Vol. 78 Monday, 

No. 231 December 2, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 413 and 414 

Medicare Program; End-Stage Renal Disease Prospective Payment 

System, Quality Incentive Program, and Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies; Final Rule 


sroberts on DSK5SPTVN1PROD with RULES
72156 Federal Register / Vol. 78, No. 231 / Monday, December 2, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 413 and 414 

[CMS–1526–F] 

RIN 0938–AR55 

Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This rule updates and makes 

revisions to the End-Stage Renal Disease 

(ESRD) prospective payment system 

(PPS) for calendar year (CY) 2014. This 

rule also sets forth requirements for the 

ESRD quality incentive program (QIP), 

including for payment year (PY) 2016 

and beyond. In addition, this rule 

clarifies the grandfathering provision 

related to the 3-year minimum lifetime 

requirement (MLR) for Durable Medical 

Equipment (DME), and provides 

clarification of the definition of 

routinely purchased DME. This rule also 

implements budget-neutral fee 

schedules for splints and casts, and 

intraocular lenses (IOLs) inserted in a 

physician’s office. Finally, this rule 

makes a few technical amendments and 

corrections to existing regulations 

related to payment for durable medical 

equipment, prosthetics, orthotics, and 

supplies (DMEPOS) items and services. 

DATES: Effective Date: These regulations 

are effective on January 1, 2014, except 

for amendments to §§ 414.100, 414.102, 

414.106, 414.108, 414.200, and 414.226, 

which are effective on April 1, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Michelle Cruse, (410) 786–7540, for 

issues related to the ESRD PPS. 

Stephanie Frilling, (410) 786–4507, 

for issues related to the ESRD PPS wage 

index, home dialysis training, and the 

delay in payment for oral-only drugs 

under the ESRD PPS. 

Heidi Oumarou, (410) 786–7942, for 

issues related to the ESRD bundled 

market basket. 

Anita Segar, (410) 786–4614, for 

issues related to the ESRD QIP. 

Sandhya Gilkerson, (410) 786–4085, 

for issues related to the clarification of 

the grandfathering provision related to 

the 3-year MLR for DME. 

Anita Greenberg, (410) 786–4601, for 

issues related to the clarification of the 

definition of routinely purchased DME. 

Christopher Molling, (410) 786–6399, 

for issues related to DMEPOS technical 

amendments and corrections. 

Hafsa Vahora, (410) 786–7899, for 

issues related to the implementation of 

budget neutral fee schedules for splints 

and casts, and IOLs inserted in a 

physician’s office. 

SUPPLEMENTARY INFORMATION: 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

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

Government Printing Office. This 

database can be accessed via the 

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

Addenda Are Only Available Through 

the Internet on the CMS Web Site 

In the past, a majority of the Addenda 

referred to throughout the preamble of 

our proposed and final rules were 

available in the Federal Register. 

However, the Addenda of the annual 

proposed and final rules will no longer 

be available in the Federal Register. 

Instead, these Addenda to the annual 

proposed and final rules will be 

available only through the Internet on 

the CMS Web site. The Addenda to the 

End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) rules 

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

ESRDPayment/PAY/list.asp. Readers 

who experience any problems accessing 

any of the Addenda to the proposed and 

final rules of the ESRD PPS that are 

posted on the CMS Web site identified 

above should contact Michelle Cruse at 

410–786–7540. 

Table of Contents 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

2. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

3. Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 

B. Summary of the Major Provisions 

1. ESRD PPS 

2. ESRD QIP 

3. DMEPOS 

C. Summary of Costs and Benefits 

1. Impacts of the Final ESRD PPS 

2. Impacts for ESRD QIP 

3. Impacts for DMEPOS 

II. Calendar Year (CY) 2014 End-Stage 

Renal Disease (ESRD) Prospective Payment 

System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2014 ESRD PPS 

C. Routine Updates and Policy Changes to 

the CY 2014 ESRD PPS 

1. Composite Rate Portion of the ESRD PPS 

Blended Payment 

2. ESRD PPS Base Rate 

a. Adjustment to the ESRD PPS Base Rate 

To Reflect the Change in Utilization of 

ESRD-Related Drugs and Biologicals 

i. Methodology for Reducing the CY 2014 

ESRD PPS Base Rate 

ii. Determining Utilization of ESRD-Related 

Drugs and Biologicals 

iii. Pricing of ESRD-Related Drugs and 

Biologicals 

iv. Calculation of the Amount of the Per 

Treatment Reduction 

v. Final Amount of the Drug Utilization 

Adjustment 

3. ESRD Bundled Market Basket 

a. Overview and Background 

b. Market Basket Update Increase Factor 

and Labor-related Share for ESRD 

Facilities for CY 2014 

c. Productivity Adjustment for CY 2014 

d. Calculation of the Final ESRDB Market 

Basket Update, Adjusted for Multifactor 

Productivity for CY 2014 

4. The CY 2014 Wage Index 

a. Payment under the ESRD PPS for 

Facilities Located in Guam, American 

Samoa, and the Northern Mariana 

Islands 

b. Policies for Areas With No Wage Data 

c. Reduction to the ESRD Wage Index Floor 

d. Wage Index Budget-Neutrality 

Adjustment 

5. Application of the International 

Classification of Diseases (ICD), Tenth 

Revision, to the Comorbidity Payment 

Adjustment Codes 

a. One ICD–9–CM Code Crosswalks to One 

ICD–10–CM Code 

b. One ICD–9–CM Code Crosswalks to 

Multiple ICD–10–CM Codes 

c. Multiple ICD–9–CM Codes Crosswalk to 

One ICD–10–CM Code 

6. Revisions to the Outlier Policy 

a. Impact of Changes to the Outlier Policy 

b. Outlier Policy Percentage 

D. The Self-Dialysis and Home Dialysis 

Training Add On Adjustment 

a. Medicare Policy for Self-Dialysis 

Training, Home Dialysis Training, and 

Retraining 

b. Payment Methodology 

E. Delay of Payment for Oral-Only Drugs 

Under the ESRD PPS 

F. Miscellaneous Comments 

III. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

ESRD QIP for PY 2016 

C. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP for PY 2016 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) Overview 

2. Brief Overview of Proposed PY 2016 

Measures 

3. Measures Application Partnership 

Review 

D. Measures for the PY 2016 ESRD QIP and 

Subsequent PYs of the ESRD QIP 

1. PY 2015 Measures Continuing in PY 

2016 and Future Payment Years 


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2. Expansion of One PY 2015 Measure and 

Revision of Two PY 2015 Measures for 

PY 2016 and Subsequent Payment Years 

a. Expanded ICH CAHPS Reporting 

Measure 

b. Revised Mineral Metabolism Reporting 

Measure 

c. Revised Anemia Management Reporting 

Measure 

3. New Measures for PY 2016 and 

Subsequent Payment Years of the ESRD 

QIP 

a. Anemia Management Clinical Measure 

Topic and Measures 

i. Anemia Management: Hgb >12 

ii. Anemia of Chronic Kidney Disease: 

Patient Informed Consent for Anemia 

Treatment 

b. Hypercalcemia 

c. Use of Iron Therapy for Pediatric 

Patients Reporting Measure 

d. NHSN Bloodstream Infection in 

Hemodialysis Outpatients Clinical 

Measure 

e. Comorbidity Reporting Measure 

4. Other Measures Under Development 

5. Scoring for the PY 2016 ESRD QIP and 

Future Payment Years 

6. Performance Period for the PY 2016 

ESRD QIP 

7. Performance Standards for the PY 2016 

ESRD QIP and Future Payment Years 

a. Clinical Measure Performance Standards 

b. Performance Standards for Clinical 

Measures 

c. Performance Standards for Reporting 

Measures 

8. Scoring for the PY 2016 ESRD QIP 

Measures 

a. Scoring Facility Performance on Clinical 

Measures Based on Achievement 

b. Scoring Facility Performance on Clinical 

Measures Based on Improvement 

c. Calculating Facility Performance on 

Reporting Measures 

9. Weighting the PY 2016 ESRD QIP 

Measures and Calculating the PY 2016 

ESRD QIP Total Performance Score 

a. Weighting Individual Measures To 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy Measure Topic, 

the Vascular Access Type Measure 

Topic, and the Anemia Management 

Clinical Measure Topic 

b. Weighting the Total Performance Score 

c. Examples of the PY 2016 ESRD QIP 

Scoring Methodology 

10. Minimum Data for Scoring Measures 

for the PY 2016 ESRD QIP and Future 

Payment Years 

11. Payment Reductions for the PY 2016 

ESRD QIP and Future Payment Years 

12. Data Validation 

13. Scoring Facilities Whose Ownership 

Has Changed 

14. Public Reporting Requirements 

IV. Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

A. Background 

1. Background for DME 

2. Medicare Guidance and Rulemaking 

Regarding Definition of Routinely 

Purchased DME 

3. Payment for Inexpensive or Routinely 

Purchased Items and Capped Rental 

Items 

B. Current Issues 

C. Responses to Comments on the 

Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

V. Clarification of the 3-Year Minimum 

Lifetime Requirement (MLR) for DME 

A. Current Issues 

B. Scope of the 3-Year MLR for DME 

C. Response to Comments on the 3-Year 

MLR for DME 

VI. Implementation of Budget-Neutral Fee 

Schedules for Splints, Casts and 

Intraocular Lenses (IOLs) 

A. Background 

1. Payment Under Reasonable Charges 

2. Payment Under Fee Schedules 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Implementation of Budget Neutral Fee 

Schedules for Splints, Casts and IOLs 

VII. DMEPOS Technical Amendments and 

Corrections 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Proposed Technical Amendments and a 

Correction 

VIII. Waiver of Delayed Effective Date 

IX. Collection of Information Requirements 

A. Legislative Requirement for Solicitation 

of Comments 

B. Requirements in Regulation Text 

C. Additional Information Collection 

Requirements 

X. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impact 

B. Detailed Economic Analysis 

1. CY 2014 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

b. Effects on Other Providers 

c. Effects on the Medicare Program 

d. Effects on Medicare Beneficiaries 

e. Alternatives Considered 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2016 ESRD QIP 

b. Alternatives Considered for the PY 2016 

ESRD QIP 

3. DMEPOS Provisions 

a. Effects of the Implementation of Fee 

Schedules for Splints, Casts and IOLs 

b. Clarification of the 3-Year MLR for DME 

c. Definition of Routinely Purchased DME 

C. Accounting Statement. 

XI. Regulatory Flexibility Act Analysis 

XII. Unfunded Mandates Reform Act 

Analysis 

XIII. Federalism Analysis 

XIV. Congressional Review Act 

XV. Files Available to the Public via the 

Internet Regulations Text 

Acronyms 

Because of the many terms to which 

we refer by acronym in this final rule, 

we are listing the acronyms used and 

their corresponding meanings in 

alphabetical order below: 

AHRQ Agency for Healthcare Research and 

Quality 

ASP Average Sales Price 

ATRA American Taxpayer Relief Act of 

2012 BLS Bureau of Labor Statistics 

CBSA Core Based Statistical Area 

CCN CMS Certification Number 

CDC Centers for Disease Control and 

Prevention 

CKD Chronic Kidney Disease 

CY Calendar Year 

DFC Dialysis Facility Compare 

DME Durable Medical Equipment 

DMEPOS Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

ESA Erythropoiesis Stimulating Agent 

ESRD End-Stage Renal Disease 

ESRDB End-Stage Renal Disease bundled 

ESRD PPS End-Stage Renal Disease 

Prospective Payment System 

FDA Food and Drug Administration 

GEM General Equivalence Mappings 

HAIs Healthcare-Acquired Infections 

HCPCS Healthcare Common Procedure 

Coding System 

HHS Department of Health and Human 

Services 

ICD International Classification of Diseases 

ICD–9–CM International Classification of 

Disease, 9th Revision, Clinical 

Modification 

ICH CAHPS In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems 

IGI IHS Global Insight 

IOLs Intraocular Lenses 

IPPS Inpatient Prospective Payment System 

MAP Medicare Allowable Payment 

MFP Multifactor Productivity 

MLR Minimum Lifetime Requirement 

NCD National Coverage Determination 

NHSN National Health Safety Network 

NQF National Quality Forum 

OMB Office of Management and Budget 

PFS Physician Fee Schedule 

QIP Quality Incentive Program 

SHR Standardized Hospitalization Ratio 

Admissions 

SMR Standardized Mortality Ratio 

TPS Total Performance Score 

VBP Value Based Purchasing 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

This final rule updates and makes 

revisions to the End-Stage Renal Disease 

(ESRD) prospective payment system 

(PPS) for calendar year (CY) 2014. 

Section 1881(b)(14) of the Social 

Security Act (the Act), as added by 

section 153(b) of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) (Public 

Law 110–275), and section 

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

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act (Public Law 111–148), 

established that beginning CY 2012, and 

each subsequent year, the Secretary 

shall reduce the market basket increase 

factor by a productivity adjustment 


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

of the Act. 

In addition, section 1881(b)(14)(I) of 

the Act, as added by section 632(a) of 

the American Taxpayer Relief Act of 

2012 (ATRA) (Pub. L. 112–240), requires 

the Secretary, by comparing per patient 

utilization from 2007 with such data 

from 2012, to reduce the single payment 

amount to reflect the Secretary’s 

estimate of the change in the utilization 

of ESRD-related drugs and biologicals. 

Section 632(b) of ATRA prevents the 

Secretary from paying for oral-only 

ESRD-related drugs and biologicals 

under the ESRD PPS before January 1, 

2016. 

2. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

This final rule also sets forth 

requirements for the ESRD Quality 

Incentive Program (QIP), including for 

payment year (PY) 2016. The program is 

authorized under section 153(c) of 

MIPPA, which added section 1881(h) to 

the Social Security Act (the Act). The 

ESRD QIP is the most recent step in 

fostering improved patient outcomes by 

establishing incentives for dialysis 

facilities to meet performance standards 

established by CMS. 

3. Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

This final rule clarifies the definition 

of routinely purchased equipment 

covered under the DME benefit category 

and the scope of the 3-year minimum 

lifetime requirement (MLR) for DME. In 

addition, this final rule implements 

budget neutral fee schedules for splints 

and casts, and intraocular lenses (IOLs) 

inserted in a physician’s office. Finally, 

this final rule makes a few technical 

amendments and corrections to existing 

regulations related to payment for 

DMEPOS items and services. 

B. Summary of the Major Provisions 

1. ESRD PPS 

• Update to the ESRD PPS base rate 

for CY 2014: For CY 2014, the ESRD 

PPS base rate is $239.02. This reflects 

the CY 2013 ESRD PPS base rate of 

$240.36 adjusted by the ESRDB market 

basket (3.2 percent) minus productivity 

(0.4 percent) increase factor of 2.8 

percent, the wage index budget 

neutrality factor of 1.000454, and the 

home dialysis training add-on budget 

neutrality adjustment factor of 0.999912 

to get $247.18 ($240.36 * 1.028 * 

1.000454 * 0.999912 = $247.18). We 

reduced this amount by the portion of 

the CY 2014 drug utilization adjustment 

that is being transitioned this year, or 

$8.16, to arrive at a final CY 2014 ESRD 

PPS base rate of $239.02 

($247.18¥$8.16 = $239.02). 

• The CY 2014 wage index and wage 

index floor: We adjust wage indices on 

an annual basis using the most current 

hospital wage data to account for 

differing wage levels in areas in which 

ESRD facilities are located. We did not 

propose any changes to the application 

of the wage index adjustment factor for 

CY 2014, and we will continue to apply 

the adjustment to the ESRD PPS base 

rate. For CY 2014 and CY 2015, we are 

continuing our policy for the gradual 

phase-out of the wage index floor and 

reducing the wage index floor values to 

0.45 and 0.40, respectively. 

• The outlier policy: We are updating 

the outlier services fixed dollar loss 

amounts for adult and pediatric patients 

and Medicare Allowable Payments 

(MAPs) for adult patients for CY 2014 

using 2012 claims data. Based on the 

use of more current data, the fixeddollar loss amount for pediatric 

beneficiaries would increase from 

$47.32 to $54.01 and the adjusted 

average outlier services MAP amount 

would decrease from $41.39 to $40.49 as 

compared to CY 2013 values. For adult 

beneficiaries, the fixed-dollar loss 

amount would decrease from $110.22 to 

$98.67 and the adjusted average outlier 

services MAP amount would decrease 

from $59.42 to $50.25. The 1 percent 

target for outlier payments was not 

achieved in CY 2012. We believe using 

CY 2012 claims data to update the 

outlier MAP and fixed dollar loss 

amounts for CY 2014 will increase 

payments for ESRD beneficiaries 

requiring higher resource utilization in 

accordance with a 1 percent outlier 

policy. 

• Application of ICD–10–CM 

Diagnosis Codes to the comorbidity 

payment adjustment codes: Effective 

October 1, 2014, CMS will implement 

the 10th revision of the ICD coding 

scheme. We discuss and provide a 

crosswalk from ICD–9–CM to ICD–10– 

CM for codes that are subject to the 

comorbidity payment adjustment. We 

are finalizing our proposed policy that 

all ICD–10–CM codes to which ICD–9– 

CM codes that are eligible for the 

comorbidity payment adjustments 

crosswalk will be eligible for the 

comorbidity payment adjustments with 

two exceptions. 

• The self-dialysis and home dialysis 

training add-on adjustment: In response 

to public comments, we are finalizing 

an increase in the amount of the selfdialysis and home dialysis training addon adjustment of 50 percent for both 

peritoneal dialysis (PD) and home 

hemodialysis (HHD) training treatments 

furnished on or after January 1, 2014. In 

CY 2014, the nursing time accounted for 

in the training add-on adjustment will 

increase from one hour to 1.5 hours per 

training treatment, resulting in an 

increase of $16.72, for a total training 

add-on adjustment of $50.16 per 

training treatment. We note that the 

increase to the training add-on 

adjustment will be made in a budget 

neutral manner in that we have applied 

a training add-on budget-neutrality 

adjustment factor of 0.999912 to the 

base rate. 

2. ESRD QIP 

This final rule implements 

requirements for the ESRD QIP. With 

respect to the PY 2016 ESRD QIP, we 

are continuing some of the previous 

ESRD QIP measures, adding new 

measures, and expanding the scope of 

some of the existing measures to cover 

the measure topics as follows: 

• To evaluate anemia management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure 

Æ Anemia Management, a reporting 

measure †

• To evaluate dialysis adequacy: 

Æ A Kt/V measure for adult 

hemodialysis patients, a clinical 

measure 

Æ A Kt/V measure for adult peritoneal 

dialysis patients, a clinical measure 

Æ A Kt/V measure for pediatric 

hemodialysis patients, a clinical 

measure 

• To determine whether patients are 

treated using the most beneficial 

type of vascular access: 

Æ An arteriovenous fistula measure, a 

clinical measure 

Æ A catheter measure, a clinical 

measure 

• To address effective bone mineral 

metabolism management: 

Æ Hypercalcemia, a clinical measure* 

Æ Mineral Metabolism, a reporting 

measure †

• To address safety: 

Æ National Healthcare Safety Network 

(NHSN) Bloodstream Infection in 

Hemodialysis Outpatients, a 

clinical measure *

• To assess patient experience: 

Æ ICH CAHPS survey reporting 

measure ‡ 

* Denotes that this measure is new to the 

ESRD QIP. † Denotes that this measure is revised in the 

ESRD QIP. 

‡ Denotes that this measure is expanded in 

the ESRD QIP. 

We also establish CY 2014 as the 

performance period for the PY 2016 


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ESRD QIP, establish performance 

standards for each measure, and adopt 

scoring and payment reduction 

methodologies that are similar to those 

finalized for the PY 2015 ESRD QIP. 

3. DMEPOS 

• Definition of routinely purchased 

DME: This final rule clarifies the 

definition of routinely purchased 

DME set forth at section 

§ 414.220(a), as well as addresses 

the classification of and payment 

for expensive items of DME and 

accessories (over $150) as a capped 

rental items in accordance with 

§ 414.229, if the items were not 

acquired by purchase on a national 

basis at least 75 percent of the time 

during the period July 1986 through 

June 1987. 

• Clarification of to the 3-year MLR and 

Related Grandfathering Policy: This 

final rule provides further 

clarification about how we will 

apply the 3-year MLR set forth at 

§ 414.202, which must be satisfied 

for an item or device to be 

considered DME. 

• Implementation of budget neutral fee 

schedules for splints and casts, and 

IOLs inserted in a physician’s 

office: For CY 2014, we are 

implementing budget neutral fee 

schedule amounts for splints and 

casts, and IOLs inserted in a 

physician’s office. Section 1842(s) 

of the Act authorizes CMS to 

implement fee schedule amounts 

for these items if they are 

established so that they are initially 

budget neutral. In 2011, total 

allowed charges for splints and 

casts were $5.6 million, while total 

allowed charges for IOLs inserted in 

a physician’s office were $76 

thousand. 

C. Summary of Costs and Benefits 

In section XI. of this final rule, we set 

forth a detailed analysis of the impacts 

that the changes will have on affected 

entities and beneficiaries. The impacts 

include the following: 

1. Impacts of the Final ESRD PPS 

The impact chart in section XI.B.1.a. 

of this final rule displays the estimated 

change in payments to ESRD facilities in 

CY 2014 compared to estimated 

payments in CY 2013. The overall 

impact of the CY 2014 changes is 

projected to result in an average 

increase in payments of 0.0 percent 

from CY 2013 to CY 2014. Hospitalbased ESRD facilities have an estimated 

0.8 percent increase in payments 

compared with freestanding facilities 

with an estimated 0.0 percent increase. 

We estimate that there will be no 

change in aggregate ESRD PPS 

expenditures from CY 2013 to CY 2014. 

This reflects a $240 million increase 

from the payment rate update, a $30 

million increase due to the updates to 

the outlier threshold amounts, and a $20 

million increase due to the change in 

the blend of payments, and a $290 

million decrease in expenditures 

specifically related to the drug 

utilization adjustment. The drug 

utilization adjustment for CY 2014 

represents 27 percent of the total drug 

utilization adjustment amount of 

$29.93. The estimated 0.0 percent 

overall payment change will result in a 

small reduction in beneficiary 

coinsurance compared to CY 2013 

beneficiary because the CY 2014 ESRD 

PPS base rate is slightly less than that 

CY 2013 base rate, discussed in section 

II.C.2.a.v. 

2. Impacts for ESRD QIP 

The overall economic impact of the 

proposed ESRD QIP is an estimated 

$15.2 million in PY 2016. In PY 2016, 

we expect the total payment reductions 

to be approximately $15.1 million, and 

the costs associated with the collection 

of information requirements for certain 

measures to be approximately $39.5 

thousand. For PY 2017 and future 

payment years, we expect the costs 

associated with the collection of 

information requirements for the 

expanded ICH CAHPS measure in the 

proposed ESRD QIP to be approximately 

$9.7 million. 

The ESRD QIP will continue to 

incentivize facilities to provide higher 

quality care to beneficiaries. The 

reporting measures associated with the 

collection of information requirements 

are critical to better understanding the 

quality of care beneficiaries receive, 

particularly patients’ experience of care, 

and will be used to incentivize 

improvements in the quality of care 

provided. 

3. Impacts for DMEPOS 

The overall impact of implementing 

fee schedules for splints and casts, and 

IOLs inserted in a physician’s office is 

insignificant. The reasonable charge 

amounts that we convert to fee schedule 

amounts will be budget neutral the first 

year and will be updated annually 

thereafter based on the consumer price 

index for all consumers (CPI–U) for the 

12-month period ending June 30 of the 

previous year and, reduced by the 

productivity adjustment described in 

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

For the 3-year MLR, we believe that a 

vast majority of the categories of items 

that were classified as DME before 

January 1, 2012, did function for 3 or 

more years (76 FR 70289). The 3-year 

MLR is designed to represent a 

minimum threshold for determination 

of durability for equipment that is 

consistent with the statutory DME 

payment provisions and applies on a 

prospective basis, effective January 1, 

2012. CMS recognizes that the 

healthcare industry and beneficiaries 

have come to rely on items that have 

qualified as DME on or prior to January 

1, 2012, regardless of whether those 

items met the 3-year MLR set forth at 

§ 414.202. We note that given that 

reliance and consistent with the 

regulation at § 414.202, CMS would not 

reopen those prior decisions and 

reclassify the equipment in light of the 

new 3-year standard. We believe that 

continuing the Medicare coverage for all 

the items that qualified as DME on or 

prior to January 1, 2012, would avoid 

disrupting the continuity of care for the 

beneficiaries that received these items 

for medical treatment prior to January 1, 

2012, without creating a significant 

fiscal impact on the Medicare Program. 

We also do not expect any significant 

impact as a result of how this rule will 

be applied in terms of equipment that is 

modified. Based on our experience with 

the Medicare Program, items covered as 

DME prior to 2012 that have lifetimes of 

less than 3 years are well established 

and have been used in treating illnesses 

or injuries of patients for many years. 

The items are designed to provide 

treatment for the period of time 

generally needed for the patient and it 

is unlikely that devices will be modified 

to be less durable. 

We expect that the overall impact of 

clarifying the definition of routinely 

purchased DME and finalizing our 

proposal to classify certain expensive 

items as cap rental will be a decrease in 

expenditures because payment on a 

13-month capped rental basis rather 

than a lump sum purchase basis for 

certain, very expensive items will lower 

total payments for these items and 

because many beneficiaries would not 

rent the items for as long as 13 months. 

II. Calendar Year (CY) 2014 End-Stage 

Renal Disease (ESRD) Prospective 

Payment System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

On August 12, 2010, we published in 

the Federal Register a final rule (75 FR 

49030 through 49214) titled, ‘‘End-Stage 

Renal Disease Prospective Payment 

System,’’ (hereinafter referred to as the 

CY 2011 ESRD PPS final rule). In the CY 

2011 ESRD PPS final rule, we 


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implemented a case-mix adjusted 

bundled PPS for Medicare outpatient 

ESRD dialysis services beginning 

January 1, 2011, in accordance with 

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

by section 153(b) of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA). 

