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[Federal Register: August 12, 2010 (Volume 75, Number 155)]
[Proposed Rules]               
[Page 49215-49232]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12au10-23]                         

[[Page 49215]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 413

[CMS-3206-P]
RIN 0938-AP91

 
Medicare Program; End-Stage Renal Disease Quality Incentive 
Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule proposes to implement a quality incentive 
program (QIP) for Medicare outpatient end-stage renal disease (ESRD) 
dialysis providers and facilities with payment consequences beginning 
January 1, 2012, in accordance with section 1881(h) of the Act (added 
on July 15, 2008 by section 153(c) of the Medicare Improvements for 
Patients and Providers Act (MIPPA)). The proposed ESRD QIP would reduce 
ESRD payments by up to 2.0 percent for dialysis providers and 
facilities that fail to meet or exceed a total performance score for 
performance standards established with respect to certain specified 
measures.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. eastern standard 
time (EST) on September 24, 2010.

ADDRESSES: In commenting, please refer to file code CMS-3206-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address only:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-3206-P, P.O. Box 8010, Baltimore, MD 
21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-3206-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. This document 
does not propose any paperwork requirements in the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Lynn Riley, (410) 786-1286.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following Web site as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Background
    A. Evolution of Quality Monitoring Initiatives
    B. Statutory Authority for ESRD QIP
    C. Selection of the ESRD QIP Measures
II. Provisions of the Proposed Rule
    A. Overview of the Proposed ESRD QIP
    B. Performance Standards for the ESRD QIP Measures
    C. Performance Period for the ESRD QIP Measures
    D. Methodology for Calculating the Total Performance Score for 
the ESRD QIP Measures
    E. Payment Reductions Using the Total Performance Score
    F. Public Reporting Requirements
    1. Introduction
    2. Notifying Providers/Facilities of Their QIP Scores
    3. Informing the Public Through Facility-Posted Certificates
    4. Informing the Public Through Medicare's Web Site
III. Future QIP Considerations
    A. Program Monitoring and Evaluation
    B. QIP Changes and Updates
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis
    A. Overall Impact
    B. Anticipated Effects
    C. Alternatives Considered

Acronyms

    Because of the many terms to which we refer by acronym in this 
proposed rule, we are listing the acronyms used and their corresponding 
meanings in alphabetical order below:

CIP Core Indicators Project
CMS Centers for Medicare & Medicaid Services
CPM Clinical performance measure
CROWNWeb Consolidated Renal Operations in a Web-Enabled Network
DFC Dialysis Facility Compare
DFR Dialysis Facility Report
ESA Erythropoiesis stimulating agent
ESRD End stage renal disease
FDA Food and Drug Administration
Kt/V A measure of dialysis adequacy where K is dialyzer clearance, t 
is dialysis time, and V is total body water volume
LDO Large dialysis organization
MIPPA Medicare Improvements for Patients and Providers Act of 2008 
(Pub. L. 110-275)
NQF National Quality Forum
PPS Prospective payment system
QIP Quality incentive program

[[Page 49216]]

REMIS Renal management information system
RFA Regulatory Flexibility Act
SIMS Standard information management system
SSA Social Security Administration
the Act Social Security Act
URR Urea reduction ratio

I. Background

A. Evolution of Quality Monitoring Initiative

    Monitoring the quality of care provided to ESRD patients and 
provider/facility accountability are important components of the 
Medicare ESRD payment system and have been priorities for over 30 
years. We will describe the evolution of our ESRD quality monitoring 
initiatives by category below.
1. ESRD Network Organization Program
    In the End-Stage Renal Disease Amendments of 1978 (Pub. L. 95-292), 
Congress required the formation of ESRD Network Organizations to 
further support the ESRD program. CMS currently contracts with 18 ESRD 
Networks throughout the United States to perform oversight activities 
and to assist dialysis providers and facilities in providing 
appropriate care for their dialysis patients. The Networks' 
responsibilities include monitoring the quality of care provided to 
ESRD patients, providing technical assistance to patients who have ESRD 
and to providers/facilities that treat ESRD patients to assist them in 
improving care, addressing patient complaints and/or grievances, and 
emergency preparedness. In 1994, CMS and the ESRD Networks, with input 
from the renal community, established the ESRD Core Indicators Project 
(CIP). The ESRD CIP was CMS's first nationwide population-based study 
designed to assess and identify opportunities to improve the care of 
patients with ESRD. This project established the first consistent 
clinical ESRD database. Information in this database included clinical 
measures thought to be indicative of key components of care provided to 
individuals who required dialysis. The initial Core Indicators focused 
on adult hemodialysis patients who received care in dialysis 
facilities. The Core Indicators included measures related to anemia 
management, adequacy of hemodialysis, nutritional status and blood 
pressure control. On March 1, 1999, the ESRD CIP was merged with the 
ESRD Clinical Performance Measures (CPM) Project (described below).
2. Clinical Performance Measures (CPM) Project
    Section 4558(b) of the Balanced Budget Act of 1997 required CMS to 
develop and implement, by January 1, 2000, a method to measure and 
report the quality of renal dialysis services furnished under the 
Medicare program. To implement this legislation, CMS developed the ESRD 
Clinical Performance Measures (CPM) Project based on the National 
Kidney Foundation's Dialysis Outcome Quality Initiative (NKF-DOQI) 
Clinical Practice Guidelines. The purpose of collecting and reporting 
the ESRD CPMs was to enable us to provide comparative data to ESRD 
providers/facilities to assist them in assessing and improving the care 
furnished to ESRD patients.
3. Dialysis Facility Compare (DFC)
    Also in response to the Balanced Budget Act of 1997, CMS created 
Dialysis Facility Compare (DFC) as a new feature on http://www.medicare.gov that was modeled after Nursing Home Compare and 
continues to be used by CMS today. CMS worked with a contractor and a 
consumer workgroup to identify dialysis facility-specific measures that 
could be provided to the public for consumer choice and information 
purposes. This tool was launched in January 2001 on the http://www.medicare.gov/Dialysis Web site to provide information to the public 
for comparing the quality of dialysis facilities across the country, 
including specific information about services available and the quality 
of care furnished by a specific dialysis facility/provider. DFC 
captures administrative and quality related data submitted by dialysis 
facilities and providers.
    The quality measures initially reported on DFC were measures of 
anemia control, adequacy of hemodialysis treatment and patient 
survival. Medicare claims data were used to calculate the anemia 
management and hemodialysis adequacy rates, and administrative data 
(non-clinically based data such as demographic data, and data acquired 
from the Social Security Administration (SSA) and obtained from the CMS 
forms 2728 and 2746) were used to determine patient survival rates. The 
anemia measure assessed the percentage of Medicare patients receiving 
an erythropoiesis-stimulating agent (ESA) at a given provider/facility 
whose anemia (low red blood cell count) was not controlled. More 
specifically, the anemia measure when DFC was launched in January 2001 
assessed the percentage of Medicare patients whose hematocrit levels 
were at 33 percent (33 percent out of 100 percent) or more (or 
hemoglobin levels of 11 g/dL or more). Since that time, evidence about 
increased risk of certain adverse events associated with the use of 
ESAs, which are used to treat anemia, raised concerns about patients 
who have hemoglobin levels that are too high, as well as patients whose 
hemoglobin levels are too low. The Food and Drug Administration (FDA) 
responded by requiring manufacturers to develop a Medication Guide 
(http://www.fda.gov/Drugs/DrugSafety/PublicHealthAdvisories/ucm054716.htm) and to ensure that this information is provided to 
patients. The labeling guideline for ESAs states ``The dosing 
recommendations for anemic patients with chronic renal failure have 
been revised to recommend maintaining hemoglobin levels within 10 g/dL 
to 12 g/dL''. As a result of this guideline, in November 2008 DFC was 
revised to include two anemia measures: one measure shows the 
percentage of patients whose hemoglobin levels are considered too low 
(that is, below 10 g/dL), and a second measure shows the percentage of 
patients whose hemoglobin levels are too high (that is, above 12 g/dL). 
The dialysis adequacy measure assesses the percentage of in-center 
hemodialysis Medicare patients treated by the facility who had enough 
wastes removed from their blood during dialysis. More specifically, the 
measure is the percentage of Medicare patients with urea reduction 
ratio (URR) levels of 65 percent or more. The patient survival measure 
indicates general facility survival as better than expected, as 
expected, or worse than expected. These measures are updated annually 
on the DFC Web site, usually at the end of the year, using Medicare 
claims data from the previous year for the hemodialysis adequacy and 
anemia measures and Medicare administrative data from the past 4 years 
for the patient survival measure.
4. ESRD Quality Initiative
    In 2004, the ESRD Quality Initiative was launched and continues 
today. The objective is to stimulate and support significant 
improvements in the quality of dialysis care. The initiative aims to 
refine and standardize dialysis care measures, ESRD data definitions, 
and data transmission to support the needs of the ESRD program; empower 
patients and consumers by providing access to facility service and 
quality information; provide quality improvement support to dialysis 
facilities and providers; assure compliance with conditions of 
coverage; and build strategic partnerships with

