would revise the 

adjusted payment amounts for DME, 

enteral nutrients, supplies, and 

equipment, and OTS orthotics each time 

a SPA is updated following one or more 

new competitions, which may occur at 

the end of a contract period, as 

additional items are phased in, or as 

new programs in new areas are phased 

in (79 FR 40287). This is required by 

section 1834(a)(1)(F)(iii) for DME. Since 

we believe it is reasonable to assume 

that updated information from CBPs 

would better reflect current costs for 

furnishing items and services, we 

proposed regulations to require similar 

updates for enteral nutrients, supplies, 

and equipment, and OTS orthotics. 

As we indicated above, if the only 

SPAs available for an item are those that 

were established under CBP that are no 

longer in effect, we proposed to use 

these SPAs to adjust payment amounts 

using the methodologies described 

above and we proposed to do so 

following application of inflation 

adjustment factors. We proposed that 

the inflation adjustment factor would be 

based on the percentage change in the 

Consumer Price Index for all Urban 

Consumers (CPI–U) from the mid-point 

of the last year the SPAs were in effect 

to the month ending 6 months prior to 

the date the initial payment adjustments 

would go into effect. The adjusted 

payment amounts would continue to be 

updated every 12 months using the 

percentage change in the CPI–U for the 

12-month period ending 6 months prior 

to the date the updated payment 

adjustments would go into effect (79 FR 

40288). 

The payment amounts that would be 

adjusted in accordance with sections 

1834(a)(1)(F)(ii) and (iii) of the Act for 

DME, section 1834(h)(2)(H)(ii) of the Act 

for orthotics, and section 1842(s)(2)(B) 

of the Act for enteral nutrients, supplies, 

and equipment shall be used to limit 

bids submitted under future 

competitions of the DMEPOS CBP in 

accordance with regulations at 

§ 414.414(f). Section 1847(b)(2)(A)(iii) 

prohibits the awarding of contracts 

under a CBP unless total payments 

made to contract suppliers in the CBA 

are expected to be less than the payment 

amounts that would otherwise be made. 

In order to assure savings under a CBP, 

the fee schedule amount that would 

otherwise be paid is used to limit the 

amount a supplier may submit as their 

bid for furnishing the item in the CBA. 

The payment amounts that would be 

adjusted in accordance with sections 

1834(a)(1)(F)(ii) and (iii) of the Act for 

DME, section 1834(h)(2)(H)(ii) of the Act 

for orthotics, and section 1842(s)(2)(B) 

of the Act for enteral nutrients, supplies, 

and equipment would be the payment 

amounts that would otherwise be made 

if payments for the items and services 

were not made through implementation 

of a CBP. Therefore, the adjusted fee 

schedule amounts would become the 

new bid limits (79 FR 40288). 

We solicited comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: Some commenters 

suggested updating adjusted fees yearly 

with CPI–U and not freeze it for 3 years 

until the next. 


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Response: We disagree. Contracts and 

SPAs are replaced at least once every 3 

years, following one or more new 

competitions and as other items are 

added to programs established under 

Subpart F of this part, and increased 

costs in doing business are factored into 

the bids with each new competition. In 

addition, suppliers submitting bids 

under the CBPs are educated that their 

bids will be used in establishing SPAs 

that will be in effect for the entire 

duration of the contract period. 

Therefore, we believe that suppliers take 

increased costs and prices into account 

when developing their bids. In addition, 

because section 1847(b)(2)(A)(iii) of the 

Act prohibits the awarding of contracts 

under a CBP if the total amounts paid 

to contract suppliers are expected to be 

more than the total amounts that would 

otherwise be paid, we believe that the 

intent of competitive bidding is to 

product a reduction in payment 

amounts rather than an increase in 

payment amounts. In lieu of 

establishing a CBP in an area, the 

authorities under the statute for 

adjusting fee schedule amounts based 

on information from CBPs must be used; 

however, in no case should it result in 

an increase in the amounts that would 

otherwise be paid. If an inflation 

adjustment factor is applied to fee 

schedule amounts that are adjusted by 

the methodologies we are adopting in 

this final rule, it could result in an 

amount that is greater than the fee 

schedule amount that would otherwise 

be paid, and we believe that this is 

contrary to the intent of the statute. 

After consideration of the public 

comments, for the reasons we set forth 

above, we are finalizing the proposals 

and are adding § 414.210(g)(8) to 

indicate that adjusted fee schedule 

amounts are revised each time an SPA 

for an item or service is updated 

following one or more new competitions 

and as other items are added to 

programs established under Subpart F of 

this part. 

Table 32 provides a summary of the 

final methodologies intended to achieve 

savings by adjusting fee schedule 

amounts using information from CBPs. 

With regard to all methodologies in this 

final rule that are intended to achieve 

savings by adjusting fee schedule 

amounts using information from CBPs, 

we are adding a provision specifying 

that in any case where application of 

these methodologies results in an 

increase in the fee schedule amount, the 

adjustment to the fee schedule amount 

is not made. 

TABLE 32—SUMMARY OF FINAL METHODOLOGIES FOR ADJUSTING PAYMENT IN NON-BID AREAS

Proposed Methodology Calculations 

(1) Adjustments for Items Included in More than 10 

CBAs*: 

(a) Regional Adjustments Limited by National Parameters for Items Furnished Within the Contiguous United States.—Adjusted payment equal to the RSPA (calculated using the un-weighted average of 

SPAs from CBAs that are fully or partially located with a BEA region) limited by a 

national floor and ceiling. The national ceiling and floor would be set at 110 percent and 90 percent, respectively, of the average of the RSPAs calculated for each 

of the 48 contiguous states and District of Columbia (national average RSPA). 

(b) Adjustments for Rural Areas ................................. —Adjusted payment for areas designated as rural areas based on 110 percent of the 

national average RSPA. 

(c) Adjustments for Items Furnished Outside the 

Contiguous United States.

—Adjusted payment for non-contiguous areas (e.g., Alaska, Guam, Hawaii) based on 

the higher of the average of SPAs for CBAs in areas outside the contiguous U.S. 

or 110 percent of the national average RSPA applied to adjustments within the 

contiguous U.S. 

(2) Adjustments for Lower Volume or Other Items Included in 10 or Fewer CBAs*.—Adjusted payment based on 110 percent of the un-weighted average of the SPAs 

for the areas where CBPs are implemented for contiguous and non-contiguous 

areas of the United States. 

(3) Adjustments for Items Where the Only Available SPA 

is from a CBP No Longer in Effect.

—Payment based on adjusted payment determined under 1) or 2) above and adjusted on an annual basis based on the CPI–U update factors from the mid-point 

of the last year the SPAs were in effect to the month ending 6 months prior to the 

date the initial payment adjustments would go into effect. 

(4) Adjustments for Accessories Used with Different 

Types of Base Equipment: 

(a) Adjustments for Accessories Included in One 

CBP Product Category.

—SPAs for the item from that one Product Category would be used in determining 

the adjusted payment amounts under methodologies 1) or 2). 

(b) Adjustments for Accessories Included in One or 

More CBP Product Category.

—A weighted average of the SPAs for the item in each CBA where the item is included in more than one Product Category would be used to determine the adjusted payment amounts under methodologies 1) or 2). 

(5) Payment Adjustments to Northern Mariana Islands 

Using the National Mail Order SPAs.

—Fee schedule amounts adjusted to equal the SPAs under the national mail order 

CBP. 

VI. Final Payment Methodologies and 

Payment Rules for Durable Medical 

Equipment and Enteral Nutrition 

Furnished Under the Competitive 

Bidding Program 

A. Background 

The payment rules for DME have 

changed significantly over the years 

since 1965, resulting in the replacement 

of the original monthly rental payment 

methodology with lump sum purchase 

and capped rental payment rules, as 

well as separate payment for repairs, 

maintenance and servicing, and 

replacement of expensive accessories for 

beneficiary-owned equipment. In our 

experience, these payment rules have 

been burdensome to administer and 

have added program costs associated 

with expensive wheelchair repairs and 

payment for loaner equipment, and have 

significantly increased costs associated 

with frequent replacement of expensive 

accessories at regular intervals for items 

such as continuous positive airway 

pressure (CPAP) devices. 

We believe that we have general 

authority under section 1847(a) and (b) 

of the Act to establish payment rules for 

DME and enteral nutrition equipment 

that are different than the rules 

established under section 1834(a) of the 

Act for DME, section 1842(s) for enteral 

nutrients, supplies, and equipment, and, 

section 6112(b) of Omnibus Budget 

Reconciliation (OBRA) Act of 1989 

(Pub. L. 101–239) for enteral pumps. We 


tkelley on DSK3SPTVN1PROD with RULES3
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believe that lump sum purchase and 

capping rentals for certain DME and 

enteral nutrition may no longer be 

necessary to achieve savings under the 

program when competitive bidding can 

be used to establish a reasonable 

monthly payment. We also believe that 

payment on a continuous rental basis— 

that is, ongoing monthly payments not 

subject to a cap—could help to ensure 

that medically necessary DME and 

enteral nutrition equipment is kept in 

good working order for the entire 

duration of medial need and would 

make it easier for beneficiaries to change 

from one supplier to another since the 

new supplier would not be faced with 

a finite number of rental payments. 

Currently, there is no requirement that 

a supplier take responsibility for 

repairing equipment once it is owned by 

a beneficiary, which may cause 

difficulties for the beneficiary to find a 

supplier to undertake such services. We 

believe that continuous rental payment 

would eliminate such issues because the 

supplier of the rented equipment would 

always be responsible for keeping the 

equipment in good working order. We 

do not believe that continuous monthly 

rental payments for DME and enteral 

nutrition would negatively impact 

access to items and services and could 

potentially be implemented in a manner 

that does not increase program 

expenditures since suppliers would be 

paid based on bids for furnishing the 

same general items and services they 

would otherwise provide. In addition, 

since Medicare payment for rental of 

DME and enteral nutrition equipment 

include payment for maintenance and 

servicing of the rented equipment, the 

suppliers would be directly responsible 

for meeting the monthly needs of the 

beneficiary in terms of keeping the 

rented equipment in good working 

order. 

As explained in more detail below, 

we proposed to revise the regulation by 

adding a new section at 42 CFR 414.409 

with special payment rules to replace 

existing payment rules at § 414.408 for 

certain items and services in no more 

than 12 CBPs where these rules are 

applied. We also proposed to revise 

§ 414.412 to address the submission of 

bids for furnishing items and services 

paid in accordance with these proposed 

special payment rules. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Payment Methodologies and Payment 

Rules for Durable Medical Equipment 

and Enteral Nutrition Furnished Under 

the Competitive Bidding Program 

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 

DMEPOS CBP. Comments related to the 

paperwork burden are addressed in the 

‘‘Collection of Information 

Requirements’’ section in this final rule. 

Comments related to the impact analysis 

are addressed in the ‘‘Economic 

Analyses’’ section in this final rule. 

We proposed to update the 

regulations to include proposed special 

payment rules for paying claims for 

certain DME or enteral nutrition under 

a limited number of CBPs. We proposed 

to revise the regulation by adding a new 

section at 42 CFR 414.409 with special 

payment rules to replace specific 

payment rules at § 414.408 for these 

items and services in CBPs where the 

special rules are applied. We also 

proposed to revise § 414.412 regarding 

submission of bids for furnishing items 

and services paid in accordance with 

these special payment rules. 

We believe that alternative payment 

models for certain DME and enteral 

nutrition may achieve savings under the 

program when competitive bidding can 

be used to establish a reasonable 

monthly payment. We also believe that 

payment on a continuous rental basis— 

that is, ongoing monthly payments not 

subject to a cap—could help to ensure 

that medically necessary DME and 

enteral nutrition equipment is kept in 

good working order for the entire 

duration of medial need and would 

make it easier for beneficiaries to change 

from one supplier to another since the 

new supplier would not be faced with 

a finite number of rental payments. 

Currently, there is no requirement that 

a supplier take responsibility for 

repairing equipment once it is owned by 

a beneficiary, which may cause 

difficulties for the beneficiary to find a 

supplier to undertake such services. We 

believe that continuous rental payment 

would eliminate such issues because the 

supplier of the rented equipment would 

always be responsible for keeping the 

equipment in good working order. We 

do not believe that continuous monthly 

rental payments for DME and enteral 

nutrition would negatively impact 

access to items and services and could 

potentially be implemented in a manner 

that does not increase program 

expenditures since suppliers would be 

paid based on bids for furnishing the 

same general items and services they 

would otherwise provide. In addition, 

since Medicare payment for rental of 

DME and enteral nutrition equipment 

include payment for maintenance and 

servicing of the rented equipment, the 

suppliers would be directly responsible 

for meeting the monthly needs of the 

beneficiary in terms of keeping the 

rented equipment in good working 

order. We sought comments on these 

proposals. 

We proposed (79 FR 40291 through 

40292) to phase-in the special payment 

rules described in sections VI.B.1 and 

VI.B.2 below in a limited number of 

areas for a limited number of items 

initially to determine whether it is in 

the best interest of the Medicare 

program and its beneficiaries to phase 

these rules in on a larger scale based on 

evaluation of the rules’ effects on 

Medicare program costs, quality of care, 

and access to items and services. In 

order to monitor the impact of phasing 

in the special payment rules in no more 

than 12 CBAs, we proposed that, at a 

minimum, we would utilize evaluation 

criteria that are consistent with the 

current evaluation criteria for 

monitoring the impact of the CBP on 

utilizers of items and services in CBAs. 

To evaluate the quality of care for 

beneficiaries affected by the special 

payment rules, we proposed that, at a 

minimum, we would utilize health 

status outcomes based criteria that 

would measure specific indicators such 

as mortality, morbidity, 

hospitalizations, emergency room, and 

other applicable indicators unique to 

each product category. To evaluate 

beneficiary access to necessary items 

and services we proposed that, at a 

minimum, we would monitor utilization 

trends for each product category and 

track beneficiary complaints related to 

access issues. To evaluate the cost of the 

program, we proposed that, at a 

minimum, we would analyze the claims 

data for allowed services and allowed 

cost for each product category and the 

associated accessories, supplies and 

repair cost in the 12 CBAs and the 

comparator CBAs. We proposed to 

analyze the effect of the proposed 

payment rules on beneficiary cost 

sharing. 

We proposed that in any competition 

where these rules are applied, suppliers 

and beneficiaries would receive advance 

notice about the rules at the time the 

competitions that utilize the rules are 

announced. The combined, total 

number of CBAs where the proposed 

rules in either section 1 or 2 would 

apply would be limited to twelve. In 

other words, it would not be twelve 

CBAs for the rules in section 1 and an 

additional twelve CBAs for the rules in 

section 2, but 12 CBAs total. In addition, 

we proposed that the PCs listed below 

would be phased in to include one or 

more of the CBAs that would number no 

more than twelve total. In addition, if a 

determination is made to phase-in these 

rules on a larger scale in additional 


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areas and for additional items based on 

program evaluation results regarding 

cost, quality, and access, the process for 

phasing in the rules and the criteria for 

determining when the rules would be 

applied would be addressed in future 

notice and comment rulemaking. This 

rulemaking would also address how the 

methodology for using these SPAs to 

adjust fee schedule amounts would 

need to be revised. 

We proposed that separate payment 

for all repairs, maintenance and 

servicing, and replacement of supplies 

and accessories for beneficiary-owned 

DME or enteral nutrition equipment 

would cease in the CBAs where the 

payment rules proposed under this 

section are in effect. We proposed that 

if the beneficiary has a medical need for 

the equipment, the contract supplier 

would be responsible for furnishing new 

equipment and servicing that 

equipment. This option would ensure 

that beneficiaries continue to receive 

medically necessary equipment; 

including the supplies, accessories, 

maintenance and servicing that may be 

needed for such equipment. Please note 

that this would not apply to items 

which are not paid on a bundled, 

continuous rental basis. We proposed to 

revise the regulations at § 414.409 to 

specify that any beneficiary who owns 

DME or enteral nutrition equipment and 

continues to have a medical need for the 

items should these rules take effect in a 

CBA where they reside, would have the 

option to obtain new equipment, if 

medically necessary, and related 

servicing from a contract supplier. We 

requested comment as to whether a 

transitional process should be 

considered when claims are selected for 

review to determine whether they are 

reasonable and necessary and other 

safeguards are required to ensure timely 

delivery of the replacement DME so that 

individuals’ mobility and ability to live 

independently is not adversely 

impacted by delays. While this could 

potentially increase beneficiary cost 

sharing, it would eliminate issues 

associated with repair of beneficiaryowned equipment. 

The Affordable Care Act (Patient 

Protection and Affordable Care Act of 

2010, Pub. L. 111–148 (March 23, 2010), 

Sec. 3021) establishes the Center for 

Medicare and Medicaid Innovations 

(CMMI) which is authorized to test 

models to reduce Medicare and 

Medicaid expenditures while preserving 

or improving quality for beneficiaries of 

those two programs. We solicited 

comments on the option for testing the 

above special payment rules for DME 

and enteral nutrition using the CMMI 

demonstration authority in no more 

than 12 CBAs that would allow us to 

test and evaluate the special payment 

rules on a wider scale and determine 

whether the special payment rules 

reduce Medicare expenditure while 

preserving or improving the quality for 

Medicare beneficiaries. Regardless of 

the authority used to phase-in or test 

these special payment rules, we 

proposed to undertake rigorous 

evaluation to determine the rules’ 

effects on program costs, quality, and 

access. 

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 

DMEPOS CBP. Comments related to the 

paperwork burden are addressed in the 

‘‘Collection of Information 

Requirements’’ section in this final rule. 

Comments related to the impact analysis 

are addressed in the ‘‘Economic 

Analyses’’ section in this final rule. 

We received 28 public comments on 

this proposal from manufacturers, 

DMEPOS suppliers, coalitions, and 

beneficiaries. The comments and our 

responses are set forth below. 

1. Payment on a Continuous Rental 

Basis for Select Items 

Under our general authority under 

section 1847(a) and (b) of the Act to 

establish payment rules for DME and 

enteral nutrition equipment, we 

proposed (79 FR 40292) to revise the 

regulation at 42 CFR 414.409 to allow 

for payment on a continuous monthly 

rental basis under future competitions 

in no more than 12 CBAs for one or 

more of the following categories of items 

and services: enteral nutrition, oxygen 

and oxygen equipment, standard 

manual wheelchairs, standard power 

wheelchairs, CPAP and respiratory 

assist devices (RADs), and hospital 

beds. We proposed that the SPAs 

established under the special payment 

rules would be based on bids submitted 

and accepted for furnishing rented DME 

and enteral nutrition on a monthly 

basis. We proposed that the SPAs would 

represent a monthly payment for each 

month that rented DME or enteral 

nutrition is medically necessary. The 

SPA for the monthly rental of DME 

would include payment for each item 

and service associated with the rental 

equipment including the ongoing 

maintenance and servicing of the rental 

equipment, and replacement of supplies 

and accessories that are necessary for 

the effective use of the equipment. 

Comment: Several commenters 

indicated that CMS does not have the 

authority to use bundled payments 

under the CBP. 

Response: We do not agree with this 

comment. The existing payment rules 

under section 1834 of the Act govern 

DMEPOS paid under the various fee 

schedules and do not directly apply to 

the CBP; therefore, CMS is not explicitly 

required to apply such rules to the CBP. 

Section 1847 of the Act mandates the 

implementation of CBPs throughout the 

United States for the purpose of 

awarding contracts for furnishing 

competitively priced items and services 

described under section 1847(a)(2) of 

the Act. As discussed in the proposed 

rule (79 FR 40290), we believe we have 

broad authority under section 1847 to 

establish payment rules for the CBP. In 

particular, consistent with section 

1847(a)(6), the general payment rules for 

the CBPs are governed by section 

1847(b) which mandates payment based 

on bids submitted and accepted by 

Medicare for the competitively priced 

items and services. Therefore, we 

believe that we have discretion to 

establish rules on whether covered 

items are paid for on a purchase or 

rental basis as long as total payments to 

contract suppliers are expected to be 

less than the total amounts that would 

otherwise be paid. 

Comment: Several commenters felt 

that CMS has not demonstrated that a 

CBP that includes bundling meets the 

criteria for a demonstration under the 

CMMI. 

Response: We thank the commenters 

for their comments. If a decision is 

made to use CMMI demonstration 

authority to implement and evaluate 

payment on a bundled, continuous 

rental basis for DME and/or enteral 

nutrition, it would only be after CMMI 

has determined that a particular 

payment model meets the criteria 

established for such a demonstration. 

Comment: Many commenters 

expressed concerns that monthly 

bundled payments for DME and enteral 

nutrition would reduce quality and 

access to care. For example, they believe 

that if separate payments are not made 

for certain items, such as the ongoing 

replacement of CPAP accessories, 

contract suppliers will not have an 

incentive to replace the items when they 

need to be replaced. Other commenters 

suggested that specific parameters or 

guidelines for replacement of such 

items, such as the usual maximum 

number of accessories needed as 

provided in DME MAC local coverage 

policies, be established under the 

programs. Commenters were 

particularly vocal about the fact that 

these rules should not be phased in for 

enteral nutrition and that enteral 

nutrition is not a suitable product 

category for bundled monthly payments. 


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Response: We do not agree. The rules 

are not being phased-in in limited areas 

due to concerns that suppliers 

contracted to provide items and services 

under these rules will not provide those 

items and services. The rules are being 

phased in to gauge whether rental caps 

are necessary in order to save money for 

items used on a longer term basis and 

whether the rules can address problems 

associated with repair of beneficiaryowned equipment. Suppliers awarded 

contracts under the programs must be in 

compliance with DMEPOS quality 

standards and supplier standards in 

order to remain a contract supplier and 

in order to continue to be an enrolled 

DMEPOS supplier under Medicare. As 

always, we will closely monitor contract 

suppliers and real time claims data and 

health outcomes data to ensure that 

suppliers are in compliance with the 

standards. Guidelines for the usual 

maximum amount of accessories 

expected to be medically necessary have 

already been established under local 

DME MAC policies, and suppliers will 

be educated to take the cost of replacing 

these accessories into account when 

establishing their bids. Suppliers 

submitting bids under the program will 

be educated that they cannot receive 

payment for furnishing DME without 

furnishing everything the patient needs 

each and every month they continue to 

need and use the equipment. As stated 

in the proposed rule, the impact of the 

rules on program expenditures, 

beneficiary cost sharing, access to items 

and services, and quality of care will be 

closely monitored and compared to 

impacts under comparator areas. 

However, in light of concerns regarding 

the impact of the rules on access to 

quality items and services, we are 

further limiting the scope of the phase 

in to CPAP devices and standard power 

wheelchairs, and we are not finalizing 

the remaining categories of items at this 

time. These two categories of items 

generate the greatest amount of separate 

payments for accessories and repair 

compared to enteral nutrition or any 

other category of DME described in 

section 1847(a)(2) of the Act. 

We will apply a focused and intense 

monitoring program to these two 

categories of items to evaluate quality of 

care and access to items and services, 

including specific accessories 

prescribed for beneficiaries under the 

programs to these two categories. Using 

real time claims analysis and health 

outcomes data, we will quickly identify 

potential problems and take action to 

ensure that contract suppliers are 

providing access to quality items and 

services under the programs. We believe 

these two DME categories will provide 

sufficient information in order to 

determine the overall effect of the 

special payment rules on program and 

beneficiary costs, quality, and access to 

items and services. 

Comment: Some commenters 

supported bundling for enteral 

nutrition. They noted that the 

beneficiary would not be responsible for 

maintaining the pump and temporary 

cessation of therapy would not occur 

while the pump is being repaired if it is 

not owned. Other commenters believed 

that bundled payment for enteral 

nutrition would be beneficial for short 

term nutritional therapy because the 

patient would no longer own a pump 

that is not needed. However, other 

commenters argued that CMS should 

exclude enteral nutrition from the 

bundled initiative because of the wide 

variation in cost of the enteral nutrients. 

Some commenters recommended 

establishing a monthly rental bundled 

payment based upon mode of delivery. 