On November 10, 2011, we published 

in the Federal Register, a final rule 

(76 FR 70228 through 70316) titled, 

‘‘Medicare Program; End-Stage Renal 

Disease Prospective Payment System 

and Quality Incentive Program; 

Ambulance Fee Schedule; Durable 

Medical Equipment; and Competitive 

Acquisition of Certain Durable Medical 

Equipment, Prosthetics, Orthotics and 

Supplies’’ (hereinafter referred to as the 

CY 2012 ESRD PPS final rule). In that 

final rule, for the ESRD PPS, we made 

a number of routine updates for CY 

2012, implemented the second year of 

the transition to the ESRD PPS, made 

several policy changes and 

clarifications, and made technical 

changes. 

On November 9, 2012, we published 

in the Federal Register, a final rule (77 

FR 67450 through 67531) titled, 

‘‘Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and Bad 

Debt Reductions for All Medicare 

Providers’’ (hereinafter referred to as the 

CY 2013 ESRD PPS final rule). In that 

final rule, for the ESRD PPS, we made 

a number of routine updates for CY 

2013, implemented the third year of the 

transition to the ESRD PPS, and made 

several policy changes and reiterations. 

For a summary of the provisions in that 

final rule, we refer readers to the CY 

2014 ESRD PPS proposed rule at 78 FR 

40836, 40840–40841 (July 8, 2013). 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2014 ESRD PPS 

The proposed rule, titled ‘‘Medicare 

Program; End-Stage Renal Disease 

Prospective Payment System, Quality 

Incentive Program, and Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies’’ (78 FR 40836 through 40890), 

(hereinafter referred to as the CY 2014 

ESRD PPS proposed rule), was 

published in the Federal Register on 

July 8, 2013, with a comment period 

that ended on August 30, 2013. In that 

proposed rule, for the ESRD PPS, we 

proposed to (1) make a number of 

routine updates for CY 2014, (2) 

implement the fourth and last year of 

the transition where payments are based 

100 percent on the ESRD PPS, and (3) 

make revisions to the ESRD PPS base 

rate as required by statute. We received 

approximately 1282 public comments 

on the ESRD PPS proposals, including 

comments from ESRD facilities; national 

renal groups, nephrologists and patient 

organizations; patients; manufacturers; 

health care systems; and nurses. 

In this final rule, we provide a 

summary of each proposed provision, a 

summary of the public comments 

received and our responses to them, and 

the policies we are finalizing for the CY 

2014 ESRD PPS. Comments related to 

the paperwork burden are addressed in 

the ‘‘Collection of Information 

Requirements’’ section in this final rule. 

Comments related to the impact analysis 

are addressed in the ‘‘Economic 

Analyses’’ section in this final rule. 

C. Routine Updates and Policy Changes 

to the CY 2014 ESRD PPS 

1. Composite Rate Portion of the ESRD 

PPS Blended Payment 

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

requires a 4-year transition under the 

ESRD PPS. This final rule implements 

the fourth year of the transition for those 

ESRD facilities that did not elect to 

receive 100 percent of the payment 

amount under the ESRD PPS. For 

services furnished beginning in CY 

2014, under 42 CFR 413.239(a)(4), 100 

percent of the payment amount will be 

determined in accordance with section 

1881(b)(14) of the Act. Accordingly, a 

blended rate will no longer be provided, 

all facilities will be paid 100 percent 

under the ESRD PPS, and there will no 

longer be a transition budget neutrality 

adjustment factor applied to these 

payments starting on January 1, 2014. 

Therefore, facilities that participate in 

the transition will no longer receive a 

portion of their payments based on the 

basic case-mix adjusted composite rate 

payment system. Because payments will 

no longer be based on the basic case-mix 

adjusted composite rate, we will not 

update the drug add-on or wage index 

values (which included a budgetneutrality adjustment factor) that 

comprised that rate. In this final rule, 

we only discuss updates and policy 

changes that affect the components of 

the ESRD PPS. 

2. ESRD PPS Base Rate 

In the CY 2011 ESRD PPS final rule 

(75 FR 49071 through 49083), we 

discussed the development of the ESRD 

PPS per treatment base rate that is 

codified in the Medicare regulations at 

§ 413.220 and § 413.230. The CY 2011 

ESRD PPS final rule also provides a 

detailed discussion of the methodology 

used to calculate the ESRD PPS base 

rate and the computation of factors used 

to adjust the ESRD PPS base rate for 

projected outlier payments and budget 

neutrality in accordance with sections 

1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) 

of the Act, respectively. Specifically, the 

ESRD PPS base rate was developed from 

CY 2007 claims (that is, the lowest per 

patient utilization year as required by 

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

updated to CY 2011, and represented 

the average per treatment Medicare 

Allowable Payment (MAP) for 

composite rate and separately billable 

services. In accordance with section 

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

regulations at § 413.230, the ESRD PPS 

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

applicable facility adjustments, 

geographic differences in area wage 

levels using an area wage index, as well 

as applicable outlier payments or 

training payments. 

As discussed in section II.C.3. of this 

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

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

MIPPA and amended by section 3401(h) 

of the Affordable Care Act, provides 

that, beginning in 2012, the ESRD PPS 

payment amounts are required to be 

annually increased by the rate of 

increase in the ESRD market basket, 

reduced by the productivity adjustment 

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

Accordingly, we applied the 2.8 percent 

increase factor, that is the ESRDB 

market basket (3.2 percent) minus 

productivity (0.4 percent) to the CY 

2013 ESRD PPS base rate of $240.36, 

which results in a CY 2014 ESRD PPS 

base rate of $247.09 ($240.36 × 1.028 = 

$247.09). 

In addition, as discussed in section 

II.C.4.d. of this final rule, we apply the 

wage index budget-neutrality 

adjustment factor of 1.000454 to the CY 

2014 ESRD PPS base rate (that is, 

$247.09), yielding a CY 2014 ESRD PPS 

wage-index budget-neutrality adjusted 

base rate of $247.20 ($247.09 × 1.000454 

= $247.20). Also, as discussed in section 

II.D.b. of this final rule, we finalized an 

increase in the home dialysis training 

add-on in a budget-neutral manner. 

Because this adjustment was applied in 

a budget-neutral manner, we needed to 

adjust the CY 2014 ESRD PPS base rate 

after the application of the wage index 

budget neutrality adjustment factor to 

account for the increase in training 

payments. This application yields a CY 

2014 ESRD PPS base rate of $247.18 

($247.20 × 0.999912 = $247.18). This 

amount is then reduced by the portion 

of the drug utilization adjustment that is 

being implemented this year, which is 

$8.16, which yields a final CY 2014 base 

rate of $239.02. The drug utilization 

adjustment is addressed in the following 

section. 


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a. Adjustment to the ESRD PPS Base 

Rate To Reflect the Change in 

Utilization of ESRD-Related Drugs and 

Biologicals 

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

added by section 632(a) of the ATRA, 

requires that, for services furnished on 

or after January 1, 2014, the Secretary 

shall make reductions to the single 

payment for renal dialysis services to 

reflect the Secretary’s estimate of the 

change in the utilization of ESRDrelated drugs and biologicals (excluding 

oral-only ESRD-related drugs) by 

comparing per patient utilization data 

from 2007 with such data from 2012. 

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

that in making the reductions, the 

Secretary take into account the most 

recently available data on Average Sales 

Prices (ASP) and changes in prices for 

drugs and biologicals reflected in the 

ESRD market basket percentage increase 

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

the Act. Consistent with these 

requirements, in the CY 2014 ESRD PPS 

proposed rule (78 FR 40843) we 

proposed to apply a payment 

adjustment to the CY 2014 ESRD PPS 

base rate that reflects the change in 

utilization of ESRD-related drugs and 

biologicals from CY 2007 to CY 2012. 

i. Methodology for Reducing the CY 

2014 ESRD PPS Base Rate 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40841 through 40843), we 

discussed the methodology used for 

calculating the drug utilization 

adjustment that will reduce the ESRD 

PPS base rate. Because the ESRD PPS 

base rate is a per treatment base rate, the 

adjustment is calculated on a per 

treatment basis. We proposed to 

calculate the amount of the per 

treatment adjustment by applying CY 

2014 prices for ESRD-related drugs and 

biologicals to the utilization data for CY 

2007 and CY 2012. We noted that the 

CY 2014 ESRD PPS base rate is 

reflective of 2007 utilization because the 

base rate was derived from CY 2007 

data. We explained that using prices for 

drugs and biologicals inflated to 2014 

levels allows us to appropriately 

measure changes that are attributable to 

utilization patterns as opposed to 

differences in pricing for drugs and 

biologicals in 2007 and 2012. In 

addition, because we proposed to make 

the reduction in CY 2014, we priced the 

ESRD-related drugs and biologicals for 

the year in which the adjustment 

applies. We explained that for purposes 

of this analysis, we view utilization of 

drugs and biologicals as units of an 

ESRD-related drug or biological 

furnished to a patient on a per treatment 

basis. We took the estimated amount of 

the per treatment difference between the 

estimated spending on drugs and 

biologicals in CY 2007 and CY 2012 and 

reduced this amount by the same 

adjustment factors that were used to 

calculate the ESRD PPS base rate from 

the CY 2007 unadjusted rate per 

treatment, which are the 

standardization, outlier, and the 98 

percent budget-neutrality adjustments. 

A detailed explanation of these 

adjustment factors is provided in the CY 

2011 ESRD PPS final rule (75 FR 49081 

through 49082). We proposed to reduce 

the CY 2014 ESRD PPS base rate by the 

resulting amount. 

ii. Determining Utilization of ESRDRelated Drugs and Biologicals 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40841 through 40842), we 

explained how we determined 

utilization of ESRD-related drugs and 

biologicals. Section 1881(b)(14)(I) of the 

Act requires the single payment amount 

to be reduced by an amount that 

‘‘reflects the Secretary’s estimate of the 

change in utilization of drugs and 

biologicals described in clauses (ii), (iii), 

and (iv) of subparagraph (B) (other than 

oral-only ESRD-related drugs, as such 

term is used in the final rule 

promulgated by the Secretary in the 

Federal Register on August 12, 2010 (75 

FR 49030))’’. As we mentioned above, 

for purposes of this analysis, we view 

utilization of drugs and biologicals as 

units of a drug or biological furnished 

to a patient per treatment. ESRD 

facilities report this information on 

claims. To calculate this adjustment, we 

analyzed the utilization of 

erythropoiesis stimulating agents (ESAs) 

and any oral forms of such agents 

furnished to individuals for the 

treatment of ESRD. We also analyzed 

the utilization of other injectable drugs 

and biologicals (such as iron sucrose 

and doxercalciferol) and any oral 

equivalent form of such drug or 

biological furnished to individuals for 

the treatment of ESRD that were 

included in the expanded bundle of 

services covered by the ESRD PPS. We 

did not include diagnostic laboratory 

tests or other items and services in the 

comparison analysis because section 

1881(b)(14)(I) only refers to estimating 

the change in utilization of drugs and 

biologicals. 

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

requires the Secretary to compare per 

patient utilization data from 2007 with 

per patient utilization data from 2012. 

For the CY 2007 utilization data for 

ESRD-related drugs and biologicals, we 

proposed to use the data analysis 

prepared for the CY 2011 ESRD PPS 

final rule. In the CY 2011 ESRD PPS 

final rule (75 FR 49071 through 49083), 

we discuss in detail the development of 

the ESRD PPS base rate and, as we 

stated above, the base rate represents the 

average MAP for composite rate and 

separately billable services, which was 

derived from 2007 claims data. We also 

explained in the CY 2011 ESRD PPS 

final rule that in order to comply with 

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

determined that 2007 was the year with 

the lowest per patient utilization of 

renal dialysis services by Medicare 

ESRD beneficiaries among the years 

2007, 2008, and 2009. Therefore, 

utilization data for ESAs and other 

drugs and biologicals including the oralequivalent forms of those drugs and 

biologicals furnished for the treatment 

of ESRD was readily available for 

purposes of analyzing 2007 utilization. 

For the CY 2012 utilization data for 

ESRD-related drugs and biologicals, we 

proposed to use the latest available 

claims data based on the CY 2012 ESRD 

facility claims. For the proposed rule, 

we used CY 2012 ESRD facility claims 

updated through December 31, 2012 

(that is, claims with dates of service 

from January 1 through December 31, 

2012, that were received, processed, 

paid, and passed to the National Claims 

History File as of December 31, 2012). 

We stated that we would use the CY 

2012 claims file updated through June 

30, 2013, (that is, claims with dates of 

service from January 1 through 

December 31, 2012, that were received, 

processed, paid, and passed to the 

National Claims History File as of June 

30, 2013) to calculate 2012 utilization 

for the final rule. We solicited 

comments on the proposed use of 2007 

and 2012 claims data to capture the 

utilization of ESRD-related drugs and 

biologicals in those years. The 

comments and our responses are set 

forth below. 

Comment: Several commenters agreed 

with CMS that claims data from 2007 

and 2012 are reliable sources for ESRDrelated drugs and biologicals utilization. 

Response: We thank the commenters 

for their support. For this final rule, we 

used the CY 2007 claims data that was 

used in preparation of the CY 2011 

ESRD PPS final rule. In addition, we 

used the CY 2012 claims file updated 

through June 30, 2013, (that is, claims 

with dates of service from January 1 

through December 31, 2012, that were 

received, processed, paid, and passed to 

the National Claims History File as of 

June 30, 2013) to calculate 2012 

utilization. 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40842), we explained that 

because section 1881(b)(14)(I) requires 


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that we compare per patient utilization 

of ESRD-related drugs and biologicals in 

2007 with per patient utilization in 

2012, we would also include utilization 

of drugs and biologicals furnished in 

ESRD facilities located in the United 

States Territories of Guam, American 

Samoa and the Northern Mariana 

Islands (the Pacific Rim), even though 

facilities in the Pacific Rim were not 

paid under the ESRD PPS during these 

years. Therefore, we proposed to use 

2007 and 2012 utilization of ESRDrelated drugs and biologicals (including 

oral equivalents) for ESRD facilities 

located in these territories in our 

analysis of the reduction required by 

section 1881(b)(14)(I). For the proposed 

rule, we did not readily have access to 

the 2007 utilization data for the ESRD 

facilities located in these areas; 

however, we planned to include these 

data in our calculation for the final rule. 

Because there are very few ESRD 

facilities in this region, we indicated 

that the inclusion of utilization of drugs 

and biologicals furnished in CY 2007 at 

these facilities would not have a 

significant impact on the amount of the 

adjustment. 

We solicited comments on the 

proposal to include data on the 

utilization of drugs and biologicals 

furnished in ESRD facilities located in 

the Pacific Rim when comparing 

utilization of drugs and biologicals in 

CY 2007 with CY 2012. We did not 

receive any comments objecting to the 

use of data from ESRD facilities located 

in the Pacific Rim in the analysis. In the 

analysis for this final rule, we have 

included the drug utilization data from 

facilities located in the Pacific Rim. 

iii. Pricing of ESRD-Related Drugs and 

Biologicals 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40842 through 40843), we 

explained how we priced ESRD-related 

drugs and biologicals to CY 2014 to 

allow for an accurate comparison 

between utilization of those drugs and 

biologicals furnished in CY 2007 with 

utilization in CY 2012. In order to price 

ESRD-related drugs and biologicals 

based on CY 2014 prices, we started 

with CY 2011 prices as established and 

published in the CY 2011 ESRD PPS 

final rule. 

In developing the CY 2011 ESRD PPS 

base rate, we included the MAP 

amounts for ESRD-related drugs and 

biologicals that were, prior to January 1, 

2011, separately paid under Part B. We 

used the second quarter of 2010 ASP+6 

prices (which was the most current data 

available at the time) and then used the 

Producer Price Index (PPI) to inflate the 

prices to CY 2011 (75 FR 49079). We 

also included the MAP amounts for the 

ESRD-related oral-equivalent drugs and 

biologicals that were, prior to January 1, 

2011, separately paid under Part D (75 

FR 49080). For setting the CY 2011 

ESRD PPS base rate for these drugs, we 

used the growth rates for overall 

prescription drug prices that were used 

in the National Health Expenditure 

Projections (NHE) for updating prices 

for former Part D drugs to CY 2011 from 

CY 2007. 

We proposed to inflate the prices 

established in the CY 2011 ESRD PPS 

final rule for ESRD-related drugs and 

biologicals and their oral equivalents to 

CY 2014 by applying the ESRD bundled 

(ESRDB) market basket, the productivity 

adjustment, and the wage index budget 

neutrality adjustment factors. Because 

the base rate and the ESRDB market 

basket account for ESRD-related drugs 

and biologicals and we have updated all 

components of the base rate annually 

using a market basket minus 

productivity with wage index budget 

neutrality adjustment factor, we believe 

that using these inflation factors is 

consistent with how these services are 

paid under the ESRD PPS. The drug 

component of the ESRDB market basket 

uses the PPI for prescription drugs as a 

proxy for the growth in drug prices. We 

believe using the ESRDB market basket 

to price drugs and biologicals for CY 

2014 complies with the requirement in 

section 1881(b)(14)(I) that the Secretary 

take into account the changes in prices 

for drugs and biologicals reflected in the 

ESRDB market basket percentage 

increase factor. The ESRDB market 

basket minus productivity increase 

factors were 2.1 percent and 2.3 percent 

for CY 2012 and CY 2013, respectively. 

The proposed CY 2014 update was 2.5 

percent. The wage index budget 

neutrality adjustment factors for the 

same years are 1.001520, 1.000613, and 

a CY 2014 proposed factor of 1.000411. 

Therefore, we proposed to use a total 

growth update factor of 7.3 percent 

(1.021 * 1.023 * 1.025 * 1.001520 * 

1.000613 * 1.000411 = 1.073) to inflate 

prices for ESRD-related drugs and 

biologicals from CY 2011 levels to CY 

2014 levels. We solicited comments on 

the use of the ESRDB market basket 

percentage increase factor to inflate 

prices for drugs and biologicals to CY 

2014 levels. The comment and our 

response is set forth below. 

Comment: A few commenters 

expressed concern that inflating the 

prices from 2007 levels does not capture 

the true cost of the drugs and biologicals 

for small and independent ESRD 

facilities and small dialysis 

organizations (SDOs). One commenter 

stated that if the price is an average 

number, then SDOs and mid-sized 

dialysis organizations (MDOs) would be 

at a disadvantage because their prices 

are far greater than the prices paid by 

large dialysis organizations. Therefore, 

the commenters did not believe that the 

costs incurred by SDOs and MDOs were 

accounted for by using 7.3 percent to 

inflate prices for ESRD-related drugs 

and biologicals from CY 2011 levels to 

CY 2014 levels and urged CMS to use 

actual drug costs reported on ESRD 

facility cost reports. 

Response: The drug utilization 

adjustment is a per treatment reduction 

to the single ESRD PPS base rate, which 

is a payment amount that reflects the 

average cost for an ESRD facility to 

furnish a dialysis treatment. Because the 

drug utilization adjustment is a 

reduction to the average payment, the 

drug utilization analysis needs to be 

performed at an aggregate level, that is, 

across all facilities using the same 

sources of data regardless of ownership 

type. In addition, we do not believe that 

it would be beneficial to SDOs/MDOs to 

use drug costs that are reported in ESRD 

facility cost reports. Even if we were to 

use cost report drug data, the SDO/MDO 

costs for drugs would continue to be 

averaged out by that of the large dialysis 

organizations (LDOs), which furnish the 

majority of dialysis treatments. More 

importantly, we would only be able to 

consider the ESRD facility cost reports 

for cost reporting periods ending in 

2011 and in 2012 for the drug utilization 

adjustment analysis, We would not have 

the information for cost reporting 

periods ending in 2013, which is when 

significant price increases have 

reportedly occurred. 

For these reasons, we continue to 

believe using the ESRDB market basket 

to price drugs and biologicals for CY 

2014 complies with the requirement in 

section 1881(b)(14)(I) that the Secretary 

take into account the changes in prices 

for drugs and biologicals reflected in the 

ESRDB market basket percentage 

increase factor and provides the most 

accurate way to price drugs at 2014 

levels. Therefore, in this final rule we 

are finalizing the use of the ESRDB 

market basket percentage increase factor 

to inflate prices for drugs and 

biologicals to CY 2014 levels. 

To determine the final growth update 

factor’s value, we used the methodology 

discussed above with one modification 

(described below) and updated the 

calculation using the final CY 2014 

ESRDB market basket minus the CY 

2014 multifactor productivity 

adjustment and the final CY 2014 wage 

index budget neutrality adjustment 

factor, which are based on the most 

recently available data. The ESRDB 


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market basket minus productivity 

increase factors were 2.1 percent and 2.3 

percent for CY 2012 and CY 2013, 

respectively. The final ESRDB market 

basket minus productivity increase 

factor for CY 2014 is 2.8 percent. The 

wage index budget neutrality 

adjustment factors for the same years are 

1.001520, 1.000613, and a final CY 2014 

factor of 1.000454. 

In addition to the ESRDB market 

basket minus productivity increase 

factor and the wage index budget 

neutrality adjustment factor, to account 

for the home dialysis training add-on 

increase for CY 2014 we applied an 

additional factor of 0.999912. We made 

this modification so that the 

methodology for developing the growth 

update factor is consistent with the way 

we update the ESRD PPS base rate. For 

CY 2014, we are increasing the home 

dialysis training add-on in a budgetneutral manner, and therefore, we 

needed to include an adjustment that 

accounts for the increase. We are 

finalizing a total growth update factor of 

7.64 percent (1.021 * 1.023 * 1.028 * 

1.001520 * 1.000613 * 1.000454 * 

0.999912 = 1.0764) to inflate prices for 

ESRD-related drugs and biologicals from 

CY 2011 levels to CY 2014 levels. For 

more information regarding the increase 

in the home dialysis training add-on 

payment, see section II.D.b. of this final 

rule. 

In addition to proposing the use of the 

ESRDB market basket percentage 

increase factor to inflate prices for drugs 

and biologicals to CY 2014 levels, in the 

CY 2014 ESRD PPS proposed rule (78 

FR 40843) we discussed an alternative 

method of using ASP instead of the PPI. 

Specifically, section 1881(b)(14)(I) 

requires the Secretary to ‘‘take into 

account the most recently available data 

on average sales prices and changes in 

prices for drugs and biologicals reflected 

in the ESRDB market basket percentage 

increase factor’’ in making the reduction 

to the ESRD PPS base rate to reflect the 

change in utilization of ESRD-related 

drugs and biologicals from CY 2007 to 

CY 2012. While we could have chosen 

to inflate prices for drugs and 

biologicals to 2014 levels with more 

recently available ASP data, we stated 

that we believed using a growth based 

on the ESRDB market basket is more 

appropriate because it reflects what 

Medicare is required to pay for drugs 

and biologicals through the ESRD PPS 

base rate. 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40843), we discussed an 

alternative analysis using prices based 

on the first quarter 2013 ASP+6 percent 

prices and the National Drug Code 

(NDC) prices published on the CMS 

Web site located at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/Outlier_

Services.html that are used for outlier 

calculations, and the PPI to project to 

CY 2014. The results were minimally 

different (a difference of $29.40 versus 

$29.52), and because we believed that 

the ESRDB market basket approach was 

a more appropriate measure of how 

Medicare pays for these drugs under the 

ESRD PPS, we proposed to use it to 

update drug prices. Nonetheless, we 

solicited comments on the potential use 

of ASP instead of the ESRDB market 

basket to inflate drug prices to 2014 

levels for purposes of the drug 

utilization adjustment. The comments 

and our responses are set forth below. 

Comment: An SDO expressed concern 

that the alternative analysis of 

comparing ASP to PPI is not accurate 

because there is an inherent problem 

with using ASP data. The commenter 

stated that ASP data does not accurately 

reflect the cost of epogen because the 

ASP data reports the combined price of 

epogen and procrit. The commenter 

further explained that procrit has a 

lower price than epogen but it is not a 

drug that ESRD facilities can purchase 

as an ESA to furnish to their patients 

because it is indicated for non-ESRD 

use. The commenter stated that while 

the average cost of procrit has 

diminished since 2007, the cost of 

epogen has risen significantly for SDOs 

and therefore the commenter believes 

that this results in a lower overall ASP 

amount because procrit dilutes the ASP 

price. A national organization for SDOs 

and an MDO expressed concern that due 

to the lag in the reporting and 

publishing of ASP data, the price 

increases that they have experienced 

were not fully reflected in the analysis. 

Response: We thank the commenters 

for this information. The ASP+6 

payment limits are based on actual 

marketplace prices submitted by 

manufacturers to CMS. Given that the 

ASP is an average price, some National 

Drug Codes (NDCs) in a given HCPCS 

code will be available at prices below 

the payment limit and others will be 

above the payment limit. The payment 

limits are evaluated and updated on a 

quarterly basis. We will initiate 

discussions with appropriate staff 

regarding the ASP for epogen to gain a 

better understanding of how including 

procrit impacts the ASP. We agree that 

the lag in reporting price increases in 

the ASP system as well as the 

combination of ASP data for Epoetin 

with that of procrit makes the use of 

ASP+6 prices to update the prices of 

drugs and biologicals to 2014 levels less 

desirable. 

After consideration of the comments 

that we received on the use of ASP 

versus PPI, we continue to believe that 

using a growth based on the ESRDB 

market basket is more appropriate 

because it reflects what Medicare is 

required to pay for the drugs and 

biologicals through the ESRD PPS base 

rate and because, as commenters noted, 

ASP prices may not be accurate or upto-date for drugs and biologicals used in 

the treatment of ESRD. 

iv. Calculation of the Amount of the Per 

Treatment Reduction 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40843), we provided detail 

on how the drug utilization reduction 

amount was calculated. We applied the 

2014 prices to the CY 2007 and CY 2012 

drug and biological utilization data to 

calculate aggregate amounts for each 

year. For drugs and biologicals for 

which we have utilization data for CY 

2012, but that were not present on CY 

2007 claims, we priced those drugs 

using the ASP+6 percent price for 2012, 

which is an average of the four quarter 

prices, and inflated it using the CY 2013 

and the CY 2014 proposed ESRDB 

market basket, productivity, and wage 

index budget neutrality adjustment 

factors. We noted that while most of 

these drugs had minimal utilization, 

feraheme was the only significant 

exception. Specifically, feraheme was 

not available until January 2010 and 

once the drug was available, the use of 

the drug rose to the top 12th drug 

furnished to ESRD beneficiaries. 