[[Page 49217]]

patients, providers/facilities, professionals, and other stakeholders. 
Components of this Quality Initiative include the DFC, and the CPM 
Project.
5. ESRD Conditions for Coverage
    On April 15, 2008, we published in the Federal Register, the 
updated ESRD Conditions for Coverage final rule, which contains revised 
requirements that dialysis providers and facilities must meet in order 
to be approved by Medicare and receive payment (73 FR 20370 April 15, 
2008). As part of the revised requirements, dialysis providers and 
facilities are each required to implement their own quality assessment 
and performance improvement program. In addition, providers and 
facilities are required to submit electronically the CPMs developed 
under the ESRD CPM Project for all Medicare patients on an annual 
basis. The CPMs were updated and expanded in April 2008. The current 
CPMs include 26 measures in the areas of anemia management; 
hemodialysis adequacy; peritoneal dialysis adequacy; mineral 
metabolism; vascular access; patient education/perception of care/
quality of life; and patient survival.
6. CROWNWeb
    CMS has developed a new web-based system, Consolidated Renal 
Operations in a Web-Enabled Network (CROWNWeb) for the purposes of 
electronically collecting information about patients, facilities, 
providers, and clinical data to support the CPM Project. CROWNWeb 
supports the mineral metabolism, anemia management, hemodialysis 
adequacy, peritoneal dialysis adequacy, survival, and type of vascular 
access CPMs. Use of the CROWNWeb system will increase the efficiency of 
data collection for both CMS and providers/facilities, improve data 
quality, and provide a more stable and accessible platform for 
continual improvements in functionality. In February 2009, for Phase 
one, we began implementing the CROWNWeb system with a number of 
providers/facilities testing the system and expanded reporting to 
additional providers/facilities in July 2009 for Phase two.
    During these initial phases, nearly 200 dialysis providers/
facilities (representing a cross section of small independent 
facilities and large dialysis organizations (LDOs)) were selected to 
enter data into CROWNWeb. These providers/facilities worked closely 
with CMS, their respective ESRD Networks, and CROWNWeb development and 
support contractors to understand the requirements of CROWNWeb, and to 
refine the internal business processes and procedures used to submit 
data effectively and efficiently into the system.
    The successful launch of both Phase One and Phase Two and helpful 
feedback provided by users has enabled CMS to work on additional 
upgrades to CROWNWeb that address both the technical and usability 
elements of the system. We continue to further refine the system as an 
additional tool for quality improvement.
7. QIP Conceptual Model
    On September 29, 2009, we published in the Federal Register (74 FR 
49922), the ESRD Prospective Payment System (PPS) proposed rule, 
describing how the Agency proposes to implement the new ESRD PPS in 
2011. As part of that proposed rule, we outlined a conceptual model of 
the initial ESRD QIP design and solicited public comments. We received 
and reviewed many helpful comments regarding the design of the QIP that 
contributed to the development of this proposed rule.

B. Statutory Authority for the ESRD QIP

    Congress required in section 153 of MIPPA that the Secretary 
implement an ESRD quality incentive program (QIP). We believe that the 
QIP is the next step in the evolution of the ESRD quality program 
because it measures provider/facility performance rather than simply 
reporting outcomes data.
    Specifically, section 1881(h) of the Social Security Act (the Act), 
as added by section 153(c) of MIPPA, requires the Secretary to develop 
a QIP that will result in payment reductions to providers of services 
and dialysis facilities that do not meet or exceed a total performance 
score with respect to performance standards established for certain 
specified measures. As provided under this section, the payment 
reductions, which will be up to 2.0 percent of payments otherwise made 
to providers and facilities under section 1881(b)(14) of the Act, will 
apply to payment for renal dialysis services furnished on or after 
January 1, 2012. The total performance score that providers and 
facilities must initially meet or exceed in order to receive their full 
payment in 2012 will be based on a specific performance period prior to 
this date. Under section 1881(h)(1)(C) of the Act, the payment 
reduction will only apply with respect to the year involved for a 
provider/facility and will not be taken into account when computing 
future payment rates for the impacted provider/facility.
    For the ESRD quality incentive program, section 1881(h) of the Act 
generally requires the Secretary to: (1) Select measures; (2) establish 
the performance standards that apply to the individual measures; (3) 
specify a performance period with respect to a year; (4) develop a 
methodology for assessing the total performance of each provider and 
facility based on the performance standards with respect to the 
measures for a performance period; and (5) apply an appropriate payment 
reduction to providers and facilities that do not meet or exceed the 
established total performance score.
    We view the ESRD QIP required by section 1881(h) of the Act as the 
next step in the evolution of the ESRD quality program that began more 
than 30 years ago. Our vision is to implement a robust, comprehensive 
ESRD QIP that builds on the foundation that has already been 
established.

C. Selection of the ESRD QIP Measures

    As required by section 1881(h)(2)(A)(i) of the Act, we finalized 
the measures for the initial year of the QIP to include two-anemia 
management measures that reflect the labeling approved by the Food and 
Drug Administration (FDA) for the administration of erythropoesis 
stimulating agents (ESAs), and one-hemodialysis adequacy measure in the 
Medicare End-Stage Renal Disease Prospective Payment System Final Rule 
(CMS-1418-F) published on August 12, 2010. The following are the three 
finalized measures for the initial year of the ESRD QIP:
     Percentage of Medicare patients with an average Hemoglobin 
dL
     Percentage of Medicare patients with an average Hemoglobin 
>12.0 g/dL
     Percentage of Medicare patients with an average Urea 
Reduction Ratio (URR) 65 percent.
    Data for these measures are collected from ESRD claims submitted to 
CMS for payment purposes. We have publicly reported anemia and adequacy 
of hemodialysis data on DFC since January 2001. The quality measure 
selection is limited to these three measures for the first year of the 
QIP because they are measures for which we already have complete data 
available to us. We are working to develop additional quality measures 
that we can adopt for the ESRD QIP in subsequent years.
    The ESRD QIP is the first Medicare program that links any provider 
or facility payments to performance based on outcomes as assessed 
through specific quality measures. The three measures that we adopted 
for the initial year of the ESRD QIP are important indicators of 
patient outcomes because poor management of anemia and inadequate 
dialysis can lead to

[[Page 49218]]

avoidable hospitalizations, decreased quality of life, and death. These 
measures are at the core of medical management of ESRD patients.
    As noted previously, data for these three measures are collected 
through ESRD claims submitted to CMS. The process used to ensure 
accuracy of claims coding and measure calculation has been used and 
refined since our implementation of the DFC. A full description of the 
methodologies used for the calculation of the measures can be reviewed 
at: http://www.dialysisreports.org/pdf/esrd/public/DFRGuide.pdf under 
the ``Facility Modality, Hemoglobin, and Urea Reduction Ratio'' 
section.
    As we have previously stated, we are committed to adding additional 
quality measures as soon as complete data sources become available to 
us. For example, we are considering the possibility of adopting 
measures such as Kt/V, vascular access rates, bone and mineral 
metabolism, and access infection rates to the ESRD QIP for future 
years. CMS is committed to further development of quality measures for 
future years of the QIP in order to better assess the quality of care 
provided by ESRD facilities.

II. Provisions of the Proposed Rule

A. Overview of the Proposed ESRD QIP

    This proposed rule proposes to implement a quality incentive 
program for Medicare ESRD dialysis providers and facilities with 
payment reductions beginning January 1, 2012, in accordance with the 
statutory provisions set forth in section 1881(h) of the Act. This 
proposed rule was developed based on the conceptual model set forth in 
the September 29, 2009 proposed rule (74 FR 49922) and on comments 
received on this model. In general, we propose to calculate individual 
total performance scores ranging from 0-30 points for providers and 
facilities based on the three finalized measures. We propose to weigh 
the total performance score for each provider/facility such that the 
percentage of Medicare patients with an average Hemoglobin dL 
measure makes up 50 percent of the score, and the other hemoglobin 
measure and the hemodialysis adequacy measure will each be 25 percent 
of the score. Providers/facilities that do not meet or exceed a certain 
total performance score would receive a payment reduction ranging from 
0.5 percent to 2.0 percent. We also propose below how we plan to 
implement the public reporting requirements in section 1881(h)(6) of 
the Act.