Other commenters recommended 

establishing a separate bundled 

payment amount that would only cover 

the supplies and equipment used for 

each mode of delivery (syringe, gravity 

and pump) and would exclude enteral 

formulas from the bundle because of 

wide variation in cost and treatment. 

Response: We thank the commenters 

for their support and input. After careful 

consideration of the comments received 

on this topic, we will not be finalizing 

the proposal to phase in bundled, 

continuous monthly rental payment for 

enteral nutrition at this time. 

Comment: One commenter made 

suggestions for calculating the bundled 

payment rates for oxygen and oxygen 

equipment. 

Response: We thank the commenter 

for their input. We will not be finalizing 

the proposal to phase in bundled, 

continuous monthly rental payment for 

oxygen at this time. 

Comment: Many commenters opposed 

bundling monthly payment for all 

standard manual wheelchair bases with 

accessories or all standard power 

wheelchair bases with accessories or all 

standard and power wheelchair bases 

with accessories because they feel the 

different types are wheelchair bases are 

unique and should not be bundled 

together. Some recommended a bundled 

bid approach for standard manual or 

standard power wheelchairs and only 

those accessory items that are tied to the 

same medical necessity as the 

wheelchair. Some suggested bundling 

only 3 codes or 6 accessory codes with 

each base code for wheelchairs based on 

utilization in order to simplify billing. 

Some suggested excluding repair and 

replacement items from the bundle. 

Commenters believed that bundling of 

multiple HCPCS codes into a single 

code for payment will further decrease 

access and quality of products and 

services and is complex. The 

commenters believes that a single bid 

code cannot accommodate the 

characteristics of the various 

technologies and varying manufacturing 

costs for standard manual or power 

wheelchairs. The commenters believe 

that there will be no mechanism to track 

utilization to ensure the beneficiaries 

still have access to the range of 

medically necessary technology. If base 

codes are combined then distinguishing 

coverage policies that reflect the 

medical and functional needs of 

beneficiaries cannot be developed. It 

provides a disincentive to suppliers to 

avoid high risk or complex beneficiaries 

and decreases beneficiary choices. 

Response: We will not be finalizing 

the proposal to phase in competitions 

for bundled, continuous monthly rental 

payment for standard manual 

wheelchairs at this time. The specific 

power wheelchair items and HCPCS 

codes included in competitions where 

special payment rules are applied will 

be announced to suppliers and 

beneficiaries in advance of the 

competitions with an explanation of 

why wheelchair bases are bundled 

together to the extent that they are 

under the competition. 

Comment: Many commenters were 

opposed to applying bundled monthly 

continuous rental payment rules to 

CPAP devices and RADs. Some 

commenters recommended enforcing 

the current replacement schedule for 

CPAP and RAD accessories as outlined 

in DME MAC local coverage policies 

under the CBPs that utilize the special 

payment rules. Other commenters 

stressed that the CPAP supply 

replacement schedules should be 

factored into the development of any 

bundled payment data and should be 

used to determine bundles and their 

respective amounts. In addition, 

commenters were concerned that 

bundling of CPAP removes all ability of 

CMS and providers to ensure that 

beneficiaries receive medically 

necessary equipment because they will 

not see claims for the items to know 

how often they are being replaced. For 

CPAP, some commenters urged CMS to 

craft policies integral to bundling such 

as a minimum service/contract level 

requirement for the provider to maintain 

with the beneficiary. Some commenters 

suggested that we require suppliers to 

check in on supply requirements with 

the beneficiaries. 


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Response: After consideration of the 

public comments we received, we will 

not be finalizing the proposal to phase 

in competitions for bundled, continuous 

monthly rental payment for respiratory 

assist devices. But we will be finalizing 

the proposal to phase in competitions 

for bundled, continuous monthly rental 

payment for CPAP devices. We note that 

Medicare paid on a bundled, continuous 

monthly rental basis for CPAP devices 

under the fee schedules from 1989 thru 

1993 and did not encounter any 

problems related to access to necessary 

items and services during this time. The 

tables in the DME MAC local coverage 

policies listing the usual maximum 

amount of CPAP accessories expected to 

be reasonable and necessary are not 

tables that indicate how often these 

items need to be replaced. They 

represent how often claims for the 

accessories would be paid without the 

need to have additional medical 

documentation in the patient’s record. 

They can be used as guidelines for the 

usual maximum amount that are 

typically needed, but under a bundled, 

continuous rental payment method for 

CPAP devices, the supplier would be 

expected to replace the accessories as 

often as necessary for the effective use 

of the CPAP device. If the usual number 

of masks needed is once every 6 

months, the masks may need to be 

replaced less often in the case of some 

beneficiaries and more often than once 

every 6 months in the case of other 

beneficiaries. In any case where a 

replacement of an accessory is needed 

during a month, the contract supplier 

would be responsible for furnishing the 

necessary accessory, just as they would 

be responsible for repairing rented 

equipment whenever necessary. We will 

closely monitor contract suppliers to 

ensure that they are doing so. 

Comment: Two commenters opposed 

our proposal that the bids submitted for 

furnishing CPAP devices on a bundled, 

continuous monthly rental basis cannot 

exceed the 1993 fee schedule amounts 

for these items, increased by the covered 

item update factors provided for these 

items in section 1834(a)(14) of the Act. 

The commenters contended that 

equipment features developed since the 

establishment of the base year fees, such 

as a heated humidifier, would not be 

encompassed in the bid limits and 

instead suggested using a more recent 

base period for these items. Other 

commenters noted that the proposal to 

set bid limits for CPAP to 1993 fee 

schedule is inconsistent with the 

proposed methodology for the other 

bundled product categories which 

would use recent expenditures per 

beneficiary. 

Response: We do not agree with these 

comments. Historical bundled, monthly 

rental fee schedule amounts are 

available for CPAP devices and reflect a 

bundled monthly rental payment that 

was previously mandated and 

established for these items under the 

Medicare program. We believe that 

separate payment for CPAP accessories 

has led to overutilization of the 

accessories based on complaints 

received from beneficiaries over the 

years about suppliers shipping 

unnecessary quantities of accessories. 

Therefore, we believe that the average 

payment per beneficiary for equipment 

and accessories could result in a bid 

limit that is artificially high when 

compared to historic Medicare bundled 

monthly rental fees for CPAP devices 

that were in place for 5 years and did 

not result in any problems with access 

to necessary items and services. The 

1993 fee schedule amounts for CPAP 

devices are based on historic reasonable 

charges that are representative of 

payment made to a supplier for 

furnishing these items on a bundled, 

continuous rental basis over a period of 

5 years. The application of the covered 

item updates for DME in general, in 

section 1834(a)(14) of the Act, account 

for changes in the costs of furnishing 

covered items and services. Historic 

continuous bundled fee schedule 

amounts are not available to use to set 

the bid limit for the standard power 

wheelchair bundled category, therefore, 

current expenditure data would be used 

to set bid limits for the standard power 

wheelchair product category. 

Comment: Many commenters believed 

that continuous monthly rental 

payments for DME would increase the 

financial burden of the beneficiaries 

because instead of being limited to 

paying coinsurance for no more than 13 

months of continuous use, they would 

be required to make coinsurance 

payments for as long as they use the 

equipment. 

Response: Our analysis strongly 

suggests that the benefits associated 

with paying on a continuous monthly 

rental basis outweigh the potential of 

increased copayments for the 

beneficiary. For items that are paid on 

a capped rental basis where title to the 

item transfers to the beneficiary after 

conclusion of the 13-month rental 

period, beneficiaries are responsible for 

maintaining and repairing the item after 

title transfer. Under the special payment 

rules that provide for payment on a 

continuous rental basis, beneficiaries 

will no longer be responsible for repair 

and maintenance of equipment because 

they will not own the equipment. The 

supplier will retain the title to the 

equipment and will be responsible for 

repair and maintenance. Although 

beneficiaries who use a CPAP device or 

power wheelchair for more than 13 

months of continuous use will pay 

coinsurance payments for additional 

rental months beyond 13 months of 

continuous use, the monthly payments 

include payment for ongoing costs such 

as replacement of accessories and repair 

and maintenance of equipment, which 

are also ongoing costs that exist under 

the current capped rental payment 

methodology. The cost of furnishing 

items and services is the same 

regardless of whether payment is made 

on a capped rental basis for equipment 

with separate payment for accessories, 

maintenance and servicing or on a 

bundled, continuous rental basis. 

Most importantly, the statute 

prohibits the awarding of contracts 

under a CBP if the total payments to 

contract suppliers under the CBP are 

expected to be more than what would 

otherwise be paid and we would 

confirm that this requirement is met 

prior to implementing prices established 

under these special payment rules. 

Comment: Some commenters were 

concerned that beneficiaries would not 

have the choice of opting out of the 

program although they would be 

notified about the alternative payment 

initiative. 

Response: We proposed to phase-in 

the special payment rules because we 

believe they will have a positive impact 

on beneficiary access to quality 

equipment that continues to remain in 

good working order, while lowering the 

administrative costs of the program, and 

eliminating the need for beneficiaries to 

locate suppliers willing to repair 

equipment they own. In order to receive 

payment for equipment subject to this 

program, beneficiaries do not have the 

option to opt out. The programs will be 

closely monitored. 

Comment: Most commenters were 

supportive of phasing in or testing the 

continuous rental bundled payment 

methodology on select products in 

limited areas. Some stakeholders 

suggested that bundled payment should 

be pilot tested first with a small subset 

of items and exclude complex items. 

Many commenters agreed that bundling 

will simplify complex administration 

procedures. 

Response: We agree with commenters 

that a phase-in limited to only a few 

select categories would be the best way 

to evaluate the impact of the special 

payment rules at this time. As such, we 

are not finalizing bundled, continuous 

payment rules for the following 


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categories of items: Enteral nutrition, 

oxygen and oxygen equipment, standard 

manual wheelchairs, respiratory assist 

devices and hospital beds. The special 

payment rules would only be phased in 

initially for the following categories of 

DME items: CPAP devices and standard 

power wheelchairs. We selected the 

category of CPAP devices because we 

believe the cost of paying separately for 

the expensive accessories used with 

these devices exceeds the amount of 

savings achieved from capping the 

rental payments for the equipment. We 

selected the category of power 

wheelchairs because we believe that 

payment on a separate, piecemeal basis 

for hundreds of various power 

wheelchair options and accessories is 

unnecessary and overly complex. In 

addition, power wheelchairs are the 

most frequently repaired DME item and 

we believe that phasing in payment on 

a continuous monthly rental basis 

would ensure access to power 

wheelchairs that are in good working 

order. As discussed in our proposal (79 

FR 40291), the CBPs would be phased 

in as early as 2017, and would be 

closely monitored. Subsequent 

rulemaking would be necessary to adopt 

special payment rules for other items or 

in more than 12 CBAs. 

Comment: Some commenters 

recommended a bundled bid approach 

comprised of products associated with a 

single medical necessity or single 

coverage and payment policy. Some 

suggested accessories that are included 

in a bundle with the base equipment 

must be tied to the same medical 

necessity as the base equipment. One 

commenter suggested that beneficiaries 

meeting medical necessity for a support 

surface may also meet the medical 

necessity for a hospital bed; however, 

support surfaces and hospital beds 

should never be included in the same 

bundle. 

Response: These are issues that would 

be addressed in Medicare program 

guidance. 

Comment: Some commenters were 

concerned that CMS has not provided 

information about how the Agency will 

administer a bundled bid program so 

the lack of information violates the 

Administrative Procedure Act (APA). 

The commenter’s claim the proposed 

rule only gives general outline of the 

bundling program but does not explain 

what makes up a bundle, how bids will 

be evaluated or pivotal bids will be 

selected to establish payment amounts. 

These commenters stated that CMS 

must publish a new proposed rule 

soliciting comments on the elements of 

the bidding program. 

Response: We disagree. We have 

issued rules concerning the general 

dictates of the CBP and this competition 

would be consistent with those rules. 

We would evaluate suppliers and bids 

consistent with those provisions except 

that the bids and the SPAs established 

based on those bids would be for the 

monthly rental of DME and all items 

and services necessary for the effective 

use of the DME (that is, all related 

supplies, accessories, maintenance and 

servicing, etc.). Bids would not be 

submitted for purchase of any item or 

for separate payment for accessories 

used with base DME items. Under the 

existing CBP, CMS specifies certain 

parameters, but then through the 

Request for Bids (RFB) and competitive 

bidding process, further addresses 

certain details. Similar to other CBPs 

that do not employ the special payment 

rules, we intend to conduct extensive 

education outreach programs prior to 

implementing competitions that apply 

the bundled continuous rental 

methodology so that suppliers are 

educated about the rules and 

understand what is required of the 

bidding suppliers. This includes 

advance notice of bidding and 

comparator areas and defining the 

bundled categories. We believe that our 

proposed rules were sufficiently 

detailed to enable the public to provide 

meaningful comments on them. 

Comment: Many commenters urged 

CMS to share the bundled bidding 

methodology with stakeholders and 

establish quality metrics before 

beginning the program. Some 

commenters suggested that to facilitate 

accurate bidding CMS must give 

suppliers per patient utilization and 

expenditures data by HCPCS codes. 

Some commenters argued that CMS 

states in the proposed rule that it will 

monitor and evaluate the quality and 

success of bundled payments but no 

metrics have been determined or shared 

by CMS. Some suggested that submitted 

claims data versus paid claims data 

must be used. Those commenters stated 

that bid limits must take into account all 

repairs, accessories, and rental 

payments divided by number of patients 

to create a monthly per patient 

allowable. Commenters stated that bids 

must include only patients with active 

rental periods in calculating the bid 

limit. Commenters also stated that CMS 

must identify the data parameters from 

which it will take data. Many 

commenters recommended that CMS 

establish quality metrics before 

implementing the bundled payment. 

Some commenters recommended 

providing safeguards for Medicare 

beneficiaries, setting proper 

expectations with providers and 

evaluating the feasibility of the bundled 

payment methodology by creating 

methods to identify beneficiaries not 

identified in claims data, establishing 

minimum standards of quality and 

quantity of services, tracking products 

provided to the beneficiaries furnished 

with equipment paid on a bundled 

continuous rental basis as compared to 

all other Medicare beneficiaries to 

ensure quality care is being provided 

and beneficiaries have access to most 

innovative products. Commenters 

suggested we conduct a long term 

longitudinal study to determine 

comorbidity costs and access to care 

with bundled payments. 

Response: We thank the commenters 

for their input. Consistent with the 

current CBP monitoring and oversight, 

CMS will employ a wide range of 

monitoring techniques before beginning 

any competition that applies the special 

payment rules. We will provide advance 

notice of the areas and comparator 

areas, defining bundles, verifying bona 

fide bids, and setting up monitoring 

techniques before beginning the 

competition. As we proposed in the 

proposed rule (79 FR 40291), in any 

competition where these final special 

payment rules are applied, we will 

provide advance notice of the rules at 

the time the competitions that utilize 

the rules are announced. 

In order to monitor the impact of 

phasing in the special payment rules in 

the no more than 12 CBAs we are 

finalizing, we will utilize evaluation 

criteria that are consistent with the 

current evaluation criteria for 

monitoring the impact of the CBP on 

utilizers of items and services in CBAs. 

To evaluate the quality of care for 

beneficiaries affected by the special 

payment rules, we will at a minimum, 

utilize health status outcomes based 

criteria that would measure specific 

indicators such as mortality, morbidity, 

hospitalizations, emergency room and 

other applicable indicators unique to 

each product category. To evaluate 

beneficiary access to necessary items 

and services we will monitor utilization 

trends for each product category and 

track beneficiary complaints related to 

access issues. To evaluate the cost of the 

program, we intend to analyze the 

claims data for allowed services and 

allowed cost for each product category 

and the associated accessories, supplies 

and repair cost in the 12 CBAs and the 

comparator CBAs. We will also analyze 

the effect of the proposed payment rules 

on beneficiary cost by analyzing number 

of monthly rental payments made 

compared to reductions in coinsurance 


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payments. Medicare has established 

quality standards, supplier standards, 

local medical review policies and other 

requirements that currently address 

furnishing medically necessary items 

and services, and CMS monitors 

whether these requirements have been 

met by suppliers, as applicable. 

Submitted charge data is not used to 

establish Medicare allowed payment 

amounts and therefore would not be a 

good bid limit or a limit used to ensure 

that payments under the programs are 

less than what would otherwise be paid. 

Comment: Some commenters argued 

that CMS did not provide information 

on how bids will be evaluated, what 

constitutes a bundle or how the pivotal 

bid will be selected to establish 

payment amounts. Commenters also 

indicated that CMS did not identify 

CBAs and comparator areas. 

Commenters also stated that there is no 

baseline for what constitutes a bundle in 

a product category so suppliers will not 

know what to bid. Commenters raised 

concerns that CMS has no way to 

compare bids because there is no 

consensus on what it takes to service 

patients who receive the bundle. 

Without an assessment tool and a 

baseline tool, those commenters believe 

that CMS has no way of comparing bids, 

or determining pivotal bids or verifying 

bona fide bids because there is no 

consensus on what is in the bundle or 

the intensity of the services patients 

who receive the bundle need. It would 

be difficult for suppliers to determine 

the appropriate amount to bid under a 

bundled payment method because there 

are many factors that would influence 

the cost associated with supplies, 

maintenance and repairs. Some 

expressed concerns about supplier 

challenges in determining the 

appropriate amount to bid because of 

factors such as case mix, variable cost of 

different types of base equipment and 

accessories and the variable cost 

associated with supplies, maintenance, 

repairs and frequency of replacement 

parts. Suppliers will have to guess the 

type of equipment and frequency of 

services different patients may need. 

Under a bundled bid, commenters were 

concerned that CMS will not be able to 

track utilization patterns that could be 

harmful to the beneficiaries. 

Response: We thank the commenters 

for their input. Although specific CBAs 

were not identified in the proposed rule, 

we will be identifying the areas and 

comparator areas, defining the bundles, 

and setting up monitoring techniques 

before beginning the competition as we 

have done during the previous rounds. 

As we proposed in the proposed rule 

(79 FR 40291), in any competition 

where these final special payment rules 

are applied, we will provide advance 

notice of implementation at the time the 

competitions that utilize the rules are 

announced. This notice could take the 

form of the competitive bidding request 

for bids or a CMS web posting or 

programs instructions or listserv 

messages and would define the related 

products and services included in a 

category’s single bundled grouping. The 

process for setting the SPA and 

determining the pivotal bid in 

competitions where the special payment 

rules are applied would follow the 

existing process that is in place for a 

product category and outlined in 

sections 42 CFR 414.414 and 414.416 of 

our regulations. 

Using the CPAP and standard power 

wheelchair bid limits, which we will 

announce in advance of the 

competitions and calculate, consistent 

with what we proposed in the proposed 

rule (79 FR 40291) and are finalized in 

this rule, as well as past CBA utilization 

data for these bundled items, we believe 

bidding suppliers can use their 

experience in furnishing these items to 

develop a monthly bundled rental bid 

that would be reflective of their costs 

and profit for all items identified in the 

bundle. In competitions where the 

single bundled bid rules apply, CMS 

would continue to employ the wide 

range of resources used to monitor the 

CBP including use of real-time claims 

analysis to monitor the health outcomes 

status of groups in CBAs. Suppliers are 

responsible for providing all items and 

services to beneficiaries in accordance 

with the orders of their physicians. This 

responsibility does not change 

depending on whether one payment is 

made for the monthly rental of DME and 

all related supplies, accessories, and 

services or whether piece meal 

payments are made for each individual 

item or service. For example, a supplier 

furnishes a CPAP device and accessories 

in accordance with the physician’s 

order and replaces the accessories and 

services the rented equipment for up to 

13 months of continuous use for 

individual beneficiaries. 

As stated in the proposed rule, the 

impact of the rules on program 

expenditures, beneficiary cost sharing, 

access to items and services, and quality 

of care will be closely monitored and 

compared to impacts under comparator 

areas. To evaluate the quality of care for 

beneficiaries affected by the special 

payment rules, we will at a minimum, 

utilize health status outcomes based 

criteria that would measure specific 

indicators such as mortality, morbidity, 

hospitalizations, emergency room and 

other applicable indicators unique to 

each product category. To evaluate 

beneficiary access to necessary items 

and services we will monitor utilization 

trends for each product category and 

track beneficiary complaints related to 

access issues. To evaluate the cost of the 

program, we intend to analyze the 

claims data for allowed services and 

allowed cost for each product category 

and the associated accessories, supplies 

and repair cost in the 12 CBAs and the 

comparator CBAs. We will also analyze 

the effect of the proposed payment rules 

on beneficiary cost by analyzing number 

of monthly rental payments made 

compared to reductions in coinsurance 

payments. 

Comment: Some commenters 

contended that payment on a 

continuous rental basis for select 

bundled items instead of on a capped 

rental basis would result in additional 

administrative burden for suppliers 

because they would have to submit 

more than 13 claims for rental of 

equipment to a beneficiary. Commenters 

reacted unfavorably to repeated billings 

for monthly rental claims for as long as 

the item is medically necessary. 

Response: While suppliers may need 

to submit additional claims for the 

monthly rental of CPAP devices and 

power wheelchairs, they would no 

longer have to submit separate claims 

for accessories and repairs and would 

no longer have to keep track of periods 

of continuous use or when a rental cap 

is approaching. In addition, suppliers 

would no longer have to transfer title to 

equipment after 13 months of 

continuous use, and would therefore 

need to replace items in their inventory 

less often. 

Comment: Numerous commenters 

requested a delay in the implementation 

of payment on a continuous rental basis 

for select bundled items. One 

commenter stated that more time is 

needed to educate practitioners, 

suppliers, and patients along with 

receipt of adequate program guidance. 

Several commenters stated CMS should 

convene advisory groups to study 

bundling payment methods and bidding 

factors. Another comment from a 

manufacturer’s association requested 

CMS establish an additional HCPCS 

Advisory Panel to review and revise 

current HCPCS codes for improved 

bundling. 

Response: The final rule does not set 

forth an exact timeframe for when the 

special payment rules will be 

implemented. CMS will be providing 

additional guidance and education, if 

needed. 

Comment: Various commenters 

expressed concern that our proposal did 

not include a listing of existing HCPCS 


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base codes along with HCPCS accessory 

codes that may comprise a bundled item 

code. As a result, several commenters 

submitted recommended coding 

bundles of existing HCPCS codes for 

enteral nutrition, oxygen and oxygen 

equipment, standard manual 

wheelchairs, power wheelchairs, CPAP, 

RADs, and hospital beds. 

Response: CMS will follow the 

HCPCS coding process. We appreciate 

these comments and thank the 

commenters for their helpful 

suggestions for coding bundles. When 

further steps for implementing a 

continuous rental basis for select 

bundled items are developed, we will 

review the submitted information to 

ensure compliance with the Medicare 

coverage and coding guidelines. As 

noted in an earlier response, specific 

information on the items that comprise 

a bundled bid for the CPAP category or 

standard power wheelchairs category 

will be announced well in advance of a 

competition that would use the 

continuous rental payment 

methodology. 

Comment: Commenters stated that the 

proposed change in payment rules will 

be adopted by payers other than 

Medicare and therefore should not be 

adopted. 

Response: Such issues are beyond the 

scope of this rulemaking and we have 

not taken such things into consideration 

when finalizing our policies for the 

Medicare program. We appreciate that 

changes in Medicare policy may affect 

other insurers who choose to base their 

payments on Medicare payment rules; 

however, it is our obligation to set our 

policies based upon the needs of 

Medicare and its beneficiaries. 

Comment: One commenter asked for 

clarification on how CMS will establish 

coverage criteria for a bundle of HCPCS 

codes consisting of a base and all 

options and accessories including what 

data will be used to establish the 

coverage criteria that will identify 

whether or not a beneficiary qualifies 

for a bundle of equipment, services, and 

supplies. 

Response: These comments are 

outside the scope of the proposed rule, 

and therefore are not addressed in this 

final rule. The process for reviewing 

coverage for an item or bundle of items 

is not addressed in this payment rule. 

We received many additional 

comments that were out of the scope of 

this rule. 