Next, we divided each year’s 

estimated aggregate amount for drugs 

and biologicals by that year’s count of 

treatments furnished to Medicare 

beneficiaries to get an average payment 

per treatment for the year. This resulted 

in a per treatment amount for drugs and 

biologicals of $83.76 in 2007 and a per 

treatment amount for drugs and 

biologicals of $51.42 in 2012. We then 

subtracted the average payment per 

treatment for CY 2012 from the average 

amount per treatment for CY 2007 to get 

a total of $32.34 ($83.76¥$51.42 = 

$32.34). We then reduced this amount 

by the standardization, the outlier, and 

the 98 percent budget neutrality 

adjustments to get a total of $29.52 

($32.34 × .9407 × .99 × .98 = $29.52). We 

applied these adjustments before 

reducing the base rate because the base 

rate was reduced by these adjustments 

when it was first established, and the 

reduction should be adjusted in the 

same way to make the two figures 

comparable. We then reduced the CY 

2014 proposed base rate of $246.47 by 

$29.52, resulting in the CY 2014 

proposed base rate of $216.95. A 


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reduction of $29.52 from the proposed 

CY 2014 ESRD PPS base rate would 

have amounted to a 12 percent 

reduction in Medicare payments. We 

solicited comments on the proposed 

methodology for the reduction to the 

ESRD PPS base rate to reflect the change 

in the utilization of ESRD-related drugs 

and biologicals from CY 2007 to CY 

2012. The comments and our responses 

are set forth below. 

Comment: We received comments 

from national organizations and a drug 

manufacturer that stated they were 

unable to determine if the methodology 

CMS used to calculate the reduction 

was proper because they did not have 

access to the same data that was used in 

the calculation. 

Response: We disagree with 

commenters who contend that they 

were unable to determine whether 

CMS’s methodology was proper because 

they did not have access to all of the 

data used to calculate the amount of the 

reduction. Our methodology for 

calculating the drug utilization 

adjustment required by section 

1881(b)(14)(I) was described in 

substantial detail in the CY 2014 ESRD 

PPS proposed rule. As a result, we do 

not believe that it was necessary for 

commenters to have every data point 

used in our calculations in order to have 

commented meaningfully on the 

methodological approach to the 

adjustment. Nonetheless, between the 

information provided in the proposed 

rule and included in the CY 2011 ESRD 

PPS final rule, commenters did have 

data we used in calculating the drug 

utilization adjustment. Moreover, 

shortly after the CY 2014 ESRD PPS 

proposed rule was published we posted 

a table titled, ‘‘Drug Utilization 

Adjustment’’ onto the CMS Web site as 

a convenience to stakeholders following 

requests for the data points used in our 

calculation of the drug utilization 

adjustment amount. This table includes 

the data we used to perform the 

calculation of the reduction amount for 

the proposed rule and it is posted with 

the rule’s addenda. Addendum C titled, 

‘‘Calculation of the Amount of the Per 

Treatment Reduction Using the EndStage Renal Disease Bundled Market 

Basket’’ contains updated data and the 

methodology used for this final rule. 

The Addendum can be found on the 

CMS Web site: http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/End-StageRenal-Disease-ESRD-PaymentRegulations-and-Notices.html. 

Comment: We received a comment 

from the Medicare Payment Advisory 

Commission (MedPAC) stating that they 

compared their own analyses of the 

changes in drug utilization using CMS’s 

methods and alternative methods to 

check for errors in the methodology. 

They concluded that CMS’ methods are 

consistent with the ATRA mandate and 

appear to be reasonable. 

Response: We thank the MedPAC for 

their support. 

v. Final Amount of the Drug Utilization 

Adjustment 

Using the methodology we proposed 

in the 2014 ESRD PPS proposed rule, 

we are updating the drug utilization 

adjustment based on the most current 

claims data available, that is, CY 2012 

claims with dates of service from 

January 1 through December 31, 2012 

that were received, processed, paid, and 

passed to the National Claims History 

File as of June 30, 2013. We applied the 

2014 prices to the CY 2007 and CY 2012 

drug and biological utilization data to 

calculate aggregate amounts for each 

year. For drugs and biologicals for 

which we have utilization data for CY 

2012, but that were not present on CY 

2007 claims, we priced those drugs 

using the ASP+6 percent price for 2012, 

which is an average of the four quarter 

prices, and inflated it using the CY 2013 

and the CY 2014 ESRDB market basket, 

productivity, and wage index budgetneutrality adjustment factors. 

Next, we divided each year’s 

estimated aggregate amount for drugs 

and biologicals by that year’s count of 

treatments furnished to Medicare 

beneficiaries to get an average payment 

per treatment for the year. This resulted 

in a per treatment amount for drugs and 

biologicals of $83.96 in 2007 and a per 

treatment amount for drugs and 

biologicals of $51.17 in 2012. We then 

subtracted the average payment per 

treatment for CY 2012 from the average 

amount per treatment for CY 2007 to get 

a total of $32.79 ($83.96¥$51.17 = 

$32.79). We then reduced this amount 

by the standardization, the outlier, and 

the 98 percent budget neutrality 

adjustments to get a total of $29.93 

($32.79 × .9407 × .99 × .98 = $29.93). As 

in the proposed rule, we applied these 

adjustments because the base rate was 

reduced by these adjustments when it 

was first established, and the reduction 

should be adjusted in the same way to 

make the two figures comparable. We 

are finalizing the drug utilization 

adjustment amount of $29.93. As 

discussed further below, this amount 

will be applied to the base rate over the 

course of a 3- to 4-year transition. 

Comment: Several national 

organizations representing the dialysis 

industry and dialysis patients believe 

our CY 2011 ESRD PPS base rate is 

incorrect and recommended that we 

correct the base rate prior to application 

of the drug utilization adjustment to 

account for overstated estimates of 

payment adjustments, especially the 

comorbidity case-mix adjusters, the 

outlier policy, and the low-volume 

adjuster. Because these adjustments 

have been paid out at a rate less than 

anticipated, the commenters stated that 

we have not met our obligation under 

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

which requires the Secretary to ensure 

that the estimated total amount of 

payments for 2011 for renal dialysis 

services equals 98 percent of the 

estimated total amount of payments that 

would have been made for services 

furnished in 2011 if the ESRD PPS had 

not been implemented. Furthermore, 

these commenters indicated that they 

were unable to receive discharge 

information from hospitals to document 

the comorbid conditions, which is 

necessary to seek reimbursement for the 

comorbidity payment adjustments. In 

order to the make the comorbidity 

adjustments more accessible, the 

commenters urged us to revisit the 

documentation requirements or remove 

the comorbidity adjustments entirely 

and return the dollars to the base rate. 

Dialysis organizations also 

encouraged CMS to substantially reduce 

the percentage of the outlier pool or 

eliminate it entirely. One commenter is 

concerned that SDO and non-profit 

providers are disproportionately 

impacted by this provision because they 

do not have the infrastructure of larger 

providers and therefore are less likely to 

capture all of the costs for a patient. The 

commenter went on to state the net 

effect of the outlier policy is that a 

provision that was originally put into 

place to protect small providers is 

actually penalizing them by decreasing 

the base rate. This same commenter 

recommended that CMS either suspend 

or, if that is not feasible, lower the 

outlier withhold from 1.0 percent to 0.5 

percent. 

Finally, several commenters 

referenced the GAO report 13–287, 

entitled, ‘‘End-Stage Renal Disease: CMS 

Should Improve Design and Strengthen 

Monitoring of Low-Volume 

Adjustment’’ and published March 1, 

2013, that found discrepancies in the 

identification of low-volume facilities. 

One commenter suggested that CMS 

delay implementation of the drug 

utilization adjustment until the 

purported problems with the underlying 

PPS can be resolved. 

Response: In developing the final 

ESRD PPS base rate for 2011, in 

accordance with section 

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

standardized the rate to account for the 


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payment adjustments and the outlier 

policy. As stated in the 2011 ESRD PPS 

final rule (75 FR 49081), to account for 

the overall effects of the proposed ESRD 

PPS case-mix patient and facility 

adjustment factors and wage indexes, 

we had to standardize payments in 

order to ensure that total projected PPS 

payments were equal to what would 

otherwise have been paid had the ESRD 

PPS not been implemented, prior to 

application of the 98 percent budgetneutrality adjustment. The 

standardization factor was calculated by 

dividing total estimated payments in 

2011 under the basic case-mix adjusted 

composite rate payment system by 

estimated payments under the final 

ESRD PPS in 2011. We do not intend to 

revise the standardization factor that 

was applied to the 2011 ESRD PPS base 

rate to reflect actual payments made 

under each of the adjustments and 

therefore we did not propose to restandardize the CY 2014 ESRD PPS base 

rate. Rather, we used the best data 

available and made a good faith effort to 

simulate payments under the ESRD PPS 

to determine the standardization factor 

that was applied to the CY 2011 ESRD 

PPS base rate. The final standardization 

adjustment was .9407 or a reduction of 

5.93 percent from the unadjusted per 

treatment base rate. 

Since the ESRD PPS began, 

organizations representing LDOs have 

expressed concern about the 

comorbidity adjustments and requested 

that we return the 5.93 percent 

standardization factor to the base rate. 

In response to this concern, in 

preparation for this final rule, we 

performed an analysis of the 

composition of the standardization 

factor and determined that the bulk of 

the 5.93 percent standardization 

reduction to the base rate arises from 

factors other than the comorbidities. 

Age adjustments account for 

approximately 3.0 percent, the onset of 

dialysis adjustment accounts for 

approximately 2.4 percent, the low 

volume adjustment accounts for 

approximately 0.3 percent, the body size 

adjustments account for approximately 

0.2 percent, and the wage adjustment 

accounts for approximately ¥0.7 

percent (this was negative and partially 

offset the effects of the other 

adjustments because the average wage 

adjustment was less than 1.00, unlike 

the other adjustments). The comorbidity 

adjustments jointly account for 

approximately 0.8 percent. 

Section 632(c) of ATRA requires the 

Secretary, by not later than January 1, 

2016, to conduct an analysis of the case 

mix payment adjustments under section 

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

appropriate revisions to those 

adjustments. Pursuant to this authority, 

CMS plans to conduct a regression 

analysis for the CY 2016 ESRD PPS 

rulemaking cycle to reassess the 

appropriateness of the patient and 

facility level payment adjustments. At 

that time, we plan to analyze the various 

payment adjustments under the PPS to 

determine whether they should 

continue to apply as well as whether the 

magnitude of the adjustments is 

appropriate. 

In responses to the comments 

regarding the comorbidity adjustments, 

we will consider whether changes to 

documentation requirements are 

warranted with respect to qualifying for 

the comorbidity payment adjustment. 

In regards to the outlier policy, as we 

explained in section II.C.6. of this final 

rule, section 1881(b)(14)(D)(ii) of the Act 

requires that the ESRD PPS include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variations in the amount 

of erythropoiesis stimulating agents 

necessary for anemia management. Each 

year, we simulate payments under the 

ESRD PPS in order to set the outlier 

fixed dollar loss and MAP amounts for 

adult and pediatric patients to try to 

achieve the 1 percent outlier policy. We 

would not increase the base rate in years 

where outlier payments were less than 

1 percent of total ESRD PPS payments, 

nor would we reduce the base rate if the 

outlier payments exceed 1 percent of 

total ESRD PPS payments. Rather, we 

would simulate payments in the 

following year and adjust the fixed 

dollar loss and MAP amounts to try to 

achieve outlier payments that meet the 

1 percent outlier percentage. This 

approach to updating the outlier policy 

is consistent with how we update 

outlier policies in other Medicare 

prospective payment systems, for 

example, the prospective payment 

system for inpatient psychiatric 

facilities. We believe that the outlier 

policy continues to be important for 

patient access to ESRD-related services 

because it offsets the cost of high-cost 

patients, particularly those who receive 

more drugs and biologicals than the 

average patient. We will reassess the 

outlier policy along with our review of 

the other payment adjustments for the 

CY 2016 ESRD PPS. With respect to the 

low-volume payment adjustment, we 

are reviewing the GAO’s findings and 

are considering their recommendations. 

Comment: A national organization 

representing large dialysis organizations 

(LDOs) and ESRD facilities 

recommended that prior to making any 

adjustment to reduce payments to 

reflect changes in utilization of drugs 

and biologicals, CMS should take into 

consideration what these commenters 

believe to be a cross subsidization of 

items and services that were previously 

paid for under the basic case-mix 

adjusted composite rate payment system 

with payments for formerly separately 

billable items. The commenters believe 

that because the composite rate, which 

historically did not have annual market 

basket increases, was underfunded, 

payments for separately billable drugs, 

laboratory tests, and supplies offset 

those losses. The organization provided 

a report that estimates that $15–20 of 

costs for items and services that were 

previously paid for under the basic casemix adjusted composite rate payment 

system are subsidized by the 

incorporation into the base rate of 

formerly separately billable drugs and 

biologicals, laboratory tests, and 

supplies. The commenters stated that 

CMS has the authority to take into 

account that Congress intended that 

some previously separately billable drug 

dollars be used to compensate for items 

and services formerly paid for under the 

purportedly underfunded basic casemix adjusted composite rate payment 

system. This comment was supported 

by other national providers and patient 

organizations. 

Response: Section 1881(b)(14)(I) of 

the Act requires that the single payment 

amount be reduced by an amount that 

reflects the Secretary’s estimate of the 

change in utilization of drugs and 

biologicals. It does not provide for the 

reduction to account for crosssubsidization of other components of 

the base rate. We do not believe we 

would be in compliance with section 

1881(b)(14)(I) if we were to eliminate 

most of the drug utilization reduction to 

reflect the purported need for crosssubsidization of the composite rate with 

separately billable services. 

Comment: In making the reduction to 

the ESRD PPS base rate, national 

organizations representing the dialysis 

industry and dialysis patients 

recommended that we factor in the 2 

percent reduction already made to the 

original ESRD PPS base rate in 2011 as 

required by section 1881(b)(14)(A)(ii), 

which was implemented in the form of 

the 98 percent budget neutrality 

adjustment. The comments indicated 

that this reduction accounts for the 

anticipated reduction in drug utilization 

and has already been built into the 

payment rate. The commenters stated 

that CMS has the authority to temper 

the drug utilization adjustment because 

section 1881(b)(14)(I) does not require a 

dollar-for-dollar adjustment. Rather, the 

statute indicates that the adjustment 


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should ‘‘reflect’’ the Secretary’s estimate 

of the change in utilization of drugs and 

biologicals. Therefore, the commenters 

contended, CMS has the authority to 

consider the 2 percent reduction 

implemented in 2011 as part of the drug 

utilization adjustment. 

Response: In the CY 2014 ESRD PPS 

proposed rule (78 FR 40843), we 

explained that once we determined the 

per-treatment difference in utilization of 

drugs and biologicals ($32.34), we 

reduced this amount by the 

standardization, the outlier, and the 98 

percent budget neutrality adjustment to 

yield the proposed drug utilization 

adjustment amount of $29.52. As noted 

previously, for this final rule, the 

difference in drug utilization per 

treatment was computed to be $32.79 

and this amount was also reduced by 

the standardization, the outlier, and the 

98 percent budget neutrality adjustment 

to yield the final drug utilization 

adjustment amount of $29.93. Therefore, 

the 98 percent budget neutrality 

adjustment was considered in 

computing the drug utilization 

adjustment. Moreover, because the 98 

percent budget neutrality adjustment 

and the drug utilization adjustment both 

apply to the ‘‘single’’ payment rate 

required by section 1881(b)(14)(A), we 

do not believe it would be appropriate 

to reduce the drug utilization 

adjustment by the amount of the 98 

percent budget neutrality adjustment, 

absent a clear statement of congressional 

intent that we should do so. 

Comment: Several national dialysis 

organizations indicated that CMS has an 

obligation to ensure that the single 

payment amount is consistent with the 

factors set forth in section 1881(b)(2)(B) 

of the Act, which provides that payment 

amounts for renal dialysis services be 

determined on a ‘‘cost-related basis or 

other economical and equitable basis.’’ 

The commenters submitted data that 

displayed profit margins for ESRD 

facilities prior to the proposed one-time 

reduction and then what the profit 

margins would look like after the onetime reduction. The comments stated 

that if payment rates do not reflect the 

cost of providing care, then they are 

neither economical nor equitable. Also, 

since section 1881(b)(14)(I) did not 

repeal section 1881(b)(2)(B) and the 

sections do not conflict with one 

another, both must be considered. In 

addition, because Congress inserted an 

‘‘and’’ between section 1881(b)(2)(B) 

requirements and section 1881(b)(7)— 

the reference to the payment system in 

effect at the time the provision was 

modified—this suggests the intent to 

have a two-step process for setting the 

payment rate. Commenters claim this 

conjunction suggests that the Secretary 

must not only apply the provisions that 

prescribe the payment model, but also 

evaluate the final payment amount 

against the factors outlined in 

subsection (b)(2)(B). Using these 

authorities, commenters claim CMS 

could temper any payment reduction so 

the final amount remains based either 

upon the cost of providing services or 

upon economic and equitable factors. 

The commenters indicated that a 

payment amount that does not cover the 

cost of providing care would not be 

cost-related or equitable. The 

commenters believe use of the word 

‘‘reflect’’ in section 1881(b)(14)(I) 

provides CMS the authority to adjust the 

drug utilization adjustment consistent 

with other provisions of section 1881. 

The commenters contend that this 

interpretation is also supported by the 

fact that section 1881(b)(14)(I) notes that 

the drug utilization adjustment applies 

to ‘‘this paragraph’’ (which establishes 

the PPS bundle) and thus, does not 

override or repeal other provisions of 

this section, including section 

1881(b)(2)(B). 

Response: We disagree with the 

commenters that section 1881(b)(2)(B) of 

the Act applies to the ESRD PPS. The 

MIPPA revisions to section 1881 of the 

Act did not specify that we must take 

section 1881(b)(2) of the Act into 

account in implementing the ESRD PPS. 

Instead, it required that we base the 

ESRD PPS on the lowest per patient 

utilization year out of 2007, 2008, and 

2009 and that the system should result 

in payments that are 98 percent of what 

would otherwise have been paid. Once 

we established that 2007 was the lowest 

per patient utilization year, we used 

cost report and claims data to compute 

the base rate. Section 1881(b)(14)(I) 

requires the Secretary to compare per 

patient utilization data for 2007 with 

such data for 2012 and then make 

reductions to the ESRD PPS single 

payment amount to reflect the 

Secretary’s estimate of the change in 

utilization of drugs and biologicals. We 

do not believe this very specific 

statutory provision gives us discretion 

to mitigate the amount of the reduction 

based on the very general authority of 

section 1881(b)(2)(B), which, moreover, 

we believe no longer applies to payment 

for renal dialysis services. 

Other commenters pointed out that 

the prospective payment systems should 

protect beneficiary access while 

conserving beneficiaries’ and taxpayers’ 

resources. Accordingly, in addition to 

proposing a full reduction of $29.52 in 

CY 2014, in the CY 2014 ESRD PPS 

proposed rule (78 FR 40843), we noted 

that a one-time reduction to the ESRD 

PPS base rate could be a significant 

reduction for ESRD facilities for the year 

and potentially impact beneficiary 

access to care. Therefore, we solicited 

comments on a potential transition or 

phase-in period of the proposed 12 

percent reduction and the number of 

years for such transition or phase-in 

period. The comments related to a 

transition and our responses are set 

forth below. 

Comment: We received a comment 

from MedPAC providing the details 

from their March 2013 report to 

Congress which is one of two reports 

that they issue each year to advise 

Congress on issues affecting the 

Medicare program (the March 2013 

report is available at the following link: 

http://www.medpac.gov/documents/

Mar13_entirereport.pdf). Specifically, 

MedPAC noted that there is historical 

evidence that implementation of PPSs 

in Medicare has been characterized by 

providers quickly reducing use of 

services included in the payment 

bundle, resulting in periods of 

‘‘overpayment’’ where providers benefit 

from the change in practice patterns and 

the Medicare program does not realize 

savings until the payment is adjusted. 

The MedPAC recommended that the 

Medicare program move expeditiously 

toward correcting overpayments, while 

also adjusting payments so that 

providers have time to respond in a way 

that does not disrupt beneficiary access. 

The MedPAC further recommended that 

CMS consider their analyses of 

Medicare margins, that is, the extent to 

which facilities are reimbursed more 

than their cost of furnishing services to 

Medicare beneficiaries, in implementing 

the drug utilization reduction. Based 

upon the available 2011 cost reports at 

the time of their analysis, MedPAC 

estimated an aggregate 2011 Medicare 

margin of about 4 percent for free 

standing ESRD facilities. 

Specifically, MedPAC recommended 

that the Secretary take action to freeze 

the payment rates for 2014 at 2013 

levels, consistent with their 

recommendation to the Congress in 

their March 2013 report. MedPAC 

explained that this method would 

accomplish several goals. First, it would 

start to move the payment system 

toward greater accuracy and in doing so, 

protect scarce Medicare resources paid 

for by the beneficiary and the taxpayer. 

Second, it would protect beneficiary 

access and give MedPAC the ability to 

report back to Congress on any 

developing access issues should they 

occur. Third, it would give ESRD 

facilities time to respond to payment 

changes by identifying efficiencies in 

care. Lastly, it would give CMS, 


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MedPAC, and the Congress time to 

consider policies that should be 

changed concurrent with further 

refinements, such as targeting facilities 

critical to beneficiary access (rather than 

protecting industry-wide payment rates) 

and improving the case-mix 

adjustments. 

Response: We agree with the MedPAC 

suggestion that freezing payments could 

ensure access to essential ESRD services 

while not further perpetuating 

overpayments. However, we believe that 

section 1881(b)(14)(I) of the Act requires 

that, effective January 1, 2014, we 

‘‘make reductions to the single payment 

that would otherwise apply. . . .’’ and 

therefore, we believe the base rate must 

be reduced by some portion of the drug 

utilization adjustment amount to be 

consistent with this provision. We 

interpreted MedPAC’s recommendation 

of freezing payment rates at the CY 2013 

level, provided in both their public 

comment and in their March 2013 

Report to Congress, to mean that 

payment is adequate in CY 2013. We 

believe that we can be in compliance 

with section 1881(b)(14)(I) and follow 

MedPAC’s recommendation by applying 

a portion of the drug utilization 

reduction to the base rate to offset the 

payment update, that is, the ESRDB 

market basket minus productivity 

increase factor, and other impacts (such 

as, changes in the outlier thresholds) to 

create an overall impact of zero percent 

for ESRD facilities from the previous 

year’s payments in CYs 2014 and 2015. 

We relied on the impact chart provided 

in the impact analysis section of our 

annual rules to determine the impact of 

various policy changes on aggregate 

ESRD facility payments and took those 

values into consideration to determine 

the drug utilization adjustment for this 

year, and we will do the same next year. 

To implement a portion of the drug 

utilization adjustment in CY 2014, we 

adjusted the CY 2013 ESRD PPS base 

rate by the CY 2014 ESRDB market 

basket minus productivity increase 

factor, the wage index budget-neutrality 

factor, and the home dialysis training 

add-on budget-neutrality factor. As we 

mentioned above, we took into 

consideration other impacts (provided 

in Table 12 presented in section 

XI.B.1.a. of this final rule) of the CY 

2014 ESRD PPS that will cause a change 

in average payments to ESRD facilities 

in order to create and overall impact of 

zero percent. Specifically, for CY 2014, 

we are accounting for the changes to 

outlier payments and the movement 

from a 75/25 blend of PPS and pre-PPS 

payments to 100 percent ESRD PPS 

payments (for those ESRD facilities 

transitioning to the ESRD PPS) to create 

a zero percent average impact for 

facilities from the CY 2013 estimated 

payments. As indicated in Table 12, the 

average increase resulting from changes 

to the fixed dollar loss threshold and 

Medicare allowable payment (MAP) 

amounts under the ESRD PPS outlier 

policy is estimated to be a 0.4 percent 

increase over 2013 payments. For the 

ESRD PPS transition change to 100 

percent ESRD PPS payments, the 

estimated average increase is 0.2 

percent. These percentage increases, in 

addition to the ESRDB market basket 

minus productivity adjustment increase 

of 2.8 percent as discussed in section 

II.C.3. of this final rule, yield a drug 

utilization reduction for CY 2014 of 3.3 

percent or $8.16 per treatment. 

Specifically, in Table 12, the overall 

impact of all of the changes for CY 2014 

ESRD PPS totals 3.4 percent, however, 

in a multiplicative system to achieve a 

zero percent overall impact we had to 

divide 1 by 1.034 to derive a 0.967 or 

3.3 percent decrease. Therefore, we are 

finalizing a transition of the drug 

utilization adjustment amount as an 

annual offset to payment rate updates 

and other impacts that would otherwise 

cause a change in average payments to 

ESRD facilities, thereby creating an 

overall impact of zero percent for ESRD 

facilities from the previous year’s 

payments. We are finalizing this 

methodology for CY 2014 and CY 2015. 

For CY 2016, we will evaluate how to 

apply the balance of the adjustment 

when we conduct an analysis of the 

case-mix adjustments required by 

section 632(c) of ATRA and implement 

the inclusion of oral-only ESRD-related 

drugs and biologicals consistent with 

section 632(b) of ATRA. At that time, 

this evaluation will allow us to 

determine if we should apply the 

balance of the reduction in CY 2016 or 

provide one additional transition year 

so that the entire amount of the drug 

utilization adjustment will have been 

applied to the base rate no later than CY 

2017. This transition approach will 

make it easier for ESRD facilities to plan 

and budget, allow time for providers to 

respond to payment changes by 

identifying efficiencies, and allow time 

for CMS to consider further refinements 

to the ESRD PPS. 