B. Performance Standards for the ESRD QIP Measures

    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the QIP for a performance period with respect to a year. Section 
1881(h)(4)(B) of the Act provides that the performance standards shall 
include levels of achievement and improvement, as determined 
appropriate by the Secretary. However, for the first performance 
period, we propose to establish a performance standard for the two 
anemia management and one hemodialysis adequacy measures based on the 
special rule in section 1881(h)(4)(E) of the Act. This provision 
requires the Secretary to ``initially'' use as a performance standard 
for the anemia management and hemodialysis adequacy measures the lesser 
of a provider/facility-specific performance rate in the year selected 
by the Secretary under the second sentence of section 
1881(b)(14)(A)(ii) of the Act, or a standard based on the national 
performance rate for such measures in a period determined by the 
Secretary. We are not proposing to include in this initial performance 
standard levels of achievement or improvement because we do not believe 
that section 1881(h)(4)(E) of the Act requires that we include such 
levels. In addition, we interpret the term ``initially'' to apply only 
to the performance period applicable for payment consequence calendar 
year 2012. For subsequent performance periods, we plan to propose 
performance standards under section 1881(h)(4)(A) of the Act. Such 
standards will include levels of achievement and improvement, as 
required under section 1881(h)(4)(B) of the Act, and are discussed 
below in section III.B QIP Changes and Updates.
    As stated above, to implement the special rule for the anemia 
management and hemodialysis adequacy measures, we propose to select as 
the performance standard the lesser of the performance of a provider or 
facility on each measure during 2007 (the year selected by the 
Secretary under the second sentence of section 1881(b)(14)(A)(ii) of 
the Act, referred to as the base utilization year) or the national 
performance rates of all providers/facilities for each measure in 2008.
    In terms of establishing a performance standard based on national 
performance rates, we propose to adopt a standard that is equal to the 
national performance rates of all dialysis providers and facilities 
based on 2008 data, as calculated and reported on the Dialysis Facility 
Compare Web site. We propose to use 2008 data because it is the most 
recent year for which data is publicly available prior to the beginning 
of the proposed performance period (discussed below). Specifically, the 
rates for the anemia management and hemodialysis adequacy measures were 
posted on DFC in November 2009, and are as follows:
     For the anemia management measure (referred to in this 
proposed rule as ``Hemoglobin Less Than 10 g/dL'')--the national 
performance percentage of Medicare patients who have an average 
hemoglobin value less than 10.0 g/dL: The national performance rate is 
2 percent.
     For the anemia management measure (referred to in this 
NPRM as ``Hemoglobin More Than 12 g/dL'')--the national performance 
percentage of Medicare patients who have an average hemoglobin value 
greater than 12.0 g/dL: The national performance rate is 26 percent.
     For the proposed hemodialysis adequacy measure (referred 
to in this NPRM as ``Hemodialysis Adequacy Measure'')--the percentage 
of Medicare patients who have an average URR level above 65 percent: 
The national performance rate is 96 percent.
    This means that, for the purpose of implementing the special rule 
for the anemia management and hemodialysis adequacy measures, we 
propose that the performance standard for each of the three measures 
for the initial performance period with respect to 2012 payment would 
be the lesser of (1) the provider/facility-specific rate for each of 
these measures in 2007, or (2) the 2008 national average rates for each 
of these measures.

C. Performance Period for the ESRD QIP Measures

    Section 1881(h)(4)(D) of the Act requires the Secretary to 
establish a performance period with respect to a year, and for that 
performance period to occur prior to the beginning of such year. 
Because we are required under section 1881(h)(1)(A) of the Act to 
implement the payment reduction beginning with renal dialysis services 
furnished on or after January 1, 2012, the first performance period 
would need to occur prior to that date.
    We propose to select all of CY 2010 as the initial performance 
period for the three finalized measures. We believe that this is the 
performance period that best balances the need to collect sufficient 
data, analyze the data, allows us sufficient time to calculate the 
provider/facility-specific total performance scores, determine whether 
providers and facilities meet the

[[Page 49219]]

performance standards, prepare the pricing files needed to implement 
applicable payment reductions beginning on January 1, 2012, and allow 
providers and facilities time to preview their performance scores and 
inquire about their scores prior to finalizing their scores and making 
performance data public (discussed in section II.D. of this proposed 
rule). We emphasize that providers/facilities are already required to 
submit all the necessary data needed to calculate the measures as part 
of their Medicare claims, so this proposal will not create any new 
requirements. We seek public comments about the selection of CY 2010 as 
the initial performance period.

D. Methodology for Calculating the Total Performance Score for the ESRD 
QIP Measures

    Section 1881(h)(3)(A)(i) of the Act requires the Secretary to 
develop a methodology for assessing the total performance of each 
provider and facility based on the performance standards with respect 
to the measures selected for a performance period. Section 
1881(h)(3)(A)(iii) of the Act states that the methodology must also 
include a process to weight the performance scores with respect to 
individual measures to reflect priorities for quality improvement, such 
as weighting scores to ensure that providers/facilities have strong 
incentives to meet or exceed anemia management and dialysis adequacy 
performance standards, as determined appropriate by the Secretary. In 
addition, section 1881(h)(3)(B) of the Act requires the Secretary to 
calculate separate performance scores for each measure. Finally, under 
section 1881(h)(3)(A)(ii) of the Act, for those providers and 
facilities that do not meet (or exceed) the total performance score, 
the Secretary is directed to ensure that the application of the scoring 
methodology results in an appropriate distribution of reductions in 
payments to providers and facilities, with providers and facilities 
achieving the lowest total performance scores receiving the largest 
reductions.
    We propose to calculate the total performance of each provider and 
facility with respect to the measures we have adopted for the initial 
performance period by assigning 10 points to each of the three 
measures. That is, if a provider or facility meets or exceeds the 
performance standard for one measure, then it would receive 10 points 
for that measure. We propose to award points on a 0 to 10 point scale 
because this scale is commonly used in a variety of settings and we 
believe it can be easily understood by stakeholders. We also believe 
that the scale provides sufficient variation to show meaningful 
differences in performance between providers/facilities.
    We propose that a provider or facility that does not meet or exceed 
the initial performance standard for a measure based on its 2010 data 
would receive fewer than 10 points for that measure, with the exact 
number of points corresponding to how far below the initial performance 
standard the provider/facility's actual performance falls. 
Specifically, we propose to implement a scoring methodology that 
subtracts 2 points for every 1 percentage point the provider or 
facility's performance falls below the initial performance standard. 
For example, if under the special rule, the initial performance 
standard for a particular provider or facility for the Hemoglobin More 
Than 12 g/dL is set under section 1881(h)(4)(E)(ii) as the 2008 
national average rate (26 percent), then if that provider/facility had 
28 percent of Medicare patients with hemoglobin levels greater than 12 
g/dL during 2010 (the initial performance period), the provider/
facility would receive 6 points for its performance on the measure 
because 28 percent is 2 percentage points below the performance 
standard (see Table 1, which also illustrates how the scoring would 
work if the Hemoglobin Less Than 10 g/dL was set under section 
1881(h)(4)(E)(ii) as the 2008 national average rate (2 percent)). 
However, if the initial performance standard for the provider/facility 
is set under section 1881(h)(4)(E)(i) as the provider or facility's 
actual performance during 2007 (for purposes of this example, 30 
percent), the provider/facility would receive 10 points for this 
measure so long as its performance during 2010 (the initial performance 
period) was not worse than 30 percent (see Table 2, which also 
illustrates how the scoring would work if the Hemoglobin Less Than 10 
g/dL was set under section 1881(h)(4)(E)(i) as the facility's actual 
performance during 2007 (for purposes of the example, 4 percent)). 
Tables 3 and 4 illustrate how scores would be assigned for the 
Hemodialysis Adequacy Measure.
BILLING CODE 4120-01-P

[[Page 49220]]

[GRAPHIC] [TIFF OMITTED] TP12AU10.000

[[Page 49221]]

[GRAPHIC] [TIFF OMITTED] TP12AU10.001

    We note that our proposed methodology--that is, subtracting 2 
points for every 1 percentage point the provider or facility's 
performance falls below the performance standard--does not take into 
account the relative variability in performance associated with each 
measure. For example, based on 2008 data, a 1 percentage point 
difference under the Hemoglobin Less Than 10 g/dL measure would affect 
a greater proportion of facilities and providers than a 1 percentage 
point difference under the Hemoglobin More Than 12 g/dL measure. The 
table below highlights the variability in performance associated with 
each measure. (We note that lower scores on the anemia measures reflect 
better performance.)
[GRAPHIC] [TIFF OMITTED] TP12AU10.002