In this final rule we are finalizing our 

proposal for only two items, CPAP 

devices and standard power 

wheelchairs. This rule finalizes the 

phase-in of special payment rules for 

CPAP and power wheelchairs as noted 

previously in the proposed rule (79 FR 

40293) under the DMEPOS CBP in no 

more than 12 CBAs at 42 CFR 414.408, 

414.409, and 414.412. 

Comment: Some commenters noted 

that making payments for DME on a 

bundled, continuous rental basis will 

not eliminate repair issues and will 

increase financial burden on the 

beneficiaries. Some commenters noted 

that the ability for a beneficiary to 

switch to another provider should he/

she feel the service is not appropriate 

would drive competition for better care 

but bundling would not eliminate the 

need for patients to requalify for 

equipment when they change suppliers. 

Beneficiaries would still need to reestablish medical necessity when 

changing suppliers. Some suggested 

allowing beneficiaries to switch 

suppliers without restarting 

documentation. Some commented that 

mandating suppliers repair will not 

solve beneficiary’s inability to obtain 

repairs for beneficiary-owned 

equipment. 

Response: Contract suppliers paid for 

furnishing DME paid for on a bundled, 

continuous rental basis would be 

responsible for all necessary repairs, 

maintenance and servicing needed to 

keep the rental equipment in good 

working order or for replacing rental 

equipment that no longer functions and 

cannot be repaired. The process for 

documenting medical necessity for 

items would be addressed outside the 

rulemaking process. 

We proposed to revise the regulation 

at 42 CFR 414.409 to the include 

supplier transition rules for enteral 

nutrition, oxygen and oxygen 

equipment, standard manual 

wheelchairs, standard power 

wheelchairs, CPAP and respiratory 

assist devices, and hospital beds that 

would be paid in accordance with the 

rules proposed in this section. We also 

proposed to revise the regulation at 42 

CFR 414.408 to provide a cross 

reference to proposed § 414.409. We 

proposed that changes in suppliers from 

a non-contract supplier to a contract 

supplier at the beginning of the CBP 

where the proposed payment rules 

would apply would simply result in the 

contract supplier taking on 

responsibility for meeting all of the 

beneficiary’s monthly needs while 

receiving payment for each month of 

service. We developed these proposed 

rules based on that fact that for capped 

rented DME and oxygen and oxygen 

equipment, since rental caps would not 

apply under the proposed rules, there 

would be no need to restart or extend 

capped rental periods when a 

beneficiary transitions from a noncontract supplier to a contract supplier. 

We proposed that supply arrangements 

for oxygen and oxygen equipment, and 

rental agreements for standard manual 

wheelchairs, standard power 

wheelchairs, CPAP devices, respiratory 

assist devices, and hospital beds entered 

into before the start of a CBP and 

application of the payment rules 

proposed in this section would be 

allowed to continue so long as the 

supplier agrees to furnish all necessary 

supplies and accessories used in 

conjunction with the rented equipment 

and needed on a monthly basis. We 

proposed that non-contract suppliers in 

these cases would have the option to 

continue rental agreements; however, 

we proposed that as part of the process 

of allowing the rental agreements to 

continue, the grandfathered supplier 

would be paid based on existing rules 

at § 414.408. We solicited comments on 

this proposed process. We did not 

receive any specific comment for this 

section and therefore, for the reasons we 

discussed previously, we are finalizing 

the proposed transition rules. This rule 

finalizes the transition rules as noted 

previously in the proposed rule (79 FR 

40293, 40294) under the DMEPOS CBP 

at 42 CFR 414.409. 

2. Responsibility for Repair of 

Beneficiary-Owned Power Wheelchairs 

Furnished Under CBPs 

We proposed (79 FR 40294) to revise 

the regulation at 42 CFR 414.409 to add 

a new payment rule that would apply to 

future competitions for standard power 

wheelchairs in no more than 12 CBAs 

where payment is made on a capped 

rental basis. In these CBPs, we proposed 

that contract suppliers for power 

wheelchairs would be responsible for all 

necessary repairs and maintenance and 

servicing of any power wheelchairs they 

furnish during the contract period under 

the CBP, including repairs and 

maintenance and servicing of power 

wheelchairs after they have transferred 

title to the equipment to the beneficiary. 

We proposed that this responsibility 

would end when the reasonable useful 

lifetime established for the power 

wheelchair expires, medical necessity 

for the power wheelchair ends, the 

contract period ends, or the beneficiary 

relocates outside the CBA. We proposed 

that the contract supplier would not 

receive separate payment for these 

services and would factor the costs of 

these services into their bids. We 

proposed that the contract supplier 

would not be responsible for repairing 

power wheelchairs they did not furnish. 

We proposed that services to repair 

beneficiary-owned equipment furnished 

prior to the start of the contract period 


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would be paid in accordance with the 

standard payment rules at § 414.210(e). 

We sought comments on these 

proposals. The comments and our 

responses are set forth below. 

Comment: Some commenters argued 

that adding a requirement specifying 

that contract suppliers are responsible 

for repairing power wheelchairs they 

furnish will not eliminate problems 

beneficiaries are experiencing related to 

obtaining repairs for beneficiary-owned 

equipment. 

Response: We agree that this 

requirement would not address 

situations where a beneficiary owns a 

power wheelchair in need of repairs that 

they received prior to the start of the 

CBP or prior to moving into the CBA 

where the proposed rule would be in 

effect. It would also not address 

situations where a beneficiary owns a 

power wheelchair in need of repairs that 

they received prior to enrolling in 

Medicare part B. As stated in our 

proposal (79 FR 40294) we proposed 

that a contract supplier would not be 

responsible for repairing power 

wheelchairs they did not furnish. As a 

result, we proposed that services to 

repair beneficiary-owned equipment 

furnished prior to the start of the 

contract period would be paid in 

accordance with the standard payment 

rules at § 414.210(e), which allows any 

Medicare enrolled DME supplier to 

perform this service and receive 

payment. 

We also proposed that in the event 

that a beneficiary relocates from a CBA 

where the rules proposed in this section 

apply to an area where rental cap rules 

apply, that a new period of continuous 

use would begin for the capped rental 

item, enteral nutrition equipment, or 

oxygen equipment as long as the item is 

determined to be medically necessary. 

We believe these rules are necessary to 

safeguard beneficiary access to covered 

items and services and plan to closely 

monitor the impact these rules have on 

beneficiary cost sharing before phasing 

in these rules in more than a limited 

number of CBAs. We sought comments 

on these proposals, did not receive any 

specific comment for these proposals, 

and are therefore, for the reasons we 

discussed previously, we are finalizing 

these proposals. This rule finalizes the 

sections Beneficiary-Owned Equipment 

and Responsibility for Repair of 

Beneficiary-Owned Power Wheelchairs 

furnished under CBPs as noted 

previously in the proposed rule (79 FR 

40294) under the DMEPOS CBP at 42 

CFR 414.409 

We proposed that the CBAs where the 

proposed rules in (79 FR 40294) above 

would be applied would be for MSAs 

with a general population of at least 

250,000 and a Medicare Part B 

enrollment population of at least 20,000 

that are not already included in Round 

1 or 2. Based on 2012 population 

estimates from the Census Bureau and 

2011 Medicare enrollment data, there 

are approximately 80 MSAs that would 

satisfy this criteria. Selecting MSAs not 

already included in Round 1 or 2 would 

allow competitions and rules associated 

with these competitions to begin after 

the final rule would take effect in areas 

that are comparable to existing CBAs. 

We proposed that the boundaries of the 

CBAs would be established in 

accordance with the rules set forth at 

§§ 414.406 and 414.410. We proposed 

that additional CBPs for the items 

identified in sections 1 and 2 above be 

established in ‘‘comparator’’ CBAs 

concurrent with CBPs where the 

proposed rules would be applied. 

Payment for items and services in the 

comparator CBAs would be made in 

accordance with the existing payment 

rules in § 414.408. We proposed that 

these additional comparator CBAs and 

CBPs be established to facilitate our 

analysis of the effect of the payment 

rules proposed in sections 1 and 2 above 

compared to the effect of the existing 

payment rules in § 414.408. We 

proposed that for each CBP where either 

the rules in section 1 or 2 above are 

implemented, a comparator CBA and 

CBP would be established. We proposed 

that the comparator CBAs be selected so 

that they are located in the same state 

as the CBA where the special payment 

rules would apply and are similar to the 

CBAs in which the proposed payment 

rules would be implemented based on a 

combination of factors that could 

include geographic location (region of 

the country), general population, 

beneficiary population, patient mix, and 

utilization of items. We proposed to 

establish the comparator CBAs and 

CBPs to enable us to review the impact 

of the proposed payment rules on 

expenditures, quality, and access to 

items and services in order to determine 

whether to pursue future rulemaking to 

expand the proposed payment rules to 

additional areas and or items. We 

sought comments on this proposal, did 

not receive any specific comment for 

this proposal, and are therefore 

finalizing this proposal. 

We proposed that payment to a 

supplier that elects to be a 

grandfathered supplier of DME 

furnished in CBPs where these special 

payment rules apply is made in 

accordance with § 414.408(a)(1). We 

sought comments on this proposal, did 

not receive any specific comment for 

this proposal, and are therefore 

finalizing this proposal. 

We are finalizing a change to add 

special payment rules at § 414.409 that 

will be phased in. In no more than 12 

CBAs, payment is made on a bundled, 

continuous monthly rental basis for 

standard power wheelchairs and CPAP 

devices. In addition, in no more than 12 

CBAs, payment for power wheelchairs 

is made on a continuous rental basis, for 

power wheelchairs furnished in 

conjunction with competitions that 

begin after January 1, 2015, contract 

suppliers that furnish power 

wheelchairs under contracts awarded 

based on these competitions shall 

continue to repair power wheelchairs 

they furnish following transfer of title to 

the equipment to the beneficiary. The 

responsibility of the contract supplier to 

repair, maintain and service beneficiaryowned power wheelchairs does not 

apply to power wheelchairs that the 

contract supplier did not furnish to the 

beneficiary. For power wheelchairs that 

the contract supplier furnishes during 

the contract period, the responsibility of 

the contract supplier to repair, maintain 

and service the power wheelchair once 

it is owned by the beneficiary continues 

until the reasonable useful lifetime of 

the equipment expires, coverage for the 

power wheelchair ends, or the 

beneficiary relocates outside the CBA 

where the item was furnished. In 

accordance with § 414.408(c), the 

contract supplier may not charge the 

beneficiary or the program for any 

necessary repairs or maintenance and 

servicing of a beneficiary-owned power 

wheelchair it furnished during the 

contract period. 

VII. Scope of Hearing Aid Coverage 

Exclusion 

A. Background 

Section 1862(a)(7) of the Act states 

notwithstanding any other provision of 

title XVIII, no payment may be made 

under part A or part B for any expenses 

incurred for items or services ‘‘where 

such expenses are for . . . hearing aids 

or examinations therefor. . . .’’ This 

policy is codified in the regulation at 42 

CFR 411.15(d), which states that hearing 

aids or examination for the purpose of 

prescribing, fitting, or changing hearing 

aids are excluded from Medicare 

coverage. Historically, CMS has 

periodically addressed the scope of the 

Medicare hearing aid coverage 

exclusion through program instructions 

and national coverage policies or 

determinations. We briefly discuss the 

relevant changes that have occurred 

over time with regard to Medicare 


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coverage and payment of hearing 

devices. 

Cochlear implants (CIs) were the first 

device covered for Medicare payment 

for adult beneficiaries in October 1986, 

when no other hearing device was being 

covered under Medicare, and such 

coverage was supported by the Office of 

Health Technology Assessment’s 

‘‘Public Health Service Assessment of 

Cochlear Implant Devices for the 

Profoundly Hearing Impaired’’, dated 

June 30, 1986 found at https://

archive.org/stream/

cochlearimplantd00feig/

cochlearimplantd00feig_djvu.txt. 

Medicare coverage was restricted to CIs 

that treated patients with post lingual, 

profound, bilateral, sensorineural 

deafness who are stimulable and who 

lack the unaided residual auditory 

ability to detect sound. 

Effective January 1, 2003, we clarified 

that the hearing aid exclusion broadly 

applied to all hearing aids that utilized 

functional air and/or bone conduction 

pathways to facilitate hearing (see 

section 15903, Hearing Aid Exclusion, 

Medicare Carriers Manual, Part 3— 

Claims Process (HCFA-Pub. 14–3), 

which was later moved to section 100, 

Hearing Aids and Cochlear Implants, of 

Chapter 16, of the Medicare Benefit 

Policy Manual, CMS-Pub. 100–02). Any 

device that does not produce at its 

output an electrical signal that directly 

stimulates the auditory nerve is a 

hearing aid for purposes of coverage 

under Medicare. Devices that produce 

air conduction sound into the external 

auditory canal, devices that produce 

sound by mechanically vibrating bone, 

or devices that produce sound by 

vibrating the cochlear fluid through 

stimulation of the round window are 

considered hearing aids and excluded 

from Medicare coverage. 

Effective April 4, 2005, Medicare’s 

national coverage policy for CIs was 

modified through the NCD process (see 

section 65–14 of the Medicare Coverage 

Issues Manual (HCFA-Pub. 6), which 

was later moved to section 50.3, 

Cochlear Implantation, of Chapter 1, 

Part 1 of the Medicare National 

Coverage Determinations Manual (CMSPub. 100–03)). Our findings under the 

NCD, in part, state that ‘‘CMS has 

determined that cochlear implants fall 

within the benefit category of prosthetic 

devices under section 1861(s)(8) of the 

Social Security Act.’’ Medicare is a 

defined benefit program. An item or 

device must not be statutorily excluded 

and fall within a benefit category as a 

prerequisite to Medicare coverage. 

Additional changes, regarding coverage 

criteria, have been made to section 50.3 

over time, however, the NCD decision 

regarding benefit category and Medicare 

coverage for cochlear implantation has 

remained consistent. The NCD states 

that a cochlear implant device is an 

electronic instrument, part of which is 

implanted surgically to stimulate 

auditory nerve fibers, and part of which 

is worn or carried by the individual to 

capture, analyze, and code sound. 

Cochlear implant devices are available 

in single-channel and multi-channel 

models. The purpose of implanting the 

device is to provide awareness and 

identification of sounds and to facilitate 

communication for persons who are 

moderately to profoundly hearing 

impaired. 

The regulation at 42 CFR 419.66 was 

revised to add new requirements, 

effective January 1, 2006, for transitional 

pass-through payments for medical 

devices. The auditory osseointegrated 

implant (AOI) device, referred to as a 

bone anchored hearing aid (BAHA), was 

determined to be a new device category 

according to the new requirements for 

transitional pass-through payment. 

Medicare coverage was also expanded to 

cover AOI and auditory brainstem 

devices payable as prosthetic devices. 

Currently, section 100 of Chapter 16 of 

the Medicare Benefit Policy Manual 

(CMS Pub. 100–02) reads as follows: 

Hearing aids are amplifying devices that 

compensate for impaired hearing. Hearing 

aids include air conduction devices that 

provide acoustic energy to the cochlea via 

stimulation of the tympanic membrane with 

amplified sound. They also include bone 

conduction devices that provide mechanical 

energy to the cochlea via stimulation of the 

scalp with amplified mechanical vibration or 

by direct contact with the tympanic 

membrane or middle ear ossicles. 

Certain devices that produce perception of 

sound by replacing the function of the 

middle ear, cochlea, or auditory nerve are 

payable by Medicare as prosthetic devices. 

These devices are indicated only when 

hearing aids are medically inappropriate or 

cannot be utilized due to congenital 

malformations, chronic disease, severe 

sensorineural hearing loss or surgery. 

The following are considered prosthetic 

devices: 

• Cochlear implants and auditory 

brainstem implants, that is, devices that 

replace the function of cochlear structures or 

auditory nerve and provide electrical energy 

to auditory nerve fibers and other neural 

tissue via implanted electrode arrays. 

• Osseointegrated implants, that is, 

devices implanted in the skull that replace 

the function of the middle ear and provide 

mechanical energy to the cochlea via a 

mechanical transducer. 

B. Current Issues 

We received several benefit category 

determination requests in recent years 

for the consideration of non-implanted, 

bone conduction hearing aid devices for 

single-sided deafness (SSD), as 

prosthetic devices under the Medicare 

benefit. We have received similar 

requests for several other types of 

implanted and non-implanted devices 

as well. In response to these requests, 

we have re-examined the scope of the 

statutory hearing aid exclusion. 

C. Proposed Provisions 

The proposed rule (79 FR 40297) 

stated that after further considering the 

statutory Medicare hearing aid 

exclusion under section 1862(a)(7) of 

the Act, and re-examining the different 

types of non-implanted and implanted 

devices, we proposed to interpret the 

term ‘‘hearing aid’’ to include all types 

of air or bone conduction hearing aid 

devices, whether external, internal, or 

implanted, including, but not limited to, 

middle ear implants, AOI devices, 

dental anchored bone conduction 

devices, and other types of external or 

non-invasive devices that mechanically 

stimulate the cochlea. 

We believed that the hearing aid 

exclusion did not apply to brainstem 

implants and CIs as discussed in the 

proposed rule (79 FR 40297). Therefore, 

we did not propose any changes to our 

current policy about brainstem implants 

and CIs and how such implants fall 

outside of the hearing aid statutory 

exclusion (that is, such devices would 

fall outside the Medicare coverage 

exclusion for hearing aids and remain 

covered subject to the Medicare NCD 

50.3 found at https://www.cms.gov/

Regulations-and-Guidance/Guidance/

Manuals/downloads/ncd103c1_

Part1.pdf). We proposed, however, to 

modify § 411.15(d)(2) to specifically 

note that such devices do not fall within 

the hearing aid exclusion. 

We sought public comment on this 

proposal and received approximately 

2,635 public comments on this 

provision. After consideration of the 

comments received we have decided not 

to finalize our proposal to further 

interpret the hearing aid statutory 

exclusion, but in response to comments, 

this final rule will codify the current 

program instructions found at section 

100 of Chapter 16 of the Medicare 

Benefit Policy Manual (CMS Pub. 100– 

02) noted above. We believe AOIs that 

provide focused stimulation to the 

temporal bone structures, through an 

implant that is physically integrated 

into the bone of the skull, to the cochlea 

are outside the scope of the hearing aid 

exclusion. At the time section 1862(a)(7) 

of the Act was initially established, 

hearing aids consisted of non-implanted 

air and bone conduction devices. AOIs 

did not exist at the time the coverage 


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exclusion was drafted and there are 

clinical distinctions that separate AOIs 

from all non-implanted air and bone 

conduction hearing aids. Air conduction 

and non-osseointegrated bone 

conduction hearing aids have been in 

existence since 1965 and have not been 

covered by Medicare. In accordance 

with section 100 of Chapter 16 of the 

Medicare Benefit Policy Manual (CMS 

Pub. 100–02), we believe the coverage 

exclusion applies to all air conduction 

and non-osseointegrated bone 

conduction hearing aids or 

technological refinements of nonimplanted air and bone conduction 

devices that are not osseointegrated. 

Cochlear devices, brainstem implants, 

and AOIs are invasive devices and are 

significantly different than the hearing 

devices in existence at the time the 

Medicare coverage exclusion for hearing 

aids was enacted. We therefore do not 

consider them to be the hearing aids or 

technological refinements of the hearing 

aids excluded from the program in 1965 

and after 1965. We consider all types of 

air conduction and non-osseointegrated 

bone conduction hearing devices 

utilized today to be technological 

refinements of the devices excluded 

from Medicare coverage; and therefore, 

we consider all types of air conduction 

and non-osseointegrated bone 

conduction hearing devices utilized 

today to be hearing aids excluded from 

coverage under the Medicare program. 

However, we recognize that new 

technology in this area continues to 

emerge that may benefit the Medicare 

population and we will continue to 

examine this issue as more information 

becomes available and new devices are 

introduced. 

The comments and responses are set 

forth below. 

Comment: We received many 

comments relating personal stories on 

the profound difference the AOI has 

made on themselves, friends, and 

relatives who have suffered hearing loss. 

Many people shared tremendous 

improvement in the quality of life the 

AOI has provided for them. 

Response: We appreciate these 

comments. We have reexamined AOIs 

and the statutory exclusion for hearing 

aids. We have come to the conclusion 

that AOIs are not hearing aids because 

of the clinical distinctions that separate 

them from hearing aids excluded from 

coverage under the Medicare program in 

1965. Cochlear devices, brainstem 

implants, and AOIs are invasive devices 

and are significantly different than the 

hearing devices in existence at the time 

the Medicare coverage exclusion for 

hearing aids was enacted. We therefore 

do not consider them to be the hearing 

aids or technological refinements of the 

hearing aids excluded from the program 

in 1965 and after 1965. We consider all 

types of air conduction and nonosseointegrated bone conduction 

hearing devices utilized today to be 

technological refinements of the devices 

excluded from Medicare coverage. 

Therefore, we have modified the 

regulation at § 414.15 to reflect that 

AOIs are outside the scope of the 

hearing aid exclusion. 

Comment: Many commenters stated 

an AOI is a prosthetic device that 

replaces all or part of an internal organ 

and should remain classified as such. 

The commenters stated that the AOI is 

not simply a hearing aid but rather the 

device replaces the function of the ear. 

An AOI device meets the definition of 

a prosthetic device as it requires an 

implantable post which helps by-pass 

an impaired ear canal and/or middle ear 

system to directly stimulate a functional 

sensory nerve via bone conduction. One 

commenter stated the AOI replaces the 

function of the ossicles by (1) converting 

acoustic energy to mechanical energy, 

(2) magnifying that mechanical energy, 

and (3) transmitting that mechanical 

energy to the inner ear, functions a 

hearing aid cannot perform. Another 

commenter added when the implantable 

post is surgically placed by an 

otolaryngologist, the post must 

osseointegrate with the skull and then 

becomes part of the patient’s skull 

anatomy. It will also compensate for the 

loss of the cochlea in a single sided 

deafness (SSD) due to trauma, surgery, 

infection, nerve injury or congenital 

defect. One commenter stated these 

types of hearing loss result from the loss 

of organ function. Therefore, an AOI 

does replace all or part of the internal 

body organ making it a prosthetic. 

Response: The hearing aid statutory 

exclusion under section 1862(a)(7) of 

the Act does not identify a particular 

benefit category. However, we agree that 

the AOI is distinguishable in that it 

functions as a prosthetic device that is 

designed to restore hearing for a limited 

class of individuals with conductive 

hearing loss (CHL), mixed hearing loss, 

or SSD by replacing the function of the 

middle ear and providing mechanical 

energy to the cochlea via a mechanical 

transducer. Therefore, we do not believe 

it is a hearing aid excluded from 

coverage by section 1862(a)(7) of the 

Act. The AOI is functionally and 

clinically distinct from the hearing aids 

excluded from coverage in 1965. In this 

final rule, we are modifying § 411.15 to 

reflect that AOIs are outside the scope 

of the hearing aid exclusion. 

Comment: Many commenters stated 

an AOI is not a hearing aid and does not 

provide traditional aid to hearing. Those 

commenters believe that hearing aids 

are designed to compensate the hearing 

loss by amplifying the incoming sound 

to the ear. By design, hearing aids do 

not replace the function of the ear but 

rather restore hearing loss using the 

existing anatomical parts and organ. 

Several commenters stated air 

conduction hearing aids operate by 

amplifying sound to overcome damaged 

hair cells in the cochlea or inner ear. 

Other commenters provided the 

following differences of an AOI 

compared to a conventional air 

conduction hearing device: (1) The AOI 

is surgically implanted in the patients 

skull where it osseointegrates with the 

bone and becomes part of the patients 

anatomy, (2) The components of the 

AOI function by bypassing the ear canal 

and middle ear stimulating the hearing 

nerve directly through bone conduction 

and (3) The implant replaces the 

function of outer and middle ear. Bone 

conduction hearing aids utilize a tight 

band placed around the user’s head to 

transmit vibrations of sound to the 

bones in the head. One commenter 

stated an AOI is physically and 

functionally distinguishable from a bone 

conduction hearing aid in that they: (1) 

Are never retained by a headband, and 

(2) supply focused stimulation to the 

temporal bone structures through an 

implant that is physically integrated 

into the bone of the skull. Further, 

traditional hearing aids require no 

surgery, may be purchased without a 

physician’s prescription, and are 

removed and placed ‘‘in the drawer’’ by 

the hearing impaired person. In 

addition, traditional hearing aids treat 

presbycusis which is the cumulative 

effect of aging on hearing. One 

commenter stated candidates for the 

AOIs do not have a functioning ear(s) 

and cannot benefit even from the most 

advanced hearing aid. While an AOI 

does provide access to sound to patients 

that would not, in most cases, otherwise 

have that access it is not a hearing aid. 