Comment: We received several 

comments from national organizations 

representing ESRD facilities stating that 

they were unable to provide useful or 

constructive comments on the nature, 

extent and operation of a transition until 

they understand how CMS intends to 

correct the base rate to reflect crosssubsidization of the composite rate 

services with separately billable 

services, standardization, comorbidity 

case-mix adjusters, the low-volume 

adjuster, and the outlier policy. 

However, the commenters stated that 

the transition should not be viewed as 

a substitute for making necessary 

corrections to the current payment 

system. 

The commenters suggested that if 

CMS does utilize a transition to 

implement the drug utilization 

adjustment, then it should do so over a 

period of 2 to 4 years to minimize 

system disruption for beneficiaries, 

assess the impact on access, and correct 

course, as needed. The commenters 

further explained that a transition 

would allow providers to adjust to the 

payment reduction and engage in a 

more thoughtful process to evaluate and 

close facilities that cannot be made 

viable, reduce service, and change 

staffing. The commenters also explained 

that the transition would allow CMS to 

evaluate the impact of the payment 

reduction. 

Response: As stated previously, we do 

not intend to offset the drug utilization 

adjustment amount to reflect purported 

cross-subsidization of items and 

services paid for under the composite 

rate with formerly separately billable 

services, nor do we intend to update the 

standardization and outlier reductions 

made to the 2011 ESRD PPS base rate 

to reflect actual payments of the 

adjustments. However, the transition 

approach we are adopting will spread 

the reduction over a 3- to 4-year period 

to minimize system disruption. 

Comment: One national organization 

that represents small dialysis 

organizations and several independent 

ESRD facilities suggested that we treat 

small dialysis organizations differently 

from large dialysis organizations when 

implementing a transition of the 

reduction to the base rate because we 

determined in the CY 2014 ESRD PPS 

proposed rule (78 FR 40888) that a onetime reduction to the base rate would 

have a significant economic impact on 

a substantial number of small entities. 

The commenter explained that ESRD 

facilities that are owned by small 

dialysis organizations have less 

flexibility and working capital to 

withstand a substantial decrease in 

revenue. The commenter urged CMS to 

hold off on implementing the reduction 

for the first 6 months of CY 2014 

because the rule is not likely to be 

finalized until November 2013 and 

without a 6-month delay, ESRD 

facilities would not have sufficient time 

to plan for and make adjustments in 

their operations. The commenter further 

suggested that the amount of the 

reduction should be transitioned over a 

period of 6 years after the 6-month 


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deferral and should not exceed 2 

percent of the base rate in any given 

year. 

Another national organization that 

represents not-for-profit ESRD facilities 

with support from several ESRD 

facilities recommended a transition 

under which the base rate is not 

reduced by more than $5.00 in a given 

year. One commenter recommended 

that CMS continue to provide a market 

basket update each year and apply the 

drug utilization adjustment to the base 

rate after the market basket update is 

applied. The commenter stated that 

CMS does not have an obligation to 

meet a certain overall reduction in 

expense over time and that it has 

discretion to implement a transition that 

does not effectively end with a lower 

rate than would have been in place if 

there were no transition. One 

commenter suggested that CMS 

implement the transition as optional, 

just as how the original ESRD PPS 

implementation allowed the option of 

accepting the full bundle or a 4-year 

transition. 

Another commenter suggested that 

CMS create a differential payment for 

non-profit and SDOs. The commenter 

pointed out that the Regulatory 

Flexibility Act allows CMS to assess the 

impact of the regulation on small 

entities. A medium dialysis organization 

that was created as a result of a 

divestiture requirement imposed by the 

Federal Trade Commission (FTC) 

pointed out that the proposed drug 

utilization adjustment will undermine 

specific FTC action to preserve 

competition in the dialysis facility’s 

marketplace. The commenter stated that 

overall the diminished competition in 

the marketplace will result in lower 

capacity, lower quality of care, and 

higher private payer prices in those 

markets. 

Response: We agree with the 

commenters that implementing the full 

amount of the drug utilization 

adjustment in CY 2014 would have a 

significant impact on access to ESRD 

services. We believe that the transition 

approach we are taking, which will 

apply the drug utilization adjustment 

amount to the base rate over several 

years, will allow ESRD facilities an 

opportunity to plan for and adjust their 

future operations accordingly. Because 

facilities are currently operating 

efficiently under the CY 2013 payment 

rates and we are largely offsetting future 

increases to achieve an average impact 

of zero percent for ESRD facilities in 

CYs 2014 and 2015, we do not believe 

a 6-month grace period is necessary. We 

note that the dollar value of the 3.3 

percent drug utilization reduction for 

CY 2014 is $8.16 per treatment. 

Although this amount is higher than the 

$5.00 reduction suggested by the 

commenters, we believe that ESRD 

facilities will be able to maintain their 

current programs and services because 

payments will remain close to CY 2013 

levels for the next 2 years. With regard 

to the comment that we should provide 

a market basket increase prior to 

application of the reduction, we note 

that under our approach to the drug 

utilization adjustment we apply the 

ESRDB market basket minus 

productivity increase prior to making 

the drug utilization reduction. 

In regards to the commenters that 

suggested that CMS create a different 

payment amount or transition scheme 

for non-profit ESRD facilities and SDOs, 

as well as for those ESRD facilities that 

were created due to FTC-ordered 

divestiture, we believe that we must 

provide for a single payment rate in 

accordance with section 

1881(b)(14)(A)(i) of the Act, but that the 

transition will mitigate the potential 

negative effects of the adjustment that 

commenters pointed out. In addition, 

any other adjustments to the payment 

rate, such as an adjustment for nonprofit facilities and SDOs would be 

established through regression analysis. 

Comment: One patient advocacy 

group supported the drug utilization 

reduction but pointed out that the 

industry got the benefit of a base rate 

that included higher utilization of 

ESRD-related drugs and biologicals 

since CY 2011, but CMS did not make 

an adjustment to the payment until CY 

2014 and continued to increase the base 

rate using the ESRDB market basket. 

The commenter further pointed out that 

prior to implementation of the ESRD 

PPS, annual increases to the composite 

rate were sporadic. 

Response: We share the commenter’s 

view that small, medium, and large 

dialysis facilities have benefited from an 

inflated base rate since CY 2011. As 

noted previously, there is historical 

evidence that implementation of PPSs 

has resulted in providers quickly 

reducing use of services included in the 

bundle, thereby creating periods of 

overpayment in which providers benefit 

from the change in practice patterns and 

the Medicare program does not realize 

savings until the payment is adjusted. 

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

provided the specific authority to 

reduce the base rate to reflect only the 

change in utilization of ESRD-related 

drugs and biologicals and not all renal 

dialysis services. We note that annual 

market basket increases to the ESRD 

PPS base rate are required by section 

1881(b)(14)(F)(i)(I) of the Act, although 

these increases are reduced by the 

multifactor productivity adjustments 

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

of the Act. 

Comment: Several commenters 

expressed concern that with the 

implementation of the ESRD PPS and 

QIP have come a significant number of 

unfunded mandates that the Agency has 

not acknowledged in any specific way 

and the market basket does not address. 

The commenters recommended that a 

thorough analysis of costs should 

include those that have increased since 

the initiation of the bundle when 

calculating the drug utilization 

reduction. Notable among these are the 

costs of new IT requirements for 

participation in CROWNWeb, 

administration of Consumer Assessment 

of Healthcare Providers and Systems 

(CAHPS) surveys, participation in the 

National Healthcare Safety Network 

(NHSN), and transitioning to ICD–10– 

CM coding. One small dialysis 

organization indicated that the costs of 

these initiatives are as much as $5 per 

treatment. In addition to the costs 

discussed, commenters urged us to 

consider the reductions caused by 

sequestration and QIP penalties. The 

commenters urged us to take these costs 

into consideration when computing the 

drug utilization adjustment. 

Response: We understand the 

commenter’s concerns. Nonetheless, 

section 1881(b)(14)(I) of the Act requires 

us to make reductions to the single 

payment amount to reflect the 

Secretary’s estimate of the change in 

utilization of drugs and biologicals from 

2007 to 2012. Section 1881(b)(14)(I) 

does not give us authority to take into 

account any additional factors that may 

impact the cost of care, such as the 

sequestration, and the QIP 

requirements. We note that entering 

data in CROWNWeb is a Condition for 

Coverage for dialysis facilities (42 CFR 

§ 494.180(h)), and that CROWNWeb was 

implemented in accordance with the 

1995 Paperwork Reduction Act. In 

regards to the transition to ICD–10–CM 

coding scheme, this is a requirement 

that is shared by all Health Insurance 

Portability and Accountability Act of 

1996 covered entities and is not unique 

to ESRD facilities. 

Comment: Hundreds of comments 

from ESRD patients, their family 

members, friends and caregivers, to 

national organizations representing 

dialysis patients and facilities, to ESRD 

facility staff expressed grave concerns 

about steps facilities would take if we 

were to adopt the proposed drug 

utilization adjustment. They were 

concerned about facility closures, 

staffing cuts, cuts to hours of operation, 


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loss of transportation services, and their 

continued access to life-saving ESRD 

treatment. Some commenters indicated 

that facilities have already begun to shift 

costs to patients and cut back staffing 

and programs even though the reduction 

will not be applied until January 1, 

2014. Patients who attend nocturnal 

dialysis programs stated that without 

these programs they would be unable to 

continue working. ESRD facility staff 

also expressed concern about the 

magnitude of the proposed reduction 

and the likelihood of facility closures 

and resulting job losses. One commenter 

pointed out that pediatric patients often 

require more intensive staffing; it is not 

uncommon for younger pediatric 

patients to need a staffing ratio of two 

nurses to one patient. The commenter 

stated that the drastic payment 

reduction proposed by CMS will 

challenge pediatric facilities to provide 

safe care for these vulnerable patients. 

Commenters expressed concern about 

facility closures and their continued 

access to quality ESRD services, 

especially in rural and inner city areas. 

Many commenters noted the burden and 

expense of traveling long distances 

should their facilities close. Another 

commenter stated that the drug 

utilization adjustment threatens the 

networks of dialysis facilities where 

profitable facilities allow organizations 

to subsidize those facilities that operate 

at a loss in underserved areas. 

Conversely, a few comments indicated 

support for the proposed drug 

utilization adjustment, stating that 

facilities are primarily interested in 

higher profits and high corporate 

salaries at the expense of patient care. 

One patient advocacy group 

expressed concern about the corporate 

practice by ESRD facilities of shifting 

the responsibility of prescribing therapy 

and medication from the nephrologist to 

the dialysis organization. Another 

commenter representing nephrology 

nurses expressed concern that the 

proposed reduction will cause ESRD 

facilities to curtail the number of 

nursing positions and no longer 

maintain staff education and 

competencies. Other commenters 

pointed out that many commercial 

payers use Medicare reimbursement 

rates as a basis for their reimbursement, 

limiting ESRD facilities’ ability to make 

up the lost revenue from other sources. 

Several commenters expressed concern 

that the 12 percent payment reduction 

in CY 2014 may hinder the ESRD 

facilities’ ability to participate in the 

Center for Medicare and Medicaid 

Innovation’s (CMMI) Comprehensive 

ESRD Care model which is testing 

innovative models of care. 

Response: We believe that the 

approach we have taken to transition 

the drug utilization reduction over a 3 

to 4-year timeframe will minimize 

disruption in the delivery of ESRD 

services and will hopefully lead 

facilities to reverse cuts they may have 

already implemented in anticipation 

that the full amount of the drug 

utilization adjustment would be applied 

to the base rate in CY 2014. In addition, 

part of our rationale for the transition 

was to enable facilities to maintain their 

current programs and services. We 

developed a comprehensive claimsbased monitoring system when we 

implemented the ESRD PPS in 2011 and 

will use that system to identify changes 

in practice patterns, prescribing 

patterns, health outcomes, and 

ownership that may impact the 

furnishing of ESRD services. We have 

provided sufficient information in this 

final rule about how we plan to 

transition the drug utilization 

adjustment so that ESRD facilities can 

assess whether to participate in the 

CMMI Comprehensive ESRD Care 

model. 

Comment: One commenter 

recommended that CMS specify how it 

plans to ensure that access to and 

quality of care is not compromised by 

the drug utilization adjustment. They 

provided a list of monitoring elements 

including ESA and other drug 

utilization rates, hospital admission/

readmission rates, transfusion rates, 

availability to patients of dietitian and 

social worker services, changes in 

numbers of shifts per facility, changes in 

staffing ratios or staffing composition 

(that is, fewer nurses), consolidation/

sales of dialysis facilities in markets 

with limited numbers of providers, and 

facility closures. The commenter 

recommended that CMS post quarterly 

updates on monitored aspects of care 

that are feasible to report publically. 

Response: We intend to monitor 

access through the comprehensive 

claims monitoring program we 

implemented when the ESRD PPS began 

in 2011. We believe that the transition 

approach we are adopting for 

implementing the drug utilization 

reduction will mitigate many of the 

unintended consequences identified by 

the commenters. We note that many of 

the suggested monitoring elements are 

already part of the comprehensive 

claims monitoring program (for 

example, ESA and other drug utilization 

rates, use of inpatient hospital services, 

and transfusion rates). Other elements 

suggested by the commenters warrant 

additional review by CMS to assess the 

burden associated with collecting the 

information. We currently provide a 

workbook that displays several key 

trends from CY 2011 through CY 2013 

on the CMS Web site: http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/

Spotlight.html. This workbook is 

updated on a quarterly basis. 

Comment: Comments from ESRD 

patients indicated that they believe 

Medicare will no longer pay for dialysis 

or that the cost of the reduction would 

be shifted to patients. 

Response: We want to reassure ESRD 

patients, their families, and caregivers 

that Medicare will continue to cover 

dialysis services, but at a lower rate. As 

a result of the small reduction to the 

ESRD PPS base rate (that is, from the CY 

2013 ESRD PPS base rate of $240.36 to 

CY 2014 ESRD PPS base rate of 

$239.02), beneficiary co-insurance will 

also decrease slightly. We believe the 

transition approach we are finalizing 

makes cost shifting to beneficiaries less 

likely. 

In summary, to comply with section 

1881(b)(14)(I) of the Act we have 

computed the drug utilization 

adjustment to be $29.93 as detailed in 

section II.C.2.a.v. above. Specifically, 

we used the CY 2007 claims data that 

was used in the preparation of the CY 

2011 ESRD PPS final rule for CY 2007 

utilization and included the drug 

utilization data from facilities located in 

the Pacific Rim. For CY 2012 utilization 

we used the CY 2012 claims file 

updated through June 30, 2013, (that is, 

claims with dates of service from 

January 1 through December 31, 2012, 

that were received, processed, paid, and 

passed to the National Claims History 

File as of June 30, 2013) to calculate 

2012 utilization. 

To determine the final growth update 

factor’s value, we used the methodology 

discussed above resulting in a 7.64 

percent growth update factor to inflate 

prices for ESRD-related drugs and 

biologicals from CY 2011 levels to CY 

2014 levels. The 7.64 percent growth 

update factor represents the ESRDB 

market basket minus the multifactor 

productivity adjustments finalized in 

CYs 2012, 2013, and 2014, the wage 

index budget-neutrality adjustment 

factors finalized in CYs 2012, 2013, and 

2014, and the home dialysis training 

add-on budget neutrality adjustment 

factor finalized for CY 2014. We applied 

the CY 2014 prices to the CY 2007 and 

CY 2012 drug utilization data to 

calculate aggregate amounts for each 

year. Next, we divided each year’s 

estimated aggregate amount for drugs 

and biologicals by that year’s count of 

treatments furnished to Medicare 

beneficiaries to get an average payment 

per treatment for the year. This resulted 


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in a per treatment amount for drugs and 

biologicals of $83.96 in 2007 and a per 

treatment amount for drugs and 

biologicals of $51.17 in 2012. We then 

subtracted the average payment per 

treatment for CY 2012 from the average 

amount per treatment for CY 2007 to get 

a total of $32.79 ($83.96 ¥ $51.17 = 

$32.79). We then reduced this amount 

by the standardization, the outlier, and 

the 98 percent budget neutrality 

adjustments to get a total of $29.93 

($32.79 × .9407 × .99 × .98 = $29.93). We 

are finalizing $29.93 as the total drug 

utilization reduction. 

In response to comments we are 

finalizing the following approach for 

implementing the amount of the drug 

utilization adjustment over a 3- to 4-year 

transition period. For CYs 2014 and 

2015, we are implementing a transition 

of the drug utilization adjustment by 

offsetting the payment update, that is 

the ESRDB market basket minus 

productivity increase factor and other 

impacts (such as, changes to the outlier 

thresholds), by a portion of the 

reduction amount necessary to create an 

overall impact of zero percent for ESRD 

facilities from the previous year’s 

payments. We relied on the impact chart 

provided in the impact analysis section 

of our annual rules to determine the 

impact of various policy changes on 

aggregate ESRD facility payments and 

took those values into consideration to 

determine the drug utilization 

adjustment for this year, and we will do 

the same for next year. 

For CY 2014, this approach results in 

a base rate reduction of $8.16, which 

yields a CY 2014 ESRD PPS base rate of 

$239.02. This reflects the CY 2013 ESRD 

PPS base rate of $240.36 adjusted by the 

ESRDB market basket minus 

productivity increase factor of 2.8 

percent, the wage index budget 

neutrality factor of 1.000454, and the 

home dialysis training add-on budget 

neutrality adjustment factor of 0.999912 

to get $247.18 

($240.36*1.028*1.000454*0.999912 = 

$247.18). Then we reduced this amount 

by the portion of the drug utilization 

reduction that is being implemented 

this year—$8.16—to arrive at a final CY 

2014 ESRD PPS base rate of $239.02 

($247.18 ¥ $8.16=$239.02). 

For CY 2016, we will evaluate how to 

apply the balance of the reduction when 

we conduct an analysis of the case-mix 

adjustments as required by section 

632(c) of ATRA and implement the 

inclusion of oral-only ESRD-related 

drugs and biologicals as permitted by 

section 632(b) of ATRA. Following this 

evaluation, we will determine whether 

we should apply the balance of the 

reduction in CY 2016 or provide one 

additional transition year so that the full 

amount of the drug utilization 

adjustment will have been applied to 

the base rate over a 4-year transition 

period ending in CY 2017. 

3. ESRD Bundled Market Basket 

a. Overview and Background 

In accordance with section 

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

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act, beginning in 2012, the ESRD 

payment amounts are required to be 

annually increased by an ESRD market 

basket increase factor that is reduced by 

the productivity adjustment described 

in section 1886(b)(3)(B)(xi)(II) of the 

Act. The application of the productivity 

adjustment described may result in the 

increase factor being less than 0.0 for a 

year and may result in payment rates for 

a year being less than the payment rates 

for the preceding year. The statute also 

provides that the market basket increase 

factor should reflect the changes over 

time in the prices of an appropriate mix 

of goods and services used to furnish 

renal dialysis services. 

b. Market Basket Update Increase Factor 

and Labor-related Share for ESRD 

Facilities for CY 2014 

As required under section 

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

developed an all-inclusive ESRDB input 

price index (75 FR 49151 through 

49162). Although ‘‘market basket’’ 

technically describes the mix of goods 

and services used for ESRD treatment, 

this term is also commonly used to 

denote the input price index (that is, 

cost categories, their respective weights, 

and price proxies combined) derived 

from a market basket. Accordingly, the 

term ‘‘ESRDB market basket,’’ as used in 

this document, refers to the ESRDB 

input price index. 

We proposed to use the CY 2008- 

based ESRDB market basket described 

in the CY 2011 ESRD PPS final rule (75 

FR 49151 through 49162) to compute 

the CY 2014 ESRDB market basket 

increase factor and labor-related share 

based on the best available data. 

Consistent with historical practice, we 

estimate the ESRDB market basket 

update based on IHS Global Insight 

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

recently available data. IGI is a 

nationally recognized economic and 

financial forecasting firm that contracts 

with CMS to forecast the components of 

the market baskets. 

Using this methodology and the IGI 

forecast for the first quarter of 2013 of 

the CY 2008-based ESRDB market 

basket (with historical data through the 

fourth quarter of 2012), and consistent 

with our historical practice of 

estimating market basket increases 

based on the best available data, the 

proposed CY 2014 ESRDB market basket 

increase factor was 2.9 percent. 

For the CY 2014 ESRD payment 

update, we proposed to continue using 

a labor-related share of 41.737 percent 

for the ESRD PPS payment, which was 

finalized in the CY 2011 ESRD final rule 

(75 FR 49161). 

Comment: Several commenters 

supported the ESRDB proposed market 

basket update. 

Response: We appreciate the 

commenters support and are finalizing 

our update to the ESRDB market basket 

for CY 2014 based on the most recent 

forecast of the ESRDB market basket. 

c. Productivity Adjustment for CY2014 

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

Act, as amended by section 3401(h) of 

the Affordable Care Act, for CY 2012 

and each subsequent year, the ESRD 

market basket percentage increase factor 

shall be reduced by the productivity 

adjustment described in section 

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

statute defines the productivity 

adjustment as equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

fiscal year, year, cost reporting period, 

or other annual period) (the ‘‘MFP 

adjustment’’). The Bureau of Labor 

Statistics (BLS) is the agency that 

publishes the official measure of private 

nonfarm business MFP. Please see 

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

BLS historical published MFP data. 

CMS notes that the proposed and final 

methodology for calculating and 

applying the MFP adjustment to the 

ESRD payment update is similar to the 

methodology used in other payment 

systems, as required by section 3401 of 

the Affordable Care Act. 

The projection of MFP is currently 

produced by IGI. The details regarding 

the methodology for forecasting MFP 

and how it is applied to the market 

basket were finalized in the CY 2012 

ESRD PPS final rule (76 FR 70232 

through 70234). Using this method and 

the IGI forecast for the first quarter of 

2013 of the 10-year moving average of 

MFP, the proposed CY 2014 MFP factor 

was 0.4 percent. We did not receive any 

comments on this proposal. 

Accordingly, are finalizing the CY 

2014 MFP adjustment to the ESRDB 

market basket for CY 2014 based on the 

most recent forecast available. 


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d. Calculation of the Final ESRDB 

Market Basket Update, Adjusted for 

Multifactor Productivity for CY 2014 

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

Act, beginning in CY 2012, ESRD PPS 

payment amounts shall be annually 

increased by an ESRD market basket 

percentage increase factor reduced by 

the productivity adjustment. We 

proposed to use the same methodology 

for calculating the ESRDB market basket 

updates adjusted for MFP that was 

finalized in the CY 2012 ESRD PPS final 

rule (76 FR 70234) and based on the 

most recent forecast of the data. 

It is our policy that if more recent data 

are available after publication of the 

proposed rule (for example, a more 

recent estimate of the market basket or 

MFP adjustment), we will use such data, 

if appropriate, to determine the CY 2014 

market basket update and MFP 

adjustment in the CY 2014 ESRD PPS 

final rule. Thus, in accordance with 

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

final ESRDB market basket percentage 

increase factor for CY 2014 is based on 

the 3rd quarter 2013 forecast of the CY 

2008-based ESRDB market basket, 

which is estimated to be 3.2 percent. 

This market basket percentage is then 

reduced by the MFP adjustment (the 10- 

year moving average of MFP for the 

period ending CY 2014) of 0.4 percent, 

which is based on IGI’s 3rd quarter 2013 

forecast. The resulting final MFPadjusted ESRDB market basket update 

for CY 2014 is equal to 2.8 percent, or 

3.2 percent less 0.4 percentage point. 

4. The CY 2014 Wage Index 

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

Act provides that the ESRD PPS may 

include a payment adjustment by 

geographic wage index payment 

adjustment, such as the index referred 

to in section 1881(b)(12)(D) of the Act. 

In the CY 2011 ESRD PPS final rule (75 

FR 49117), we finalized the use of the 

Office of Management and Budget’s 

(OMB) Core-Based Statistical Areas 

(CBSAs)-based geographic area 

designations to define urban and rural 

areas and their corresponding wage 

index values. In the CY 2012 ESRD PPS 

final rule (76 FR 70239–70241), we 

finalized that, under the ESRD PPS, we 

will continue to utilize the ESRD PPS 

wage index methodology, first 

established under the basic case-mix 

adjusted composite rate payment 

system, for updating the wage index 

values using the OMB’s CBSA-based 

geographic area designations to define 

urban and rural areas and corresponding 

wage index values; the gradual 

reduction of the wage index floor during 

the transition; and the policies for areas 

with no hospital data. The CBSA-based 

geographic area designations were 

originally described in OMB bulletin 

03–04, issued June 6, 2003. This 

bulletin, as well as subsequent bulletins, 

are available online at http://

www.whitehouse.gov/omb/bulletins_

default. 

OMB publishes bulletins regarding 

CBSA changes, including changes to 

CBSA numbers and titles. In accordance 

with our established methodology, we 

have historically adopted any CBSA 

changes that are published in the OMB 

bulletin that correspond with the IPPS 

hospital wage index. For CY 2014, we 

use the FY 2014 pre-floor, prereclassified hospital wage index to 

adjust the ESRD PPS payments. On 

February 28, 2013, OMB issued OMB 

Bulletin No. 13–01, which establishes 

revised delineations of statistical areas 

based on OMB standards published in 

the Federal Register on June 28, 2010 

and 2010 Census Bureau data. Because 

the FY 2013 pre-floor, pre-reclassified 

hospital wage index was finalized prior 

to the issuance of this Bulletin, the FY 

2013 pre-floor, pre-reclassified hospital 

wage index does not reflect OMB’s new 

area delineations based on the 2010 

Census. Further, as stated in the FY 

2014 IPPS/LTCH PPS final rule (78 FR 

50586), because the bulletin was not 

issued until February 28, 2013, with 

supporting data not available until later, 

and because the changes made by the 

bulletin and their ramifications must be 

extensively reviewed and verified, we 

were unable to undertake such a lengthy 

process before publication of the FY 

2014 IPPS/LTCH PPS proposed rule; 

therefore, the FY 2014 pre-floor, prereclassified hospital wage index does 

not reflect OMB’s new area delineations 

based on the 2010 Census. CMS intends 

to propose changes to the hospital wage 

index based on this OMB Bulletin in the 

FY 2015 IPPS/LTCH PPS proposed rule. 