[[Page 49222]]

    Despite this difference in variability in performance among the 
measures, we are proposing to apply the straight-forward methodology we 
have described above in a manner that is consistent across all three 
measures adopted in this rule. In designing the scoring methodology for 
the first year, CMS wanted to adopt a clear-cut approach (that is, 
subtracting two points for each percentage point providers and 
facilities fell below their performance standard) consistent with the 
conceptual model published in the End-Stage Renal Disease Prospective 
Payment System Final Rule (CMS-1418-F) on August 12, 2010 in the 
Federal Register. We seek public comment on our proposal to apply the 
score reductions in this manner, as opposed to a methodology which 
takes into account the relative variation in performance that exists 
for each measure.
    We recognize that this straight-forward approach may not be 
appropriate in future years of the QIP as we adopt new measures for 
inclusion in the program that may have a wider variability in 
performance. Moreover, we may need to reevaluate this approach for the 
three measures adopted in this rule, depending on how providers and 
facilities perform in future years on these measures. If this approach 
is finalized, we will continue to evaluate the applicability and 
appropriateness of such an approach in future years of the QIP. As we 
have stated, we want to ensure that the performance measures included 
in the QIP will result in meaningful quality improvement for patients 
at both the national and individual facility/provider level. Therefore, 
we seek comment on potential methodologies that would take into account 
variation in performance amongst all measures included in the QIP. For 
example, under one possible methodology, a provider or facility's 
performance could be awarded 10 points for achieving a higher level of 
performance (for example, the 90th percentile). The remaining points 
could then be assigned according to a linear distribution, where a 
provider/facility might receive 0 points for a lower level of 
performance (for example, 1 standard deviation below the mean).
    In calculating the total performance score, section 
1881(h)(3)(A)(iii) of the Act requires the agency to weight the 
performance scores with respect to individual measures to reflect 
priorities for quality improvement, such as weighting scores to ensure 
that providers/facilities have strong incentives to meet or exceed the 
performance standards. In the development of our conceptual model, we 
initially considered that the initial scoring method would weight each 
of the three proposed measures equally. After further examination and 
based on the public comments received, we propose to give greater 
weight to the Hemoglobin Less Than 10 g/dL measure. Low hemoglobin 
levels below 10 g/dL can lead to serious adverse health outcomes for 
ESRD patients such as increased hospitalizations, need for 
transfusions, and mortality. Giving more weight to the Hemoglobin Less 
Than 10 g/dL measure ensures that providers/facilities are incentivized 
to continue to properly manage and treat anemia. We believe that this 
is important in light of concerns that have been raised that the new 
bundled ESRD payment system could improperly incentivize providers/
facilities to undertreat patients with anemia by underutilizing ESAs.
    Specifically, we propose to weight the Hemoglobin Less Than 10 g/dL 
measure as 50 percent of the total performance score. The remaining 50 
percent of the total performance score would be divided equally between 
the Hemoglobin More Than 12 g/dL measure and the Hemodialysis Adequacy 
Measure. When calculating the total performance score for a provider/
facility, we would first multiply the score achieved by that provider/
facility on each measure (0-10 points) by that measure's assigned 
weight (.50 or .25). Then we would add each of the three numbers 
together, resulting in a number (although not necessarily an integer) 
between 0-10. Lastly, this number would be multiplied by the number of 
measures (three) and rounded to the nearest integer (if necessary). In 
rounding, any fractional portion 0.5 or greater would be rounded up to 
the next integer, while fractional portions less than 0.5 are rounded 
down. Thus, a score of 27.4 would round to 27, while 27.6 would round 
to 28.
    An example of how the proposed scoring methodology would work 
follows below. The example assumes that the performance standard for 
Facility A during the initial performance period is based on the 2008 
national average rates under section 1881(h)(4)(E)(ii) of the Act 
(which are set forth above) (because Facility A's base utilization year 
results were higher than the 2008 national average) and that Facility A 
achieves the following results in 2010:
    1. Hemoglobin Less Than 10 g/dL: 2 percent.
    2. Hemoglobin More Than 12 g/dL: 26 percent.
    3. Hemodialysis Adequacy: 93 percent.
    The total performance score for Facility A would be 26 points. 
Facility A would receive 10 points for achieving the 2008 national 
average rate for the Hemoglobin Less Than 10 g/dL measure (see Table 
1); 10 points for achieving the 2008 national average rate for the 
Hemoglobin More Than 12 g/dL measure (see Table 1); and 4 points for 
performing 3 percentage points below the 2008 national average rate for 
the Hemodialysis Adequacy Measure in 2010. Next, we would multiply each 
individual measure's score by its assigned weight: 10 x .5 = 5; 10 x 
.25 = 2.5; 4 x .25 = 1. Then, all three scores would be added together 
and multiplied by three: (5 + 2.5 + 1) x 3 = 25.5. Finally, we would 
round Facility A's score to the nearest whole number, resulting in a 
total performance score of 26 points (see Table 6 below).

[[Page 49223]]

[GRAPHIC] [TIFF OMITTED] TP12AU10.003

    It is important to note that this example assumes that Facility A's 
facility specific performance in 2007 (the base utilization year) on 
each of the three measures was better than or equal to the national 
performance average in 2008. If however, Facility A's performance in 
2007 on the Hemodialysis Adequacy Measure had been 92 percent, then its 
performance standard for that measure would have been set according to 
section 1881(h)(4)(E)(i), therefore setting a lower performance 
standard for Facility A (see Table 4). In that case, Facility A's score 
of 93 percent during the performance period would have earned it a 
score of 10 points, resulting in a total performance score of 30 points 
(see Table 7 below).
[GRAPHIC] [TIFF OMITTED] TP12AU10.004

    As we stated above, we believe that this proposed weighting 
methodology will ensure that providers/facilities have the incentive to 
adequately maintain patients' hemoglobin levels, particularly 
considering concerns about appropriate ESA use that could arise when 
the new bundled ESRD payment system is implemented. We believe this 
proposed weighting methodology is appropriate for the initial year of 
the QIP. However, consistent with our desire to improve the quality of 
care provided to ESRD patients, we solicit comments on potential 
weighting methodologies that could be incorporated to the QIP in future 
years as new measures are introduced.

[[Page 49224]]

    As previously discussed, we believe this proposed total performance 
score methodology is appropriate for the initial performance period in 
the new ESRD QIP, but recognize that it will be important to monitor 
and potentially reevaluate this methodology as provider and facility 
performance changes and as new measures are added in future years of 
the ESRD QIP. We seek public comments about the proposed scoring 
methodology for the ESRD QIP.

E. Payment Reductions Using the Total Performance Score

    Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to 
ensure that the application of the scoring methodology results in an 
appropriate distribution of reductions in payments among providers and 
facilities achieving different levels of total performance scores, with 
providers and facilities achieving the lowest total performance scores 
receiving the largest reductions.
    We propose to implement a sliding scale of payment reductions for 
payment consequence year 2012, where the minimum total performance 
score that providers/facilities would need to achieve in order to avoid 
a payment reduction would be 26 points. Providers/facilities that score 
between 21-25 points would receive a 0.5 percent payment reduction, 
between 16-20 points a 1.0 percent payment reduction, between 11-15 
points a 1.5 percent payment reduction, and between 0-10 points the 
full 2.0 percent payment reduction (see Table 8). Applying this payment 
reduction scale to the example of Facility A above, Facility A's total 
performance score of 26 would result in it receiving no payment 
reduction.
[GRAPHIC] [TIFF OMITTED] TP12AU10.005