Several commenters stated a hearing aid 

is just that; it ‘‘aids’’ what residual 

hearing an individual has, it does not 

restore hearing. An AOI restores hearing 

loss in a completely non-functioning 

ear. 

Response: We agree with commenters 

that an AOI is not a hearing aid 

excluded from coverage under the 

Medicare statute for some of the same 

clinical and technological reasons set 

forth by the commenters. Therefore, we 

are modifying § 411.15 in this final rule 

to reflect that AOI’s are outside the 

scope of the hearing aid exclusion. 

Comment: We received many 

comments stating that candidates for 


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AOI devices typically have no other 

reasonable option for hearing assistance 

or restoration and do not get benefit 

from hearing aids. Instead, an AOI is the 

modality of last resort for many of 

patients, CMS’s current coverage 

position provides that AOIs are 

indicated only when hearing aids are 

medically inappropriate or cannot be 

utilized. Additionally, commenters were 

concerned that patients with congenital 

malformations and chronic diseases 

(Treacher Collins, Aural Atresia and 

Microtia) will be left without an 

effective option as they are not 

candidates for traditional hearing aids. 

AOI technology is for a small and very 

special group. AOIs have specific 

indications—for example unilateral 

anacousis (deafness), and particular 

patterns of severe conductive and mixed 

hearing loss. Patients with a conductive 

or mixed hearing loss with a chronic 

draining ear are unable to wear a 

conventional air conduction hearing 

device. The air conduction device 

blocks the ear canal, which exacerbates 

the build-up of infectious material in 

the ear canal. The AOI is remote from 

the ear canal. Therefore, chronic ear 

drainage is often stopped or minimized 

in these patients. 

Response: We have reexamined AOIs 

and the statutory exclusion 

applicability. We have come to the 

conclusion that AOIs are not hearing 

aids given how they are functionally 

and clinically distinct from the hearing 

aids excluded from coverage in 1965., as 

noted in section 100 of Chapter 16 of the 

Medicare Benefit Policy Manual (CMS 

Pub. 100–02). An AOI is an 

osseointegrated device that is implanted 

in the skull that replaces the function of 

the middle ear and provides mechanical 

energy to the cochlea via a mechanical 

transducer. Therefore, we are finalizing 

changes to § 414.15 to reflect that AOIs 

are outside the scope of the hearing aid 

exclusion. 

Comment: Some commenters stated 

that although there are other options for 

treatment of SSD, patients report that 

the sound quality of the AOI is far 

superior to these other treatment 

options for SSD (for example, CROS 

hearing system, TransEar hearing 

device). In addition the use of 

conventional non-osseointegrated bone 

conduction aids may be associated with 

complications including: discomfort 

and breakdown of skin at stimulation 

point; feedback from mechanical 

coupling via a steel headband; poor 

compliance for consistent wear due to 

discomfort, difficulty with fit and 

feedback as well as poor sound quality 

through all of the options that were 

attempted prior to being fit with AOI 

devices. 

Response: We understand there are 

other bone conduction hearing aids that 

may be used instead of the AOI devices 

for some individuals with SSD. In 

addition, as technology continues to 

evolve there will be other new hearing 

aid devices coming onto the market for 

the treatment of SSD. However, nonosseointegrated air and bone conduction 

hearing aids were in use in 1965 when 

the coverage exclusion for hearing aids 

was enacted and have not been covered 

under the program. We believe that 

given how they function, they should 

continue to fall under the hearing aid 

exclusion. However, osseointegrated 

hearing devices were not in use in 1965 

and as commenters have pointed out, 

there are significant clinical and 

technological difference between 

osseointegrated hearing devices and 

non-osseointegrated hearing devices 

reasons. 

Comment: A few commenters stated if 

the fiscal impact on Medicare is so 

insignificant why would you deny 

thousands of men, women, children and 

infants the ability to hear? 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

the § 414.15 to further specify the scope 

of the hearing aid exclusion. 

Comment: We received many 

comments stating without Medicare 

coverage patients who use AOIs would 

otherwise benefit greatly in terms of 

quality of life, productivity, engagement 

in their community’s life, etc. will not 

have the opportunity. Several 

commenters stated denial of coverage of 

these AOIs will affect not only hearing 

and communication ability in older 

adults but because CMS also provides 

benefits under Social Security Disability 

Insurance (SSDI) program, denial of 

coverage also will prevent the normal 

development of language and speech 

ability in young children. It would cost 

much more not having the AOI option 

than to have the relatively inexpensive 

surgery that would help them for the 

rest of their lives. 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

the § 414.15 to further specify the scope 

of the hearing aid exclusion. 

Comment: Some commenters believe 

most private insurers follow CMS 

policies as they design their own 

coverage which will inevitably lead to 

the loss of this very valuable technology 

for everyone. Others stated, not covering 

this procedure will mean many 

thousands of people with this condition 

will forego treatment. A great many 

people benefit from an AOI and 

otherwise will not be able to afford it if 

insurance no longer covered the device. 

Another commenter stated private third 

party payers would eventually eliminate 

coverage for AOIs, affecting both 

children and adults, as these payers’ 

looks to Medicare for coverage 

guidelines. 

Response: Coverage by private 

insurers is outside the scope of this 

rulemaking. However, we have 

reexamined AOIs and the statutory 

exclusion applicability. We have come 

to the conclusion that AOIs are not 

hearing aids and therefore, have 

modified the final regulation to specify 

that AOIs are outside the scope of the 

hearing aid exclusion. 

Comment: Several commenters stated 

that AOIs have been in use for over 30 

years and have been shown to provide 

significant, cost-effective benefit for 

recipients. There is a large body of 

published literature to support the use 

of this technology for appropriate 

indications. 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

§ 414.15 to further specify the scope of 

the hearing aid exclusion. 

Comment: One commenter stated 

given the recent research on increased 

presence of cognitive decline in 

individuals with hearing loss, one 

would think that the CMS would be 

looking for ways to improve access to 

sound for our Medicare and Medicaid 

patients, thereby decreasing the overall 

costs of managing dementia, not for 

ways to make that situation even worse. 

Hearing allows people to stay connected 

to people; it increases their earning 

potential thus increasing the tax base of 

our society. In the retired population, 

good access to hearing keeps people 

engaged in their community, 

volunteering, helping to raise 

grandchildren, and in general 

participating in life. As we all know the 

more connected and engaged in society 

and life around us, the lower financial 

burden we present to society. 

Response: We appreciate the 

comments. However, Congress excluded 

hearing aids from the Medicare program 

in section 1862(a)(7) of the Act. We have 

reexamined this issue and the statutory 

exclusion applicability. We have come 

to the conclusion that AOIs are not 

hearing aids and therefore, have 

modified § 414.15 to specify that AOIs 


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are outside the scope of the hearing aid 

exclusion. 

Comment: Other commenters stated 

AOIs restore a sense of safety to 

individuals who have SSD as the 

implant allows them to hear sounds on 

the dead ear. In the SSD application, a 

patient must have an unaidable ear 

(meaning the hearing loss is so great or 

their ability to understand speech is so 

poor that use of a hearing aid is not 

possible as a hearing aid would not 

correct that degree of hearing loss). In 

these cases, the AOI can be implanted 

on the bad ear and allow patients to 

have awareness of the sounds on the 

dead ear because the sound is delivered 

via bone conduction to the good ear 

which can process the speech signal. In 

unilateral hearing losses (such as 

described above), individuals 

experience difficulty localizing sounds, 

an inability to hear sounds immediately 

to the side with hearing loss and they 

also experience difficulty understanding 

in background noise. The recovery of 

sound on the dead ear can provide a 

sense of stability and safety as they no 

longer have to work about people 

sneaking up on the dead side. 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

§ 414.15 to further specify the scope of 

the hearing aid exclusion. 

Comment: Some commenters stated 

there was no rationale provided 

articulating reasoning or new evidence 

that a change in Medicare policy, after 

8 years of coverage, is necessary due to 

law or for the benefit of Medicare 

patients was necessary. Another 

commenter stated AOIs function the 

same way they did in 2006 when CMS 

correctly recognized them as 

prosthetics. One commenter stated that 

the decision in 2005 that AOIs replace 

the function of the middle ear and are 

prostheses was made based on an 

extensive record. In contrast, the 

proposed rule fails to cite any evidence 

on which CMS now contends that its 

position has reversed. There are no 

studies or other data mentioned, no 

professional standards are cited, nor is 

there any description of the content of 

the benefit category determination 

requests that are mentioned. Since CMS 

has not disclosed the basic clinical or 

legal information underlying the 

proposed reversal of its benefit policy 

and its interpretation of Section 

1862(a)(7), CMS should defer any 

action. 

Response: As discussed in the 

proposed rule, CMS has received several 

new benefit category determinations 

that initiated a new review of devices 

that are considered hearing aids. 

However, in light of the comments and 

upon further examination, we have 

decided not to change the policy in 

section 100 of Chapter 16 of the 

Medicare Benefit Policy Manual (CMS 

Pub. 100–02), that AOIs are not hearing 

aids and therefore, are modifying 

§ 414.15 to reflect that AOIs are outside 

the scope of the hearing aid exclusion. 

Comment: One commenter provided 

their interpretation of the Congressional 

intent and scope of the hearing aid 

exclusion as meant to exclude routine 

items and services, and not medical 

treatment for disability created by 

disease, trauma, infection, or congenital 

deformity. They provided a comparison 

of various Court decisions on the 

eyeglass exclusion. Another commenter 

stated while Medicare does not cover 

eye glasses and/or contact lenses, they 

do cover intraocular lenses because the 

patient’s sensory organ cannot benefit 

from nonsurgical treatment-the same 

logic should hold for implantable 

hearing devices, for patients who are not 

able to benefit from amplification. 

Response: The eyeglass exclusion is 

not an appropriate comparison to the 

hearing aid exclusion. Congress 

amended the Social Security Act to 

make allowances for eyeglasses and 

intraocular lenses by amendments to 

section 1862(a)(7) of the Act. There has 

not been a similar allowance made for 

hearing aids. As noted above, upon 

consideration of the comments and for 

the reasons outlined, we are modifying 

the final regulation, as discussed above. 

Comment: Several commenters 

discussed the National Coverage 

Determination for CIs stating that CMS 

states in the NCD CIs are prosthetic 

devices primarily because a CI replaces 

the function of the cochlear by creating 

an electrical output that stimulates the 

auditory nerve as opposed to the 

mechanical output of a bone conduction 

device. There is no scientific, clinical, 

or legal rational for distinguishing the 

devices based on the type of energy 

output. Nor does the agency provide any 

medical or other justification as to why 

the replacement of the function of the 

cochlea meets the requirement of 

replacing an organ function, but 

replacing the function of the middle ear 

does not. Another commenter stated in 

both cases, the device in question 

bypasses an organ and replaces its 

function, in one case; it is part of the 

cochlea, in the other, the ossicles and/ 

or auditory canal. Since in both cases a 

device replaces the function of a 

component of the ear, there is no basis 

on which to classify one as a hearing aid 

and the other as a prosthetic. 

Response: A National Coverage 

Determination (NCD) is provided upon 

request or internally generated, and is 

vetted through a thorough scientific and 

medical review. The information 

provided for NCD 50.3 was provided 

specifically for CIs. It is important to 

understand that an item or device must 

not be statutorily excluded and fall 

within a benefit category as a 

prerequisite to Medicare coverage. We 

believe that AOIs are not ‘‘hearing aids’’ 

given that such devices do more than 

‘‘aid’’ in hearing and instead replace the 

function of an internal body organ (i.e., 

a part of the ear). Therefore, we’ve 

concluded that AOIs are not hearing 

aids and do not fall within the statutory 

exclusion. 

Comment: One commenter stated a 

policy that deems which technology is 

a Medicare benefit based on whether 

that technology replaces hearing by a 

particular means (electrical versus 

mechanical energy), or whether it has a 

surgically implanted component or not 

(osseointegrated versus a dental 

anchored device), or whether the 

deafness is bilateral or unilateral, are 

arbitrary distinctions without clinical 

justification. Medicare policy should 

focus on whether attributes of a device 

replace the function of all or part of the 

ear to restore hearing, not the means by 

which it is accomplishes this task. 

Response: We disagree that our policy 

creates an arbitrary distinction. The 

policy is based on whether a device 

qualifies as a hearing aid as defined in 

section 100 of Chapter 16 of the 

Medicare Benefit Policy Manual (CMS 

Pub. 100–02), or whether a device 

functions in such a way that it falls 

outside this definition. 

Comment: A few commenters stated 

withdrawing coverage of these devices 

will preclude coverage and designing 

new innovations that improve SSD 

treatment and are more cost effective 

than existing alternatives. One 

commenter explained its concern that 

the proposal will stifle innovation and 

advances in auditory prosthetics and 

will send a negative and damaging 

message to the medical technology 

development community as a whole— 

that Medicare coverage is unpredictable, 

even when there is long established 

policy in favor of coverage. Such 

unreliability makes it impossible for 

investors to make reasoned decisions 

about future investments and will lead 

to the freezing of meaningful 

innovation. 

Response: We do not agree. We 

believe new innovations will continue 

to be pursued without Medicare 

coverage as other payers would 

continue to provide AOIs. However, we 


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have reexamined AOIs and the 

applicability of the hearing aid statutory 

exclusion. We have come to the 

conclusion that AOIs are not hearing 

aids and therefore, have modified the 

final regulation to specify that AOIs are 

outside the scope of the hearing aid 

exclusion. 

Comment: Some commenters equated 

removing coverage of the AOI as to 

denying coverage for glasses, a 

prosthetic leg, and colostomy. 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

§ 414.15 to further specify the scope of 

the hearing aid exclusion. 

Comment: Several commenters 

provided their definition of a hearing 

aid. Several commenters stated the 

definition should include ‘‘wearable’’ 

and another commenter stated it should 

include ‘‘amplify sound’’ and another 

stated it should be ‘‘air conduction 

devices.’’ Commenters provided 

additional criteria as well, such as there 

must be a medical evaluation and 

physician prescription. In addition 

several commenters advocated for a 

plain and ordinary meaning of hearing 

aid provided in the dictionary. 

Response: We disagree with the 

commenters’ definition of a hearing aid; 

as stated in the proposed rule, in section 

100 of Chapter 16 of the Medicare 

Benefit Policy Manual (CMS Pub. 100– 

02) Medicare defines hearing aids as 

‘‘amplifying devices that compensate for 

impaired hearing.’’ Hearing aids include 

air conduction devices that provide 

acoustic energy to the cochlea via 

stimulation of the tympanic membrane 

with amplified sound. They also 

include bone conduction devices that 

provide mechanical energy to the 

cochlea via stimulation of the scalp with 

amplified mechanical vibration or by 

direct contact with the tympanic 

membrane or middle ear ossicles.’’ We 

believe the Medicare definition captures 

the provisions we are finalizing and 

accurately defines a hearing aid. Upon 

re-examining the Medicare hearing aid 

exclusion provision at section 1862(a)(7) 

of the Act, and its applicability to AOIs, 

we have determined that AOIs are not 

hearing aids because they are 

functionally and clinically distinct from 

the hearing aids excluded from coverage 

in 1965. They are implants that replace 

the function of the middle ear and are 

physically integrated into the temporal 

bone structure of the skull to provide 

mechanical stimulation through the 

temporal bone to the cochlea. Therefore, 

we have modified the final regulation to 

specify that AOIs are outside the scope 

of the hearing aid exclusion. 

Comment: One commenter stated 

according to the Food and Drug 

Administration (FDA) definition of a 

hearing aid and state hearing aid 

dispensing laws, the AOI is in fact not 

a hearing aid because it is not 

removable, is not available to the 

general public for purchase and the 

primary purpose is not to amplify 

sound. Another commenter believed 

CMS should recognize the FDA’s 

classification system as these devices 

are Class II whereas hearing aids are 

Class I devices. 

Response: Medicare does not adhere 

to the same definition as the FDA 

regarding hearing aids. For the reasons 

state above, we have come to the 

conclusion that AOIs are not hearing 

aids in the context of section 1862(a)(7) 

of the Act and the Medicare program 

and coverage exclusion and therefore 

have modified our final rule to reflect 

that AOIs are outside the scope of the 

hearing aid exclusion. 

Comment: A few commenters stated 

neither the statute nor its legislative 

authority support the broad 

interpretation CMS seeks in order to 

prohibit AOIs under the hearing aid 

exclusion. After review of the 

Congressional Record and hearings held 

by Congress before enactment of this 

provision clearly shows Congress’ intent 

was to exclude ‘‘routine care’’ from the 

Medicare program. The majority of the 

technologies that would be considered 

hearing aids under this proposed rule 

were not available in 1965. In particular, 

AOIs could not have been contemplated 

by Congress at the time the hearing aid 

exclusion was enacted, because they did 

not exist. At that time patients could 

self-select available hearing aids, no 

physician order was required, and 

patients where accustomed to paying 

out of pocket for these items. 

Response: We believe we understand 

the Congressional intent in 1965 

regarding the hearing aid exclusion. We 

believe air and bone conduction devices 

were available and commonly used 

when the exclusion was established and 

therefore are excluded. However, since 

AOIs were not in existence and are 

clinically and functionally distinct from 

bone conduction hearing aids in 1965, 

we do not believe the exclusion applies. 

Different refinements of bone 

conduction hearing aid technologies 

have been introduced over the years that 

represent variations of non-implanted 

devices that send mechanical energy to 

the cochlea through bone without the 

need to surgically implant a transducer 

into the patient’s skull. These 

implanted, osseointegrated devices were 

not part of the general technology and 

category of devices excluded from 

coverage from 1965 to the present. We 

have therefore come to the conclusion 

that AOIs are not hearing aids and have 

modified the final regulation to specify 

that AOIs are outside the scope of the 

hearing aid exclusion. 

Comment: One commenter stated the 

AOI has a record of demonstrated cost 

effectiveness in studies conducted 

around the world. One example 

includes a significant reduction in the 

number of medical visits and prescribed 

medications to address repeated 

infections for individuals with chronic 

suppurative otitis media following AOI 

surgery. Another commenter stated for 

patients that have failed previous 

surgical attempts at hearing 

reconstruction using conventional 

techniques, it makes better sense for 

Medicare to provide AOIs for these 

patients in lieu of repeated, costly 

traditional surgical attempts without an 

AOI. 

Response: CMS is bound by the 

statutory coverage rules and to the 

extent an items falls within a statutory 

exclusion, it cannot be covered under 

Medicare. Therefore, we are modifying 

§ 414.15 to further specify the scope of 

the hearing aid exclusion. 

Comment: A few commenters stated 

current users on Medicare who are 

benefiting from an AOI will be unable 

to maintain and upgrade their 

equipment. Several commenters stated 

discontinuing coverage for the 

numerous existing recipients of AOIs is 

unethical and discriminatory. These 

individuals have existing AOIs that 

require maintenance and fully 

functioning systems in order to hear and 

communicate. By discontinuing 

coverage, the medical community is 

forced to unjustly discontinue care of 

these individuals unless they can 

financially assume the cost of their 

implant. This is an unreasonable 

assumption, as many Medicare 

recipients are no longer working and 

living on a fixed income. 

Response: As we stated above, we 

have determined that AOIs are outside 

the scope of the hearing aid exclusion. 

So Medicare beneficiaries with existing 

AOIs will continue to receive upgrades 

and maintenance of these devices. 

Comment: One commenter stated that 

the patient’s medical condition should 

be the primary consideration for 

providing coverage, not the technology. 

Many commenters stated there are 

currently very specific patient selection 

criteria for AOIs. 

Response: We disagree; while the 

patient’s medical condition is 

important, we do not believe it should 


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be the primary consideration for 

providing coverage of a particular 

device. Medicare is a defined benefit 

program. It is important to understand 

that an item or device must not be 

statutorily excluded and fall within a 

benefit category as a prerequisite to 

Medicare coverage. We must analyze 

whether the device is a hearing aid as 

they are statutorily excluded from 

coverage. We have reexamined AOIs 

and the statutory exclusion 

applicability. We have come to the 

conclusion that AOIs are not hearing 

aids and therefore, have modified the 

final regulation to specify that AOIs are 

outside the scope of the hearing aid 

exclusion. 

Comment: One commenter stated 

hearing aids cost on average $1,675 per 

device. AOIs including surgery cost are 

in the range of $12,000 and that cost is 

moderated by the significant availability 

of insurance coverage. This cost would 

likely double in the absence of 

insurance coverage, which would 

clearly make AOIs unaffordable for 

many people. Another commenter 

stated CMS is undermining the goals of 

the Medicare program by decreasing 

access and affordability to Medicare 

patients. 

Response: We understand, however, 

Medicare is a defined benefit program 

with certain coverage requirements. We 

have reexamined AOIs and the statutory 

exclusion applicability. We have come 

to the conclusion that AOIs are not 

hearing aids and therefore, have 

modified the final regulation to specify 

that AOIs are outside the scope of the 

hearing aid exclusion. 

Comment: Several commenters urged 

CMS to continue to provide coverage of 

CIs, brain stem implants, and AOIs, to 

extend coverage to dental anchored 

bone conduction devices since these 

devices also meet the definite of covered 

prosthetics and are not hearing aids, and 

to provide coverage to other clinically 

proven bone conduction hearing device 

technologies with restrictive principles 

applied. 

Response: We will continue to cover 

AOI devices that replace the function of 

the middle ear and provide mechanical 

energy directly to the cochlea, because 

we do not consider them to be hearing 

aids and excluded from coverage. 

Comment: One commenter stated over 

the past 8 years CMS has established a 

precedent for providing coverage of 

AOIs for Medicare beneficiaries, upon 

which Medicare beneficiaries who have 

received these technologies and health 

care providers who establish patient 

treatment plans have relied. 

Response: While CMS had established 

a precedent for coverage of AOIs, we 

reexamined AOIs and the statutory 

exclusion applicability. CMS received 

requests for informal benefit category 

determinations from manufacturers of 

certain non-implanted hearing devices. 

We elected to address the issue of the 

applicability of the Medicare coverage 

exclusion for hearing aids to all hearing 

devices in light of these requests and 

initially determined and proposed (79 

FR 40296) that all external, internal, and 

implanted air conduction and bone 

conduction hearing devices were subject 

to the coverage exclusion for hearing 

aids. Based on our review and in light 

of comments received on the proposed 

rule, for the reasons stated above, CMS 

has decided that AOIs are not hearing 

aids subject to the statutory exclusion. 

Comment: One commenter opposed 

the classification of middle ear implants 

as a hearing aid, stating these devices do 

not meet the definition of a hearing aid 

and do bypass or supersede a nonfunctioning organ in the auditory 

pathway. In addition, this commenter 

stated CMS is over-reaching its 

authority in including implantable bone 

conduction hearing aids in this 

definition. This commenter 

recommended seeking input from the 

medical and scientific community 

convening a public meeting to discuss 

the definitions at stake in this rule. 

Response: For the reasons stated 

above, CMS has decided to continue 

covering AOIs because we have decided 

they are not hearing aids subject to the 

statutory exclusion. 

Comment: One commenter felt the 

current proposal would reverse the 2005 

NCD. 

Response: The proposed rule (79 FR 

40297) would not reverse the NCD. As 

we stated in the proposed rule, ‘‘we 

continue to believe that the hearing aid 

exclusion does not apply to brain stem 

implants and CIs because these devices 

directly stimulate the auditory nerve, 

replacing the function of the inner ear 

rather than aiding the conduction of 

sound as hearing aids do.’’ Therefore, 

we did not propose any changes to our 

current policy about brain stem 

implants and CIs and how such 

implants fall outside of the hearing aid 

statutory exclusion. 