Therefore, we anticipate that the OMB 

Bulletin changes will be reflected in the 

FY 2015 hospital wage index. Because 

we base the ESRD PPS wage index on 

the hospital wage index, we anticipate 

that the OMB Bulletin changes would be 

reflected in the FY 2015 hospital wage 

index and, thus, in the CY 2015 ESRD 

PPS wage index. 

For CY 2014, we will continue to use 

the same methodology as finalized in 

the CY 2011 ESRD PPS final rule (75 FR 

49117), for determining the wage 

indices for ESRD facilities in CY 2014. 

Specifically, we proposed to adjust 

wage indices for CY 2014 to account for 

annually updated wage levels in areas 

in which ESRD facilities are located. We 

proposed to use the most recent, FY 

2014 IPPS pre-floor, pre-reclassified 

hospital wage index, which, as 

discussed above, does not reflect OMB’s 

new area delineations based on the 2010 

Census. The ESRD PPS wage index 

values are calculated without regard to 

geographic reclassifications authorized 

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

the Act and utilize pre-floor hospital 

data that are unadjusted for 

occupational mix. The CY 2014 wage 

index values for urban areas are listed 

in Addendum A (Wage Indices for 

Urban Areas) and the CY 2014 wage 

index values for rural areas are listed in 

Addendum B (Wage Indices for Rural 

Areas). Addenda A and B are located on 

the CMS Web site at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/

End-Stage-Renal-Disease-ESRDPayment-Regulations-and-Notices.html. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49117), we finalized a policy to 

use the labor-related share of 41.737 for 

the ESRD PPS portion of the payment. 

For the CY 2014 ESRD PPS, we did not 

propose any changes to the labor-related 

share of 41.737. However, because all 

providers that elected to participate in 

the transition are entering the fourth 

year of the transition and will begin 

being paid 100 percent under the ESRD 

PPS, the 53.711 labor-related share that 

was applied to the composite rate 

portion of the blended payment is no 

longer applicable. We discuss the 

methodology for the ESRD PPS laborrelated share in our CY 2011 ESRD PPS 

final rule (75 FR 49161), where we 

noted that the labor-related share is 

typically the sum of Wages and Salaries, 

Benefits, Housekeeping and Operations, 

Professional Fees, Labor-related 

Services, and a portion of the Capitalrelated Building and Equipment 

expenses. For additional discussions on 

the labor-related share please refer to 

section II.C.3.b. of this final rule. 

Comment: We received several 

comments expressing concern about 

applying the same labor-related share in 

CY 2014, as was finalized in CY 2011. 

Many commenters suggested that CMS 

review the labor-related share and 

update the factor to reflect 2012 cost 

report data. Other commenters noted 

that smaller providers cannot ‘‘offset 

negative impacts across a national 

market base’’ and therefore are 

disadvantaged by rising salary costs in 

labor markets that compete regionally. A 

few commenters suggested that CMS has 

erred in not updating the labor-related 

share for CY 2014 to appropriately 

reflect the decrease in pharmaceutical 

spending identified in ESRD facility 

cost reports for 2011 and 2012. One 

commenter noted that the current laborrelated share calculation is based upon 


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2008 cost report data, and the decrease 

in pharmaceutical spending since that 

time has resulted in an ‘‘understated 

labor-related share’’ used to adjust 

wages when making ESRD PPS 

payments. 

Response: The ESRD bundled laborrelated share is based on the cost 

weights for wages and salaries, benefits, 

housekeeping and operation, 

professional fees, labor-related services 

and a portion of the capital-related 

building and equipment expenses. 

Because we did not propose to rebase or 

revise the ESRDB market basket for CY 

2014, the labor-related share will remain 

41.737 percent. At the time of preparing 

the CY 2014 ESRD PPS proposed rule 

we had access to cost report data 

through 2010. The 2011 cost report data 

was captured on the revised ESRD cost 

report form and complete data files were 

not available in time to estimate cost 

shares on the 2011 data in time for the 

proposed rule. In order to estimate if 

any major changes had occurred since 

2008 (the current base years of the 

ESRDB market basket) we did produce 

ESRD market basket cost shares based 

on the Medicare Cost Report data for 

2009 and 2010 (which were the latest, 

complete year of data we had available 

at the time) and we did not have access 

to the files in order to estimate the cost 

weights based on data from 2011 or 

later. We did run the cost report data for 

2009 and 2010 and found that the cost 

share weights for the market basket and 

the estimated labor-related share as 

described in the CY 2011 ESRD PPS 

final rule (75 FR 49161) did not change 

significantly. We understand that under 

the bundled payment system the 

relative shares of wages and salaries and 

pharmaceuticals may change. We will 

be rebasing and revising the ESRD 

market basket for CY 2015 based on the 

most up-to-date and complete year of 

cost report data available, which will be 

based on data from a year after 2011. 

This will reflect the costs for ESRD 

services that were reported in a payment 

year under the bundled system. 

a. Payment Under the ESRD PPS for 

Facilities Located in Guam, American 

Samoa, and the Northern Mariana 

Islands 

It came to our attention after the ESRD 

PPS was implemented that ESRD 

facilities located in the United States 

Territories of Guam, American Samoa 

and the Northern Mariana Islands 

(collectively, the Pacific Rim) have been 

paid on the basis of reasonable costs and 

charges, rather than under the ESRD 

PPS. Because section 1881(b)(14)(A)(i) 

of the Act requires the Secretary to 

implement a payment system under 

which a single payment is made to a 

renal dialysis facility for renal dialysis 

services in lieu of any other payment for 

services furnished on or after January 1, 

2011, and section 1881(b)(14)(E)(i) 

requires that the payment amounts 

under the ESRD PPS by fully 

implemented for services furnished on 

or after January 1, 2014, ESRD facilities 

located in the Pacific Rim must be paid 

under the ESRD PPS beginning for 

services furnished on or after January 1, 

2014. In order to pay these facilities 

under the ESRD PPS, we would need to 

identify a wage index value for these 

areas to make payment adjustments for 

geographic wages according to § 413.231 

of the regulations. We proposed to use 

the current value calculated under the 

existing methodology, that is, the prefloor, pre-reclassified, hospital wage 

data that is unadjusted for occupational 

mix for the island of Guam of 0.9611, 

which is displayed in Addendum B 

(Wage Indices for Rural Areas), because 

the FY 2014 IPPS pre-floor, prereclassified hospital wage data does not 

include wage data for American Samoa 

and the Northern Mariana Islands. 

Accordingly, we proposed to apply the 

wage index value for Guam to facilities 

located in American Samoa and the 

Northern Mariana Islands as discussed 

below in section II.C.4.b. of this final 

rule. 

Comment: We received two comments 

suggesting that the ESRD PPS does not 

sufficiently account for the unique 

economic circumstances faced by 

dialysis facilities located in the 

Territory of Guam. One commenter 

noted higher costs for shipping and 

warehousing of supplies, as well as 

significant training costs, which results 

from high employee turnover when 

military personnel and their families 

relocate to the mainland. Another 

commenter requested that Medicare 

continue to make payments to ESRD 

facilities located in Guam under 

reasonable costs and charges payment 

methodologies. 

Response: We appreciate the concern 

expressed by commenters’ regarding the 

payment change. However, section 

1881(b)(14)(A)(i) of the Act requires the 

Secretary to implement a payment 

system under which a single payment is 

made to a renal dialysis facility for renal 

dialysis services in lieu of any other 

payment. In order to comply with the 

statute, ESRD facilities located in the 

Pacific Rim must be paid under the 

ESRD PPS and will be paid under this 

system for renal dialysis services 

furnished on or after January 1, 2014. 

We understand that ESRD facilities 

located in Guam, as well as many other 

geographic areas where Medicare 

services are furnished, have unique 

geographic, labor, or regulatory 

circumstances that have an impact on 

their provision of dialysis services. For 

example, the states of Hawaii and 

Alaska have similar shipping and 

storage considerations as Guam and 

these areas are paid under the ESRD 

PPS. Likewise, the island of Puerto Rico, 

(which shares the status of a United 

States Territory), must comply with 

unique staffing requirements, in that 

only registered nurses may furnish 

dialysis services to dialysis patients and 

these facilities are paid under the ESRD 

PPS. Further, many ESRD facilities are 

located near military bases where there 

is high turnover of staff and these 

facilities are also paid under the ESRD 

PPS. Nonetheless, CMS has no authority 

to continue to pay ESRD facilities 

located in the Territory of Guam or 

elsewhere in the Pacific Rim based on 

reasonable costs or any other payment 

methodology. Therefore, beginning 

January 1, 2014, in accordance with 

section 1881(b)(14)(A)(i) of the Act, all 

ESRD facilities furnishing renal dialysis 

services to Medicare beneficiaries will 

be paid 100 percent under the ESRD 

PPS, including ESRD facilities located 

in the Pacific Rim. 

b. Policies for Areas With No Wage Data 

In the CY 2011 ESRD PPS final (75 FR 

49116 through 49117), we also 

discussed and finalized the 

methodologies we use to calculate wage 

index values for ESRD facilities that are 

located in urban and rural areas where 

there is no hospital data. We further 

explained our approach for areas with 

no hospital data in the CY 2012 ESRD 

PPS final rule (76 FR 70241). For urban 

areas with no hospital data, we compute 

the average wage index value of all 

urban areas within the State and use 

that value as the wage index. For rural 

areas with no hospital data, we compute 

the wage index using the average wage 

index values from all contiguous CBSAs 

to represent a reasonable proxy for that 

rural area. Therefore, we use our 

established methodology to compute an 

appropriate wage index using the 

average wage index values from 

contiguous CBSAs, to represent a 

reasonable proxy. 

As stated previously, the FY 2014 

IPPS pre-floor, pre-reclassified hospital 

wage data does not include wage data 

for American Samoa and the Northern 

Mariana Islands, which are rural areas 

with no hospital data. While we 

appreciate that the islands of the Pacific 

Rim are not actually contiguous, we 

believe the same principle applies here, 

and that Guam is a reasonable proxy for 

American Samoa and the Northern 


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Mariana Islands. We believe that Guam 

represents a reasonable proxy because 

the islands are located within the 

Pacific Rim and share a common status 

as United States Territories. We noted 

that if hospital data becomes available 

for American Samoa or the Northern 

Mariana Islands, we will use that data 

for the CBSA instead of the proxy. As 

discussed previously, the current wage 

index value for Guam using the existing 

methodology is 0.9611. Therefore, for 

CY 2014, we proposed to apply this 

wage index value of 0.9611 to ESRD 

facilities located in America Samoa and 

the Northern Mariana Islands and 

included this value in Addendum B. 

For CY 2014, the only urban area 

without wage index data is HinesvilleFort Stewart, GA. As we discussed in 

our CY 2013 ESRD PPS final rule (77 FR 

67459), we will continue to use the 

statewide urban average based on the 

average of all urban areas within the 

state for urban areas without hospital 

data. Accordingly, we proposed to apply 

the statewide urban average wage index 

value for Georgia of 0.7582 to 

Hinesville-Fort Stewart, GA and 

included this value in Addendum A. 

We received no public comments 

regarding our proposal to use the wage 

index value for Guam of 0.9611 as an 

appropriate proxy for American Samoa 

and the Northern Mariana Islands. 

Therefore, we are finalizing our 

proposal. For renal dialysis services 

furnished in American Samoa or the 

Northern Mariana Islands and paid 

under the ESRD PPS on or after January 

1, 2014, a wage index value of 0.9611, 

as calculated for the Territory of Guam, 

will be applied to the ESRD PPS base 

rate when making Medicare payments. 

The wage index values for Guam, 

America Samoa and the Northern 

Mariana Islands are included in 

Addendum B. 

We received no comments on our 

proposal to apply the computed 

statewide urban average wage index 

value for Georgia to the CBSA for 

Hinesville-Fort Stewart, GA. Therefore, 

we are finalizing the proposal with the 

following clarification. In the CY 2014 

ESRD PPS proposed rule (78 FR 40845), 

we incorrectly stated the computed 

value for the statewide urban average 

wage index value for Georgia of 0.7582. 

The correct value computed for the 

urban average wage index value for 

Georgia and applied to Hinesville-Fort 

Stewart, GA was correctly identified in 

Addendum A of the CY 2014 ESRD PPS 

proposed rule as 0.8602. We apologize 

for this error. In addition, the urban 

wage index values have been updated 

with more recent data for this final rule, 

and therefore for CY 2014 we are 

finalizing a statewide urban average 

wage index value for Georgia of 0.8700 

and will apply this value to the CBSA 

for Hinesville-Fort Stewart, GA and 

include this value in Addendum A. 

c. Reduction to the ESRD Wage Index 

Floor 

A wage index floor value has been 

used in lieu of the calculated wage 

index values below the floor in making 

payment for renal dialysis services 

under the ESRD PPS. In the CY 2011 

ESRD PPS final rule (75 FR 49116 

through 49117), we finalized that we 

would continue to reduce the wage 

index floor by 0.05 for each of the 

remaining years of the transition. In the 

CY 2012 ESRD PPS final rule (76 FR 

70241), we finalized the 0.05 reduction 

to the wage index floor for CYs 2012 

and 2013, resulting in a wage index 

floor of 0.550 and 0.500, respectively. 

Most recently, in the CY 2013 ESRD PPS 

final rule (77 FR 67459 through 67461), 

we discussed the elimination of the 

wage index floor beginning in CY 2014, 

noting that we would propose a new 

methodology in CY 2014 to address 

wages in rural Puerto Rico because we 

would no longer be applying a wage 

index floor. 

As described above, our intention has 

been to provide a wage index floor only 

through the transition to 100 percent 

implementation of the ESRD PPS (75 FR 

49116 through 49117; 76 FR 70240 

through 70241). However, the CY 2014 

wage index values for both urban and 

rural Puerto Rico remain below the 

finalized CY 2013 ESRD PPS wage 

index floor of 0.500 (77 FR 67459), and 

we believe that both rural and urban 

facilities in Puerto Rico would benefit 

from continuing the gradual reduction 

of the floor. We believe that continuing 

the wage index floor for CY 2014 and 

CY 2015 will allow renal dialysis 

facilities located in Puerto Rico the 

benefit afforded to other geographical 

areas in the fifty states, that is, a gradual 

and systematic elimination of the wage 

index floor. Therefore, for CY 2014 and 

for CY 2015, we proposed to continue 

to apply the wage index floor to areas 

with wage indexes below the floor. For 

CY 2014, Puerto Rico is the only area 

with a wage index value below the 

proposed floor; however, to the extent 

that other geographical areas fall below 

the floor in CY 2015, we believe they 

should have the benefit of a gradual 

reduction in the floor as well. Thus, for 

CY 2014 and CY 2015, we proposed to 

continue our policy of gradually 

reducing the wage index floor by 0.05 

per year. Specifically, we proposed a 

wage index floor value of 0.450 for CY 

2014 and a wage index floor value of 

0.400 for CY 2015. We believe that 

continuing our policy of applying a 

wage index floor for an additional two 

years would allow Puerto Rico to benefit 

from the anticipated and predictable 

phase out of the wage index floor. While 

we would not expect to continue this 

policy past CY 2015, we will review the 

appropriateness of a wage index floor 

for CY 2016 at that time. 

Comment: We received a few 

comments requesting that CMS review 

hospital wage data and consider the 

appropriateness of a wage index floor. 

For example, a commenter from 

Wheeling, WV, suggested that CMS 

consider increasing the wage index floor 

value, so that rural facilities with low 

wage index values will be able to 

compete with urban facilities in 

attracting qualified staff members. 

Another commenter requested that CMS 

modify the current wage index 

methodology to capture ‘‘true’’ ESRD 

facility wages in Puerto Rico. The 

current methodology relies upon 

hospital wage data and the commenter 

contended that the hospital 

occupational wage mix does not 

adequately reflect wages in ESRD 

facilities in Puerto Rico, where 

registered nurses are required to furnish 

dialysis care. In addition, the 

commenter requested that the wage 

index floor be frozen at 2011 levels. 

Response: We thank the commenters 

for their comments and we appreciate 

their concerns regarding the impact of a 

wage index floor on dialysis facilities. 

We have committed to reviewing the 

appropriateness of applying a wage 

index floor for CY 2016. However, for 

CY 2014 and CY 2015, we are finalizing 

our proposal. We will continue our 

policy of gradually reducing the wage 

index floor by 0.05 per year. 

Accordingly, we are finalizing in this 

rule a wage index floor value of 0.450 

for CY 2014, and a wage index floor 

value of 0.400 for CY 2015. This policy 

will benefit ESRD facilities located in 

Puerto Rico, where wage index values 

remain below the wage index floor 

values finalized in this rule. We note 

that if another geographic CBSA area 

wage index value falls below the floor 

in CY 2015, the facilities in that CBSA 

will also have the benefit of the wage 

index floor. 

In summary, for CY 2014, we will 

continue to use the same wage index 

methodology as finalized in the CY 2011 

ESRD PPS final rule (75 FR 49117). That 

is, we will use the most recent IPPS prefloor, pre-reclassified hospital wage 

index to calculate the ESRD PPS wage 

index values. Thus, for CY 2014, we 

will use the FY 2014 IPPS pre-floor, prereclassified hospital wage index to 


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calculate the CY 2014 ESRD PPS waged 

index. The 2014 wage index values for 

urban areas, Addendum A (Wage 

Indices for Urban Areas) and the CY 

2014 wage index values for rural areas, 

Addendum B (Wage Indices for Rural 

Areas) may be viewed at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/

End-Stage-Renal-Disease-ESRDPayment-Regulations-and-Notices.html. 

Lastly, for CY 2014 and CY 2015, we 

are continuing our policy of gradually 

reducing the wage index floor by 0.05 

per year. That is, we are finalizing a 

wage index floor value of 0.450 for CY 

2014, and a wage index floor value of 

0.400 for CY 2015. 

d. Wage Index Budget-Neutrality 

Adjustment 

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

Act gives us broad discretion to 

implement payment adjustments to the 

ESRD PPS, including an adjustment of 

the ESRD PPS by a geographic index. 

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

specifically refers to section 

1881(b)(12)(D) as an example of such a 

geographic index, and in the CY 2011 

ESRD PPS final rule, we finalized the 

use of the same wage index 

methodology that we utilized under the 

basic case-mix adjusted composite rate 

payment system (75 FR 49116). We had 

applied a wage index budget-neutrality 

adjustment factor under the basic casemix adjusted composite payment 

system, and accordingly, in the CY 2012 

ESRD PPS final rule, we finalized a 

policy for CY 2012 and future years to 

apply wage index budget-neutrality 

adjustment factors to the composite rate 

portion of the ESRD PPS blended 

payments for facilities participating in 

the transition as well as to the base rate 

for the ESRD PPS portion of the blended 

payment and the full ESRD PPS for 

those facilities that elected to receive 

100 percent of their payment under that 

system (76 FR 70241 and 70242). We 

also finalized the methodology for 

computing the wage index budgetneutrality adjustment factors for CY 

2012 and subsequent years (76 FR 

70242). 

For CY 2014, we did not propose any 

changes to the methodology, but we 

noted that we will no longer compute a 

wage index budget-neutrality 

adjustment factor for the composite rate 

portion of the ESRD PPS blended 

payment because all facilities will be 

paid 100 percent under the ESRD PPS 

in CY 2014. For ease of reference, we 

explain the methodology for computing 

the budget-neutrality adjustment factor 

here. For the CY 2014 wage index 

budget-neutrality adjustment factor, we 

use the fiscal year (FY) 2014 pre-floor, 

pre-reclassified, non-occupational mixadjusted hospital data to compute the 

wage index values, 2012 outpatient 

claims (paid and processed as of June 

30, 2013), and geographic location 

information for each facility, which may 

be found through Dialysis Facility 

Compare. Dialysis Facility Compare 

(DFC) can be found at the DFC Web 

page on the CMS Web site at http://

www.medicare.gov/

dialysisfacilitycompare/. The FY 2014 

hospital wage index data for each urban 

and rural locale by CBSA may also be 

accessed on the CMS Web site at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/Acute

InpatientPPS/index.html?redirect=/

AcuteInpatientPPS/. The wage index 

data are located in the section entitled, 

‘‘FY 2014 Final Rule Occupational Mix 

Adjusted and Unadjusted Average 

Hourly Wage and Pre-Reclassified Wage 

Index by CBSA’’. 

We computed the proposed CY 2014 

wage index budget-neutrality 

adjustment factor using treatment 

counts from the 2012 claims and 

facility-specific CY 2013 payment rates 

to estimate the total dollar amount that 

each ESRD facility would have received 

in CY 2013. The total of these payments 

became the target amount of 

expenditures for all ESRD facilities for 

CY 2014. Next, we computed the 

estimated dollar amount that would 

have been paid for the same ESRD 

facilities using the ESRD wage index for 

CY 2014. The total of these payments 

becomes the new CY 2014 amount of 

wage-adjusted expenditures for all 

ESRD facilities. 

The wage index budget-neutrality 

factor is calculated as the target amount 

divided by the new CY 2014 amount. 

When we multiplied the wage index 

budget-neutrality factor by the 

applicable CY 2014 estimated payments, 

aggregate payments to ESRD facilities 

would remain budget neutral when 

compared to the target amount of 

expenditures. That is, the wage index 

budget-neutrality adjustment factor 

ensures that wage index adjustments do 

not increase or decrease aggregate 

Medicare payments with respect to 

changes in wage index updates. 

Therefore, we proposed a wage index 

budget-neutrality adjustment factor of 

1.000411, which would be computed in 

ESRD PPS base rate payment 

methodology when making payment for 

renal dialysis services in CY 2014. 

We received no public comments on 

this proposal, and therefore, we are 

finalizing the proposed CY 2014 wage 

index budget-neutrality adjustment 

factor as updated with the most recently 

available data. In the proposed rule, the 

CY 2014 wage index budget-neutrality 

adjustment factor was computed at 

1.000411. This calculation was based 

upon the use of the FY 2014 pre-floor, 

pre-reclassified, non-occupational mixadjusted hospital data computed for 

wage index values and the CY 2012 

Medicare outpatient claims data file as 

of December 31, 2012. For CY 2014, we 

are finalizing a wage index budgetneutrality adjustment factor of 1.000454. 

This final calculation reflects the most 

recent Medicare claims data available, 

which is the FY 2014 pre-floor, prereclassified, non-occupational mixadjusted hospital data computed for 

wage index values and the CY 2012 

Medicare outpatient claims data file 

(that is, claims with dates of service 

from January 1, through December 31, 

2012, that were received, processed, 

paid, and passed to the National Claims 

History file as of June 30, 2013). 

5. Application of the International 

Classification of Diseases (ICD), Tenth 

Revision, to the Comorbidity Payment 

Adjustment Codes 

In the CY 2011 ESRD PPS final rule 

(75 FR 49094), we explained that 

section 1881(b)(14)(D)(i) of the Act, as 

added by section 153(b) of MIPPA, 

requires that the ESRD PPS include a 

payment adjustment based on case-mix 

that may take into account, among other 

things, patient comorbidities. 

Comorbidities are specific patient 

conditions that coexist with the 

patient’s principal diagnosis that 

necessitates dialysis. The comorbidity 

payment adjustments recognize the 

increased costs associated with 

comorbidities and provide additional 

payment for certain conditions that 

occur concurrently with the need for 

dialysis. 

To develop the comorbidity payment 

adjustments, we used a stepwise 

regression model to analyze comorbidity 

data and found that certain 

comorbidities are predictors of variation 

in payments for ESRD patients. Details 

on the development of the comorbidity 

categories eligible for a comorbidity 

payment adjustment, including an 

explanation of the stepwise regression 

model that we used to analyze 

comorbidity data, is discussed in the CY 

2011 ESRD PPS final rule (75 FR 49094 

through 49108). We analyzed the 

comorbidity categories and excluded 

those categories from the comorbidity 

payment adjustments that met any of 

three exclusion criteria (75 FR 49095 

through 49100): (1) Inability to create 

accurate clinical definitions; (2) 

potential for adverse incentives 

regarding care; and (3) potential for 


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ESRD facilities to directly influence the 

prevalence of the comorbidity either by 

altering dialysis care, changing 

diagnostic testing patterns, or 

liberalizing the diagnostic criteria. 

We finalized six comorbidity 

categories that are eligible for a 

comorbidity payment adjustment, each 

with associated International 

Classification of Disease, 9th Revision, 

Clinical Modification (ICD–9–CM) 

diagnosis codes (75 FR 49100). Among 

these categories are three acute, shortterm diagnostic categories (pericarditis, 

bacterial pneumonia, and 

gastrointestinal tract bleeding with 

hemorrhage) and three chronic 

diagnostic categories (hereditary 

hemolytic anemia with sickle cell 

anemia, myelodysplastic syndrome, and 

monoclonal gammopathy). The 

comorbidity categories eligible for an 

adjustment and their associated ICD–9– 

CM codes were published in the 

Appendix of the CY 2011 ESRD PPS 

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

Recognized for a Comorbidity Payment 

Adjustment (75 FR 49211). 

In the CY 2012 ESRD PPS final rule 

(76 FR 70252), we clarified that the 

ICD–9–CM codes eligible for a 

comorbidity payment adjustment are 

subject to the annual ICD–9–CM coding 

updates that occur in the hospital IPPS 

final rule and are effective October 1st 

of every year. We explained that any 

updates to the ICD–9–CM codes that 

affect the categories of comorbidities 

and the diagnoses within the 

comorbidity categories that are eligible 

for a comorbidity payment adjustment 

would be communicated to ESRD 

facilities through sub-regulatory 

guidance. Accordingly, Change Request 

(CR) 7476, Transmittal 2255, entitled, 

‘‘Quarterly Update to the End-Stage 

Renal Disease Prospective Payment 

System,’’ was issued on July 15, 2011 to 

update the ICD–9–CM codes eligible for 

a comorbidity payment adjustment in 

accordance with the annual ICD–9–CM 

update effective October 1, 2011. This 

CR can be found on the CMS Web site 

at the following link: http://

www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/

Downloads/R2255CP.pdf. There have 

not been updates to the ICD–9–CM 

codes eligible for a comorbidity 

payment adjustment since October 1, 

2011. 