    In developing the proposed payment reduction scale, we carefully 
considered the size of the incentive to providers/facilities to provide 
high quality care and range of total performance scores to which the 
payment incentive applies, recognizing that this would be the first 
year of a new program. Our goal is to avoid situations where small 
deficiencies in a provider/facility's performance results in a large 
payment reduction. For example, we want to avoid imposing a large 
payment reduction on providers/facilities whose performance on one or 
more measures falls just slightly below the performance standard. At 
the same time, we want poorly performing providers/facilities to 
receive a more significant payment reduction. Our analysis suggests 
that use of payment differentials of 0.5 percent for the total 
performance score ranges we are proposing differentiates between 
providers/facilities with fair to good performance and providers/
facilities with poor performance. We will consider smaller 
differentials between payment levels for future years of the QIP, which 
we believe will further differentiate providers/facilities based on 
their performance. Additionally, section 1881(h)(1)(A) of the Act 
requires that the Secretary implement payment reductions of up to 2.0 
percent, and section 1881(h)(3)(A)(ii) requires that the application of 
the total performance score methodology result in an appropriate 
distribution of reductions in payment among providers/facilities. 
Consistent with these requirements, we believe that Medicare 
beneficiaries will be best served if the full 2.0 percent payment 
reduction is initially applied only to those providers/facilities whose 
performance falls well below the performance standards. We believe that 
applying a payment reduction of 2.0 percent to providers/facilities 
whose performance falls significantly below the performance standards, 
coupled with applying 0.5 payment differential reductions to providers/
facilities based on lesser degrees of performance deficiencies, will 
incentivize all providers/facilities to improve the quality of their 
care and avoid a payment reduction the following year. We seek public 
comments about how the proposed payment reduction scale will 
incentivize providers/facilities to meet or exceed the performance 
standards for the first year of the QIP, and whether it is an 
appropriate standard to use in future years.
    In general, ESRD facilities are paid monthly by Medicare for the 
ESRD services they furnish to a beneficiary even though payment is on a 
per treatment basis. In finalizing the new bundled payment system 
starting on January 1, 2011, we elected to continue the practice of 
paying ESRD facilities monthly for services furnished to a beneficiary 
in the End-Stage Renal Disease Prospective Payment System Final Rule 
(CMS-1418-F) published on August 12, 2010.
    In keeping with this practice, we propose to apply any payment 
reduction under the QIP for payment consequence year 2012 to the 
monthly payment amount received by ESRD facilities and providers. The 
payment reduction would be applied after any other applicable 
adjustments to an ESRD facility's payment, including case-mix, wage 
index, outlier, etc, were made. (This includes providers/facilities 
being paid a blended amount under the transition and those that had 
elected to be excluded from the transition and receive its payment 
amount based entirely on the payment amount under the ESRD PPS.)
    Section 1833 of the Act governs payments of benefits for Part B 
services and the cost sharing amounts for services that are considered 
medical and other health services. In general, many Part B services are 
subject to a payment structure that requires beneficiaries to be 
responsible for a 20 percent co-insurance after the deductible (and 
Medicare pays 80 percent). With respect

[[Page 49225]]

to dialysis services furnished by ESRD facilities to individuals with 
ESRD, under section 1881(b)(2)(a) of the Act, payment amounts are 80 
percent (and 20 percent by the individual).
    Under the proposed approach for implementing the QIP payment 
reductions, the beneficiary co-insurance amount would be 20 percent of 
the total Medicare ESRD payment, after any payment reductions are 
applied. To the extent a payment reduction applies, we note that the 
beneficiary's co-insurance amount would be calculated after applying 
the proposed payment reduction and would thus lower the co-insurance 
amount. We seek public comment on the impact of this effect.
    We propose to incorporate the statutory requirements of the QIP 
payment reduction set forth in proposed Sec.  413.177.

F. Public Reporting Requirements

1. Introduction
    Section 1881(h)(6)(A) of the Act requires the Secretary to 
establish procedures for making information regarding performance under 
the ESRD QIP available to the public, including information on the 
total performance score (as well as appropriate comparisons of 
providers and facilities to the national average with respect to such 
scores) and performance scores for individual measures achieved by each 
provider and facility. Section 1881(h)(6)(B) further requires that a 
provider or facility has an opportunity to review the information to be 
made public with respect to it prior to its publication.
    In addition, section 1881(h)(6)(C) of the Act requires the 
Secretary to provide each provider and facility with a certificate 
containing its total performance score to post in patient areas within 
their facility. Finally, section 1881(h)(6)(D) of the Act requires the 
Secretary to post a list of providers/facilities and performance-score 
data on a CMS-maintained Web site.
2. Notifying Providers/Facilities of Their QIP Scores
    Section 1881(h)(6)(B) of the Act requires CMS to establish 
procedures that include giving providers/facilities an opportunity to 
review the information that is to be made public with respect to the 
provider or facility prior to such data being made public.
    CMS currently uses a secure, web-based tool to share confidential, 
facility-specific quality data with providers, facilities, and select 
others. Specifically, we provide annual Dialysis Facility Reports 
(DFRs) to dialysis providers/facilities, ESRD Network Organizations, 
and State Survey Agencies. The DFRs provide valuable facility-specific 
and comparative information on patient characteristics, treatment 
patterns, hospitalizations, mortality, and transplantation patterns. In 
addition, the DFRs contain actionable practice patterns such as dose of 
dialysis, vascular access and anemia management. We expect providers 
and facilities to use the data included in the DFRs as part of their 
ongoing clinical quality improvement projects.
    The information contained in DFRs is sensitive and as such, most of 
that information is made available through a secure Web site only to 
that provider/facility and its ESRD Network Organization, State Survey 
Agency, and the applicable CMS Regional Office. However, select 
measures based on DFR data are made available to the public through the 
DFC Web site, which allows Medicare beneficiaries and others to review 
and compare characteristics and quality information on dialysis 
providers and facilities in the United States. To allow dialysis 
providers/facilities a chance to ``preview'' these data before they are 
released publicly, we supply draft DFRs to providers/facilities in 
advance of every annual DFC update. Dialysis providers and facilities 
are generally provided 30 days to review their facility-specific data 
and submit comments if the provider/facility has any questions or 
concerns regarding the report. A provider/facility's comment is 
evaluated and researched. If a provider/facility makes us aware of an 
error in any DFR information, a recalculation of the quality 
measurement results for that provider/facility is conducted, and the 
revised results are displayed in the DFC Web site.
    We propose to use the above-described procedures, including the 
DFRs framework, to allow dialysis providers/facilities to preview their 
quality data under the QIP before they are reported publicly. 
Specifically, the quality data available for preview through the web 
system will include a provider/facility's performance score (both in 
total and by individual quality measure) as well as a comparison of how 
well the provider/facility's performance scores compare to national 
averages for total performance and individual quality measure 
performance. We believe that adapting these existing procedures for 
purposes of the ESRD QIP will create minimum expense and burden for 
providers/facilities because they will not need to familiarize 
themselves with a new system or process for obtaining and commenting 
upon their preview reports. We also note that under these procedures, 
dialysis providers and facilities would have an opportunity to submit 
performance score inquiries and to ask questions of CMS data experts 
about how their performance scores were calculated on a facility-level 
basis. This performance score inquiry process would also give 
providers/facilities the opportunity to submit inquiries, including 
what they believe to be errors in their performance score calculations, 
prior to the public release of the performance scores. Any provider/
facility that submits an inquiry will receive a response.
    While we believe that the DFR process is the most logical solution 
for meeting the data preview requirement at this time, we may decide to 
revise this approach in the future. Should we decide to make changes, 
or should we find a more administratively feasible or cost-effective 
solution, we propose to use sub-regulatory processes to revise our 
approach for administering the QIP performance score preview process in 
a way that maintains our compliance with section 1881(h)(6)(B) of the 
Act. We also propose to use sub-regulatory processes to determine 
issues such as the length of the preview period and the process we will 
use to address inquiries received from dialysis providers/facilities 
during the preview period.
    We seek public comments on our proposal to use the DFR process and 
suggestions for other options that will allow dialysis providers/
facilities to preview the information that is to be made public with 
respect to the provider or facility in advance of such information 
being made public.
3. Informing the Public Through Facility-Posted Certificates
    Section 1881(h)(6)(C) of the Act requires the Secretary to provide 
certificates to dialysis providers and facilities about their total 
performance scores under the QIP. This section also requires each 
provider/facility that receives a QIP certificate to display it 
prominently in patient areas.
    We propose to meet this requirement by providing providers and 
facilities with an electronic file in a generally accessible format 
(for example, Microsoft Word and/or Adobe Acrobat). We propose to 
disseminate these certificates to providers and facilities once per 
year after the preview period for the QIP performance scores has been 
completed. We would use a secure, web-based system, similar to the 
system used to allow facilities to preview their QIP performance 
scores, to disseminate certificates. The secure web-based