Comment: Several commenters agreed 

with the decision CMS made in 2005 by 

providing coverage for AOIs as 

prosthetics and not hearing aids. 

Response: We agree the decision in 

2005 to provide coverage for AOIs was 

correct. We believe AOIs are not hearing 

aids since they are functionally and 

clinically distinct from the hearing aids 

excluded from coverage in 1965. 

Therefore, this final rule will codify the 

current program instructions found at 

section 100 of Chapter 16 of the 

Medicare Benefit Policy Manual (CMS 

Pub. 100–02). 

Comment: One commenter stated the 

statute at section1861(s)(8), regulations 

at 42 CFR 414.202, and program 

manuals in the Medicare Benefit Policy 

Manual, Ch. 15, 120 set out a 

straightforward test for defining a 

covered prosthetic device which have 

not been changed. 

Response: We have reexamined AOIs 

and the statutory exclusion 

applicability. We have come to the 

conclusion that AOIs are not hearing 

aids and therefore, have modified the 

final regulation to specify that AOIs are 

outside the scope of the hearing aid 

exclusion. 

After consideration of the comments 

received we have decided not to finalize 

§ 411.15, as proposed. In response to 

comments, this final rule will codify the 

policy in the current program 

instructions found at section 100 of 

Chapter 16 of the Medicare Benefit 

Policy Manual (CMS Pub. 100–02) noted 

above. 

VIII. Definition of Minimal SelfAdjustment of Orthotics Under 

Competitive Bidding 

A. Background 

Section 1847(a)(1)(A) of the Act 

mandates the implementation of CBPs 

throughout the United States for 

awarding contracts for furnishing 

competitively priced items and services, 

including OTS orthotics described in 

section 1847(a)(2)(C) of the Act (leg, 

arm, back or neck braces described in 

section 1861(s)(9) of the Act for which 

payment would otherwise be made 

under section 1834(h)) which require 

minimal self-adjustment for appropriate 

use and do not require expertise in 

trimming, bending, molding, 

assembling, or customizing to fit the 

individual. The regulation at 42 CFR 

414.402 currently defines ‘‘minimal selfadjustment’’ as ‘‘an adjustment that the 

beneficiary, caretaker for the 

beneficiary, or supplier of the device 

can perform and does not require the 

services of a certified orthotist (that is, 

an individual who is certified by either 

the American Board for Certification in 

Orthotics and Prosthetics, Inc., or the 

Board for Orthotist/Prosthetist 

Certification) or an individual who has 

specialized training.’’ This current 

definition was proposed in the 71 FR 

25669 (May 1, 2006) proposed rule but 

did not include the term ‘‘individual 

with specialized training.’’ The 

definition was finalized in the 72 FR 

18022 (April 10, 2007) Final Rule with 

the term ‘‘individual with specialized 


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training’’ added after receiving 

comments that disagreed with the May 

2006 definition and pointed out that 

occupational therapists, physical 

therapists, and physicians are licensed 

and trained to provide orthotics. 

B. Current Issues 

Since adoption of the minimal selfadjustment definition there has been 

some concerns raised by industry and 

other stakeholders regarding who is 

considered an individual with 

specialized training. We have had many 

inquiries and comments that this term is 

too ambiguous and left open for 

interpretation. In addition, questions 

were raised regarding when it is 

appropriate for a supplier to bill for a 

prefabricated orthotic as having been 

custom fitted versus one furnished OTS. 

In order to address this specific 

question, the DME MACs issued a 

policy article on March 27, 2014, which 

details what custom fitting of an 

orthotic involves and indicating that 

furnishing custom fitted orthotics 

‘‘requires the expertise of a certified 

orthotist or an individual who has 

equivalent specialized training in the 

provision of orthotics such as a 

physician, treating practitioner, an 

occupational therapist, or physical 

therapist in compliance with all 

applicable Federal and State licensure 

and regulatory requirements.’’ The 

DMEPOS quality standards have been 

updated to reflect this requirement and 

we decided to revise the definition of 

minimal self-adjustment in the 

regulation to address this issue as well. 

In order to identify OTS orthotics for 

the purpose of implementing CBPs for 

these items and services in accordance 

with the statute, we need a clearer 

distinction between OTS orthotics and 

those that require more than minimal 

self-adjustment and expertise in custom 

fitting. In doing so, we believed it was 

essential to identify the credentials and 

training a supplier needs to have in 

order to be considered a supplier with 

expertise in custom fitting; therefore, we 

believed the term ‘‘individual with 

specialized training’’ must be clarified 

in regulations as well as in contractor 

policies and DMEPOS quality standards. 

In addition, we believed that suppliers 

who are not certified orthotists should 

not be allowed to furnish custom fitted 

orthotics unless they have specialized 

training equivalent to a certified 

orthotist for the provision of custom 

fitted orthotic devices. We believed that 

these suppliers must satisfy 

requirements concerning higher 

education, continuing education 

requirements, licensing, and 

certification/registration requirements 

so that they meet a minimum 

professional skill level in order to 

ensure appropriate care and safety for 

Medicare beneficiaries. 

C. Summary of the Proposed Provisions 

and Responses to Comments on the 

Definition of Minimal Self-Adjustment 

of Orthotics Under Competitive Bidding 

For reasons discussed above, we 

proposed that physicians, treating 

practitioners, occupational therapists, 

and physical therapists are considered 

‘‘individuals with specialized training’’ 

that possess training equivalent to a 

certified orthotist for the provision of 

custom fitted orthotic devices through 

their individual degree programs and 

continuing education requirements. We 

proposed these types of practitioners 

because we believe physicians, treating 

practitioners, occupational therapists, 

and physical therapists possess 

equivalent or higher educational 

degrees, continuing education 

requirements, licensing, and 

certification and/or registration 

requirements. Each of these 

professionals has undergone medical 

training in various courses such as 

kinesiology and anatomy. 

Specifically, we proposed to update 

the definition of minimal selfadjustment in § 414.402 to recognize as 

an individual with specialized training: 

a physician defined in section 1861(r) of 

the Act, a treating practitioner defined 

at section 1861(aa)(5) (physician 

assistant, nurse practitioner, or clinical 

nurse specialist), an occupational 

therapist defined at 42 CFR 484.4, or 

physical therapist defined at 42 CFR 

484.4, who is in compliance with all 

applicable Federal and State licensure 

and regulatory requirements. 

At this time, we have decided not to 

finalize any changes to the definition of 

minimal self-adjustment in § 414.402 to 

recognize as an individual with 

specialized training. We may address 

this provision in future rulemaking. 

IX. Revision To Change of Ownership 

Rules To Allow Contract Suppliers To 

Sell Specific Lines of Business 

A. Background 

Section 1847(a) of the Act, as 

amended by section 302(b)(1) of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173), requires 

the Secretary to establish and 

implement competitive bidding 

programs (CBPs) in competitive bidding 

area (CBAs) throughout the United 

States for contract award purposes for 

the furnishing of certain competitively 

priced DMEPOS items and services. The 

programs mandated by section 1847(a) 

of the Act are collectively referred to as 

the ‘‘Medicare DMEPOS Competitive 

Bidding Program.’’ The 2007 DMEPOS 

competitive bidding final rule (Medicare 

Program; Competitive Acquisition for 

Certain DMEPOS and Other Issues 

published in the Federal Register on 

April 10, 2007 (71 FR 17992)), required 

CBPs for certain Medicare Part B 

covered items of DMEPOS throughout 

the United States. The CBP, which was 

phased in over several years, utilizes 

bids submitted by qualified suppliers to 

establish applicable payment amounts 

under Medicare Part B for certain 

DMEPOS items for beneficiaries 

receiving services in designated CBAs. 

CMS awards contracts to those 

suppliers who meet all of the 

competitive bidding requirements and 

whose composite bid amounts fall at or 

below the pivotal bid (the bid at which 

the capacity provided by qualified 

suppliers meets the demand for the 

item). These qualified suppliers will be 

offered a competitive bidding contract 

for that PC, provided there are a 

sufficient number of qualified suppliers 

(there must be at a minimum of 2) to 

serve the area. Contracts are awarded to 

multiple suppliers for each PC in each 

CBA and will be re-competed at least 

once every 3 years. 

CMS specifies the duration of the 

contracts awarded to each contract 

supplier in the Request for Bid 

Instructions. We also conduct extensive 

bidder education where we inform 

bidders of the requirements and 

obligations of contract suppliers. Each 

winning supplier is awarded a single 

contract that includes all winning bids 

for all applicable CBAs and PCs. A 

competitive bidding contract cannot be 

subdivided. For example, if a contract 

supplier breaches its contract, the entire 

contract is subject to termination. In the 

Physician Fee Schedule final rule 

published on November 29, 2010, we 

stated that ‘‘once a supplier’s contract is 

terminated for a particular round due to 

breach of contract under the DMEPOS 

CBP, the contract supplier is no longer 

a DMEPOS contract supplier for any 

DMEPOS CBP PC for which it was 

awarded under that contract. This 

termination applies to all areas and PCs 

because there is only one contract that 

encompasses all CBAs and PCs for 

which the supplier was awarded a 

contract.’’ (75 FR 73578) 

A competitive bidding contract 

cannot be sold. However, CMS may 

permit the transfer of a contract to an 

entity that merges with or acquires a 

competitive bidding contract supplier if 

the new owner assumes all rights, 

obligations, and liabilities of the 


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competitive bidding contract pursuant 

to regulations at 42 CFR 414.422(d). 

For the transfer of a contract to be 

considered, the Change of Ownership 

(CHOW) must include the assumption 

of the entire contract, including all 

CBAs and PCs awarded under the 

contract. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Revision to Change of Ownership Rules 

To Allow Contract Suppliers To Sell 

Specific Lines of Business 

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 

DMEPOS CBP. We received 1 public 

comment on this proposal from a 

manufacturer and supplier. Comments 

related to the paperwork burden are 

addressed in the ‘‘Collection of 

Information Requirements’’ section in 

this final rule. Comments related to the 

impact analysis are addressed in the 

‘‘Economic Analyses’’ section in this 

final rule. 

Specifically, we proposed (79 FR 

40298) to revise § 414.422(d) to permit 

transfer of part of a competitive bidding 

contract under specific circumstances. 

We believe requiring a transfer of the 

entire contract to a successor entity in 

all circumstances may be overly 

restrictive, and may be preventing 

routine merger and acquisition activity. 

To maintain integrity of the bidding 

process we award one contract that 

includes all the CBA/PCs combinations 

for which the supplier qualifies and 

accepts as a contract supplier. We 

proposed to establish an exception to 

the prohibition against transferring part 

of a contract by allowing a contract 

supplier to sell a distinct company (for 

example, an affiliate, subsidiary, sole 

proprietor, corporation, or partnership) 

which furnishes one or more specific 

PCs or serves one or more specific CBAs 

and transfer the portion of the contract 

initially serviced by the distinct 

company, including the PC(s), CBA(s), 

and location(s), to a new qualified 

successor entity who meets all 

competitive bidding requirements (that 

is, financial standards, licensing, and 

accreditation) (79 FR 40299). The 

exception would not apply to existing 

contracts but would apply to contracts 

issued in all future rounds of the 

program, starting with the Round 2 

Recompete. As required in § 414.422(d), 

we also proposed that a contract 

supplier that wants to sell a distinct 

company which furnishes one or more 

specific PCs or serves one or more 

specific CBAs would be required to 

notify CMS 60 days before the 

anticipated date of a change of 

ownership. If documentation is required 

to determine if a successor entity is 

qualified that documentation must be 

submitted within 30 days of anticipated 

change of ownership, pursuant to 

§ 414.422(d)(2)(ii). We proposed that 

CMS would then modify the contract of 

the original contract supplier by 

removing the affected PC(s), CBA(s) and 

locations from the original contract. For 

CMS to approve the transfer, we 

proposed that several conditions would 

have to be met. First, we proposed that 

every CBA, PC, and location of the 

company being sold must be transferred 

to the new owner. Second, we proposed 

that all CBAs and PC’s in the original 

contract that are not explicitly 

transferred by CMS must remain 

unchanged in that original contract for 

the duration of the contract period 

unless transferred by CMS pursuant to 

a subsequent CHOW. Third, we 

proposed that all requirements in 42 

CFR 414.422 (d)(2) must be met. Fourth, 

we proposed that the sale of the 

company must include all of the 

company’s assets associated with the 

CBA and/or PC(s). Finally, we proposed 

that CMS must determine that 

transferring part of the original contract 

will not result in disruption of service 

or harm to beneficiaries. No transfer 

would be permitted for purposes of this 

program if we determine that the new 

supplier does not meet the competitive 

bidding requirements (such as financial 

requirements) and does not possess all 

applicable licenses and accreditation for 

the product(s). In order for the transfer 

to occur, the contract supplier and 

successor entity must enter into a 

novation agreement with CMS and the 

successor entity must accept all rights, 

responsibilities and liabilities under the 

competitive bidding contract. Part of a 

novation agreement requires successor 

entity to ‘‘seamlessly continue to service 

beneficiaries.’’ We believe that these 

proposed conditions are necessary for 

proper administration of the program, to 

ensure that payments are made correctly 

and also to ensure continued contract 

accountability and viability along with 

continuity of service and access to 

beneficiaries. We specifically invited 

comments on whether more or different 

conditions would be appropriate. 

We proposed to update the current 

CHOW regulation at § 414.422(d) to 

clarify the language to make it easier to 

comprehend. The proposed changes 

reformat the regulation so that the 

requirements applicable to successor 

entities and new entities are listed 

separately. These proposed changes to 

the regulation are technical, and not 

substantive in nature. CMS sought 

comments on all changes proposed for 

§ 414.422. The comment and our 

responses are set forth below. 

Comment: One commenter 

recommended that CMS implement 

financial penalties for suppliers who 

sell their contracts along with selling 

their organizations prior to providing 

the product/service at the contracted 

payment rate, and/or remove an entity’s 

bid from calculation of the SPA if they 

have failed to supply the awarded 

contract items for a period of time prior 

to re-sale. The commenters also believed 

that bids by suppliers who have no 

intention of providing services to 

Medicare beneficiaries should not be 

given the same weight as those of 

reputable suppliers in the community. 

Response: CMS does not agree with 

the suggestions raised by this 

commenter. CMS cannot require a 

contract supplier to furnish a certain 

amount of competitive bid items. 

However, contract suppliers must be 

ready, available and willing to furnish 

contracted competitive bid items 

starting on day one of implementation 

to any beneficiary within a CBA. A 

contract supplier is not permitted to sell 

just its competitive bidding contract. 

CMS ensures that the successor entity 

(1) assumes all rights, obligations, and 

liabilities of the entire competitive 

bidding contract, (2) meets all 

requirements applicable to a contract 

supplier, and (3) is acquiring the assets 

of the existing supplier. In addition, the 

competitive bidding contract 

specifically states that CMS does not 

guarantee a minimum amount of 

business. In response to the comment on 

the recalculation of the single payment 

amount (SPA), CMS carefully screens 

and evaluates bids to ensure that they 

are bona fide (rational and feasible) 

before determining the single payment 

amounts and offering contracts. Since 

only bona fide bids from qualified 

suppliers are included in the array of 

bids used to set prices, recalculating 

payment amounts based on contract 

rejections would not improve the 

validity of the single payment amounts. 

Also, the SPAs are set at the time of 

contract award and cannot be changed. 

It would not be possible for CMS to recalculate the SPAs each time a contract 

supplier goes through a change of 

ownership. Contract offers include the 

SPAs applicable throughout the 

duration of the contract period for each 

HCPCS code in each CBA. Therefore, it 

is not possible for CMS to re-compute 

the SPAs whenever there is a change in 

contract suppliers as this would require 

continued re-contracting. 


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Therefore, for the reasons CMS stated 

above, CMS is finalizing the proposed 

changes to § 414.422(d) of the regulation 

and making one additional technical 

change to replace certain terms with ‘‘a 

new qualified entity,’’ when referring to 

a company that is approved to 

purchases a contract supplier and 

assume the competitive bidding contract 

in whole or in part. We are making this 

technical change for purposes of 

consistency and to avoid possible 

confusion. 

X. Changes to the Appeals Process for 

Termination of Competitive Bidding 

Contract 

We proposed (79 FR 40299) to modify 

the DMEPOS CBPs appeals process for 

termination of competitive bidding 

contracts under § 414.423. First, we 

proposed to modify the effective date of 

termination in the termination notice 

CMS sends to a contract supplier found 

to be in breach of contract. Currently, 

the regulation at 42 CFR 

414.423(b)(2)(vi) indicates that the 

effective date of termination is 45 days 

from the date of the notification letter 

unless a timely hearing request ‘‘has 

been’’ filed or corrective action plan 

‘‘has been’’ submitted within 30 days of 

the effective date of the notification 

letter (emphasis added). We proposed to 

change these references to emphasize 

that the contract will automatically be 

terminated if the supplier does not file 

a hearing request or submit a corrective 

action plan. 

In 42 CFR 414.423(l), we also 

proposed (79 FR 40299) deleting the 

lead-in sentence, as it does not properly 

lead into the first paragraph. 

Additionally, we proposed inserting 

language from the lead-in sentence in 

the second paragraph to indicate that 

the contract supplier, ‘‘whose contract 

has been terminated,’’ must notify 

beneficiaries of the termination of their 

contract. Second, we proposed to 

modify the deadline by which a 

supplier whose competitive bidding 

contract is being terminated must notify 

affected beneficiaries that it is no longer 

a contract supplier. Current regulations 

at 42 CFR 414.423(l)(2)(i) require a 

contract supplier to provide this notice 

within 15 days of receipt of a final 

notice of termination. We proposed to 

change the beneficiary notification 

deadline to no later than 15 days prior 

to the effective date of termination. This 

proposed change is intended to provide 

beneficiaries with the protection of 

advanced notice prior to a contract 

supplier being terminated from the CBP 

so they have sufficient time to plan/

coordinate their current and future 

DMEPOS needs. We did not receive any 

comments on this proposal (79 FR 

40299). For the reasons we noted 

previously, we are finalizing these 

changes to § 414.423, with two 

modifications to the regulation text to 

address errors in citation references. 

First, in the proposed regulation of the 

proposed rule (79 FR 40315), we 

incorrectly referenced § 414.423(b)(1) 

instead of § 414.423(b)(2), so we are 

correcting that citation in this final rule. 

Second, although we made clear in the 

preamble our proposal to delete the 

lead-in language in § 414.423(l), we 

inadvertently failed to note that deletion 

in the proposed regulation text. 

Therefore, we are making technical 

corrections in the final rule to reflect 

final decision to delete the lead-in 

sentence in § 414.423(l). 

XI. Technical Change Related to 

Submitting Bids for Infusion Drugs 

Under the DMEPOS Competitive 

Bidding Program 

The standard payment rules for drugs 

administered through infusion pumps 

covered as DME are located at section 

1842(o)(1)(D) of the Act, and mandate 

that payment for infusion drugs 

furnished through a covered item of 

DME on or after January 1, 2004, is 

equal to 95 percent of the average 

wholesale price for such drug in effect 

on October 1, 2003. The regulations 

implementing section 1842(o)(1)(D) of 

the Act are located at 42 CFR 414.707(a), 

under Subpart I of Part 414. Section 

1847(a)(2)(A) of the Act mandates the 

establishment of CBPs for covered DME 

and medical supplies. The statute 

specifically states that this category 

includes ‘‘items used in infusion and 

drugs (other than inhalation drugs) and 

supplies used in conjunction with 

DME.’’ Implementation of CBPs for 

infusion drugs is therefore specifically 

mandated by the statute. 

Section 1847(b)(2)(A)(iii) of the Act 

prohibits the awarding of contracts 

under a CBP unless the total amounts to 

be paid to contract suppliers are 

expected to be less than would 

otherwise be paid. The regulations 

implementing section 1847(b)(2)(A)(iii) 

of the Act with respect to items paid on 

a fee schedule basis under Subparts C 

and D of Part 414 are located at 42 CFR 

414.412(b)(2), and specify that ‘‘the bids 

submitted for each item in a PC cannot 

exceed the payment amount that would 

otherwise apply to the item under 

Subpart C or Subpart D of this part.’’ In 

addition, the regulations regarding the 

conditions for awarding contracts under 

the DMEPOS CBP at 42 CFR 414.414(f) 

state that ‘‘a contract is not awarded 

under this subpart unless CMS 

determines that the amounts to be paid 

to contract suppliers for an item under 

a CBP are expected to be less than the 

amounts that would otherwise be paid 

for the same item under subpart C or 

subpart D.’’ The regulations 

implementing of section 

1847(b)(2)(A)(iii) of the Act did not 

address payments for drugs under 

subpart I, which was an oversight. We 

therefore proposed to revise 

§§ 414.412(b)(2) and 414.414(f) to 

include a reference to drugs paid under 

subpart I in addition to items paid 

under subparts C or D. We proposed to 

revise § 414.412(b)(2) to specify that the 

bid amounts submitted for each drug in 

a PC cannot exceed the payment limits 

that would otherwise apply to the drug 

under subpart I of part 414. Infusion 

drugs have payment limits equal to 95 

percent of the average wholesale price 

for the drug in effect on October 1, 2003, 

in accordance with § 414.707(a)(3). See 

http://www.ecfr.gov/cgi-bin/text-idx

?c=ecfr&SID=7065f17b411e37b3788b6e

7fcce21f89&rgn=div8&view=text&node=

42:3.0.1.1.1.9.1.3amp;idno=42. We 

proposed to revise § 414.414(f) to 

specify that a contract is not awarded 

under this subpart unless CMS 

determines that the amounts to be paid 

to contract suppliers for infusion drugs 

provided with respect to external 

infusion pumps under a CBP are 

expected to be less than the amounts 

that would otherwise be paid to 

suppliers for the same drug under 

subpart I of part 414. We sought 

comments on this proposal and received 

4 comments. The comments and 

responses are set forth below. 

Comment: Some commenters stated 

that CMS does not have authority to 

change payment amounts for infusion 

drugs using competitive bidding. One 

commenter stated that home infusion 

therapy is one of the most clinically 

complex therapies covered under the 

DME benefit and involves more than the 

delivery of infusion drugs to patients. 

The commenter believed that payment 

amounts for infusion drugs could be 

improperly reduced if CMS sets the 

payment rate using bids from 

inexperienced providers who do not 

adequately account for the cost of the 

services. 

Response: Section 1847(a)(2)(A) of the 

Act includes infusion drugs in the list 

of items subject to the DMEPOS 

Competitive Bidding Program. 

Therefore, we are finalizing our 

proposal to modifying § 414.414(f) of the 

regulations, with an additional 

modification to make a general reference 

to Subpart I. We note, however, that at 

this time there are no CBPs in effect that 

include infusion drugs. The phase-in of 


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infusion drugs would occur under a 

future CBP(s). 

XII. Accelerating Health Information 

Exchange 

HHS believes all patients, their 

families, and their healthcare providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, ‘‘Principles and Strategies for 

Accelerating Health Information 

Exchange).’’ The Department is 

committed to accelerating health 

information exchange (HIE) through the 

use of electronic health records (EHRs) 

and other types of health information 

technology (health IT) across the 

broader care continuum through a 

number of initiatives including: (1) 

Alignment of incentives and payment 

adjustments to encourage provider 

adoption and optimization of health IT 

and HIE services through Medicare and 

Medicaid payment policies, (2) adoption 

of common standards and certification 

requirements for interoperable health 

IT, (3) support for privacy and security 

of patient information across all HIEfocused initiatives, and (4) governance 

of health information networks. These 

initiatives are designed to encourage 

HIE among health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

programs, and are designed to improve 

care delivery and coordination across 

the entire care continuum. For instance, 

to increase flexibility in the Office of the 

National Coordinator for Health 

Information Technology’s (ONC) 

regulatory certification structure Health 

IT Certification Program, ONC 

expressed in the 2014 Edition Release 2 

final rule (79 FR 54472 through 54473) 

an intent to propose future changes to 

the program that would permit the 

certification of health IT for other health 

care settings, such as long-term and 

post-acute care and behavioral health 

settings. 