Effective October 1, 2014, CMS will 

implement the 10th revision of the ICD 

coding scheme—ICD–10–CM. Because 

the transition to ICD–10–CM coding will 

occur during CY 2014, we discuss here 

the crosswalk from ICD–9–CM to ICD– 

10–CM codes for the purpose of 

determining eligibility for a comorbidity 

payment adjustment. 

We crosswalked the ICD–9–CM codes 

that are eligible for a comorbidity 

payment adjustment to ICD–10–CM 

codes using the General Equivalence 

Mappings (GEM) tool, which is the 

authoritative source for crosswalking 

developed by the National Center for 

Health Statistics and CMS. The 

crosswalk from ICD–9–CM to ICD–10– 

CM diagnosis codes resulted in three 

scenarios: one ICD–9–CM code 

crosswalked to one ICD–10–CM code; 

one ICD–9–CM code crosswalked to 

multiple ICD–10–CM codes; or multiple 

ICD–9–CM codes crosswalked to one 

ICD–10–CM code. We applied the three 

exclusion criteria listed above to each of 

the ICD–10–CM codes to which the 

ICD–9–CM codes crosswalked. 

In our clinical evaluation, we found 

the ICD–9–CM codes generally 

crosswalked to one ICD–10–CM code 

that codes for the same diagnosis, has 

the same code descriptor, and does not 

meet any of our exclusion criteria. 

Accordingly, with the exceptions noted 

below, we proposed that ICD–10–CM 

codes will be eligible for a comorbidity 

payment adjustment where they 

crosswalk from ICD–9–CM codes that 

are eligible for a comorbidity payment 

adjustment. There are, however, two 

instances where ICD–9–CM codes 

crosswalk to ICD–10–CM codes that we 

believe meet one or more of the 

exclusion criteria described above, and 

we proposed to exclude these codes 

from eligibility for a comorbidity 

payment adjustment. 

a. One ICD–9–CM Code Crosswalks to 

One ICD–10–CM Code 

Table 1 lists all the instances in which 

one ICD–9–CM code crosswalks to one 

ICD–10–CM code. We proposed that all 

of those ICD–10–CM codes would 

receive a comorbidity payment 

adjustment with the exception of K52.81 

Eosinophilic gastritis or gastroenteritis. 

Currently, 535.71 Eosinophilic gastritis 

with hemorrhage is one of 40 ICD–9–CM 

diagnosis codes under the acute 

comorbidity category of Gastrointestinal 

(GI) Bleeding. The descriptor of K52.81, 

the ICD–10–CM code to which this ICD– 

9–CM code crosswalks, does not include 

the word ‘‘hemorrhage.’’ In the CY 2011 

ESRD PPS final rule (75 FR 49097), we 

specifically limited the GI bleeding 

category for the comorbidity payment 

adjustment to GI bleed with hemorrhage 

because we believed that the 

gastrointestinal tract bleeding category 

met our first exclusion criterion— 

inability to create accurate clinical 

definitions—because it was overly 

broad. We also believed that use of this 

diagnosis category could lead to gaming 

consistent with the second and third 

exclusion criteria listed above. For these 

reasons, we limited the gastrointestinal 

tract bleeding diagnosis category to 

gastrointestinal tract bleeding with 

hemorrhage, which we believe creates 

accurate clinical definitions and 

mitigates the potential for adverse 

incentives in ESRD care. Accordingly, 

we proposed to exclude ICD–10–CM 

code K52.81 Eosinophilic gastritis or 

gastroenteritis from eligibility for the 

comorbidity payment adjustment 

because the code descriptor does not 

indicate the diagnosis of a hemorrhage. 

We proposed that all of the other ICD– 

10–CM codes listed in the Table 1 below 

would be eligible for a comorbidity 

payment adjustment. 

TABLE 1—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE

GASTROINTESTINAL BLEEDING 

ICD–9 Descriptor ICD–10 Descriptor 

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

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

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

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

BACTERIAL PNEUMONIA 

ICD–9 Descriptor ICD–10 Descriptor 

003.22 Salmonella pneumonia A02.22 Salmonella pneumonia 


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TABLE 1—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE—Continued 

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

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

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

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

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

482.41 Methicillin susceptible pneumonia due to Staphylococcus 

aureus 

J15.211 Pneumonia due to Methicillin susceptible Staphylococcus 

aureus 

482.42 Methicillin resistant pneumonia due to Staphylococcus 

aureus 

J15.212 Pneumonia due to Methicillin resistant Staphylococcus 

aureus 

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

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

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

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

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

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

510.0 Empyema with fistula J86.0 Pyothorax with fistula 

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

PERICARDITIS 

ICD–9 Descriptor ICD–10 Descriptor 

420.91 Acute idiopathic pericarditis I30.0 Acute nonspecific idiopathic pericarditis 

HEREDITARY HEMOLYTIC AND SICKLE CELL ANEMIA 

ICD–9 Descriptor ICD–10 Descriptor 

282.0 Hereditary spherocytosis D58.0 Hereditary spherocytosis 

282.1 Hereditary elliptocytosis D58.1 Hereditary elliptocytosis 

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

282.43 Alpha thalassemia D56.0 Alpha thalassemia 

282.44 Beta thalassemia D56.1 Beta thalassemia 

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

282.46 Thalassemia minor D56.3 Thalassemia minor 

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

282.49 Other thalassemia D56.8 Other thalassemias 

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

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

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

MYELODYSPLASTIC SYNDROME 

ICD–9 Descriptor ICD–10 Descriptor 

238.7 Essential thrombocythemia D47.3 Essential (hemorrhagic) thrombocythemia 

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

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

238.76 Myelofibrosis with myeloid metaplasia D47.1 Chronic myeloproliferative disease 

b. One ICD–9–CM Code Crosswalks to 

Multiple ICD–10–CM Codes 

Table 2 lists all of the instances in 

which one ICD–9–CM code crosswalks 

to multiple ICD–10–CM codes. In those 

instances, we proposed that all the 

crosswalked ICD–10–CM codes would 

receive a comorbidity payment 

adjustment, with the exception of D89.2 

Hypergammaglobulinemia, unspecified. 

ICD–9–CM code 273.1 Monoclonal 

paraproteinemia is the only ICD–9–CM 

code eligible for the comorbidity 

payment adjustment under the chronic 

comorbidity category of Monoclonal 

gammopathy. ICD–9–CM code 273.1 

Monoclonal paraproteinemia crosswalks 

to two ICD–10–CM codes: D47.2 

Monoclonal gammopathy and D89.2 

Hypergammaglobulinemia, unspecified. 

We analyzed both of these ICD–10–CM 

codes and determined that D47.2 

Monoclonal gammopathy should be 

eligible for the comorbidity payment 

adjustment because, like ICD–9–CM 

code 273.1 Monoclonal 

paraproteinemia, it indicates that there 

is an excessive amount of a single 

monoclonal gammaglobulin. When we 

analyzed the comorbidity category for 

the CY 2011 ESRD PPS final rule, single 

monoclonal gammaglobulin was shown 

to have an association with higher ESA 

usage, thereby resulting in higher costs 

to dialysis facilities. After clinical 

evaluation of D89.2 

Hypergammaglobulinemia, unspecified, 

however, we determined that this ICD– 

10–CM code should not be eligible for 

the comorbidity payment adjustment 

because D89.2 

Hypergammaglobulinemia, unspecified 

indicates only that 1 or more 

immunoglobulins are elevated, but does 

not identify which immunoglobulin(s) 

are elevated. We believe that the lack of 

specificity of this particular code results 

in an inability to create an accurate 

clinical definition, which is the first of 

the three exclusion criteria. 

Accordingly, we proposed that D89.2 

Hypergammaglobulinemia, unspecified 

would not be eligible for the 

comorbidity payment adjustment. We 

proposed that all of the other ICD–10– 

CM codes listed in Table 2 below would 

be eligible for the comorbidity payment 

adjustment. 


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TABLE 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES

GASTROINTESTINAL BLEEDING 

ICD–9 Descriptor ICD–10 Descriptor 

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

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

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

with bleeding 

K57.13 Diverticulitis of small intestine without perforation or abscess 

with bleeding 

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

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

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

K57.91 Diverticulosis of intestine, part unspecified, without perforation or abscess with bleeding 

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

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

with bleeding 

K57.33 Diverticulitis of large intestine without perforation or abscess 

with bleeding 

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

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

BACTERIAL PNEUMONIA 

ICD–9 Descriptor ICD–10 Descriptor 

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

J85.1 Abscess of lung with pneumonia 

J85.2 Abscess of lung without pneumonia 

PERICARDITIS 

ICD–9 Descriptor ICD–10 Descriptor 

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

I32 Pericarditis in diseases classified elsewhere 

M32.12 Pericarditis in systemic lupus erythematosus 

420.90 Acute pericarditis, unspecified 130.1 Infective pericarditis 

I30.9 Acute pericarditis, unspecified 

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

I30.9 Acute pericarditis, unspecified 

HEREDITARY HEMOLYTIC AND SICKLE CELL ANEMIA 

ICD–9 Descriptor ICD–10 Descriptor 

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

deficiency 

D55.1 Anemia due to other disorders of glutathione metabolism 

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

D55.3 Anemia due to disorders of nucleotide metabolism 

D55.8 Other anemias due to enzyme disorders 

D55.9 Anemia due to enzyme disorder, unspecified 

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

D57.412 Sickle-cell thalassemia with splenic sequestration 

D57.419 Sickle-cell thalassemia with crisis, unspecified 

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

D57.01 Hb-SS disease with acute chest syndrome 

D57.02 Hb-SS disease with splenic sequestration 

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

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

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

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

D57.812 Other sickle-cell disorders with splenic sequestration 

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


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TABLE 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued 

MONOCLONAL GAMMOPATHY 

ICD–9 Descriptor ICD–10 Descriptor 

273.1 Monoclonal paraproteinemia D47.2 Monoclonal gammopathy 

D89.2 Hypergammaglobulinemia, unspecified 

MYELODYSPLASTIC SYNDROME 

ICD–9 Descriptor ICD–10 Descriptor 

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

D46.1 Refractory anemia with ring sideroblasts 

D46.20 Refractory anemia with excess of blasts, unspecified 

D46.21 Refractory anemia with excess of blasts 1 

D46.4 Refractory anemia, unspecified 

D46.A Refractory cytopenia with multilineage dysplasia 

D46.B Refractory cytopenia with multilineage dysplasia and ring 

sideroblasts 

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

D46.Z Other myelodysplastic syndromes 

c. Multiple ICD–9–CM Codes Crosswalk 

to One ICD–10–CM Code 

Table 3 displays the crosswalk where 

multiple ICD–9–CM codes crosswalk to 

one ICD–10–CM code. For the reasons 

explained above, we propose that all of 

the crosswalked ICD–10–CM codes 

listed below would be eligible for a 

comorbidity payment adjustment. 

TABLE 3—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE

GASTROINTESTINAL BLEEDING 

ICD–9 Descriptor ICD–10 Descriptor 

533.20 Acute peptic ulcer of unspecified site with hemorrhage and 

perforation, without mention of obstruction 

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

and perforation 

533.21 Acute peptic ulcer of unspecified site with hemorrhage and 

perforation, with obstruction 

533.40 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage, without mention of obstruction 

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

hemorrhage 

533.41 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage, with obstruction 

533.60 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage and perforation, without mention of obstruction 

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

both hemorrhage and perforation 

533.61 Chronic or unspecified peptic ulcer of unspecified site with 

hemorrhage and perforation, with obstruction 

534.00 Acute gastrojejunal ulcer with hemorrhage, without mention 

of obstruction 

K28.0 Acute gastrojejunal ulcer with hemorrhage 

534.01 Acute gastrojejunal ulcer, with hemorrhage, with obstruction 

534.20 Acute gastrojejunal ulcer with hemorrhage and perforation, 

without mention of obstruction 

K28.2 Acute gastrojejunal ulcer with both hemorrhage and perforation 

534.21 Acute gastrojejunal ulcer with hemorrhage and perforation, 

with obstruction 

534.40 Chronic or unspecified gastrojejunal ulcer with hemorrhage, 

without mention of obstruction 

K28.4 Chronic or unspecified gastrojejunal ulcer with hemorrhage 

534.41 Chronic or unspecified gastrojejunal ulcer, with hemorrhage, 

with obstruction 

534.60 Chronic or unspecified gastrojejunal ulcer with hemorrhage 

and perforation, without mention of obstruction 

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

534.61 Chronic or unspecified gastrojejunal ulcer with hemorrhage 

and perforation, with obstruction 

BACTERIAL PNEUMONIA 

ICD–9 Descriptor ICD–10 Descriptor 

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

482.31 Pneumonia due to Streptococcus, group A 

482.39 Pneumonia due to other Streptococcus 

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

482.89 Pneumonia due to other specified bacteria 


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In summary, based on our clinical 

evaluation of the ICD–10–CM codes to 

which the eligible ICD–9–CM codes 

crosswalk, we proposed that both D89.2 

Hypergammaglobulinemia, unspecified 

and K52.81 Eosinophilic gastritis or 

gastroenteritis would not be eligible for 

the comorbidity payment adjustment. 

We proposed that all other ICD–10–CM 

codes to which eligible ICD–9–CM 

codes crosswalk that are listed in the 

Tables above would be eligible for a 

comorbidity payment adjustment 

effective October 1, 2014. We solicited 

comment on the ICD–10–CM codes that 

we proposed to exclude and those that 

we proposed would be eligible for a 

comorbidity adjustment. The comments 

that we received and our responses are 

set forth below. 

Comment: We received a few 

comments that acknowledged the 

implementation of the ICD–10–CM 

coding scheme. Two commenters 

supported our proposal to exclude 

D89.2 Hypergammaglobulinemia, 

unspecified and K52.81 Eosinophilic 

gastritis or gastroenteritis from 

eligibility for a comorbidity payment 

adjustment. 

Response: We thank commenters for 

their support. We are finalizing our 

proposal that the ICD–10–CM codes 

listed in the Tables above are eligible for 

a comorbidity payment adjustment, and 

that ICD–10–CM codes D89.2 

Hypergammaglobulinemia, unspecified 

and K52.81 Eosinophilic gastritis or 

gastroenteritis are excluded from 

eligibility for a comorbidity payment 

adjustment. 

Comment: One commenter questioned 

why CMS includes monoclonal 

gammopathy but excludes multiple 

myeloma and plasma cell leukemia. The 

commenter encouraged CMS to 

determine methods for proper disease 

identification as myeloma is the most 

common malignancy leading to ESRD. 

Response: In the CY 2011 ESRD PPS 

final rule (75 FR 49099), we discuss the 

exclusion of the cancer comorbidity 

diagnostic category from eligibility for a 

comorbidity payment adjustment. We 

explained that providing a payment 

adjustment for the cancer comorbidity 

category could overstate costs for some 

patients whose dialysis treatment is no 

longer affected by their history of cancer 

and could understate the costs of 

patients whose current cancer diagnosis 

and treatment affect their dialysis 

treatments. Until we are able to 

differentiate the cost between the two 

groups, we are unable to accurately 

reflect the ESRD resources being used to 

determine a comorbidity payment 

adjustment for patients with multiple 

myeloma and leukemia. 

Comment: We received two comments 

stating that implementing ICD–10–CM 

in 2014 will be another unfunded 

mandate and small dialysis 

organizations will suffer the most. 

Response: We understand that the 

transition from ICD–9–CM to ICD–10– 

CM may present a challenge for some 

ESRD facilities; however, the 

compliance date for implementation of 

ICD–10–CM is October 1, 2014 for all 

Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

covered entities, regardless of their size. 

6. Revisions to the Outlier Policy 

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

requires that the ESRD PPS include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variability in the amount 

of erythropoiesis stimulating agents 

(ESAs) necessary for anemia 

management. Our regulations at 42 CFR 

§ 413.237(a)(1) provide that ESRD 

outlier services are the following items 

and services that are included in the 

ESRD PPS bundle: (i) ESRD-related 

drugs and biologicals that were or 

would have been, prior to January 1, 

2011, separately billable under 

Medicare Part B; (ii) ESRD-related 

laboratory tests that were or would have 

been, prior to January 1, 2011, 

separately billable under Medicare Part 

B; (iii) medical/surgical supplies, 

including syringes, used to administer 

ESRD-related drugs, that were or would 

have been, prior to January 1, 2011, 

separately billable under Medicare Part 

B; and (iv) renal dialysis service drugs 

that were or would have been, prior to 

January 1, 2011, covered under 

Medicare Part D, excluding ESRDrelated oral-only drugs. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49142), we stated that for 

purposes of determining whether an 

ESRD facility would be eligible for an 

outlier payment, it would be necessary 

for the facility to identify the actual 

ESRD outlier services furnished to the 

patient by line item on the monthly 

claim. The ESRD-related drugs, 

laboratory tests, and medical/surgical 

supplies that we would recognize as 

outlier services were specified in 

Attachment 3 of Change Request 7064, 

Transmittal 2033 issued August 20, 

2010, rescinded and replaced by 

Transmittal 2094, dated November 17, 

2010. With respect to the outlier policy, 

Transmittal 2094 identified additional 

drugs and laboratory tests that may be 

eligible for ESRD outlier payment. 

Transmittal 2094 was rescinded and 

replaced by Transmittal 2134, dated 

January 14, 2011, which was issued to 

correct the subject on the Transmittal 

page and made no other changes. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70246), we eliminated the 

issuance of a specific list of eligible 

outlier service drugs which were or 

would have been separately billable 

under Medicare Part B prior to January 

1, 2011. However, we use separate 

guidance to continue to identify renal 

dialysis service drugs which were or 

would have been covered under Part D 

for outlier eligibility purposes in order 

to provide unit prices for calculating 

imputed outlier services. We also can 

identify, through our monitoring efforts, 

items and services that are incorrectly 

being identified as eligible outlier 

services in the claims data. Any updates 

to the list of renal dialysis items and 

services that qualify as outlier services 

are made through administrative 

issuances. 

Our regulations at 42 CFR § 413.237 

specify the methodology used to 

calculate outlier payments. An ESRD 

facility is eligible for an outlier payment 

if its actual or imputed Medicare 

Allowable Payment (MAP) amount per 

treatment for ESRD outlier services 

exceeds a threshold. The MAP amount 

represents the average incurred amount 

per treatment for services that were or 

would have been considered separately 

billable services prior to January 1, 

2011. The threshold is equal to the 

ESRD facility’s predicted ESRD outlier 

services MAP amount per treatment 

(which is case-mix adjusted) plus the 

fixed dollar loss amount. In accordance 

with § 413.237(c) of the regulations, 

facilities are paid 80 percent of the per 

treatment amount by which the imputed 

MAP amount for outlier services (that is, 

the actual incurred amount) exceeds 

this threshold. ESRD facilities are 

eligible to receive outlier payments for 

treating both adult and pediatric 

dialysis patients. 

In the CY 2011 ESRD PPS final rule, 

using 2007 data, we established the 

outlier percentage at 1.0 percent of total 

payments (75 FR 49142 through 49143). 

We also established the fixed dollar loss 

amounts that are added to the predicted 

outlier services MAP amounts. The 

outlier services MAP amounts and fixed 

dollar loss amounts are different for 

adult and pediatric patients due to 

differences in the utilization of 

separately billable services among adult 

and pediatric patients (75 FR 49140). 

As we explained in the CY 2011 ESRD 

PPS final rule (75 FR 49138 and 49139), 

the predicted outlier services MAP 

amounts for a patient are determined by 

multiplying the adjusted average outlier 

services MAP amount by the product of 

the applicable patient-specific case-mix 


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adjusters using the outlier services 

payment multipliers developed from the 

regression analysis to compute the 

payment adjustments. The average 

outlier services MAP amount per 

treatment for CY 2011 was based on 

payment amounts reported on 2007 

claims and adjusted to reflect projected 

prices for 2011. For CY 2012, the outlier 

services MAP amounts and fixed dollar 

loss amounts were based on 2010 data 

(76 FR 70250). Thus, for CYs 2011 and 

2012, the MAP and fixed dollar loss 

amounts were computed based on preESRD PPS claims data and utilization. 

For CY 2013, the outlier services MAP 

amounts and fixed dollar loss amounts 

were based on 2011 data (77 FR 67464). 

Therefore, the outlier thresholds for CY 

2013 were based on utilization of ESRDrelated items and services furnished 

under the ESRD PPS. Because of the 

lower utilization of erythropoietin 

stimulating agents (ESA) and other 

outlier services in CY 2011, we lowered 

the MAP amounts and fixed dollar loss 

amounts for both adult and pediatric 

patients for CY 2013 to allow for an 

increase in payments for ESRD 

beneficiaries requiring higher resources. 

a. Impact of Changes to the Outlier 

Policy 

In the CY 2014 ESRD PPS proposed 

rule (78 FR 40850 through 40852), we 

did not propose any changes to the 

methodology used to compute the MAP 

or fixed dollar loss amounts. Rather, we 

proposed to update the outlier services 

MAP amounts and fixed dollar loss 

amounts to reflect the utilization of 

outlier services reported on the 2012 

claims using the December 2012 claims 

file (that is, claims with dates of service 

January 1 through December 31, 2012, 

that were received, processed, paid, and 

passed to the National Claims History 

File as of December 31, 2012). In this 

final rule, for CY 2014, we used the June 

2013 update of the CY 2012 National 

Claims History File to update the outlier 

services MAP amounts and fixed dollar 

loss amounts. The impact of this update 

is shown in Table 4 below, which 

compares the outlier services MAP 

amounts and fixed dollar loss amounts 

used for the outlier policy in CY 2013 

with the updated estimates for CY 2014. 

The estimates for the CY 2014 outlier 

policy, which are included in Column II 

of Table 4, were inflation adjusted to 

reflect projected 2014 prices for outlier 

services. 

TABLE 4—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY

Column I 

Final outlier policy for CY2013 

(based on 2011 data price 

inflated to 2013)* 

Column II 

Final outlier policy for CY2014 

(based on 2012 data price 

inflated to 2014)* 

Age < 18 Age >= 18 Age < 18 Age >= 18 

Average outlier services MAP amount per treatment 1 ................................... $38.65 $61.38 $37.29 $51.97 

Adjustments: 

Standardization for outlier services 2 ........................................................ 1.0927 0.9878 1.1079 0.9866 

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

Adjusted average outlier services MAP amount 3 ........................................... $41.39 $59.42 $40.49 $50.25 

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

the outlier threshold 4 ................................................................................... $47.32 $110.22 $54.01 $98.67 

Patient months qualifying for outlier payment ................................................. 7.6% 5.1% 6.7% 5.3% 

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

2013 prices in Column I and projected 2014 prices in Column II). 1Excludes patients for whom not all data were available to calculate projected payments under an expanded bundle. The outlier services MAP 

amounts are based on 2012 data. The medically unbelievable edits of 400,000 units for Epoetin and 1,200 mcg for aranesp that are in place 

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

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

each patient. 4The fixed dollar loss amounts were calculated using 2012 data to yield total outlier payments that represent 1 percent of total projected payments for the ESRD PPS. 

As shown in Table 4, the estimated 

fixed dollar loss amount that determines 

the 2014 outlier threshold amount for 

adults (Column II) is lower than that 

used for the 2013 outlier policy 

(Column I). The estimated fixed dollar 

loss amount that determines the 2014 

outlier threshold amount for pediatric 

patients (Column II) is higher than that 

used for the 2013 outlier policy 

(Column I). The main reason for the 

reduction for adult patients is that the 

lower utilization of ESA and other 

outlier services continued to decline 

during the second year of the PPS. This 

can be seen by comparing the outlier 

service MAP amount per treatment for 

adult patients in Column I ($61.38, 

which is based on 2011 data) with that 

amount in Column II ($51.97, which is 

based on 2012 data). 

For pediatric patients, the overall 

average outlier service MAP amount per 

treatment decreased from $38.65 in 

2011 to $37.29 in 2012. In addition, 

there was a greater tendency in 2012 for 

a relatively small percentage of pediatric 

patients to account for a 

disproportionate share of the total 

outlier service MAP amounts. The one 

percent target for outlier payments is 

therefore expected to be achieved based 

on a smaller percentage of pediatric 

outlier cases using 2012 data compared 

to 2011 data (6.7 percent of pediatric 

patient months are expected to qualify 

for outlier payments rather than 7.6 

percent). These patterns led to the 

estimated fixed dollar loss amount for 

pediatric patients being higher for the 

outlier policy for CY 2014 compared to 

the outlier policy for CY 2013. 

Generally, there is a relatively higher 

likelihood for pediatric patients that the 

outlier threshold may be adjusted to 

reflect changes in the distribution of 

outlier service MAP amounts. This is 

due to the much smaller overall number 

of pediatric patients compared to adult 

patients, and to the fact that the outlier 

threshold for pediatric patients is 

calculated based on data for a much 

smaller number of pediatric patients 

compared to adult patients. 

For this final rule, based on the use 

of the most recently available data, we 

are updating the fixed dollar loss 

amounts that are added to the predicted 

MAP amounts per treatment to 


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determine the outlier thresholds for CY 

2014 from $110.22 to $98.67 for adult 

patients and from $47.32 to $54.01 for 

pediatric patients compared with CY 

2013 amounts. We are also updating the 

adjusted average outlier services MAP 

amounts for CY 2014 from $59.42 to 

$50.25 for adult patients and from 

$41.39 to $40.49 for pediatric patients 

compared with CY 2013 amounts. 

We estimate that the percentage of 

patient months qualifying for outlier 

payments under the current policy will 

be 5.3 percent and 6.7 percent for adult 

and pediatric patients, respectively, 

based on the 2012 data. The pediatric 

outlier MAP and fixed dollar loss 

amounts continue to be lower for 

pediatric patients than adults due to the 

continued lower use of outlier services 

(primarily reflecting lower use of ESAs 

and other injectable drugs). 

b. Outlier Policy Percentage 

42 CFR 413.220(b)(4) stipulates that 

the per treatment base rate is reduced by 

1 percent to account for the proportion 

of the estimated total payments under 

the ESRD PPS that are outlier payments. 