[[Page 49226]]

system would allow CMS to transmit performance score certificates to 
providers/facilities in a secure manner. CMS will make every effort to 
synchronize the release of the certificates for provider/facility 
display with the release of performance score information on the 
Internet.
    Under our proposal, each provider/facility would be required to 
display the certificate no later than 5 business days after CMS sends 
it. We expect that dialysis providers/facilities would have the 
capability to download and print their certificates from the secure Web 
site. We propose that providers/facilities would be prohibited from 
altering the content of the certificates and that they must print the 
certificates on plain, blank, white or light-colored paper, no smaller 
than 8\1/2\ inches by 11 inches (a standard-sized document). In 
addition, providers/facilities may not reduce or otherwise change the 
font size on the certificate.
    Once printed, we propose that each provider/facility must post at 
least one copy of the certificate prominently in a patient area of the 
dialysis provider/facility. Specifically, we propose that providers/
facilities must post the certificate in a conspicuous place where they 
post other patient-directed materials so that it is in plain view for 
all patients (or their parents/guardians or representatives) to 
inspect. We will update the certificates annually with new performance 
information, and providers/facilities must post the updated certificate 
within 5 business days of the day that we transmit it. We expect that 
providers/facilities will take steps to prevent certificates from being 
altered, defaced, stolen, marred, or covered by other material. In the 
event that a certificate is stolen or destroyed while it is posted, 
providers/facilities would be responsible for replacing the stolen or 
destroyed certificate with a fresh copy by re-printing the certificate 
file they have received from CMS. The provider/facility would also be 
responsible for answering patient questions about the certificate in an 
understandable manner, taking into account that some patients might 
have limited English proficiency.
    We propose to include on the certificate of each provider/facility 
all of the information that we are also making available to the public 
under sections 1881(h)(6)(A) and 1881(h)(6)(D) with respect to the 
provider/facility. These data elements are:
     The total performance score achieved by the provider/
facility under the QIP with respect to the year involved;
     Comparative data that shows how well the provider/
facility's total performance score compares to the national total 
performance score average;
     The performance score that the provider/facility achieved 
on each individual measure with respect to the year involved; and
     Comparative data that shows how well the provider/
facility's individual quality measure performance scores compare to the 
national performance score average for each quality measure.
    We considered several options for making QIP performance score data 
available via certificates. Regarding the content of the certificates, 
we considered including not just information for the ESRD QIP-related 
quality measures, but additional quality measure information that CMS 
has at its disposal from the DFC Web site that is not related to the 
QIP, such as risk-adjusted survival information. Ultimately, we 
determined that an electronic method of disseminating certificates was 
the easiest way for CMS to deliver certificates directly to providers/
facilities because it is the least burdensome and most cost effective 
way of providing the certificates. We also determined that the 
information posted on the certificates should be restricted only to QIP 
information. We believe that limiting the information on the 
certificate to QIP-specific data will make the certificate easier for 
Medicare beneficiaries to read and understand.
    We seek public comments on how to make the information contained on 
the certificate as user friendly and easy to understand as possible, 
and how to make the information available to Medicare beneficiaries who 
may be unable to read the certificates due to a physical disability or 
because of limited or no reading proficiency in the English language. 
We are particularly interested in comments on how we can educate 
Medicare beneficiaries and their families about the presence of 
certificates in dialysis providers/facilities and how the information 
can be used to engage in meaningful conversations with their dialysis 
caregivers and the clinical community about the quality of America's 
kidney dialysis care.
    Furthermore, we seek public comments on the proposal to use the DFR 
distribution process to provide the certificates to providers/
facilities under section 1881(h)(6)(C) of the Act. Specifically, we 
seek comments on the feasibility and advisability of using the DFR 
system to provide the certificates to providers/facilities in a 
generally available format such as Microsoft Word or Adobe Acrobat.
4. Informing the Public Through Medicare's Web Site
    Section 1881(h)(6)(D) of the Act requires the Secretary to use a 
CMS-maintained Web site for the purpose of establishing a list of 
dialysis providers/facilities that furnish renal dialysis services to 
Medicare beneficiaries and that indicates the total performance score 
and the performance score for individual measures achieved by the 
provider or facility.
    We currently use the DFC Web site (a CMS-maintained Web site) to 
publish information about the availability of dialysis providers/
facilities across the United States, as well as data about how well 
each of these providers/facilities has performed on existing dialysis-
related quality of care measures. DFC is part of a larger suite of 
``Compare'' tools, all of which are available online at http://www.medicare.gov. In addition to DFC, CMS hosts Nursing Home Compare, 
Home Health Compare, and Hospital Compare, as well as tools that allow 
users to compare prescription drug plans, health plans, and Medigap 
policies.
    DFC links Medicare beneficiaries with detailed information about 
each of the over 4,700 dialysis providers/facilities approved by 
Medicare, and allows them to compare providers/facilities in a 
geographic region. Users can review information about the size of the 
provider/facility, the types of dialysis offered, the provider/
facility's ownership, and whether the provider/facility offers evening 
treatment shifts. Beneficiaries can also compare dialysis providers/
facilities based on three key quality measures--how well patients at a 
provider/facility have their anemia managed, and how well patients at a 
provider/facility have waste removed from their blood during dialysis, 
and whether the patients treated at a provider/facility generally live 
as long as expected. DFC aims to help beneficiaries decide which 
dialysis provider/facility would best serve their care needs, as well 
as to encourage conversations among beneficiaries and their caregivers 
about the quality of care at dialysis providers/facilities, thus 
providing an additional incentive for dialysis providers/facilities to 
improve the quality of care they furnish. Lastly, DFC links 
beneficiaries to resources that support family members, as well as 
beneficiary advocacy groups.
    Because DFC is a current component of the Medicare suite of Compare 
tools, we propose to use DFC as the mechanism for meeting the Web-based

[[Page 49227]]

public information requirement under section 1881(h)(6)(D) of the Act. 
DFC is a consumer-focused tool, and the implementation of the QIP will 
not change this focus. We recognize that sharing information with the 
public about the QIP is not only a statutory requirement: It is also a 
function of open and transparent government. Ultimately, the intent of 
DFC is to provide beneficiaries with the information they need to be 
able to make proper care choices.
    We believe that DFC already provides accurate and trusted 
information about the characteristics of all Medicare-approved dialysis 
providers/facilities, as well as information about the quality of care 
furnished by these providers/facilities. Furthermore, CMS already has 
the information technology infrastructure in place to support DFC and 
its public reporting functions; therefore, adding new QIP-related data 
to the DFC Web site would not create additional significant 
expenditures or overly burden agency resources.
    We propose to update the DFC Web site once per year at a minimum 
with the following data elements for every provider/facility listed on 
DFC (that is, every Medicare-approved provider/facility):
     The total performance score achieved by each provider/
facility under the QIP with respect to the year involved;
     Comparative data that shows how well the provider/
facility's total performance score compares to the national total 
performance score average;
     Scores for each of the individual measures that comprise 
the overall QIP performance score for the provider/facility with 
respect to the year involved; and
     Comparative data that shows how well the provider/
facility's individual quality measure performance scores compare to the 
national performance score average for each quality measure.
    We note that this is the same information that we are proposing to 
include on the certificates that we will provide to providers/
facilities. We seek public comments about whether the total performance 
score and the individual measure performance scores should be 
integrated into the design of the DFC tool itself or whether we should 
alternatively implement section 1881(h)(6)(D) by making a file 
available to the public on the CMS Web site (at http://www.cms.hhs.gov). We are sensitive to the need to balance our interest 
in making QIP performance score information public with our need to 
provide beneficiaries with easy-to-understand, non-technical 
information about providers/facilities that they can use to make 
decisions about where to receive dialysis care.
    We also seek public comment on the advisability of using DFC as our 
mechanism for making QIP information available over the Internet. We 
also seek comment on the presentation of QIP information on the Web 
site and the breadth of detail that we should make publicly available 
regarding QIP performance scores. Lastly, we seek comment on how DFC 
could be redesigned to make QIP information useful to Medicare 
beneficiaries as they compare the quality of care available at the 
nation's Medicare-approved dialysis providers/facilities.

III. Future QIP Considerations

A. Program Monitoring and Evaluation

    CMS plans to monitor and evaluate the new ESRD Prospective Payment 
System (PPS) and QIP as part of our ongoing effort to ensure that 
Medicare beneficiaries with ESRD receive high quality care. The 
monitoring will focus on whether, following implementation of the new 
PPS and the QIP, we observe changes in access to and quality of care, 
especially within the vulnerable populations. We will be evaluating the 
effects of the new PPS and the QIP in areas such as:
     Access to care for beneficiaries including categories or 
subgroups of beneficiaries.
     Changes in care practices that could adversely impact on 
the quality of care for beneficiaries.
     Patterns of care suggesting particular effects of the new 
PPS, for example, whether there are increases/decreases in utilization 
of injectable ESRD drugs and the use of home modalities for certain 
groups of ESRD beneficiaries.
     Best practices of high-performing providers/facilities 
that might be adopted by other providers/facilities.
    CMS currently collects detailed claims data on patients' hemoglobin 
levels and adequacy of dialysis, and also collects information on other 
facets of ESRD care, including treatments provided, drugs, 
hospitalizations, and deaths. In addition, we collect beneficiary 
enrollment data which provide important demographic and other 
information related to Medicare ESRD beneficiaries. These data and 
other data sources will provide the basis for early examination of 
overall trends in care delivery, access, and quality. We also will use 
the data to assess more fully the quality of care furnished to Medicare 
beneficiaries under the new PPS, and to help inform possible 
refinements to the PPS and QIP moving forward. We welcome public 
comments about an approach to monitoring and evaluating the PPS and the 
QIP.