We believe that HIE and the use of 

certified EHRs can effectively and 

efficiently help ESRD facilities and 

nephrologists improve internal care 

delivery practices, support management 

of patient care across the continuum, 

and support the reporting of 

electronically specified clinical quality 

measures (eCQMs). 

XIII. Collection of Information 

Requirements 

A. Legislative Requirement for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

requirement should be approved by 

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

Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

B. Requirements in Regulation Text 

In section II.E and section II.G of this 

final rule, we are implementing changes 

to regulatory text for the ESRD PPS in 

CY 2015. However, the changes that are 

being finalized do not impose any new 

information collection requirements. 

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 

are not discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections. 

1. ESRD QIP 

The information collection 

requirements associated with the ESRD 

QIP are currently approved under OMB 

control number 0938–0386. 

a. Data Validation Requirements for the 

PY 2017 ESRD QIP 

Section III.F.9 in this final rule 

outlines our data validation studies for 

PY 2017. Specifically, we proposed to 

randomly sample records from 300 

facilities as part of our continuing pilot 

data-validation program. Each sampled 

facility would be required to produce 

approximately 10 records, and the 

sampled facilities will be reimbursed by 

our validation contractor for the costs 

associated with copying and mailing the 

requested records. The burden 

associated with these validation 

requirements is the time and effort 

necessary to submit the requested 

records to a CMS contractor. We 

estimated that it will take each facility 

approximately 2.5 hours to comply with 

this requirement. If 300 facilities are 

asked to submit records, we estimate 

that the total combined annual burden 

for these facilities will be 750 hours 

(300 facilities × 2.5 hours). According to 

the Bureau of Labor Statistics, the mean 

hourly wage of a registered nurse is 

$33.13/hour. Since we anticipate that 

nurses (or administrative staff who 

would be paid at a lower hourly wage) 

would submit this data, we estimated 

that the aggregate cost of the 

CROWNWeb data validation would be 

$24,847.50 (750 hours × $33.13/hour) 

total or $82.83 ($24,847.50/300 

facilities) per facility in the sample. 

We sought comments on these 

estimates but did not receive any 

comments. 

Under the feasibility study for 

validating data reported to the NHSN 

Dialysis Event Module, we proposed to 

randomly select nine facilities to 

provide CMS with a quarterly list of all 

positive blood cultures drawn from their 

patients during the quarter, including 

any positive blood cultures collected on 

the day of, or the day following, a 

facility patient’s admission to a hospital. 

A CMS contractor will review the lists 

to determine if dialysis events for the 

patients in question were accurately 

reported to the NHSN Dialysis Event 

Module. If we determine that additional 

medical records are needed to validate 

dialysis events, facilities will be 

required to provide those records within 

60 days of a request for this information. 

We estimated that the burden associated 

with this feasibility study will be the 

time and effort necessary for each 

selected facility to compile and submit 

to CMS a quarterly list of positive blood 

cultures drawn from its patients. We 

estimated that it will take each 

participating facility approximately two 

hours per quarter to comply with this 

submission. If nine facilities are asked 

to provide lists, we estimated the 

quarterly burden for these facilities 

would be 72 hours per year (9 facilities 

× 2 hours/quarter × 4 quarters/year). 

Again, we estimated the mean hourly 

wage of a registered nurse to be $33.13/ 

hour, and we anticipated that nurses (or 

administrative staff who would be paid 

at a lower hourly wage) would be 

responsible for preparing and 

submitting the list. Because we 

anticipated that nurses (or 


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66252 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

administrative staff who would be paid 

at a lower hourly rate) would compile 

and submit these data, we estimated 

that the aggregate annual cost of the 

feasibility study to validate NHSN data 

would be $2,385.36 (72 hours × $33.13/ 

hour) total or $265.04 per facility 

($2,385.36/9 facilities). 

We sought comments on these 

estimates. The comment we received 

and our response is set forth below. 

Comment: One commenter stated that 

the cost estimate provided for the 

proposed NHSN Data Validation study 

is too low, because the study 

requirements will likely be completed 

by the facility’s Nurse Manager, who is 

paid more than a Registered Nurse. 

Response: We understand the 

commenter’s concerns; however, the 

Bureau of Labor Statistics does not 

separately itemize Nurse Managers. 

Based on our experience, Nurse 

Managers are typically Registered 

Nurses; therefore, we believe that the 

costs of collecting this information have 

been estimated correctly. 

b. NHSN Healthcare Personnel 

Influenza Vaccination Reporting 

Measure for PY 2018 

We proposed to include, beginning 

with the PY 2018 ESRD QIP, a measure 

requiring facilities to report healthcare 

personnel influenza vaccination data to 

NHSN. The NHSN is a secure, Internetbased surveillance system which is 

maintained and managed by CDC. Many 

dialysis facilities already submit NHSN 

Bloodstream Infection clinical measure 

data to NHSN. Specifically, we 

proposed to require facilities to submit 

on an annual basis an HCP Influenza 

Vaccination Summary Form to NHSN, 

according to the specifications available 

in the NHSN Healthcare Personnel 

Safety Component Protocol. We 

estimated the burden associated with 

this measure to be the time and effort 

necessary for facilities to complete and 

submit the HCP Influenza Vaccination 

Summary Form on an annual basis. We 

estimated that approximately 5,996 

facilities will treat ESRD patients in PY 

2018. We estimated it will take each 

facility approximately 75 minutes to 

collect and submit the data necessary to 

complete the Healthcare Personnel 

Influenza Vaccination Summary Form 

on an annual basis. Therefore, the 

estimated total annual burden 

associated with reporting this measure 

in PY 2018 is 7,495 hours [(75/60) hours 

× 5,996 facilities]. Again, we estimated 

the mean hourly wage of a registered 

nurse to be $33.13, and we anticipated 

that nurses (or administrative staff who 

would be paid at a lower hourly wage) 

would be responsible for this reporting. 

In total, we stated that we believe the 

cost for all ESRD facilities to comply 

with the reporting requirements 

associated with the NHSN Healthcare 

Personnel Influenza Vaccination 

reporting measure would be 

approximately $248,309 (7,495 hours × 

$33.13/hour) total, or $41.37 ($248,309/ 

5,996 facilities) per facility. 

We sought comments on these 

estimates but did not receive any 

comments. 

XIV. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We examined the impacts of this 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 11, 

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, harmonizing rules, and 

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 

services in CY 2015 and implements 

several policy changes to the ESRD PPS. 

The routine updates include: wage 

index values, wage index budgetneutrality adjustment factor, and the 

outlier payment threshold amounts. The 

final policy changes to the ESRD PPS 

include the revisions to the ESRDB 

market basket, changes in the CBSA 

delineations, changes to the laborrelated share, clarifications of the lowvolume payment adjustment and the 

billing of short frequent hemodialysis 

services, and additions and corrections 

to the ICD–10–CM codes that will be 

used for the co-morbidity payment 

adjustment when compliance with ICD– 

10–CM is required beginning October 1, 

2015. In addition, this rule implements 

sections 1881(b)(14)(F)(i) and (I) of the 

Act, as amended by section 217 (b)(1) 

and (2) of PAMA, under which the drug 

utilization adjustment transition is 

eliminated and a 0.0 percent update to 

the ESRD PPS base rate is imposed in 

its place. This rule also implements the 

delay in payment for oral-only drugs 

used for the treatment of ESRD under 

the ESRD PPS until January 1, 2024 as 

required by section 217(a) of PAMA. 

Failure to publish this final rule would 

result in ESRD facilities not receiving 

appropriate payments in CY 2015. 

This final rule implements 

requirements for the ESRD QIP by 

adopting measure sets for the PYs 2017 

and 2018 programs, as directed by 

section 1881(h) of the Act. Failure to 

finalize requirements for the PY 2017 

ESRD QIP would prevent continuation 

of the ESRD QIP beyond PY 2016. In 

addition, finalizing requirements for the 

PY 2018 ESRD QIP provides facilities 

with more time to review and fully 

understand new measures before their 

implementation in the ESRD QIP. 

This final rule establishes a 

methodology for adjusting DMEPOS fee 

schedule amounts using information 

from the Medicare DMEPOS CBP. The 

final rule phases in special payment 

rules for certain DME in a limited 

number of areas under the Medicare 

DMEPOS CBP. This rule also clarifies 

the Medicare hearing aid coverage 

exclusion under section 1862(a)(7) of 

the Act. Finally, this final rule modifies 

the rules for a CHOW under the 

Medicare DMEPOS CBP. 

3. Overall Impact 

We estimate that the proposed 

revisions to the ESRD PPS will result in 

an increase of approximately $30 

million in payments to ESRD facilities 

in CY 2015, which includes the amount 

associated with updates to outlier 

threshold amounts, updates to the wage 

index, changes in CBSA delineations, 

and the labor-related share. 

For PY 2017, we estimate that the 

finalized requirements related to the 

ESRD QIP will cost approximately $27 

thousand total, and the payment 

reductions will result in a total impact 

of approximately $12 million across all 

facilities. For PY 2018, we estimate that 

the finalized requirements related to the 

ESRD QIP will cost approximately $248 

thousand total, and the payment 

reductions will result in a total impact 

of approximately $12.7 million across 

all facilities, resulting in a total impact 

from the ESRD QIP of approximately 

$13 million. 

We estimate that the final 

methodology for adjusting DMEPOS 

payment amounts using information 

from DMEPOS CBPs would save over 


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$4.4 billion in gross payments over FYs 

2016–2020. The gross savings would be 

primarily achieved from the reduced 

payment amounts for items and 

services. 

We estimate the special payment rules 

at § 414.409 would not have a negative 

impact on beneficiaries and suppliers, 

or on the Medicare program. Contract 

suppliers are responsible for furnishing 

items and services needed by the 

beneficiary, and the cost to suppliers for 

furnishing these items and services 

generally would not change based on 

whether or not the equipment and 

related items and services are paid for 

separately under a capped rental 

payment method. Because the supplier’s 

bids would reflect the cost of furnishing 

items in accordance with the new 

payment rules, we expect the fiscal 

impact generally would be the same as 

is under the current payment rules. 

Furthermore, as indicated above, the 

special payment rules would be phased 

in under a limited number of areas to 

gradually determine effects on the 

program, beneficiaries, and suppliers, 

including their effects on cost, quality, 

and access before expanding to other 

areas after notice and comment 

rulemaking, if supported by evaluation 

results. We believe that the special 

payment rules will give beneficiaries 

more choice and flexibility in changing 

suppliers. We estimate the clarification 

of the statutory Medicare hearing aid 

coverage exclusion will not have a 

significant fiscal impact on the 

Medicare program because we are not 

changing the current coverage for 

devices for Medicare payment purposes. 

This regulation at § 411.15(d) will 

provide guidance as to coverage of DME 

with regard to the statutory exclusion. 

We estimate finalizing a change to the 

CHOW rules under the Medicare 

DMEPOS CBP will have no significant 

impact to DMEPOS suppliers. 

B. Detailed Economic Analysis 

1. CY 2015 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

To understand the impact of the 

changes affecting payments to different 

categories of ESRD facilities, it is 

necessary to compare estimated 

payments in CY 2014 to estimated 

payments in CY 2015. To estimate the 

impact among various types of ESRD 

facilities, it is imperative that the 

estimates of payments in CY 2014 and 

CY 2015 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 

2014 update of CY 2013 National Claims 

History file as a basis for Medicare 

dialysis treatments and payments under 

the ESRD PPS. We updated the 2013 

claims to 2014 and 2015 using various 

updates. The updates to the ESRD PPS 

base rate are described in section II.C of 

this rule. Table 33 shows the impact of 

the estimated CY 2015 ESRD payments 

compared to estimated payments to 

ESRD facilities in CY 2014. 

TABLE 33—IMPACT OF FINAL CHANGES IN PAYMENTS TO ESRD FACILITIES FOR CY 2015 FINAL RULE

Facility type Number of 

facilities 

Number of 

treatments 

(in millions) 

Effect of 2015 

changes in 

outlier policy 

Effect of 2015 

changes in 

wage indexes, 

CBSA designations and 

labor-related 

share 

Effect of 2015 

changes in 

payment rate 

update 

Effect of total 

2015 changes 

A B C 

(%) 

D 

(%) 

E 

(%) 

F 

(%) 

All Facilities .............................................. 6,096 43.6 0.3 0.0 0.0 0.3 

Type ......................................................... ........................ ........................ ........................ ........................ ........................ ........................

Freestanding ..................................... 5,615 40.7 0.3 0.0 0.0 0.3 

Hospital based .................................. 481 2.9 0.3 0.2 0.0 0.5 

Ownership Type ....................................... ........................ ........................ ........................ ........................ ........................ ........................

Large dialysis organization ............... 4,209 30.5 0.3 ¥0.1 0.0 0.2 

Regional chain .................................. 890 6.6 0.2 0.2 0.0 0.5 

Independent ...................................... 599 4.1 0.2 0.2 0.0 0.3 

Hospital based 1 ................................ 398 2.4 0.3 0.1 0.0 0.4 

Geographic Location ................................ ........................ ........................ ........................ ........................ ........................ ........................

Rural ................................................. 1,230 6.5 0.3 ¥0.8 0.0 ¥0.5 

Urban ................................................ 4,866 37.0 0.3 0.1 0.0 0.4 

Census Region ........................................ ........................ ........................ ........................ ........................ ........................ ........................

East North Central ............................ 1,000 6.5 0.3 ¥0.1 0.0 0.2 

East South Central ........................... 504 3.2 0.3 ¥1.2 0.0 ¥0.9 

Middle Atlantic .................................. 672 5.2 0.3 0.7 0.0 0.9 

Mountain ........................................... 356 2.1 0.2 0.0 0.0 0.2 

New England .................................... 179 1.4 0.3 1.2 0.0 1.4 

Pacific 2 ............................................. 725 6.1 0.2 1.7 0.0 1.9 

Puerto Rico and Virgin Islands ......... 44 0.3 0.3 ¥3.9 0.0 ¥3.6 

South Atlantic .................................... 1,353 10.1 0.3 ¥0.5 0.0 ¥0.2 

West North Central ........................... 441 2.3 0.2 ¥0.3 0.0 ¥0.1 

West South Central .......................... 822 6.3 0.3 ¥0.9 0.0 ¥0.6 

Facility Size .............................................. ........................ ........................ ........................ ........................ ........................ ........................

Less than 4,000 treatments 3 ............ 1,283 3.2 0.3 ¥0.2 0.0 0.1 

4,000 to 9,999 treatments ................ 2,261 11.8 0.3 ¥0.3 0.0 0.0 

10,000 or more treatments ............... 2,536 28.6 0.3 0.1 0.0 0.4 

Unknown ........................................... 16 0.0 0.3 ¥2.2 0.0 ¥1.9 

Percentage of Pediatric Patients ............. ........................ ........................ ........................ ........................ ........................ ........................

Less than 2 ....................................... 5,978 43.1 0.3 0.0 0.0 0.3 

Between 2 and 19 ............................ 52 0.4 0.3 ¥0.2 0.0 0.1 


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TABLE 33—IMPACT OF FINAL CHANGES IN PAYMENTS TO ESRD FACILITIES FOR CY 2015 FINAL RULE—Continued 

Facility type Number of 

facilities 

Number of 

treatments 

(in millions) 

Effect of 2015 

changes in 

outlier policy 

Effect of 2015 

changes in 

wage indexes, 

CBSA designations and 

labor-related 

share 

Effect of 2015 

changes in 

payment rate 

update 

Effect of total 

2015 changes 

A B C 

(%) 

D 

(%) 

E 

(%) 

F 

(%) 

Between 20 and 49 .......................... 12 0.0 0.1 0.0 0.0 0.1 

More than 50 .................................... 54 0.1 0.1 0.1 0.0 0.1 

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

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

3 1,283 ESRD facilities with less than 4,000 treatments, only 407 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 0.1 percent decrease in payments. 

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

Column A of the impact table 

indicates the number of ESRD facilities 

for each impact category and column B 

indicates the number of dialysis 

treatments (in millions). The overall 

effect of the changes to the outlier 

payment policy described in section 

II.C.4 of this final rule is shown in 

column C. For CY 2015, the impact on 

all ESRD facilities as a result of the 

changes to the outlier payment policy 

will be a 0.3 percent increase in 

estimated payments. The estimated 

impact of the changes to outlier 

payment policy ranges from a 0.1 

percent to a 0.3 percent increase. Nearly 

all ESRD facilities are anticipated to 

experience a positive effect in their 

estimated CY 2015 payments as a result 

of the outlier policy changes. 

Column D shows the effect of the 

wage index, new CBSA delineations, 

and labor-related share on ESRD 

facilities and reflects the CY 2015 wage 

index values for the ESRD PPS 

payments. Facilities located in the 

census region of Puerto Rico and the 

Virgin Islands would receive a 3.9 

percent decrease in estimated payments 

in CY 2015. Since most of the facilities 

in this category are located in Puerto 

Rico, the decrease is primarily due to 

the change in the labor-related share. 

The other categories of types of facilities 

in the impact table show changes in 

estimated payments ranging from a 2.2 

percent decrease to a 1.7 percent 

increase due to the update of the wage 

indexes, CBSA delineations and laborrelated share. 

Column E shows the effect of the 

ESRD PPS payment rate update of 0.0 

percent as required by sections 

1881(b)(14)(F) and (I) as amended by 

section 217 of PAMA. 

Column F reflects the overall impact 

(that is, the effects of the outlier policy 

changes, the wage index, the CBSA 

delineations, the labor-related share, 

and the effect of the payment rate 

update. We expect that overall ESRD 

facilities will experience a 0.3 percent 

increase in estimated payments in 2015. 

ESRD facilities in Puerto Rico and the 

Virgin Islands are expected to receive a 

3.6 percent decrease in their estimated 

payments in CY 2015. This larger 

decrease is primarily due to the negative 

impact of the change in the labor-related 

share. The other categories of types of 

facilities in the impact table show 

impacts ranging from a decrease of 1.9 

percent to increase of 1.9 percent in 

their 2015 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 2015, we estimate that 

the ESRD PPS will have zero impact on 

these other providers. 

c. Effects on the Medicare Program 

We estimate that Medicare spending 

(total Medicare program payments) for 

ESRD facilities in CY 2015 will be 

approximately $9.0 billion. This 

estimate takes into account a projected 

increase in fee-for-service Medicare 

dialysis beneficiary enrollment of 3.3 

percent in CY 2015. 

d. Effects on Medicare Beneficiaries 

Under the ESRD PPS, beneficiaries are 

responsible for paying 20 percent of the 

ESRD PPS payment amount. As a result 

of the projected 0.3 percent overall 

increase in ESRD PPS payment amounts 

in CY 2015, we estimate that there will 

be an increase in beneficiary coinsurance payments of 0.3 percent in CY 

2015, which translates to approximately 

$10 million. 

e. Alternatives Considered 

For this final rule, we will implement 

a 50/50 blended wage index for CY 2015 

that will apply to all ESRD facilities, 

experiencing an impact, or not, due to 

the implementation of the new CBSA 

delineations. We considered 

implementing the new CBSA 

delineations without a transition; 

however we decided to mitigate the 

impact this change would have on ESRD 

facilities that may experience a decrease 

in payments due to the change. 

In addition, we will implement the 

updated labor-related share using a 2- 

year transition. Therefore, for CY 2015, 

we will apply 50 percent of the value of 

the current labor-related share under the 

ESRD PPS (41.737) and 50 percent of 

the percent to the revised labor-related 

share (50.673). In CY 2016, we will 

apply 100 percent, or 50.673 percent, as 

the labor-related share. We considered 

implementing the labor-related share 

without a transition; however we 

decided to mitigate the impact this 

change would have on ESRD facilities 

that may experience a decrease in 

payments due to the change. 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2017 ESRD QIP 

The ESRD QIP provisions are 

intended to prevent possible reductions 

in the quality of ESRD dialysis facility 


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services provided to beneficiaries as a 

result of payment changes under the 

ESRD PPS. The methodology that we are 

proposing to use to determine a 

facility’s TPS for PY 2017 is described 

in section III.F.5 of this final rule. Any 

reductions in ESRD PPS payments as a 

result of a facility’s performance under 

the PY 2017 ESRD QIP would affect the 

facility’s reimbursement rates in CY 

2017. 

We estimate that, of the total number 

of dialysis facilities (including those not 

receiving a TPS), approximately 19 

percent or 1,123 of the facilities would 

likely receive a payment reduction in 

PY 2017. Facilities that do not receive 

a TPS are not eligible for a payment 

reduction. 

In conducting our impact assessment, 

we have assumed that there will be an 

initial count of 5,996 dialysis facilities 

paid under the ESRD PPS. Table 34 

shows the overall estimated distribution 

of payment reductions resulting from 

the PY 2017 ESRD QIP. 

TABLE 34—ESTIMATED DISTRIBUTION

OF PY 2017 ESRD QIP PAYMENT

REDUCTIONS. 

Payment 

reduction 

Number of 

facilities 

Percent of 

facilities 

0.0% .................. 4,541 80.17 

0.5% .................. 784 13.84 

1.0% .................. 282 4.98 

1.5% .................. 44 0.78 

2.0% .................. 13 0.23 

Note: This table excludes 332 facilities that 

we estimate will not receive a payment reduction because they will not report enough data 

to receive a Total Performance Score. 

To estimate whether or not a facility 

would receive a payment reduction in 

PY 2017, we scored each facility on 

achievement and improvement on 

several measures we have previously 

finalized and for which there were 

available data from CROWNWeb and 

Medicare claims. Measures used for the 

simulation are shown in Table 35. 

TABLE 35—DATA USED TO ESTIMATE PY 2017 ESRD QIP PAYMENT REDUCTIONS

Measure 

Period of time used to calculate achievement thresholds, performance standards, 

benchmarks, and improvement thresholds 

Performance period 

Vascular Access Type 

% Fistula ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

% Catheter ............................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Kt/V 

Adult HD ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Adult PD ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Pediatric HD ........................................................... Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Hypercalcemia ............................................................... May 2012–Dec 2012 .................................. Jan 2013–Dec 2013. 

SRR ............................................................................... Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Clinical measure topic areas with less 

than 11 cases for a facility were not 

included in that facility’s Total 

Performance Score. Each facility’s Total 

Performance Score was compared to the 

estimated minimum Total Performance 

Score and the payment reduction table 

found in section III.F.8 of this final rule. 

Facility reporting measure scores were 

estimated using available data from CY 

2013. Facilities were required to have a 

score on at least one clinical and one 

reporting measure in order to receive a 

Total Performance Score. 

To estimate the total payment 

reductions in PY 2017 for each facility 

resulting from this final rule, we 

multiplied the total Medicare payments 

to the facility during the 1-year period 

between January 2013 and December 

2013 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 2013 

through December 2013 times the 

estimated payment reduction 

percentage). For PY 2017, the total 

payment reduction for the 1,123 

facilities estimated to receive a 

reduction is approximately $11.9 

million ($11,927,399). Further, we 

estimate that the total costs associated 

with the collection of information 

requirements for PY 2017 described in 

section III.F.9 of this final rule would be 

approximately $27 thousand for all 

ESRD facilities. As a result, we estimate 

that ESRD facilities will experience an 

aggregate impact of approximately $12 

million ($27,232 + $11,927,399 = 

$11,954,631) in PY 2017, as a result of 

the PY 2017 ESRD QIP. 

Table 36 below shows the estimated 

impact of the finalized ESRD QIP 

payment reductions to all ESRD 

facilities for PY 2017. The table 

estimates 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 are proposing to use for the PY 2017 

ESRD QIP, the actual impact of the PY 

2017 ESRD QIP may vary significantly 

from the values provided here. 