For this final rule, based on analysis of 

the June 2013 update of the CY 2012 

National Claims History File, outlier 

payments represented approximately 

0.2 percent of total payments, again 

falling short of the 1 percent target due 

to the continuing decline in use of ESAs 

and other outlier services. Use of 2012 

data to recalibrate the thresholds, which 

reflect lower utilization of ESAs and 

other outlier services, is expected to 

result in aggregate outlier payments 

close to the 1 percent target in CY 2014 

and result in increased payments for 

ESRD beneficiaries requiring higher 

resource utilization. 

We note that recalibration of the fixed 

dollar loss amounts for CY 2014 outlier 

payments results in no change in 

payments to ESRD facilities for 

beneficiaries with renal dialysis items 

and services that are not eligible for 

outlier payments, but increases 

payments to providers for beneficiaries 

with renal dialysis items and services 

that are eligible for outlier payments. 

Therefore, beneficiary co-insurance 

obligations increase for renal dialysis 

services eligible for outlier payments. 

We received the following comments 

on this proposal: 

Comment: Commenters generally 

supported CMS’s proposal to use CY 

2012 claims data to update and 

recalibrate the outlier policy with the 

most recent data available for adult and 

pediatric patients for CY 2014. 

Response: We thank the commenters 

for their support of our CY 2014 

proposal to update the ESRD PPS outlier 

payment policy for adult and pediatric 

patients with the most recent data 

available. As stated previously, for this 

final rule, we used the June 2013 update 

of the 2012 National Claims History 

File. This data file represents the most 

recent available data of CY 2012 paid 

Medicare claims. 

Comment: A few commenters urged 

CMS to ensure with a ‘‘high level of 

probability’’ that the full one percent 

outlier holdback will be expended in CY 

2014. One commenter contended that 

updating the outlier policy with recent 

data does not address the ongoing 

problem of ‘‘overstating the outlier’’ and 

‘‘artificially’’ reducing the base rate. 

Some commenters suggested that the 

‘‘chronic underpayment of the outlier 

pool’’ suggests that an outlier policy is 

unnecessary. Other commenters urged 

CMS to avoid future ‘‘underpayment’’ of 

the outlier policy by lowering or 

eliminating the threshold for CY 2014. 

A few commenters requested that CMS 

‘‘consider giving back’’ the amounts not 

paid in CY 2012 by increasing the CY 

2014 base rate to include outlier monies 

held back but not paid out in CY 2012. 

Response: We are unable to assure the 

commenters that the one percent outlier 

holdback will fully be expended in CY 

2014. The total amount of outlier 

payments are dependent upon patient 

utilization of high cost outlier-eligible 

services (most significantly ESAs), that 

are furnished to Medicare beneficiaries 

in a given payment year. Using the most 

recent claims and utilization data, we 

simulated 2014 Medicare payments and 

established the MAP and fixed dollar 

loss amounts to achieve one percent of 

the total ESRD PPS payments for CY 

2014. Given the continued decline in 

utilization of ESAs and other outlier 

services from CY 2011 to CY 2013, it is 

possible that the one percent outlier 

may not be fully paid out in CY 2014. 

At the same time, since the MAP and 

fixed dollar loss amounts have been 

reduced, it is also possible that the 

outlier payments could exceed the 1 

percent of payments that are held back. 

Either outcome is possible because we 

cannot predict with certainty the 

utilization of outlier services in a future 

year. However, we make a good faith 

effort to estimate future use of outlier 

services by simulating payment using 

the most current data available. To the 

extent that actual 2014 outlier payment 

do not reach that level, we will update 

the MAP and fixed dollar loss amounts 

for CY 2015. 

We disagree with the commenter who 

contended that CMS is overstating the 

outlier and artificially reducing the 

base. We remind the commenter that 

updating the outlier payment policy for 

CY 2014 does not change payments for 

dialysis items and services that are not 

eligible for outlier payments. Rather, the 

outlier payment is a per treatment 

payment increase, available to ESRD 

facilities when they furnish Medicare 

beneficiaries with high cost dialysis 

items and services that are eligible for 

outlier payments. If the ESRD facilities 

are not furnishing high cost, outliereligible, dialysis items and services to 

the patient then we believe that the base 

rate, and applicable adjustments, is an 

appropriate payment. Nonetheless, we 

continue to believe that use of the most 

recent data available to update the 

outlier payment policy should result in 

appropriate outlier payments. We 

disagree with the commenters who 

contended that CMS outlier payment 

policy has resulted in ‘‘chronic 

underpayment of the outlier,’’ and we 

continue to believe that the one percent 

outlier policy has not been fully realized 

under the ESRD PPS because of the 

continued decline in ESA utilization, 

rather than an inherent flaw in the 

outlier payment methodology. We also 

disagree with commenters who suggest 

that CMS has the authority to eliminate 

the outlier policy for CY 2014 or at some 

point in the future, as the statute at 

section 1881(b)(14)(D)(ii) clearly states 

that the ESRD PPS ‘‘shall include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variations in the amount 

of erythropoiesis stimulating agents 

necessary for anemia management.’’ 

We also disagree that with 

commenters that we should ‘‘give back’’ 

outlier monies to account for not 

achieving the 1 percent outlier 

threshold. As we explained in the CY 

2013 ESRD PPS final rule (77 FR 67450, 

67465), ‘‘[t]he 1 percent outlier policy is 

a prospective payment mechanism in 

which thresholds are established and 

adjusted on a yearly basis based on 

historical data. In the FY 1997 Inpatient 

Prospective Payment System (IPPS) 

final rule (61 FR 46229 and 46230), we 

explained that we believe our outlier 

policies are consistent with the statute 

and the goals of the prospective 

payment system. Many of the factors 

used to set prospective payment 

amounts for a given year are estimates. 

These factors include not only the 

outlier thresholds, but also the market 

basket rate of increase, the update 

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

that Congress intended that the 

standardized amounts should be 

adjusted (upward or downward) to 

reflect differences between projected or 


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actual outlier payments for a given year. 

Moreover, retroactive adjustments 

would be extremely difficult or 

impracticable (if not impossible) to 

administer. We further explained that 

the thresholds for a given year reflect 

certain levels of costs, so that if costs are 

held down, fewer cases qualify for 

outlier payments and outlier payments 

are lower than expected. We believe that 

the same explanation applies to the 

ESRD PPS.’’ Finally, we plan to review 

the outlier policy as a whole when we 

refine the system in the future. 

D. The Self-Dialysis and Home Dialysis 

Training Add-On Payment 

a. Medicare Policy for Self-Dialysis 

Training, Home Dialysis Training, and 

Retraining 

The existing Medicare policy for 

furnishing self-dialysis training, home 

dialysis training, and retraining was 

finalized in our CY 2011 ESRD PPS final 

rule (75 FR 49062 through 49064) and 

further discussed in the Medicare 

Benefits Policy Manual, (Publication 

100–02, Chapter 11, Section 30). Selfdialysis or home dialysis can only be 

performed after an ESRD patient has 

completed an appropriate course of 

training. The scope of training services 

that a certified ESRD home dialysis 

training facility must furnish to ESRD 

patients as a condition of coverage are 

described at 42 CFR 494.100(a). For 

instance, 42 CFR 494.100(a)(2) states 

that the training must be conducted by 

a registered nurse who meets the 

requirements of 42 CFR 494.140(b)(2). 

For additional information on the 

requirements for ESRD facilities in 

furnishing dialysis training, see 42 CFR 

Part 494, and for additional information 

regarding home dialysis training 

certification, see the State Operations 

Manual, which may be viewed on the 

Medicare Web site at the following link: 

http://www.cms.gov/Medicare/ProviderEnrollment-and-Certification/

GuidanceforLawsAndRegulations/

Dialysis.html. 

Our regulation at 42 CFR 494.70 

(Condition: Patients’ rights) requires 

that facilities inform patients (or their 

representatives) of their rights and 

responsibilities when they begin their 

treatment and protect and provide for 

the exercise of those rights. Our 

regulation at 42 CFR 494.70(a)(7) 

requires a facility to inform patients 

about all treatment modalities and 

settings, including but not limited to 

transplantation, home dialysis 

modalities, and in-facility hemodialysis. 

This includes the patient’s right to 

receive resource materials for dialysis 

modalities not offered by the facility. 

We expect that all ESRD facilities 

comply with this regulation and furnish 

resource information on home dialysis, 

even if the home modality is not offered 

by the facility. When ESRD facilities are 

certified for home dialysis training, we 

expect the facility to provide training 

throughout the self-dialysis or home 

dialysis experience (42 CFR 494.100). 

Self-dialysis or home dialysis training 

services and supplies may include but 

are not limited to personnel services, 

dialysis supplies, written training 

manuals and materials, and ESRDrelated items and services. 

We discuss Medicare’s training 

policies in Table 5 (Medicare’s Self or 

Home Training by Modality) for the 

following dialysis modalities: 

• Home Hemodialysis Training 

• Intermittent Peritoneal Dialysis 

Training 

• Continuous Ambulatory Peritoneal 

Dialysis Training 

• Continuous Cycling Peritoneal 

Dialysis Training 

We would expect that patients who 

elect self-dialysis or home dialysis 

training will be good candidates for 

these modalities and that they will be 

successful in completing the training. 

We also expect facilities to comply with 

the patient assessment Condition of 

Participation including the requirement 

in 42 CFR 494.80(a)(9) to include in the 

assessment: ‘‘Evaluation of the patient’s 

abilities, interests, preferences, and 

goals, including the desired level of 

participation in the dialysis care 

process; the preferred modality 

(hemodialysis or peritoneal dialysis), 

and setting (for example, home dialysis), 

and the patient’s expectations of care 

outcomes.’’ 

TABLE 5—MEDICARE’S SELF OR HOME TRAINING BY MODALITY

Home Hemodialysis (HHD) 

Training.

HHD training is generally furnished in 4 weeks. Medicare will pay the ESRD facility for up to 25 HHD training sessions. In some HHD programs, the dialysis caregiver is trained to perform the dialysis treatment in its entirety 

and the patient plays a secondary role. In other programs, the patient performs most of the treatment and is 

only aided by a helper. 

Intermittent Peritoneal Dialysis (IPD) Training.IPD training is generally furnished in 4 weeks. Medicare will pay the ESRD facility for up to 15 PD training sessions. In the IPD program, the patient’s caregiver is usually trained to carry out the dialysis care. The patient 

plays a minimal role, as most are unable to perform self-care dialysis because of other debilitating conditions. 

Continuous Ambulatory Peritoneal Dialysis (CAPD) 

Training.

CAPD training is generally furnished in 2 weeks. Medicare will pay the ESRD facility for up to 15 PD training sessions. In CAPD programs both the patient and the caregiver are trained. 

Continuous Cycling Peritoneal Dialysis (CCPD) 

Training.

CCPD training is generally furnished in 2 weeks. Medicare will pay the ESRD facility for up to 15 PD training sessions. In CCPD programs both the patient and the caregiver are trained. 

b. Payment Methodology 

In our CY 2011 ESRD PPS final rule 

(75 FR 49062 through 49064), we 

included training costs in computing 

the ESRD PPS base rate, but stated that 

the ESRD PPS base rate alone does not 

account for the staffing costs associated 

with training treatments furnished by a 

registered nurse. Thus, we finalized the 

training add-on payment, to be an 

additional payment made under the 

ESRD PPS, when one-on-one self or 

home dialysis training is furnished by a 

nurse working for a Medicare-certified 

training facility to a Medicare 

beneficiary for either hemodialysis or 

the peritoneal dialysis training 

modalities listed in Table 5. Likewise, 

we noted in our CY 2012 ESRD PPS 

final rule (76 FR 70252), that ‘‘ESRD 

facilities receive a per-treatment 

payment that accounts for case-mix, 

geographic location, low-volume, and 

outlier payment regardless [of whether] 

the patient receives dialysis at home or 

in the facility, plus the training addon[,]’’ if applicable. 

We discuss our policies for retraining 

sessions in the Medicare Benefit Policy 

Manual, Publication 100–02, Chapter 

11, Section 30.2.E. The add-on payment 

is also applied for retraining sessions 

after a patient or caregiver has 

completed the initial training program 

and if the patient continues to be an 

appropriate candidate for self or home 

dialysis modalities. We would expect 

that most Medicare beneficiaries receive 


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retraining sessions when they receive 

new equipment, have a change in 

caregiver, or a change in modality. The 

ESRD facility may not bill Medicare for 

retraining services when they install 

home dialysis equipment or furnish 

monitoring services. For example, an 

ESRD facility nurse may not bill for 

retraining sessions when they update a 

home dialysis patient’s treatment 

record, order monthly supplies, or 

instruct the patient on the use of a new 

medication for the treatment of 

infection. When retraining sessions are 

furnished to a patient or caregiver, there 

is an expectation that the patient or 

caregiver is already knowledgeable of 

the elements of home dialysis, and if 

additional training is being done for a 

change of equipment or a change in 

modality, fewer sessions would be 

necessary because of the transferability 

of certain basic skills for home dialysis. 

If a Medicare beneficiary exceeds the 

maximum amount of training sessions 

based upon their modality, and, if they 

continue to be a good candidate for 

home modalities, additional training 

sessions or retraining sessions may be 

paid by Medicare with medical 

justification. In such cases, the ESRD 

facility must indicate the medical 

justification with the claim for the 

training or retraining session submitted 

for payment. Because the requirement of 

medical justification is specific to the 

patient’s training needs, circumstances 

(such as a change in caregiver), or 

condition (change in modality), we 

would not expect that an ESRD facility 

would routinely bill Medicare for 

training or retraining sessions on any 

patient. 

In CY 2011, we finalized the amount 

for the training add-on adjustment at 

$33.44 per treatment, and noted that 

this amount would be added to the 

ESRD PPS payment when a training 

treatment is furnished by the ESRD 

facility to a Medicare beneficiary. In 

addition, we noted that because the 

training add-on payment is directly 

related to nursing salaries, and that 

nursing salaries differ greatly based on 

geographic location, we would adjust 

the training add-on payment by the 

geographic area wage index applicable 

to the ESRD facility. (For further 

discussions on wage indices, please see 

section II.C.4. of this final rule.) To 

summarize, when home dialysis 

training sessions are furnished to a 

Medicare beneficiary by a Medicarecertified home dialysis training facility, 

Medicare will make the ESRD PPS 

computed base rate payment with all 

applicable adjustments, and then the 

separate add-on payment for self or 

home dialysis training. 

In the CY 2013 ESRD PPS final rule 

(77 FR 67468 through 67469), we 

addressed comments on Medicare’s self 

and home dialysis training policies 

under the ESRD PPS. In that final rule, 

we stated that commenters were 

concerned that the payment for home 

dialysis training is insufficient and does 

not reflect the true costs of training and 

that they indicated various ranges of 

time required for home training in terms 

of time per day and number of training 

sessions. At that time, we responded to 

those comments by confirming that 

CMS will continue to monitor and 

analyze trends in home dialysis 

training, but that we believe our 

payment methodology is adequate for 

ESRD facilities furnishing training 

services. 

In the CY 2014 ESRD PPS proposed 

rule, we sought public comments on the 

costs associated with furnishing self or 

home dialysis training (78 FR 40854). 

We requested comments on the 

elements of PD vs. HHD training 

sessions, specifically the costs of 

furnishing such training, the 

appropriate number of training sessions, 

and the duration of the training 

sessions. Lastly, we sought comments 

on a ‘‘holdback’’ payment methodology, 

which we discussed in the CY 2011 

ESRD PPS final rule (75 FR 49063). 

Under this methodology, a portion of 

the training payments would be 

withheld from the ESRD facility until 

the ESRD patient demonstrates that they 

have successfully transitioned to a home 

modality. Specifically, in the CY 2014 

proposed rule (78 FR 40854), we sought 

comments on the costs associated with 

furnishing self or home dialysis 

training, the training elements of PD and 

HHD training, and the number of 

training sessions. 

Although we did not specifically 

propose to increase the training add-on 

payment amount in the CY 2014 ESRD 

PPS proposed rule (78 FR 40852 

through 40854), we received several 

hundred comments from Medicare 

beneficiaries, dialysis patients, 

caregivers, friends and family members, 

industry stakeholders and other 

interested parties in response to our 

request for comments that 

overwhelmingly encouraged us to 

evaluate the training add-on adjustment 

and to increase the training add-on 

payment amount in this final rule. 

Commenters generally noted the 

substantial patient benefits of utilizing 

home dialysis modalities, including 

improved quality of life; continued 

employment; and the ability to travel 

and live a ‘‘normal life.’’ In addition, 

commenters identified many significant 

training elements that were not 

contemplated in the original training 

add-on adjustment payment 

methodology, such as self cannualation 

and certain aspects of operating a HHD 

machine. 

After a review of the considerable 

number of compelling public comments 

and MedPAC’s ‘‘Report to Congress’’ of 

March 2013, ‘‘Considering alternative 

dialysis treatment options: Use of more 

frequent hemodialysis and home 

dialysis’’ that advocates for greater use 

of home dialysis modalities among 

Medicare beneficiaries, we are finalizing 

a 50 percent increase to the home 

dialysis training add-on adjustment 

payment amount beginning in CY 2014. 

We are persuaded to finalize this 

increase because we agree with 

commenters that access to home 

modalities is limited, and that the 

current home dialysis training add-on 

payment amount per treatment, which 

represents 1 hour of nursing time, does 

not adequately represent the staff time 

required to ensure that a patient is able 

to perform home dialysis safely. 

Therefore, beginning January 1, 2014, 

the payment add-on will be computed 

based upon 1.5 hours of nursing time 

per training treatment, which amounts 

to a payment increase of $16.72 per 

training treatment. The training add-on 

adjustment payment amount for CY 

2014 and future years will be $50.16 

and will continue to be adjusted by the 

facility’s wage index. We believe 

increasing the training time is an 

appropriate change because commenters 

largely contended that the number of 

allowable training sessions is adequate, 

but that the payment amount is 

insufficient. 

We also note that the finalized per 

training treatment add-on payment 

amount of $50.16 is in line with the 

costs reported on the 2010 ESRD facility 

cost reports, which indicates an average 

facility training cost of $53.00 per 

training treatment. In addition to the 

home dialysis training add-on payment, 

the base rate also compensates facilities 

for the cost of providing home dialysis 

training. 

We received the following comments: 

Comment: The majority of 

commenters recognized the importance 

of dialysis training services and 

modality choice for a beneficiary’s wellbeing. Many patient comments included 

personal stories about their ability to 

lead fulfilling lives after they transferred 

to HHD, including being able to return 

to work, travel, and participate in family 

activities. The commenters confirmed 

that the training elements for HHD are 

significant and require additional faceto-face nursing time. Commenters 

identified such elements as setting up 


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and orienting the patient to the HHD 

unit; explaining safety alarms; 

troubleshooting alarms; and teaching 

the patient self cannualation as training 

elements that they do not believe were 

adequately paid for by the base rate and 

the training add-on payment. 

Some commenters noted that a single 

training add-on payment amount for 

both PD and HHD training services 

disincentives HHD training. The 

commenters contend that the training 

add-on payment amount is sufficient for 

PD training services, but that higher 

training costs are incurred by the facility 

when they furnish HHD training 

services. A few commenters urged CMS 

to ‘‘fix’’ this bias in the training 

payment so that more patients have 

access to the modality of HHD services. 

One commenter pointed out that 

Medicare’s existing regulations require 

that dialysis patients be informed of all 

dialysis options, however, the modality 

of HHD is not available to many patients 

because facilities will not invest in 

home dialysis training programs under 

the current payment methodology. 

Response: Again, we thank the 

patients for their willingness to share 

their home dialysis training experiences 

with CMS, and in particular, to patients 

for commenting on the importance of 

modality choice in returning to work 

and participating fully in their lives. 

While we did not propose to increase 

the home dialysis training add-on 

payment amount, we found the 

comments very compelling. In 

particular, we agree with commenters 

that the current home dialysis training 

add-on payment amount, together with 

the base rate, does not sufficiently cover 

the costs of providing the critical HHD 

training elements that commenters 

identified. We also agree with 

commenters that the single home 

dialysis training add-on payment could 

disincentivize training in HHD, as 

opposed to PD, as the cost of HHD 

training is higher than the cost of PD 

training. As we noted in the CY 2013 

ESRD PPS final rule (77 FR 67468), we 

do not intend to encourage the use of 

one type of home dialysis modality over 

another; rather we believe that decisions 

regarding the appropriate home dialysis 

modality should be made by 

beneficiaries in consultation with their 

physicians. Where a beneficiary and his 

or her physician decide that HHD is the 

appropriate home dialysis modality, we 

do not want the amount of the home 

dialysis training add-on payment to 

discourage the use of that modality. 

We appreciate the comments detailing 

face-to-face nursing time and the 

training provided during that time. 

These comments noted significant faceto-face training time for the training 

elements of self cannualation, effective 

machine set-up, explaining warning 

alarms, troubleshooting alarms, and 

what the patient and caregiver should 

do in case of an emergency. We agree 

with the commenters that these training 

elements are significant to a patient’s 

ability to safely and effectively dialyze 

in the home, and that these training 

elements are unique to HHD training 

services. HHD training elements were 

not included in the original training 

add-on payment adjustment because 

prior to the PPS, home training services 

furnished to Medicare beneficiaries 

were largely based upon training 

elements for the modality of PD, with 

few patients receiving HHD services at 

home. We agree with commenters that 

self cannualation and troubleshooting 

alarms are critical training elements for 

HHD, and that they require additional 

training time. For all of these reasons, 

we are increasing the per-treatment 

home dialysis training treatment 

payment to account for 1.5 hours of 

nursing time per training session 

furnished on or after January 1, 2014, 

instead of 1 hour per training session. 

We expect all ESRD facilities to 

comply with our regulation at 42 CFR 

494.70(a)(7) and inform beneficiaries of 

the availability of HHD, even if this 

modality is not offered by the facility. 

Although we believe increasing the 

amount of the home dialysis training 

add-on payment adjustment in this final 

rule will further enable patients to 

dialyze at home, we also believe that the 

ESRD PPS, along with Medicare 

Conditions for Coverage requirements 

set forth in 42 CFR § 494.100(a), 

contributed to the increase in utilization 

rates for home modalities. In the CY 

2011 ESRD PPS final rule, we stated that 

the ESRD PPS monitoring program 

would assess the effect of the expanded 

bundled payment on home dialysis 

utilization rates (75 FR 49058). We 

continue to monitor Medicare submitted 

and paid claims to assess home 

modality utilization rates. This data is 

available on the ESRD PPS Spotlight 

and may be viewed at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/

Spotlight.html. 

Comment: Commenters applauded 

CMS for seeking industry feedback for 

refinements to self and home dialysis 

training policies. In general, 

commenters requested that CMS 

increase the payment amount for 

dialysis training services to more 

accurately reflect the actual costs 

incurred by facilities when they furnish 

self or home dialysis training services to 

a Medicare beneficiary. Many 

commenters noted that the training addon payment, equal to 1 hour of 

registered nursing time, $33.44, is 

‘‘inadequate’’ to cover the training costs 

incurred by the facility when they 

furnish a home dialysis training 

treatment. Numerous commenters urged 

CMS to increase the training add-on 

payment amount to ‘‘appropriately 

recognize’’ a facility’s costs when 

furnishing home dialysis training 

services and specifically noted the 

higher cost incurred by the facility 

when they furnish HHD training 

services. 

Response: We thank the facility 

commenters who shared detailed 

analysis regarding their training costs. A 

few commenters furnished CMS with an 

‘‘Updated Home Hemodialysis Cost 

Study: 2010 Medicare Cost Report 

Analysis.’’ The analysis shows that 

current Medicare policies to reimburse 

for home dialysis training fall short of 

the average costs facilities incur when 

they furnish training treatments. As 

stated above, we noted in our CY 2011 

ESRD PPS final rule (75 FR 49062 

through 49064), that the ESRD PPS base 

rate alone does not account for the 

staffing costs associated with training 

treatments furnished by a registered 

nurse and that the training add-on 

payment is an additional payment made 

under the ESRD PPS to acknowledge the 

one-on-one self or home dialysis 

training furnished by a nurse. We 

clarified this policy again in the CY 

2013 ESRD PPS final rule (77 FR 67468) 

where we stated, ‘‘Training costs are 

included in the ESRD PPS base rate, 

however, we also provide an add-on 

adjustment for each training treatment 

furnished by a Medicare-certified home 

dialysis training facility.’’ As such, it is 

not the intent of the add-on treatment to 

reimburse a facility for all of the training 

costs furnished during training 

treatments. Rather, the single ESRD PPS 

base rate, all applicable case-mix and 

facility level adjustments, as well as the 

add-on payment should be considered 

the Medicare payment for each training 

treatment and not the training add-on 

payment alone. Nonetheless, we agree 

with commenters that the home dialysis 

add-on payment, together with the base 

rate, does not account for all of the 

training elements commenters 

identified. 

We note that patient and caregiver 

commenters indicated a training time 

for home dialysis training of 2 to 6 

weeks in length, with face-to-face 

nursing time of 2 to 6 hours per training 

day. Commenters also acknowledged 

that many of the training days took 

place in the training facility, in a group 

setting, and not in the patient’s home. 


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In addition, some commenters reported 

that nursing staff were not present for 

the final week of training, as the patient 

had achieved total independent selfcare. While we understand that training 

for home dialysis is specific to the 

patients’ needs and that several factors, 

including a patient’s health status and 

emotional and mental state, are 

considerations for the length and 

number of training services furnished, 

we are concerned about the wideranging variance in training times and 

the duration of training sessions 

indicated in the comments. While 

believe that an increase in the amount 

of the home dialysis training add-on 

payment is appropriate, we note that, 

based on the comments we received, 

training services furnished to Medicare 

beneficiaries appear inconsistent across 

training facilities. We will continue to 

monitor training services furnished to 

Medicare beneficiaries in the future. 

Comment: A few commenters urged 

CMS to increase the training add-on 

payment amount without making a 

reduction to the base rate to maintain 

budget neutrality. One commenter noted 

that, ‘‘we believe that CMS has the 

discretion to independently make this 

change without adjustments for budget 

neutrality.’’ A few commenters urged 

CMS to make no change to the training 

add-on payment amount that would 

further reduce the base rate for CY 2014. 