B. Potential QIP Changes and Updates

    As noted above, section 1881(h)(4)(B) of the Act provides that the 
performance standards established under section 1881(h)(4)(A) shall 
include levels of achievement and improvement, as determined 
appropriate by the Secretary. We anticipate that we will propose to 
adopt performance standards under section 1881(h)(4)(A) of the Act that 
include levels of achievement and improvement for the 2013 QIP.
    In addition, we anticipate strengthening the performance standard 
for each measure in future years of the QIP, including potentially 
moving away from using the national performance rate as the performance 
standard and instead identifying absolute standards that reflect 
performance goals widely recognized by the ESRD medical community as 
demonstrating high quality care for ESRD patients. For instance, we may 
seek to raise the performance standard for each of the three measures 
finalized for the 2012 QIP above the proposed or finalized level (that 
is, Hemoglobin Less Than 10 g/dL--2 percent; Hemoglobin More Than 12 g/
dL--26 percent; and Hemodialysis Adequacy Measure--96 percent).
    Additionally, for these initial three finalized measures, we intend 
to establish the national performance rates of each of these measures 
as ``floors'' such that the performance standards will never be lower 
than those set for the previous year; even if provider/facility 
performance--and therefore the national performance rate--fails to 
improve, or even declines, over time, the performance standard to which 
facilities and providers will be held for these measures will not be 
reduced from one year to the next. This will better ensure that the 
quality of ESRD patient care will continue to improve over time. 
Establishing such floors for performance standards, however, will in no 
way prohibit the Secretary from establishing performance standards that 
are higher than the floors if the Secretary determines that higher 
performance standards are appropriate.
    In establishing new measures for the QIP in future years, we intend 
that the concept of ``floors'' described above would be established for 
each new measure and applied to these new measures in order to better 
ensure improvement in quality of care, once we have a historical 
perspective on how the

[[Page 49228]]

measure performs. While we will consider use of national performance 
rates, we also will take into consideration future performance measures 
that reflect performance goals widely recognized by the ESRD medical 
community as demonstrating high quality care for ESRD patients, should 
such a consensus be reached.
    As noted above, section 1881(h)(2)(A) of the Act also requires that 
the measures include, to the extent feasible, measures on patient 
satisfaction, as well as such other measures that the Secretary 
specifies, including iron management, bone mineral metabolism (i.e. for 
calcium and phosphorus), and vascular access. CMS is currently 
developing measures in each of the areas specified in section 
1881(h)(2)(A) of the Act and is also developing additional measures 
such as Kt/V, access infection rate, fluid weight management, and 
pediatric measures. As part of the process of developing these new 
measures, where necessary data are not currently being collected, we 
intend to require providers to submit data needed to establish a 
baseline for each of the measures under consideration, as listed above, 
as soon as is practicable. For most measures, CMS will use a collection 
process that has been determined appropriate by the Secretary to obtain 
this data. For collection of calcium and phosphorus levels, however, we 
intend to collect information on facility and provider ESRD claims as 
soon as practicable. Additional detail on submission of the calcium and 
phosphorus levels will be provided as soon as it is available. We 
anticipate proposing additional measures, such as those listed above 
under section 1881(h)(2)(A) of the Act, in future rulemaking for the 
QIP.
    We seek public comments on how we might best incorporate both 
improvement and achievement standards as specified by the Act. We also 
seek comments on performance standards for future years of the QIP. We 
are committed to adopting additional quality measures for the QIP as 
soon is practicable. While we are evaluating measures for inclusion in 
future years of the QIP, we also seek public comment on setting 
performance standards for the first year a new measure is included in 
the QIP.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    Section VIII.C. of the preamble of this proposed rule discusses a 
disclosure requirement. As stated earlier in the preamble, section 
1881(h)(6)(C) of the Act requires the Secretary to provide certificates 
to dialysis care providers and facilities about their total performance 
scores under the QIP. This section also requires each provider and 
facility that receives a QIP certificate to display it prominently in 
patient areas.
    To comply with this requirement, CMS will be issuing QIP 
certificates to providers and facilities via a generally accessible 
electronic file format. We propose that each provider and facility 
would prominently display the QIP certificate in patient areas. In 
addition, we propose that each provider and facility will take the 
necessary measures to ensure the security of the certificate in the 
patient areas. Finally, we propose that each provider/facility would 
have staff available to answer questions about the certificate in an 
understandable manner, taking into account that some patients might 
have limited English proficiency.
    The burden associated with the aforementioned requirements is the 
time and effort necessary for providers and facilities to print the QIP 
certificates, display the certificate prominently in patient areas, 
ensure the safety of the certificate, and respond to patient inquiries 
in reference to the certificates. We estimate that 4,311 providers and 
facilities will receive QIP certificates and will be required to 
display them. We also estimate that it will take each provider or 
facility 10 minutes to print, prominently display and secure the QIP 
certificate, for a total estimated annual burden of 719 hours. We 
estimate that approximately one-third of ESRD patients will ask a 
question about the QIP certificate. We further estimate that it will 
take each provider/facility 5 minutes to answer each patient question 
about the QIP certificate, or 1.65 hours per provider or facility each 
year. The total estimated annual burden associated with this 
requirement is 7,121 hours. The total estimated annual burden for both 
displaying the QIP certificates and answering patient questions about 
the certificates is 7,839 hours. While the total estimated annual 
burden associated with both of these requirements as discussed is 7,839 
hours, we do not believe that there will be a significant cost 
associated with these requirements because we are not requiring 
facilities to complete new forms. As discussed in Section VI. of the 
preamble of this proposed rule, we estimate that the total cost for all 
ESRD facilities to comply with the collection of information 
requirements would be less than $200,000.
    If you wish to comment on these information collection and 
recordkeeping requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
[CMS-3206-P].
    Fax: (202) 395-6974; or
    E-mail: OIRA_submission@omb.eop.gov.

V. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VI. Regulatory Impact Statement

A. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review, the Regulatory 
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 
1102(b) of the Social Security Act, section 202 of the Unfunded 
Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive 
Order 13132 on Federalism (August 4, 1999) and the Congressional Review 
Act (5 U.S.C. 804(2)).

[[Page 49229]]

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). As explained 
in the analysis that follows, we have determined that this proposed 
rule is not economically significant since it does not have effects of 
$100 million or more. Furthermore, it is not considered a major rule 
under the Congressional Review Act.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers or facilities 
are small entities, either by nature of their nonprofit status or by 
having revenues of $7.0 million to $34.5 million in any 1 year. 
Individuals and States are not included in the definition of a small 
entity. Based on our review of 2007-2008 DFC quality performance data, 
we estimate that approximately 19 percent of ESRD facilities are small 
entities according to the Small Business Administration's (SBA) size 
standard of those dialysis facilities having total revenues of $34.5 
million or less in any one year, and that 19 percent of dialysis 
facilities are nonprofit organizations. For more information on SBA's 
size standards, see the SBA Web site at http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. (Kidney 
Dialysis Centers are listed as North American Industry Classification 
System (NAICS) Code 621492 with a size standard of $34.5 million.)
    Using DFC performance data based on Medicare claims from 2007 and 
2008, we consider the 802 independent facilities and hospital-based 
facilities to be small entities. The ESRD facilities that are owned and 
operated by a Large Dialysis Organization (LDO) and/or regional chain, 
comprising approximately 3,509 facilities, would have total revenues in 
excess of $34.5 million in any year when the total revenues for all 
locations are combined for each business (individual LDO or regional 
chain). Table 9 below shows the estimated impact of the QIP on small 
entities for payment consequence year 2012. The distribution of ESRD 
providers/facilities by facility size (both among facilities considered 
to be small entities for purposes of this analysis and by number of 
treatments per facility), geography (both urban/rural and by region), 
and by facility type (hospital based/freestanding facilities).
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[[Page 49230]]

[GRAPHIC] [TIFF OMITTED] TP12AU10.006

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    SOURCE: Analysis of DFC/Medicare claims data (2007-2008) for ESRD 
providers/facilities reporting data on all three measures.
    We note that guidance issued by the Department of Health and Human 
Services interpreting the RFA considers effects to be economically 
significant if they reach a threshold of 3 to 5 percent or more of 
total revenue or total costs.