TABLE 36—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017 

Number of 

facilities 

Number of 

treatments 

2013 

(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 .......................................................................... 5,996 39.1 5,664 1,123 ¥0.13 


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TABLE 36—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017—Continued 

Number of 

facilities 

Number of 

treatments 

2013 

(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) 

Facility Type: 

Freestanding ................................................................. 5,520 36.6 5,275 1,008 ¥0.12 

Hospital-based .............................................................. 476 2.5 389 115 ¥0.21 

Ownership Type: 

Large Dialysis ............................................................... 4,150 27.5 3,987 704 ¥0.11 

Regional Chain ............................................................. 871 5.9 828 170 ¥0.14 

Independent .................................................................. 582 3.6 529 151 ¥0.23 

Hospital-based (non-chain) ........................................... 393 2.1 320 98 ¥0.22 

Facility Size: 

Large Entities ................................................................ 5,021 33.5 4,815 874 ¥0.11 

Small Entities 1 .............................................................. 975 5.7 849 249 ¥0.22 

Rural Status: 

1) Yes ........................................................................... 1,212 5.9 1,156 181 ¥0.10 

2) No ............................................................................. 4,784 33.3 4,508 942 ¥0.14 

Census Region: 

Northeast ...................................................................... 792 5.8 756 161 ¥0.15 

Midwest ......................................................................... 1,341 7.7 1,259 268 ¥0.14 

South ............................................................................. 2,527 17.5 2,451 487 ¥0.12 

West .............................................................................. 1,015 7.1 964 128 ¥0.08 

US Territories 2 ............................................................. 321 1.0 234 79 ¥0.27 

Census Division: 

East North Central ........................................................ 979 5.8 897 224 ¥0.17 

East South Central ....................................................... 497 2.9 473 81 ¥0.11 

Middle Atlantic .............................................................. 661 4.8 619 135 ¥0.15 

Mountain ....................................................................... 352 1.9 334 35 ¥0.07 

New England ................................................................ 177 1.3 167 33 ¥0.14 

Pacific ........................................................................... 710 5.4 670 104 ¥0.10 

South Atlantic ................................................................ 1,333 9.1 1,272 301 ¥0.15 

West North Central ....................................................... 438 2.0 410 59 ¥0.09 

West South Central ...................................................... 807 5.6 782 126 ¥0.10 

US Territories 3 ............................................................. 42 0.3 40 25 ¥0.43 

Facility Size (# of total treatments): 

Less than 4,000 treatments .......................................... 1,086 2.7 901 163 ¥0.13 

4,000–9,999 treatments ................................................ 2,226 10.5 2,167 371 ¥0.11 

Over 10,000 treatments ................................................ 2,523 25.7 2,504 561 ¥0.14 

Unknown ....................................................................... 161 0.3 92 28 ¥0.28 

1 Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status. 2 Includes Puerto Rico and Virgin Islands. 3 Based on claims and CROWNWeb data through December 2013. 

b. Effects of the PY 2018 ESRD QIP 

The methodology that we are using to 

determine a facility’s TPS for the PY 

2018 ESRD QIP is described in section 

III.G.9 of this final rule. Any reductions 

in ESRD PPS payments as a result of a 

facility’s performance under the PY 

2018 ESRD QIP would apply to ESRD 

PPS payments made to the facility in CY 

2018. 

We estimate that, of the total number 

of dialysis facilities (including those not 

receiving a TPS), approximately 21 

percent or 1,284 of the facilities would 

likely receive a payment reduction in 

PY 2018. Facilities that do not receive 

a TPS are not eligible for a payment 

reduction. 

In conducting our impact assessment, 

we have assumed that there will be 

5,996 dialysis facilities paid through the 

PPS. Table 37 shows the overall 

estimated distribution of payment 

reductions resulting from the PY 2018 

ESRD QIP. 

TABLE 37—ESTIMATED DISTRIBUTION

OF PY 2018 ESRD QIP PAYMENT

REDUCTIONS

Payment 

reduction 

Number of 

facilities 

Percent of 

facilities 

0.0% .................. 4,338 77.2 

0.5% .................. 1,023 18.2 

1.0% .................. 225 4.0 

1.5% .................. 33 0.6 

2.0% .................. 3 0.1 

NOTE: This table excludes 374 facilities that 

we estimate will not receive a payment reduction because they will not report enough data 

to receive a Total Performance Score. 

To estimate whether or not a facility 

would receive a payment reduction in 

PY 2018, we scored each facility on 

achievement and improvement on 

several measures we have previously 

finalized and for which there were 

available data from CROWNWeb and 

Medicare claims. Measures used for the 

simulation are shown in Table 38. 


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TABLE 38—DATA USED TO ESTIMATE PY 2018 ESRD QIP PAYMENT REDUCTIONS

Measure 

Period of time used to calculate achievement thresholds, performance standards, 

benchmarks, and improvement thresholds 

Performance period 

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

% Fistula ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

% Catheter ............................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

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

Adult HD ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Adult PD ................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Pediatric HD ........................................................... Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Pediatric PD ........................................................... Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Hypercalcemia ............................................................... May 2012–Dec 2012 .................................. Jan 2013–Dec 2013. 

SRR ............................................................................... Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

STrR .............................................................................. Jan 2012–Dec 2012 ................................... Jan 2013–Dec 2013. 

Clinical measure topic areas with less 

than 11 cases for a facility were not 

included in that facility’s Total 

Performance Score. Each facility’s Total 

Performance Score was compared to a 

proxy minimum Total Performance 

Score developed consistent with the 

policies outlined in sections III.G.9 of 

this final rule. Facility reporting 

measure scores were estimated using 

available data from CY 2013. Facilities 

were required to have a score on at least 

one clinical and one reporting measure 

in order to receive a Total Performance 

Score. 

To estimate the total payment 

reductions in PY 2018 for each facility 

resulting from this final rule, we 

multiplied the total Medicare payments 

to the facility during the 1-year period 

between January 2013 and December 

2013 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 2013 

through December 2013 times the 

estimated payment reduction 

percentage). For PY 2018, the total 

payment reduction for all of the 1,284 

facilities expected to receive a reduction 

is approximately $11.6 million 

($11,576,214). Further, we estimate that 

the total costs associated with the 

collection of information requirements 

for PY 2018 described in section III.G.2.f 

of this final rule would be 

approximately $248 thousand for all 

ESRD facilities. As a result, we estimate 

that ESRD facilities will experience an 

aggregate impact of approximately $11.8 

million ($248,309 + $11,576,215 = 

$11,824,524) in PY 2018, as a result of 

the PY 2018 ESRD QIP. 

Table 39 below shows the estimated 

impact of the finalized ESRD QIP 

payment reductions to all ESRD 

facilities for PY 2018. 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 2018 ESRD QIP, the 

actual impact of the PY 2018 ESRD QIP 

may vary significantly from the values 

provided here. 

TABLE 39—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2018 

Number of 

facilities 

Number of 

treatments 

2013 

(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 .......................................................................... 5,996 39.1 5,622 1,284 ¥0.14 

Facility Type: 

Freestanding ................................................................. 5,520 36.6 5,251 1,150 ¥0.13 

Hospital-based .............................................................. 476 2.5 371 134 ¥0.23 

Ownership Type: 

Large Dialysis ............................................................... 4,150 27.5 3,976 789 ¥0.11 

Regional Chain ............................................................. 871 5.9 823 212 ¥0.16 

Independent .................................................................. 582 3.6 520 174 ¥0.22 

Hospital-based (non-chain) .................................................. 393 2.1 303 109 ¥0.23 

Facility Size: 

Large Entities ................................................................ 5,021 33.5 4,799 1,001 ¥0.12 

Small Entities 1 .............................................................. 975 5.7 823 283 ¥0.23 

Rural Status: 

1) Yes ........................................................................... 1,212 5.9 1,151 250 ¥0.13 

2) No ............................................................................. 4,784 33.3 4,471 1,034 ¥0.14 

Census Region: 

Northeast ...................................................................... 792 5.8 748 175 ¥0.14 

Midwest ......................................................................... 1,341 7.7 1,247 317 ¥0.15 

South ............................................................................. 2,527 17.5 2,445 530 ¥0.12 

West .............................................................................. 1,015 7.1 955 153 ¥0.10 

US Territories 2 ............................................................. 321 1.0 227 109 ¥0.36 

Census Division: 

East North Central ........................................................ 979 5.8 888 256 ¥0.17 

East South Central ....................................................... 497 2.9 472 94 ¥0.12 


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TABLE 39—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2018— 

Continued 

Number of 

facilities 

Number of 

treatments 

2013 

(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) 

Middle Atlantic .............................................................. 661 4.8 612 150 ¥0.15 

Mountain ....................................................................... 352 1.9 334 46 ¥0.08 

New England ................................................................ 177 1.3 164 35 ¥0.12 

Pacific ........................................................................... 710 5.4 660 122 ¥0.11 

South Atlantic ................................................................ 1,333 9.1 1,268 328 ¥0.15 

West North Central ....................................................... 438 2.0 405 81 ¥0.12 

West South Central ...................................................... 807 5.6 779 146 ¥0.11 

US Territories 2 ............................................................. 42 0.3 40 26 ¥0.42 

Facility Size (# of total treatments).

Less than 4,000 treatments .......................................... 1,086 2.7 869 219 ¥0.16 

4,000–9,999 treatments ................................................ 2,226 10.5 2,163 429 ¥0.11 

Over 10,000 treatments ................................................ 2,523 25.7 2,502 587 ¥0.13 

Unknown ....................................................................... 161 0.3 88 49 ¥0.49 

1 Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status. 2 Includes Puerto Rico and Virgin Islands. 3 Based on claims and CROWNWeb data through December 2013. 

3. DMEPOS Provisions 

a. Effects of the Final Methodology for 

Adjusting DMEPOS Payment Amounts 

Using Information From Competitive 

Bidding Programs 

We estimate that the final 

methodology for adjusting DMEPOS 

payment amounts using information 

from DMEPOS CBPs will save over $4.4 

billion in gross payments over FY 2016 

through 2020. The gross savings will be 

primarily achieved from price 

reductions for items. Therefore, most of 

the economic impact is expected from 

the reduced prices. We estimate that 

approximately half of the DMEPOS 

items and services furnished to 

Medicare beneficiaries are furnished to 

beneficiaries residing outside existing 

CBAs. (See Table 40.) 

TABLE 40—IMPACT OF PRICING ITEMS

IN NON-COMPETITIVE AREAS USING

COMPETITIVE BIDDING PRICING * 

FY 

Impact on 

the gross 

impact in 

dollars (to 

the nearer 

ten million) 

Impact on 

beneficiary 

cost sharing 

in dollars (to 

the nearer 

ten million) 

2016 .................. ¥550 ¥130 

2017 .................. ¥1,120 ¥280 

2018 .................. ¥1,330 ¥330 

2019 .................. ¥1,430 ¥360 

2020 .................. ¥1,530 ¥380 

* The impacts of the final rule differ from 

those of the proposed rule due to six-month 

phase-in in 2016 of the adjusted fees and the 

expanded definition of rural areas. 

b. Effects of the Final Special Payment 

Methodologies Under the Competitive 

Bidding Program 

We believe that the final special 

payment rules will not have a 

significant impact on beneficiaries and 

suppliers. Contract suppliers are 

responsible for furnishing items and 

services needed by the beneficiary, and 

the cost to suppliers for furnishing these 

items and services does not change 

based on whether or not the equipment 

and related items and services are paid 

for separately under a capped rental 

payment method. Because the supplier’s 

bids will reflect the cost of furnishing 

items in accordance with the new 

payment rules, we expect the overall 

savings will be generally the same as 

they are under the current payment 

rules. Section 1847(b)(2)(A)(iii) 

prohibits the awarding of contracts 

under a CBP unless total payments 

made to contract suppliers in the CBA 

are expected to be less than the payment 

amounts that would otherwise be made. 

Furthermore, as indicated above, we are 

finalizing a phase-in of the special 

payment rules under a limited number 

of areas to gradually determine effects 

on the program, beneficiaries, and 

suppliers. If supported by evaluation 

results, a decision to expand the special 

payment rules to other areas will be 

addressed in future rulemaking. 

c. Effects of the Final Clarification of the 

Scope of the Medicare Hearing Aid 

Coverage Exclusion 

This final rule clarifies the scope of 

the Medicare coverage exclusion for 

hearing aids. This rule will not have a 

fiscal impact on the Medicare program 

because there will be no change in the 

coverage of devices for Medicare 

payment purposes. This clarification 

will provide clear guidance about 

coverage of DME with regard to the 

statutory hearing aid exclusion. 

d. Definition of Minimal SelfAdjustment of Orthotics Under 

Competitive Bidding 

The final rule will not finalize a 

modification to the definition of 

minimal self-adjustment. 

e. Effects of the Final Revision To 

Change of Ownership Rules To Allow 

Contract Suppliers To Sell Specific 

Lines of Business 

This final rule modifies the change of 

ownership rules to reduce interference 

with the normal course of business for 

DME suppliers. This rule establishes an 

exception under the CHOW rules to 

allow transfer of part of a competitive 

bidding contract when a contract 

supplier sells a distinct line of business 

to a qualified successor entity under 

certain specific circumstances. This 

change impacts businesses in a positive 

way by allowing them to conduct 

everyday transactions without 

interference from our rules and 

regulations. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars_

a004_a-4), in Table 41 below, we have 


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prepared an accounting statement 

showing the classification of the 

transfers and costs associated with the 

various provisions of this proposed rule. 

TABLE 41—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS

Category Transfers 

ESRD PPS for CY 2015 

Annualized Monetized Transfers .............................................................. $30 million. 

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

Category Transfers 

Increased Beneficiary Co-insurance Payments ....................................... $10 million. 

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

ESRD QIP for PY 2017 

Annualized Monetized Transfers .............................................................. ¥$11.9 million. 

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

Category Costs 

Annualized Monetized ESRD Provider Costs .......................................... $27 thousand. 

ESRD QIP for PY 2018 

Annualized Monetized Transfers .............................................................. ¥$11.6 million. 

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

Category Costs 

Annualized Monetized ESRD Provider Costs .......................................... $248 thousand. 

Pricing Items in Non-competitive Areas Using Competitive Bidding Pricing 

Category Transfer 

Annualized Monetized Transfer on Beneficiary Cost Sharing Estimates Year dollar Discount 

rate 

Period 

covered 

¥$288.0 million ................ 2014 7% 2016–2020 

¥$292.5 million ................ 2014 3% 2016–2020 

From Whom to Whom .............................................................................. Beneficiaries to Medicare providers. 

Transfers 

Annualized Monetized Transfer Payments Estimates Year dollar Discount 

rate 

Period 

covered 

¥$1,160.9 million ............. 2014 7% 2016–2020 

¥$1,178.5 million ............. 2014 3% 2016–2020 

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

XV. 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 16 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 $38.5 million in 

any 1 year. Individuals and States are 

not included in the definitions of a 

small entity. For more information on 

SBA’s size standards, see the Small 

Business Administration’s Web site at 

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

Dialysis Centers are listed as 621492 

with a size standard of $38.5 million). 

We do not believe ESRD facilities are 

operated by small government entities 

such as counties or towns with 

populations of 50,000 or less, and 

therefore, they are not enumerated or 

included in this estimated RFA analysis. 

Individuals and States are not included 

in the definition of a small entity. 

For purposes of the RFA, we estimate 

that approximately 16 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 33. 

Using the definitions in this ownership 

category, we consider the 599 facilities 

that are independent and the 398 

facilities that are shown as hospitalVerDate Sep<11>2014 20:32 Nov 05, 2014 Jkt 235001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4700 E:\FR\FM\06NOR3.SGM 06NOR3

tkelley on DSK3SPTVN1PROD with RULES3
66260 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

based to be small entities. The ESRD 

facilities that are owned and operated 

by LDOs and regional chains would 

have total revenues of more than $38.5 

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 final updates in 

this rule, a hospital-based ESRD facility 

(as defined by ownership type) is 

estimated to receive a 0.4 percent 

increase in payments for CY 2015. An 

independent facility (as defined by 

ownership type) is also estimated to 

receive a 0.3 percent increase in 

payments for CY 2015. 

We estimate that of the 1,123 ESRD 

facilities expected to receive a payment 

reduction in the PY 2017 ESRD QIP, 249 

of those facilities would be ESRD small 

entity facilities. We present these 

findings in in Table 34 (‘‘Estimated 

Distribution of PY 2017 ESRD QIP 

Payment Reductions’’) and Table 36 

(‘‘Estimated Impact of Finalized QIP 

Payment Reductions to ESRD Facilities 

for PY 2017’’) above. We estimate that 

the payment reductions will average 

approximately $10,621 per facility 

across the 1,123 facilities receiving a 

payment reduction, and $10,329 for 

each small entity facility. Using our 

estimates of facility performance, we 

also estimated the impact of payment 

reductions on ESRD small entity 

facilities by comparing the total 

payment reductions for the 249 small 

entity facilities with the aggregate ESRD 

payments to all small facilities. We 

estimate that there are a total of 975 

small facilities, and that the aggregate 

ESRD PPS payments to these facilities 

would decrease 0.22 percent in PY 

2017. 

We estimate that of the 1,284 ESRD 

facilities expected to receive a payment 

reduction in the PY 2018 ESRD QIP, 283 

are ESRD small entity facilities. We 

present these findings in Table 37 

(‘‘Estimated Distribution of PY 2018 

ESRD QIP Payment Reductions’’) and 

Table 39 (‘‘Estimated Impact of 

Finalized QIP Payment Reductions to 

ESRD Facilities for PY 2018’’) above. We 

estimate that the payment reductions 

will average approximately $9,016 per 

facility across the 1,284 facilities 

receiving a payment reduction, and 

$9,009 for each small entity facility. 

Using our estimates of facility 

performance, we also estimated the 

impact of payment reductions on ESRD 

small entity facilities by comparing the 

total estimated payment reductions for 

283 small entity facilities with the 

aggregate ESRD payments to all small 

entity facilities. We estimate that there 

are a total of 975 small entity facilities, 

and that the aggregate ESRD PPS 

payments to these facilities would 

decrease 0.23 percent in PY 2018. 

We expect the final methodologies for 

adjusting DMEPOS fee schedule 

amounts using information from 

DMEPOS CBPs will have a significant 

impact on a substantial number of small 

suppliers. Although suppliers 

furnishing items and services outside 

CBAs do not have to compete and be 

awarded contracts in order to continue 

furnishing these items and services, the 

fee schedule amounts for these items 

and services will be reduced using the 

methodology established as a result of 

the final rule. The statute requires that 

the methodology for adjusting fee 

schedule amounts take into 

consideration the costs of furnishing 

items and services in areas where the 

adjustments will occur and these 

considerations are discussed in the 

preamble (refer to section V.A.5.). The 

final methodology for making payment 

adjustments will allow for adjustments 

based on bids in different geographic 

regions to reflect regional costs of 

furnishing items and services or the 

national limits for adjustments in areas 

with costs outside of MSAs and areas 

subject to section 1847(a)(3)(A) of the 

Act. We believe that suppliers will be 

able to continue furnishing items and 

services to beneficiaries in areas outside 

the CBAs after the reductions in the 

payment amounts are applied without a 

significant change in the rate at which 

they accept assignment of Medicare 

claims for these items and services. 

Because section 1834(a)(1)(F)(ii) of the 

Act mandates that payment amounts for 

DME subject to competitive bidding be 

adjusted in areas where CBPs are not 

implemented, the only alternative we 

can consider other than paying based on 

adjusted fee schedule amounts is to 

implement CBPs in all areas. However, 

this approach would have an even 

greater impact on small suppliers. 

We expect the final special payment 

rules for certain DME will not have a 

significant impact on small suppliers. 

We believe that these rules will benefit 

affected suppliers since payment for 

rental of certain DME would no longer 

be capped and suppliers would retain 

ownership to the equipment. 

We expect the final rule which 

clarifies the scope of the Medicare 

statutory exclusion for hearing aids will 

have no impact on small suppliers as we 

are not changing current coverage of 

devices for Medicare payment purposes. 

We expect that the final revisions to 

CHOW rules to allow contract suppliers 

to sell specific lines of business 

provision will have a positive impact on 

suppliers and no significant negative 

impact on small suppliers. 

Therefore, the Secretary has 

determined that this final rule will have 

a significant economic impact on a 

substantial number of small entities. We 

solicited comment on the RFA analysis 

provided. The comments and our 

responses are set forth below. 

Comment: Some commenters noted 

that CMS has not considered the 

economic and regulatory flexibility 

analysis under the proposed rule for 

applying special payment rules for 

certain DME in competitive bidding 

areas and the final Methodology for 

Adjusting DMEPOS Payment Amounts 

using Information from Competitive 

Bidding Programs. 

Response: We thank the commenters 

for their input. The continuous rental 

bundled payment methodology will be 

phased in for only two items, CPAP 

device and power wheelchairs in no 

more than 12 CBAs at this time. Our 

analysis indicates that establishing 

single payment amounts based upon 

bids submitted by suppliers using the 

continuous rental bundled methodology 

instead of capped rental methodology 

for these two items in no more than 12 

CBAs will not have a significant impact 

because the bid limits for power 

wheelchairs will be based upon current 

utilization and expenditure in the 12 

CBAs. The updated 1993 fee schedule 

amounts would be the bid limits for 

CPAP. The 1993 fee schedule represents 

a fairly accurate bundled rental payment 

amount for the CPAP and the covered 

item update factor would cover for 

improvements in technology. The CPAP 

fees from 1993 were based on average 

reasonable charges from July 1986 

through June 1987 for rental of the 

device with no separate payment for the 

accessories; we believe the historic 

amounts fairly reflect the utilization and 

payment for accessories used with the 

device. We expect that the final special 

payment rules will not have a 

significant impact on small suppliers 

because of the limited scope of the 

program. The phase-in of the special 

payment rules would be limited to only 

two product categories; Power 

Wheelchairs and CPAP devices in no 

more than 12 CBAs. 

We expect the final methodologies for 

adjusting DMEPOS fee schedule 

amounts using information from 

DMEPOS CBPs will have a significant 

impact on a substantial number of small 

suppliers. However, section 

1834(a)(1)(F)(ii) of the Act mandates 

that payment amounts for DME subject 

to competitive bidding be adjusted in 

areas where CBPs are not implemented, 

therefore, the only alternative we can 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66261 

consider other than paying based on 

adjusted fee schedule amounts is to 

implement CBPs in all areas, however, 

our analysis indicates that this approach 

would have an even greater impact on 

small suppliers. The statute requires 

that the methodology for adjusting fee 

schedule amounts take into 

consideration the costs of furnishing 

items and services in areas where the 

adjustments will occur and we have 

considered these factors in developing 

the final methodology, thereby reducing 

the extent of impact on small suppliers. 

We believe that suppliers will be able to 

continue furnishing items and services 

to beneficiaries in areas outside the 

CBAs after the reductions in the 

payment amounts are applied without a 

significant change in the rate at which 

they accept assignment of Medicare 

claims for these items and services. 

XVI. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

$100 million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold is approximately $141 

million. This final rule does not include 

any mandates that would impose 

spending costs on State, local, or Tribal 

governments in the aggregate, or by the 

private sector, of $141 million. 

XVII. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

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. 

XVIII. Congressional Review Act 

This final rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 

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

transmitted to the Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

XIX. Files Available to the Public via 

the Internet 

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 and 

is posted on the CMS Web site at 

http://www.cms.gov/ESRDPayment/

PAY/list.asp In addition to the 

Addenda, limited data set (LDS) files are 

available for purchase at http://

www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/ 

LimitedDataSets/EndStageRenal

DiseaseSystemFile.html. Readers who 

experience any problems accessing the 

Addenda or LDS files, should contact 

Stephanie Frilling at (410) 786–4507. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, and X-rays 

42 CFR Part 411 

Kidney diseases, Medicare, Physician 

Referral, and Reporting and 

recordkeeping requirements 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

and Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as follows: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority for part 405 

continues to read as follows: 

Authority: Secs. 205(a), 1102, 1861, 

1862(a), 1869, 1871, 1874, 1881, and 1886(k) 

of the Social Security Act (42 U.S.C. 405(a), 

1302, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr and 1395ww(k)), and sec. 353 

of the Public Health Service Act (42 U.S.C. 

263a). 

§ 405.2102 [Amended] 

■ 2. Section 405.2102 is amended by 

removing all the definitions, with the 

exception of, ‘‘Network, ESRD’’, and 

‘‘Network organization’’. 

PART 411—EXCLUSIONS FROM 

MEDICARE AND LIMITATIONS ON 

MEDICARE PAYMENT 

■ 3. The authority citation for part 411 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, 1871, and 1877 of the Social 

Security Act (42 U.S.C. 1302, 1395w–101 

through 1395w–152, 1395hh, and 1395nn). 

■ 4. Section 411.15 is amended by 

revising paragraph (d) to read as 

follows: 

§ 411.15 Particular services excluded from 

coverage. 

* * * * * 

(d) Hearing aids or examinations for 

the purpose of prescribing, fitting, or 

changing hearing aids. 

(1) Scope. The scope of the hearing 

aid exclusion encompasses all types of 

air conduction hearing aids that provide 

acoustic energy to the cochlea via 

stimulation of the tympanic membrane 

with amplified sound and bone 

conduction hearing aids that provide 

mechanical stimulation of the cochlea 

via stimulation of the scalp with 

amplified mechanical vibration or by 

direct contact with the tympanic 

membrane or middle ear ossicles. 

(2) Devices not subject to the hearing 

aid exclusion. Paragraph (d)(1) of this 

section shall not apply to the following 

devices that produce the perception of 

sound by replacing the function of the 

middle ear, cochlea, or auditory nerve: 

(i) Osseointegrated implants in the 

skull bone that provide mechanical 

energy to the cochlea via a mechanical 

transducer, or 

(ii) Cochlear implants and auditory 

brainstem implants that replace the 

function of cochlear structures or 

auditory nerve and provide electrical 

energy to auditory nerve fibers and 

other neural tissue via implanted 

electrode arrays. 

* * * * * 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END–STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 5. 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– 


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66262 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

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

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

2354), and sec. 217 of Pub. L. No. 113–93. 

§ 413.174 [Amended] 

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

by removing ‘‘January 1, 2016’’ and by 

adding in its place ‘‘January 1, 2024’’. 

■ 7. Section 413.232 is amended by 

revising paragraph (b) introductory text 

and paragraph (f) and adding paragraph 

(h) to read as follows: 

§ 413.232 Low-volume adjustment. 

* * * * * 

(b) Definition of low-volume facility. 

A low-volume facility is an ESRD 

facility that, as determined based on the 

documentation submitted pursuant to 

paragraph (h) of this section: 

* * * * * 

(f) Except as provided in paragraph (g) 

of this section, to receive the lowvolume adjustment an ESRD facility 

must provide an attestation statement, 

by November 1st of each year preceding 

the payment year, to its Medicare 

Administrative Contractor that the 

facility meets all the criteria established 

in this section, except that, for calendar 

year 2012, the attestation must be 

provided by January 3, 2012, and for, 

calendar year 2015, the attestation must 

be provided by December 31, 2014. 

* * * * * 

(h) To receive the low-volume 

adjustment, an ESRD facility must 

include in their attestation provided 

pursuant to paragraph (f) of this section 

a statement that the ESRD facility meets 

the definition of a low-volume facility 

in paragraph (b) of this section. To 

determine eligibility for the low-volume 

adjustment, the Medicare 

Administrative Contractor (MAC) on 

behalf of CMS relies upon as filed or 

final settled 12-consecutive month cost 

reports for the 3 cost reporting years 

preceding the payment year to verify the 

number of treatments, except that: 

(1) In the case of a hospital-based 

ESRD facility as defined in § 413.174(c), 

the MAC relies upon the attestation 

submitted pursuant to paragraph (f) of 

this section and may consider other 

supporting data in addition to the total 

treatments reported in each of the 12- 

consecutive month cost reports for the 

3 cost reporting years preceding the 

payment year to verify the number of 

treatments that were furnished by the 

individual hospital-based ESRD facility 

seeking the adjustment; and 

(2) In the case of an ESRD facility that 

has undergone a change of ownership 

that does not result in a new Provider 

Transaction Access Number for the 

ESRD facility, the MAC relies upon the 

attestation and when the change of 

ownership results in two non-standard 

cost reporting periods (less than or 

greater than 12-consecutive months), 

does one or both of the following for the 

3 cost reporting years preceding the 

payment year to verify the number of 

treatments: 

(i) Combines the two non-standard 

cost reporting periods of less than 12 

months to equal a full 12-consecutive 

month period; and/or 

(ii) Combines the two non-standard 

cost reporting periods that in 

combination may exceed 12-consecutive 

months and prorates the data to equal a 

full 12-consecutive month period. 

§ 413.237 [Amended] 

■ 8. In § 413.237, paragraph (a)(1)(iv) is 

amended by removing ‘‘January 1, 

2016’’ and adding in its place ‘‘January 

1, 2024’’. 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 9. The authority citation for part 414 

continues to read as follows: 

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

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

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

■ 10. Section 414.105 is added to read 

as follows: 

§ 414.105 Application of competitive 

bidding information. 

For enteral nutrients, equipment and 

supplies furnished on or after January 1, 

2011, the fee schedule amounts may be 

adjusted based on information on the 

payment determined as part of 

implementation of the programs under 

subpart F using the methodologies set 

forth at § 414.210(g). 

■ 11. The heading of Subpart D is 

revised to read as follows: 

Subpart D—Payment for Durable 

Medical Equipment and Prosthetic and 

Orthotic Devices 

■ 12. Section 414.202 is amended by 

revising the definition of ‘‘region’’ and 

adding in alphabetical order a definition 

of ‘‘rural area’’ to read as follows: 

§ 414.202 Definitions. 

* * * * * 

Region means, for the purpose of 

implementing § 414.210(g), geographic 

areas defined by the Bureau of 

Economic Analysis in the United States 

Department of Commerce for economic 

analysis purposes, and, for the purpose 

of implementing § 414.228, those 

contractor service areas administered by 

CMS regional offices. 

Rural area means, for the purpose of 

implementing § 414.210(g), a geographic 

area represented by a postal zip code if 

at least 50 percent of the total 

geographic area of the area included in 

the zip code is estimated to be outside 

any metropolitan area (MSA). A rural 

area also includes a geographic area 

represented by a postal zip code that is 

a low population density area excluded 

from a competitive bidding area in 

accordance with the authority provided 

by section 1847(a)(3)(A) of the Act at the 

time the rules at § 414.210(g) are 

applied. 

■ 13. Section 414.210 is amended by 

revising paragraph (a) and adding 

paragraph (g) to read as follows: 

§ 414.210 General payment rules. 

(a) General rule. For items furnished 

on or after January 1, 1989, except as 

provided in paragraphs (c), (d), and (g) 

of this section, Medicare pays for 

durable medical equipment, prosthetics 

and orthotics, including a separate 

payment for maintenance and servicing 

of the items as described in paragraph 

(e) of this section, on the basis of 80 

percent of the lesser of— 

(1) The actual charge for the item; 

(2) The fee schedule amount for the 

item, as determined in accordance with 

the provisions of §§ 414.220 through 

414.232 

* * * * * 

(g) Application of Competitive 

Bidding Information and Limitation of 

Inherent Reasonableness Authority. For 

items furnished on or after January 1, 

2011, the fee schedule amounts may be 

adjusted, and for DME items furnished 

on or after January 1, 2016, the fee 

schedule amounts shall be adjusted, 

based on information on the payment 

determined as part of implementation of 

the programs under subpart F, of this 

part, excluding information on the 

payment determined in accordance with 

the special payment rules at § 414.409. 

In the case of such adjustments, the 

rules at § 405.502(g) and (h) of this 

chapter shall not be applied. The 

methodologies for adjusting fee 

schedule amounts are provided below. 

In any case where application of these 

methodologies results in an increase in 

the fee schedule amount, the adjustment 

to the fee schedule amount is not made. 

(1) Payment adjustments for areas 

within the contiguous United States 

using information from competitive 

bidding programs. For an item or service 

subject to the programs under subpart F 

of this part, the fee schedule amounts 

for such item or service for areas within 

the contiguous United States shall be 

adjusted as follows: 

(i) CMS determines a regional price 

for each state in the contiguous United 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66263 

States and the District of Columbia 

equal to the un-weighted average of the 

single payment amounts for an item or 

service established in accordance with 

§ 414.416 for competitive bidding areas 

that are fully or partially located in the 

same region that contains the state or 

District of Columbia. 

(ii) CMS determines a national 

average price equal to the un-weighted 

average of the regional prices 

determined under paragraph (g)(1)(i) of 

this section. 

(iii) A regional price determined 

under paragraph (g)(1)(i) of this section 

cannot be greater than 110 percent of 

the national average price determined 

under paragraph (g)(1)(ii) of this section 

nor less than 90 percent of the national 

average price determined under 

paragraph (g)(1)(ii) of this section. 

(iv) The fee schedule amount for all 

areas within a state that are not defined 

as rural areas for purposes of this 

subpart is adjusted to the regional price 

determined under paragraphs (g)(1)(i) 

and (iii) of this section. 

(v) The fee schedule amount for all 

areas within a state that are defined as 

rural areas for the purposes of this 

subpart is adjusted to 110 percent of the 

national average price determined under 

paragraph (g)(1)(ii) of this section. 

(2) Payment adjustments for areas 

outside the contiguous United States 

using information from competitive 

bidding programs. For an item or service 

subject to the programs under subpart F, 

the fee schedule amounts for areas 

outside the contiguous United States are 

reduced to the greater of— 

(i) The average of the single payment 

amounts for the item or service for CBAs 

outside the contiguous United States. 

(ii) 110 percent of the national average 

price for the item or service determined 

under paragraph (g)(1)(ii) of this section. 

(3) Payment adjustments for items 

and services included in no more than 

ten competitive bidding programs. 

Notwithstanding paragraph (g)(1) of this 

section, for an item or service that is 

included in ten or fewer competitive 

bidding programs as defined at 

§ 414.402, the fee schedule amounts 

applied for all areas within and outside 

the contiguous United States are 

reduced to 110 percent of the unweighted average of the single payment 

amounts from the ten or fewer 

competitive bidding programs for the 

item or service in the areas where the 

ten or fewer competitive bidding 

programs are in place. 

(4) Payment adjustments using data 

on items and services included in 

competitive bidding programs no longer 

in effect. In the case where adjustments 

to fee schedule amounts are made using 

any of the methodologies described, if 

the adjustments are based solely on 

single payment amounts from 

competitive bidding programs that are 

no longer in effect, the single payment 

amounts are updated before being used 

to adjust the fee schedule amounts. The 

single payment amounts are updated 

based on the percentage change in the 

Consumer Price Index for all Urban 

Consumers (CPI–U) from the mid-point 

of the last year the single payment 

amounts were in effect to the month 

ending 6 months prior to the date the 

initial fee schedule reductions go into 

effect. Following the initial adjustments 

to the fee schedule amounts, if the 

adjustments continue to be based solely 

on single payment amounts from 

competitive bidding programs that are 

no longer in effect, the single payment 

amounts used to reduce the fee schedule 

amounts are updated every 12 months 

using the percentage change in the CPI– 

U for the 12-month period ending 6 

months prior to the date the updated 

payment adjustments would go into 

effect. 

(5) Adjusted payment amounts for 

accessories used with different types of 

base equipment. In situations where a 

HCPCS code that describes an item used 

with different types of base equipment 

is included in more than one product 

category in a CBA under competitive 

bidding, a weighted average of the 

single payment amounts for the code is 

computed for each CBA based on the 

total number of allowed services for the 

item on a national basis for the code 

from each product category prior to 

applying the payment adjustment 

methodologies in this section. 

(6) Payment adjustments for enteral 

infusion pumps and standard power 

wheelchairs. (i) In situations where a 

single payment amount in a CBA for an 

enteral infusion pump without alarm is 

greater than the single payment amount 

in the same CBA for an enteral infusion 

pump with alarm, the single payment 

amount for the enteral infusion pump 

without alarm is adjusted to be equal to 

the single payment amount for the 

enteral infusion pump with alarm prior 

to applying the payment adjustment 

methodologies in this section. 

(ii) In situations where a single 

payment amount in a CBA for a Group 

1, standard, sling/solid seat and back 

power wheelchair is greater than the 

single payment amount in the same 

CBA for a Group 2, standard, sling/solid 

seat and back power wheelchair, the 

single payment amount for the Group 1, 

standard, sling/solid seat and back 

power wheelchair is adjusted to be 

equal to the single payment amount for 

the Group 2, standard, sling/solid seat 

and back power wheelchair prior to 

applying the payment adjustment 

methodologies in this section. 

(iii) In situations where a single 

payment amount in a CBA for a Group 

1, standard, captains chair power 

wheelchair is greater than the single 

payment amount in the same CBA for a 

Group 2, standard, captains chair power 

wheelchair, the single payment amount 

for the Group 1, standard, captains chair 

power wheelchair is adjusted to be 

equal to the single payment amount for 

the Group 2, standard, captains chair 

power wheelchair prior to applying the 

payment adjustment methodologies in 

this section. 

(iv) In situations where a single 

payment amount in a CBA for a Group 

2, standard, portable, sling/solid seat 

and back power wheelchair is greater 

than the single payment amount in the 

same CBA for a Group 2, standard, 

sling/solid seat and back power 

wheelchair, the single payment amount 

for the Group 2, standard, portable, 

sling/solid seat and back power 

wheelchair is adjusted to be equal to the 

single payment amount for the Group 2, 

standard, sling/solid seat and back 

power wheelchair prior to applying the 

payment adjustment methodologies in 

this section. 

(v) In situations where a single 

payment amount in a CBA for a Group 

2, standard, portable, captains chair 

power wheelchair is greater than the 

single payment amount in the same 

CBA for a Group 2, standard, captains 

chair power wheelchair, the single 

payment amount for the Group 2, 

standard, portable, captains chair power 

wheelchair is adjusted to be equal to the 

single payment amount for the Group 2, 

standard, captains chair power 

wheelchair prior to applying the 

payment adjustment methodologies in 

this section. 

(7) Payment adjustments for mail 

order items furnished in the Northern 

Mariana Islands. The fee schedule 

amounts for mail order items furnished 

to beneficiaries in the Northern Mariana 

Islands are adjusted so that they are 

equal to 100 percent of the single 

payment amounts established under a 

national mail order competitive bidding 

program. 

(8) Updating adjusted fee schedule 

amounts. The adjusted fee schedule 

amounts are revised each time a single 

payment amount for an item or service 

is updated following one or more new 

competitions and as other items are 

added to programs established under 

Subpart F of this part. 

(9) Transition rules. The payment 

adjustments described above are phased 

in as follows: 


tkelley on DSK3SPTVN1PROD with RULES3
66264 Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 

(i) For applicable items and services 

furnished with dates of service from 

January 1, 2016, through June 30, 2016, 

based on the fee schedule amount for 

the area is equal to 50 percent of the 

adjusted payment amount established 

under this section and 50 percent of the 

unadjusted fee schedule amount. 

(ii) For items and services furnished 

with dates of service on or after July 1, 

2016, the fee schedule amount for the 

area is equal to 100 percent of the 

adjusted payment amount established 

under this section. 

■ 14. Section 414.408 is amended by 

adding paragraph (l) to read as follows: 

§ 414.408 Payment rules. 

* * * * * 

(l) Exceptions for certain items and 

services paid in accordance with special 

payment rules. The payment rules in 

paragraphs (f) thru (h), (j)(2), (j)(3), and 

(j)(7), and (k) of this section do not 

apply to items and services paid in 

accordance with the special payment 

rules at § 414.409. 

■ 15. Section 414.409 is added to read 

as follows: 

§ 414.409 Special payment rules. 

(a) Payment on a bundled, continuous 

rental basis. In no more than 12 CBAs, 

in conjunction with competitions that 

begin after January 1, 2015, payment is 

made on a bundled, continuous 

monthly rental basis for standard power 

wheelchairs and continuous positive 

airway pressure (CPAP) devices. The 

CBAs and competitions where these 

payment rules apply are announced in 

advance of each competition, with the 

payment rules in this section used in 

lieu of the payment rules at § 414.408(f) 

thru (h), (j)(2), (j)(3), and (j)(7), and (k). 

The single payment amounts are 

established based on bids submitted and 

accepted for furnishing rented standard 

power wheelchairs and CPAP devices 

on a monthly basis for each month of 

medical need during the contract 

period. The single payment amount for 

the monthly rental of the DME includes 

payment for the rented equipment, 

maintenance and servicing of the rented 

equipment, and replacement of supplies 

and accessories necessary for the 

effective use of the rented equipment. 

Separate payment for replacement of 

equipment, repair or maintenance and 

servicing of equipment, or for 

replacement of accessories and supplies 

necessary for the effective use of 

equipment is not allowed under any 

circumstance. 

(b) Payment for grandfathered DME 

items paid on a bundled, continuous 

rental basis. Payment to a supplier that 

elects to be a grandfathered supplier of 

DME furnished in CBPs where these 

special payment rules apply is made in 

accordance with § 414.408(a)(1). 

(c) Supplier transitions for DME paid 

on a bundled, continuous rental basis. 

Changes from a non-contract supplier to 

a contract supplier at the beginning of 

a CBP where payment is made on a 

bundled, continuous monthly rental 

basis results in the contract supplier 

taking on responsibility for meeting all 

of the monthly needs for furnishing the 

covered DME. In the event that a 

beneficiary relocates from a CBA where 

these special payment rules apply to an 

area where rental cap rules apply, a new 

period of continuous use begins for the 

capped rental item as long as the item 

is determined to be medically necessary. 

(d) Responsibility for repair and 

maintenance and servicing of power 

wheelchairs. In no more than 12 CBAs 

where payment for power wheelchairs 

is made on a capped rental basis, for 

power wheelchairs furnished in 

conjunction with competitions that 

begin after January 1, 2015, contract 

suppliers that furnish power 

wheelchairs under contracts awarded 

based on these competitions shall 

continue to repair power wheelchairs 

they furnish following transfer of title to 

the equipment to the beneficiary. The 

responsibility of the contract supplier to 

repair, maintain and service beneficiaryowned power wheelchairs does not 

apply to power wheelchairs that the 

contract supplier did not furnish to the 

beneficiary. For power wheelchairs that 

the contract supplier furnishes during 

the contract period, the responsibility of 

the contract supplier to repair, maintain 

and service the power wheelchair once 

it is owned by the beneficiary continues 

until the reasonable useful lifetime of 

the equipment expires, coverage for the 

power wheelchair ends, or the 

beneficiary relocates outside the CBA 

where the item was furnished. The 

contract supplier may not charge the 

beneficiary or the program for any 

necessary repairs or maintenance and 

servicing of a beneficiary-owned power 

wheelchair it furnished during the 

contract period. 

■ 16. Section 414.412 is amended by 

revising paragraph (b)(2) and adding 

paragraphs (b)(3) through (5) to read as 

follows: 

§ 414.412 Submission of bids under a 

competitive bidding program. 

* * * * * 

(b) * * * 

(2) The bids submitted for each item 

or drug in a product category cannot 

exceed the payment amount that would 

otherwise apply to the item under 

subpart C, subpart D, or subpart I of this 

part. 

(3) The bids submitted for standard 

power wheelchairs paid in accordance 

with the special payment rules at 

§ 414.409(a) cannot exceed the average 

monthly payment for the bundle of 

items and services that would otherwise 

apply to the item under subpart D of 

this part. 

(4) The bids submitted for continuous 

positive airway pressure (CPAP) devices 

paid in accordance with the special 

payment rules at § 414.409(a) cannot 

exceed the 1993 fee schedule amounts 

for these items, increased by the covered 

item update factors provided for these 

items in section 1834(a)(14) of the Act. 

(5) Suppliers shall take into 

consideration the special payment rules 

at § 414.409(d) when submitting bids for 

furnishing power wheelchairs under 

competitions where these rules apply. 

* * * * * 

■ 17. Section 414.414 is amended by 

revising paragraph (f) to read as follows: 

§ 414.414 Conditions for awarding 

contracts. 

* * * * * 

(f) Expected savings. A contract is not 

awarded under this subpart unless CMS 

determines that the amounts to be paid 

to contract suppliers for an item or drug 

under a competitive bidding program 

are expected to be less than the amounts 

that would otherwise be paid for the 

same item under subpart C or subpart D 

or the same drug under subpart I. 

* * * * * 

■ 18. Section 414.22 is amended by 

revising paragraph (d) to read as 

follows: 

§ 414.422 Terms of contracts. 

* * * * * 

(d) Change of ownership. (1) A 

contract supplier must notify CMS if it 

is negotiating a change in ownership no 

later than 60 days before the anticipated 

date of the change. 

(2) CMS may transfer a contract to an 

entity that merges with, or acquires, a 

contract supplier if the entity meets the 

following requirements: 

(i) A successor entity— 

(A) Meets all requirements applicable 

to contract suppliers for the applicable 

competitive bidding program; 

(B) Submits to CMS the 

documentation described under 

§ 414.414(b) through (d) if 

documentation has not previously been 

submitted by the successor entity or if 

the documentation is no longer 

sufficient for CMS to make a financial 

determination. A successor entity is not 

required to duplicate previously 

submitted information if the previously 


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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations 66265 

submitted information is not needed to 

make a financial determination. This 

documentation must be submitted no 

later than 30 days prior to the 

anticipated effective date of the change 

of ownership; and 

(C) Submits to CMS, at least 30 days 

before the anticipated effective date of 

the change of ownership, a signed 

novation agreement acceptable to CMS 

stating that it will assume all obligations 

under the contract; or 

(ii) A new entity— 

(A) Meets the requirements of 

(d)(2)(i)(A) and (B) of this section; and 

(B) Contract supplier submits to CMS, 

at least 30 days before the anticipated 

effective date of the change of 

ownership, its final draft of a novation 

agreement as described in paragraph 

(d)(2)(C) of this section for CMS review. 

The new entity submits to CMS, within 

30 days after the effective date of the 

change of ownership, an executed 

novation agreement acceptable to CMS. 

(3) Except as specified in paragraph 

(d) (4) of this section, CMS transfers the 

entire contract, including all product 

categories and competitive bidding 

areas, to a new qualified entity. 

(4) For contracts issued in the Round 

2 Recompete and subsequent rounds in 

the case of a CHOW where a contract 

supplier sells a distinct company, (e.g., 

an affiliate, subsidiary, sole proprietor, 

corporation, or partnership) that 

furnishes a specific product category or 

services a specific CBA, CMS may 

transfer the portion of the contract 

performed by that company to a new 

qualified entity, if the following 

conditions are met: 

(i) Every CBA, product category, and 

location of the company being sold must 

be transferred to the new qualified 

owner who meets all competitive 

bidding requirements; i.e. financial, 

accreditation and licensure; 

(iii) All CBAs and product categories 

in the original contract that are not 

explicitly transferred by CMS remain 

unchanged in that original contract for 

the duration of the contract period 

unless transferred by CMS pursuant to 

a subsequent CHOW; 

(iv) All requirements of paragraph 

(d)(2) of this section are met; and 

(v) The sale of the distinct company 

includes all of the contract supplier’s 

assets associated with the CBA and/or 

product category(s); and 

(vi) CMS determines that transfer of 

part of the original contract will not 

result in disruption of service or harm 

to beneficiaries. 

* * * * * 

■ 19. Section 414.423 is amended by 

revising paragraphs (b)(2)(vi), (l) 

introductory text, (l)(2) introductory 

text, and (l)(2)(i) to read as follows: 

§ 414.423 Appeals Process for Termination 

of Competitive Bidding Contract. 

* * * * * 

(b) * * * 

(2) * * * 

(vi) The effective date of termination 

is 45 days from the date of the 

notification letter unless a timely 

hearing request is filed or a corrective 

action plan (CAP) is submitted within 

30 days of the date on the notification 

letter. 

* * * * * 

(l) Effect of contract termination. 

* * * * * 

(2) A contract supplier whose contract 

has been terminated must notify all 

beneficiaries who are receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis, 

of the termination of their contract. 

(i) The notice to the beneficiary from 

the supplier whose contract is 

terminated must be provided no later 

than 15 days prior to the effective date 

of termination. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: October 22, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: October 26, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–26182 Filed 11–5–14; 8:45 am] 

BILLING CODE 4120–01–P 


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