[[Page 49231]]

Under the proposed rule, the maximum payment reduction applied to 
providers/facilities, regardless of its size, is 2.0 percent of 
aggregate Medicare payments for dialysis services. This falls below the 
3.0 percent threshold for economic significance established by HHS. To 
further ascertain the impact on small entities for purposes of the RFA, 
we projected provider/facility performance based on DFC performance 
data from 2007 and 2008. For the 2012 QIP, of the 1,106 ESRD facilities 
expected to receive a payment reduction, 252 small entities would be 
expected to receive a payment reduction (ranging from 0.5 percent up to 
2.0 of total payments). We expect payment reductions received would 
average approximately $18,000 per facility, regardless of facility 
size. Using our projections of provider/facility performance, we next 
estimated the impact of expected payment reductions on small entities 
by comparing the total payment reduction for the 252 small entities 
expected to receive a payment reduction with aggregate ESRD payments to 
all small entities. For the entire group of 802 small entities, a minor 
decrease of 0.27 percent in aggregate ESRD payments is observed.
    Therefore, we are not preparing an initial analysis for the RFA 
because the Secretary has determined that this proposed rule will not 
have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area for Medicare payment regulations and has fewer than 
100 beds. We do not believe this proposed rule has a significant impact 
on operations of a substantial number of small rural hospitals because 
most dialysis facilities are freestanding. Therefore, we are not 
preparing an analysis for section 1102(b) of the Act because the 
Secretary has determined that this proposed rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2010, that 
threshold is approximately $135 million. This rule will not have a 
consequential effect on State, local, or tribal governments in the 
aggregate, or by the private sector of $135 million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of Executive Order 13132 are not 
applicable.

B. Anticipated Effects

    This proposed rule is intended to mitigate possible reductions in 
the quality of ESRD dialysis facility services provided to 
beneficiaries as a result of payment changes under the ESRD PPS by 
implementing a quality incentive program (QIP) that would reduce ESRD 
payments by up to 2 percent to dialysis providers/facilities that fail 
to meet or exceed a total performance score with respect to performance 
standards established by the Secretary with respect to certain 
specified measures. The methodology that we are proposing to determine 
a provider/facility's performance score is described in section VI 
(Methodology for Calculating the Total Performance Score for the ESRD 
QIP Measures). Any reductions in ESRD payment would begin on January 1, 
2012 for services furnished on or after January 1, 2012.
    The End-Stage Renal Disease Prospective Payment System Final Rule 
(CMS-1418-F) published on August 12, 2010 estimates payments to ESRD 
facilities in 2012 to be $8.5 billion. The calculations used to 
determine the impact of this proposed rule reveal that approximately 27 
percent or 1,106 ESRD dialysis facilities would likely receive some 
kind of payment reduction for 2012. Again using DFC/Medicare claims 
data from 2007-2008, Table 10 shows the overall estimated distribution 
of payment reductions resulting from the 2012 QIP.
[GRAPHIC] [TIFF OMITTED] TP12AU10.007

    To estimate the total payment reductions in 2012 resulting from the 
proposed rule for each facility, we multiplied the number of patients 
treated at each facility receiving a reduction times an average of 
three treatments per week. We then multiplied this product by a base 
rate of $229.63 per dialysis treatment (before an adjustor is applied) 
to arrive at a total ESRD payment for each facility:
    ((Number of patients treated at each facility x 3 treatments per 
week) x base rate)
    Finally, we applied the estimated payment reduction percentage 
expected under the QIP, yielding a total payment reduction amount for 
each facility:
    (Total ESRD payment estimated payment reduction percentage)
    Totaling all of the payment reductions for each of the 1,106 
facilities expected to receive a reduction leads to a total payment 
reduction of approximately $17.3 million for payment consequence year 
2012. Further, we estimate that the total costs associated with the 
collection

[[Page 49232]]

of information requirements described in Section IV. of the preamble of 
this proposed rule would be less than $200,000 for all ESRD facilities. 
As a result, the estimated aggregate $17.5 million impact for 2012 does 
not reach the $100 million threshold for an economically significant 
rule.

C. Alternatives Considered

    As stated above, this proposed rule proposes to implement a QIP for 
Medicare ESRD dialysis providers and facilities with payment reductions 
beginning January 1, 2012. Under section 1881(h) of the Act, after 
selecting measures, establishing performance standards that apply to 
each of the measures, specifying a performance period, and developing a 
methodology for assessing the total performance of each provider and 
facility based on the specified performance standards, the Secretary is 
required to apply an appropriate reduction to ESRD providers and 
facilities that do not meet or exceed the established total performance 
score. In developing the proposed QIP, we carefully considered the size 
of the incentive to providers and facilities to provide high-quality 
care. We also selected the measures adopted for the 2012 ESRD QIP 
because these measures are important indicators of patient outcomes and 
quality of care. Poor management of anemia and inadequate dialysis, for 
example, can lead to avoidable hospitalizations, decreased quality of 
life, and death. Thus, we believe the measures selected will allow CMS 
to continue focusing on improving the quality of care that Medicare 
beneficiaries receive from ESRD dialysis providers and facilities.
    We considered alternatives for identifying the performance 
standard, including the mean, median, and mode. However, we determined 
that the national average would be appropriate for the first payment 
year for the reasons listed below:
     CMS believes that the legislative intent was to set the 
performance standard at the ``average'', as this is the performance 
standard that has been publicly reported on the Dialysis Facility 
Compare Web site (DFC) for the past ten years and was the standard in 
effect when the language was crafted;
     Recognizing however that there was some flexibility, CMS 
reviewed other possible standards and noted that there was little 
difference in the range of performance, with the exception of 
performance for Hemoglobin More Than 12 (Hgb 12-8%-38%; 
URR 94%-100%). As the bundled payment will likely reverse the incentive 
that may be leading to the wider range for the Hgb>12, the differences 
in the performance did not warrant moving from the use of a national 
average for performance.
     CMS has seen great improvement in the rates for these 
measures over the past several years in part due to public reporting 
and continuous oversight and monitoring. The rate for Hemoglobin Less 
Than 10 has improved and maintained improvement, while Hemoglobin More 
Than 12 improved from 44% in 2007 to 26% in 2008 as demonstrated below. 
Should it become evident that the rates begin to move in the wrong 
direction due to the bundled payment, different performance standards 
can be proposed through future rulemaking. For example, if the national 
average for Hemoglobin Less Than 10 began to drop, CMS could propose to 
require a rate of 2% or less regardless of the national average;
     The national average was also selected because of the 
rapid implementation date for the first year and because the period of 
performance for the first payment year has already begun. We anticipate 
the final rule will be published near the end of the performance 
period. Therefore, introduction of a new performance standard after the 
period of performance has nearly ended was not appropriate.
    We also considered alternatives for applying payment reductions. 
Our main alternatives considered varying point reductions based on each 
1 percentage point a facility or provider was below the performance 
standard. We did not propose alternatives that applied payment 
reductions that accounted for the variability seen within each measure, 
and as noted above, we ask for public comment on such alternatives.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services propose to amend 42 CFR chapter IV as set forth 
below:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED 
PAYMENT RATES FOR SKILLED NURSING FACILITIES

    1. The authority citation for part 413 continues to read as 
follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and 
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act 
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395(g), 1395I(a), (i), and 
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of 
Public Law 106-113 (133 stat. 1501A-332).

Subpart H--Payment for End-Stage Renal Disease (ESRD) Services and 
Organ Procurement Costs

    2. Section 413.177 is added to subpart H to read as follows:

Sec.  413.177  Quality Incentive Program Payment.

    (a) With respect to renal dialysis services as defined under Sec.  
413.171 of this part, in the case of a provider of services or a renal 
dialysis facility that does not meet the performance requirements 
described in section 1881(h)(1)(B) of the Act for the performance year, 
payments otherwise made to the provider or facility under this subpart 
for renal dialysis services will be reduced by up to 2.0 percent, as 
determined appropriate by the Secretary.
    (b) Any payment reduction will apply only to services provided in 
the payment year involved and will not be taken into account in 
computing the single payment amount under this subpart for services 
provided in a subsequent payment year.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: March 18, 2010.
Marilyn Tavenner,
Acting Administrator and Chief Operating Officer, Centers for Medicare 
& Medicaid Services.
    Approved: July 19, 2010.
Kathleen Sebelius,
Secretary.
[FR Doc. 2010-18465 Filed 7-26-10; 4:15 pm]
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