Response: We appreciate commenters 

concern for protecting the ESRD PPS 

base rate. However, we are not changing 

the payment methodology used to 

compute the training add-on adjustment 

and the training add-on payment will 

continue to be budget neutral, which 

means the base rate will be affected. We 

believe that an additional half hour per 

training session better reflects the costs 

facilities incurred when furnishing 

training services to Medicare 

beneficiaries. The training add-on 

payment increase will be budget neutral 

for CY 2014 in that we will reduce the 

base rate by $0.02 to account for the cost 

of the increase. 

We computed the final CY 2014 home 

dialysis training add-on budgetneutrality adjustment factor using 

treatment counts from the 2012 claims 

and facility-specific CY 2014 payment 

rates to estimate the total dollar amount 

that each ESRD facility would have 

received in CY 2014 with no adjustment 

to the training add-on factor. The total 

of these payments became the target 

amount of expenditures for all ESRD 

facilities for CY 2014. Next, we 

computed the estimated dollar amount 

that would have been paid for the same 

ESRD facilities using the final adjusted 

home dialysis training add-on of $50.16 

for CY 2014. The total of these payments 

becomes the new CY 2014 amount of 

expenditures for all ESRD facilities. 

The training add-on budget-neutrality 

factor is calculated as the target amount 

divided by the new CY 2014 amount. 

When we multiplied the training add-on 

budget-neutrality factor by the 

applicable CY 2014 estimated payments, 

aggregate payments to ESRD facilities 

would remain budget-neutral when 

compared to the target amount of 

expenditures. The training add-on 

budget-neutrality factor ensures that 

training add-on adjustments do not 

affect aggregate Medicare payments. 

Therefore, we are finalizing a training 

add-on budget-neutrality adjustment 

factor of .999912, which will be applied 

directly to the CY 2014 ESRD PPS base 

rate. 

Comment: A few commenters noted 

that the training add-on payment is a 

‘‘fixed’’ payment and does not adjust 

from year to year for inflation or wages. 

One commenter noted that the training 

add-on payment is not included in the 

annual market basket used to update the 

ESRD PPS and that CMS should address 

this inconsistency. 

Response: We agree with comments 

that the training add-on payment 

adjustment is a fixed payment amount 

and is not updated by the annual wage 

data from the Bureau of Labor and 

Statistics. However, we also note that 

although the training add-on payments 

are not adjusted by the ESRD PPS 

market basket, the payment is adjusted 

by the geographic wage index values. 

This geographic adjustment allows 

Medicare payments to appropriately 

reflect the local wage of a registered 

nurse in the geographic areas where the 

training services are furnished. We 

appreciate commenters’ suggestions for 

updating the training add-on payment 

amount with a market basket or other 

inflation indicator such as the most 

recent wage data. We will take these 

comments into account in considering 

future refinements to the home dialysis 

training add-on payment adjustment. 

Comment: Several commenters 

discouraged CMS from considering a 

holdback payment methodology for 

making training add-on payments. One 

commenter expressed serious concerns 

regarding a holdback policy for home 

dialysis training, stating that the policy 

would ‘‘penalize facilities’’ for 

unsuccessful training. Another 

commenter contended that providers 

should not be held responsible for 

patients who decide that they are not 

able to adequately perform home 

dialysis. 

Response: We thank the commenters 

for their comments and note that CMS 

did not receive a single comment that 

endorsed the holdback payment 

methodology. We agree with 

commenters that a holdback payment 

methodology penalizes the facilities for 

patients who decide that they are not 

able to perform self or home dialysis 

and that this decision may not be a 

reflection of the quality of the training 

the patient received. 

In summary, in response to 

comments, CMS will finalize a payment 

increase of 50 percent for both PD and 

HD training treatments. Beginning 

January 1, 2014, the payment add-on 

will be computed based upon 1.5 hours 

of nursing time per training treatment, 

which amounts to a payment increase of 

$16.72 per training treatment. The 

training add-on adjustment payment 

amount for CY 2014 and future years 

will be $50.16 and will continue to be 

adjusted by the facility’s wage index. 

ESRD facilities may continue to bill a 

maximum of 25 training sessions per 

patient for HHD training and 15 sessions 

for CCPD and CAPD. For all home 

modalities, we will pay for additional 

training sessions when medical 

necessity is documented. We believe 

increasing the training time is an 

appropriate policy refinement, as CMS 

evaluated the training elements reported 

to be furnished during training 

treatments and determined that selfcannualation, equipment preparation 

and alarm management were significant 

training elements that require additional 

time per training treatment and that 

payment of an additional half hour per 

treatment would appropriately 

recognize the costs incurred by facilities 

when they furnish training treatments. 

We will reduce the base rate by $0.02 

to account for the increase in the 

amount of the home dialysis training 

add-on payment adjustment. 

E. Delay of Payment for Oral-Only Drugs 

Under the ESRD PPS 

Section 1881(b)(14)(A)(i) of the Act, as 

added by section 153(b) of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA), requires 

the Secretary to implement a payment 

system under which a single payment is 

made to a provider of services or a renal 

dialysis facility for ‘‘renal dialysis 

services’’ in lieu of any other payment. 

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

renal dialysis services, and subclause 

(iii) of that section states that these 

services include ‘‘other drugs and 

biologicals that are furnished to 

individuals for the treatment of ESRD 

and for which payment was (before the 

application of this paragraph) made 

separately under this title, and any oral 

equivalent form of such drug or 


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biological[.]’’ We interpreted this 

provision as including not only 

injectable drugs and biologicals used for 

the treatment of ESRD (other than ESAs, 

which are included under clause (ii)), 

but also all non-injectable drugs used 

for the treatment of ESRD furnished 

under Title XVIII. We also concluded 

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

of the statutory definition of renal 

dialysis services, such drugs would fall 

under clause (iv), and constitute other 

items and services used for the 

treatment of ESRD that are not described 

in clause (i). Accordingly, we defined 

‘‘renal dialysis services’’ at 42 CFR 

413.174 as including, among other 

things, ‘‘[o]ther items and services that 

are furnished to individuals for the 

treatment of ESRD and for which 

payment was (prior to January 1, 2011) 

made separately under title XVIII of the 

Act (including drugs and biologicals 

with only an oral form).’’ Although oralonly drugs are included in the 

definition of renal dialysis services, in 

the CY 2011 ESRD PPS final rule we 

also finalized a policy to delay payment 

for these drugs under the PPS until 

January 1, 2014 (75 FR 49044). We 

stated that there were certain advantages 

to delaying the implementation of 

payment for oral-only drugs, including 

allowing ESRD facilities additional time 

to make operational changes and 

logistical arrangements in order to 

furnish oral-only ESRD-related drugs 

and biologicals to their patients. 

Accordingly, 42 CFR 413.174(f)(6) 

provides that payment to an ESRD 

facility for renal dialysis service drugs 

and biologicals with only an oral form 

is incorporated into the PPS payment 

rates effective January 1, 2014. 

On January 3, 2013, the Congress 

enacted ATRA. Section 632(b) of ATRA 

states that the Secretary ‘‘may not 

implement the policy under section 

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

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

payment system), prior to January 1, 

2016.’’ Accordingly, payment for oralonly drugs will not be made under the 

ESRD PPS before January 1, 2016, 

instead of on January 1, 2014, which is 

the date originally finalized for payment 

of ESRD-related oral-only drugs under 

the ESRD PPS (75 FR 49044). We 

proposed to pay for oral-only drugs 

consistent with section 632(b) of ATRA 

and implement this delay by revising 

the effective date for providing payment 

for oral-only ESRD-related drugs under 

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

from January 1, 2014 to January 1, 2016. 

Because we proposed that oral-only 

drugs will be included in the ESRD PPS 

starting in CY 2016, we also proposed 

to change the reference to January 1, 

2014 for the outlier policy described in 

42 CFR 413.237(a)(1)(iv) to January 1, 

2016. In the CY 2011 ESRD PPS final 

rule (75 FR 49138), we defined outlier 

services as including oral-only drugs 

effective January 1, 2014. In addition to 

modifying the date on which oral-only 

drugs will be eligible for outlier 

payments, we also proposed to clarify 

our regulation at 42 CFR 

413.237(a)(1)(iv) by changing the word 

‘‘excluding’’ to ‘‘including’’ to make 

clear that oral-only drugs are ESRD 

outlier services for purposes of the 

outlier policy effective January 1, 2016, 

consistent with the policy we 

established in the CY 2011 final rule (75 

FR 49138). 

We received the following comments 

on this proposal: 

Comment: A few comments supported 

our amended regulations codifying the 

delay of oral-only drugs paid under the 

ESRD PPS payment bundle until 

January 1, 2016. One commenter 

suggested that CMS use this 2-year 

delay to ‘‘gather stakeholder input and 

conduct careful assessment’’ of the costs 

facilities will incur when furnishing 

oral-only drugs to dialysis patients. 

Another commenter cautioned CMS not 

to ‘‘negatively impact’’ Medicare 

beneficiaries by taking away patient 

protections, such as comprehensive 

drug utilization reviews, currently 

enjoyed under Medicare Part D plans. 

The commenter contends that 

phosphate binders and calcimimetics 

have significant drug interactions with 

commonly prescribed ESRD 

medications and could result in 

significant drug safety issues for 

patients if effective mechanisms for 

identifying drug-drug interactions are 

not available. 

Response: We thank the commenters 

for their support in implementing 

section 632(b) of ATRA. We appreciate 

the commenters’ suggestion on how 

CMS should best use the 2-year delay. 

In addition, we appreciate the 

commenters’ concern for patient safety 

and beneficiary protections that are 

available under Medicare Part D. In 

anticipation of the inclusion of oral-only 

ESRD-related drugs in the payment 

bundle beginning in CY 2016, we intend 

to consider appropriate patient 

protections. 

After consideration of the public 

comments we received, we are 

finalizing the proposed revisions to 42 

CFR 413.174 and 413.237 without 

modification. We will delay the 

effective date for providing payment for 

oral-only ESRD-related drugs under the 

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

January 1, 2016. Likewise, 42 CFR 

413.237(a)(1)(iv) is revised to make clear 

that oral-only drugs are ESRD outlier 

services for purposes of the outlier 

policy effective January 1, 2016. 

F. Miscellaneous Comments 

We received many comments from 

Medicare beneficiaries, family members, 

ESRD facilities, nurses, physicians, 

professional organizations, renal 

organizations, and manufacturers 

related to issues that were not 

specifically addressed in the CY 2014 

ESRD PPS proposed rule. Some of these 

comments are discussed below. 

Comment: A few commenters 

requested that CMS amend the ESRD 

facility cost report and eliminate the cap 

on medical director fees. One 

commenter noted that the limitation for 

reporting medical director fees on 

Medicare cost reports is $165,000 

annually, and that this amount reflects 

the wage of a physician of internal 

medicine and not a board-certified 

nephrologist. The commenter requested 

that CMS evaluate wages for 

nephrologists and adjust the reasonable 

compensation equivalent (RCE) on 

ESRD facility cost reports. Other 

commenters requested that CMS 

recognize the cost of supporting the 

ESRD networks. One commenter 

suggested that CMS include the $0.50 

per treatment network fee as a cost, or 

an offset to revenue, on ESRD cost 

reports. 

Response: We thank commenters for 

their suggestions. We will consider 

these comments for future refinements. 

We note that CMS has already 

implemented several updates and 

enhancements to the ESRD facility 

Medicare cost report. For example, the 

addition of cost report ‘‘Worksheet C’’ 

allows facilities to report a computation 

of the average cost per treatment by 

modality furnished under the ESRD PPS 

payment bundle. 

Comment: Several commenters 

expressed confusion regarding 

eligibility requirements for the Low 

Volume Payment Adjustment (LVPA) 

available under the ESRD PPS. A few 

commenters requested clarification on 

the identification of free-standing and 

hospital-based low-volume facilities, 

while other commenters noted the 

Government Accountability Office 

(GAO) report 13–287 (End-Stage Renal 

Disease: CMS Should Improve Design 

and Strengthen Monitoring of LowVolume Adjustment) and urged CMS to 

expeditiously refine this significant 

payment adjustment for deserving 

facilities as outlined in the report. 

Response: We agree with commenters 

that the LVPA is an important and 


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significant payment adjustment for 

eligible facilities under the ESRD PPS. 

CMS discussed the eligibility 

requirements for the LVPA payment 

adjustment in the CY 2011 ESRD PPS 

final rule (75 FR 49117 through 49125), 

and codified the adjustment in our 

regulations at 42 CFR § 413.232. For 

specific inquiries regarding LVPA 

eligibility, we suggest that facilities 

contact their Medicare Administrative 

Contractor (MAC) directly. As part of 

potential future refinements, we plan to 

evaluate our current policies for the 

LVPA to ensure that we are effectively 

targeting low-volume facilities, in order 

to support access to dialysis services. 

Comment: Some commenters 

requested that CMS consider payment 

implications outside of the ESRD PPS 

payment methodology for dialysis 

services. For example, a few 

commenters cautioned CMS that a static 

payment policy may ‘‘dampen’’ 

incentives to develop innovations and 

new technologies in the treatment of 

ESRD and urged CMS to establish a new 

technology adjustment. 

Response: We thank the commenters 

and appreciate the suggestion that we 

consider different payment mechanisms 

that would encourage innovation for 

ESRD treatments and ensure quality 

patient care. 

Comment: A few commenters 

requested that CMS consider a ‘‘casemix adjustor to address racial and 

ethnic disparities in ESRD treatment,’’ 

and noted that some patient sub-groups 

require higher utilization of ESAs and 

other pharmaceuticals in furnishing 

quality patient care. 

Response: We thank the commenters 

for expressing their concern regarding 

possible racial and ethnic disparities in 

the treatment of ESRD, and note that we 

discuss our analysis of a potential race 

case-mix adjustor in our CY 2011 ESRD 

PPS final rule (75 FR 49108 through 

49115). In that rule, we noted that while 

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

allows CMS to consider the 

implementation of race/ethnicity 

payment adjustments, we believed that 

other patient characteristics such as 

‘‘body-size and co-morbidities,’’ and not 

a patient’s race contribute to higher 

treatment costs. We stated that ‘‘[i]n 

particular, we are not convinced that 

race or ethnicity adjustments are 

necessary to ensure beneficiary access to 

ESRD services. That is, we believe that 

there may be race-neutral biological 

factors that have not yet been identified 

in the ESRD PPS modeling that could 

explain the increased cost associated 

with providing renal dialysis services to 

members of certain racial or ethnic 

groups.’’ (75 FR 49109.) We will 

continue to monitor the health 

outcomes for all Medicare ESRD 

beneficiaries, and assess the underlying 

clinical conditions that incur higher 

treatment costs for future analysis. 

Comment: A few facility commenters 

noted a geographic effect on ‘‘payer mix 

trends’’ for facilities located in inner 

city areas with nearly exclusive 

Medicare and Medicaid patients. Other 

commenters encouraged CMS to 

consider a payment mechanism that 

appropriately recognize the ‘‘higher 

costs’’ incurred by facilities when 

furnishing ESRD treatments to inner city 

patients, as these demographics have 

more minority patients, ‘‘a large number 

of whom are African American, who 

have shown to require a higher volume 

of pharmaceutical products.’’ 

Response: We thank the commenters 

for sharing the economic perspective of 

inner city ESRD facilities and we agree 

that inner city communities may have 

unique economic or demographic 

factors to manage in furnishing ESRD 

services. However, we disagree that the 

ESRD PPS payment methodology does 

not appropriately recognize these 

unique circumstances when making 

payments for dialysis services. For 

example, the outlier policy is a payment 

mechanism specifically designed to 

recognize higher cost patients in terms 

of drug, laboratory services, and supply 

utilization. In addition, we provide a 

wage index adjustment to reflect 

geographic differences in wages. 

Likewise, patient case-mix (that is, body 

size and comorbidities) and the LVPA 

facility adjustments recognize patient 

and facility characteristics that 

contribute to higher costs of care. And 

lastly, ESRD facilities are allowed to 

recover a portion of uncollected 

beneficiary coinsurance as outlined in 

42 CFR § 413.89. While we continue to 

believe that the ESRD PPS payment 

methodology appropriately recognizes 

high cost patients and high cost 

geographic areas, we will continue to 

monitor patient utilization for all 

Medicare beneficiaries and will 

consider these comments in future 

refinements. 

Comment: One commenter noted that 

historical and future Medicare bad debt 

policies do not allow for the full 

recovery of a facility’s bad debt and 

estimates a payment shortfall of 

approximately $4 to $5 per treatment in 

uncompensated care. Other commenters 

pointed out that inner city facilities 

provide services in a ‘‘fragile economic 

environment’’ where they are unable to 

collect beneficiary co-payments. 

Response: We thank the commenter 

for sharing their concerns regarding 

Medicare bad debt policies. CMS 

finalized the self-implementing 

statutory provision for the reduction in 

bad debt in the CY 2013 ESRD PPS final 

rule (77 FR 67518). 

Comment: An organization that 

represents kidney health professionals 

urged CMS to publicize ways for ESRD 

patients, their families, and care 

providers to alert CMS to changes in 

care delivery that raise concern about 

negative effects on the quality of care 

provided as a result of the drug 

utilization reduction. They suggested 

such mechanisms could include, but are 

not limited to; the Medicare 1–800 

number system; the ESRD Network 

complaint and quality of care reporting 

system; and a dedicated CMS email 

address. 

Response: We appreciate the 

commenters’ concern regarding 

ensuring quality care; however, because 

the implementation strategy for the drug 

utilization reduction will be 

transitioned over time, we believe that 

ESRD facilities should be able to 

maintain their current programs and 

services. We do not expect that the drug 

utilization reduction will negatively 

impact the quality of service a facility 

provides; therefore, we believe that our 

current methods (the 1–800 number 

system and the ESRD Network 

complaint and quality of care reporting 

system, as opposed to a dedicated email 

address) for beneficiaries, their families, 

and providers to communicate with 

CMS are adequate at this time. 

Comment: Several commenters 

expressed concern regarding data 

transparency in rate setting, and 

requested that CMS release a CY 2014 

data rate setting file. 

Response: We agree with the 

commenters that a rate setting file 

would enhance transparency, and 

therefore, we are working to make such 

a file available in the future. 

Comment: A few national 

organizations representing dialysis 

facilities expressed concern that a 

change to the census process in the 

Consolidated Renal Operations in a 

Web-Enabled Network (CROWNWeb) 

has resulted in a delay in the date of 

first dialysis reconciliation and 

verification. The commenters noted 

that, as a result, facilities are unable to 

obtain, or there is a delay in receiving, 

the onset of dialysis payment 

adjustment. 

Response: We appreciate the 

commenters bringing the on-set 

payment adjustment issues to our 

attention. We will consider these 

comments and work with agency staff to 

ensure that the on-set payment 

adjustment is applied appropriately in 

the future. 


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1 2012 Annual Progress Report to Congress: 

National Strategy for Quality Improvement in 

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

workingforquality/nqs/nqs2012annlrpt.pdf. 

Comment: One commenter pointed 

out the significant payment difference 

in dialysis treatments furnished and 

paid through the hospital outpatient 

prospective payment system (OPPS) 

versus those paid under the ESRD PPS. 

Response: We agree with the 

commenter that the payment difference 

for emergency or unscheduled dialysis 

services and maintenance renal dialysis 

services is significant, and note that the 

OPPS payment amount is based upon 

hospital claims data and reflects a 

significantly higher level of effort and 

resources to treat the patient in the 

hospital. 

Comment: A commenter representing 

teaching hospitals expressed concern 

that the proposed drug utilization 

reduction would have a serious impact 

on teaching hospitals and the patients 

they treat. The commenter 

recommended that the regulatory 

impact analysis display the impact for 

hospital-based facilities according to 

teaching status for CY 2014. 

Response: We appreciate the 

commenter’s recommendation. While 

we are unable to include this 

information for the CY 2014 impact 

analysis, we will consider modifying the 

impact table to identify hospital-based 

ESRD facilities that are part of teaching 

hospitals in the future. 

III. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

A. Background 

For more than 30 years, monitoring 

the quality of care provided to patients 

with end-stage renal disease (ESRD) by 

dialysis facilities has been an important 

component of the Medicare ESRD 

payment system. The ESRD quality 

incentive program (QIP) is the most 

recent step in fostering improved 

patient outcomes by establishing 

incentives for dialysis facilities to meet 

or exceed performance standards 

established by CMS. The ESRD QIP is 

authorized by section 1881(h) of the 

Social Security Act (the Act), which was 

added by section 153(c) of Medicare 

Improvements for Patients and 

Providers Act (MIPPA). CMS 

established the ESRD QIP for payment 

year (PY) 2012, the initial year of the 

program in which payment reductions 

were applied, in two rules published in 

the Federal Register on August 12, 

2010, and January 5, 2011 (75 FR 49030 

and 76 FR 628, respectively). 

Subsequently, on November 10, 2011, 

CMS published a rule in the Federal 

Register outlining the PY 2013 and PY 

2014 ESRD QIP requirements (76 FR 

70228). On November 9, 2012, CMS 

published a rule in the Federal Register 

outlining the ESRD QIP requirements 

for PY 2015 and future payment years 

(77 FR 67450). 

Section 1881(h) of the Act requires 

the Secretary to establish an ESRD QIP 

by (i) selecting measures; (ii) 

establishing the performance standards 

that apply to the individual measures; 

(iii) specifying a performance period 

with respect to a year; (iv) developing a 

methodology for assessing the total 

performance of each facility based on 

the performance standards with respect 

to the measures for a performance 

period; and (v) applying an appropriate 

payment reduction to facilities that do 

not meet or exceed the established Total 

Performance Score (TPS). This final rule 

discusses each of these elements and the 

policies we are finalizing for their 

application to PY 2016 and future 

payment years of the ESRD QIP. As of 

January 1, 2014, ESRD facilities located 

in Guam, American Samoa, and the 

Northern Marina Islands will be paid 

under the ESRD PPS. Under section 

1881(h)(1)(A) of the Act, these facilities 

will receive a reduction to their ESRD 

PPS payments, beginning with January 

1, 2014 dates of service, if they do not 

meet the requirements of the ESRD QIP. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

ESRD QIP for PY 2016 

The proposed rule, entitled ‘‘Medicare 

Program; End-Stage Renal Disease 

Prospective Payment System, Quality 

Incentive Program, and Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies’’ (78 FR 40836), hereinafter 

referred to as the CY 2014 ESRD PPS 

proposed rule, appeared in the Federal 

Register on July 8, 2013, with a 

comment period that ended on August 

30, 2013. In that proposed rule, we 

made proposals for the ESRD QIP, 

including introducing, expanding, and 

revising measures; refining the scoring 

methodology; modifying the program’s 

public reporting requirements; and 

continuing the data validation pilot 

program. We received approximately 55 

public comments on these proposals 

from many interested parties, including 

dialysis facilities, organizations 

representing dialysis facilities, 

nephrologists, nurses, dietitians, home 

health advocacy groups, pharmaceutical 

manufacturers, patients, patient 

advocacy groups, and the Medicare 

Payment Advisory Commission 

(MedPAC). 

In this final rule, we provide a 

summary of each proposed provision, a 

summary of the public comments 

received and our responses to them, and 

the policies we are finalizing for the 

ESRD QIP. Comments related to the 

paperwork burden are addressed in the 

‘‘Collection of Information 

Requirements’’ section in this final rule. 

C. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP for PY 2016 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) 

Overview 

Throughout the past decade, Medicare 

has been transitioning from a program 

that pays for healthcare based on 

particular services furnished to a 

beneficiary to a program that ties 

payments to providers and suppliers 

based on the quality of services they 

deliver. By paying for the quality of care 

rather than quantity of care, we believe 

we are strengthening the healthcare 

system by focusing on better care and 

lower costs through improvement, 

prevention and population health, 

expanded healthcare coverage, and 

enterprise excellence—while also 

advancing the National Strategy for 

Quality Improvement in Health Care 

(National Quality Strategy). CMS is 

currently working to update a set of 

domains and specific measures of 

quality for our VBP programs, and to 

link the aims of the National Quality 

Strategy with our payment policies on a 

national scale. We are working in 

partnership with beneficiaries, 

providers, advocacy groups, the 

National Quality Forum (NQF), the 

Measures Application Partnership, 

operating divisions within the 

Department of Health and Human 

Services (HHS), and other stakeholders 

to develop new measures where gaps 

exist, refine measures requiring 

adjustment, and remove measures when 

appropriate. We are also collaborating 

with stakeholders to ensure that the 

ESRD QIP serves the needs of our 

beneficiaries and also advances the 

goals of the National Quality Strategy to 

coordinate healthcare delivery, reduce 

healthcare costs, enhance patient 

satisfaction, promote healthy 

communities, and increase patient 

safety.1

We believe that the development of an 

ESRD QIP that is successful in 

supporting the delivery of high-quality 

healthcare services in dialysis facilities 

is paramount. We seek to adopt 

measures for the ESRD QIP that promote 

better, safer, and more-efficient care. 

Our measure development and selection 

activities for the ESRD QIP take into 

account national priorities such as those 


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established by the National Priorities 

Partnership (http://

www.nationalprioritiespartnership.org/), 

HHS Strategic Plan (http://

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

priorities.html), the National Strategy 

for Quality Improvement in Healthcare 

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

reports/quality03212011a.html), and the 

HHS National Action Plan to Prevent 

Healthcare Associated Infections (HAIs) 

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

esrd.html). To the extent feasible and 

practicable, we have sought to adopt 

measures that have been endorsed by a 

national consensus organization, are 

recommended by multi-stakeholder 

organizations, and developed with the 

input of providers, beneficiaries, and 

other stakeholders. 

2. Brief Overview of Proposed PY 2016 

Measures 

For the PY 2016 ESRD QIP and future 

payment years, we proposed a total of 

14 measures. We believe that the PY 

2016 ESRD QIP proposed measures 

promote high-quality care for patients 

with ESRD, and also strengthen the 

goals of the National Quality Strategy. 

We proposed to adopt the following 

measures to evaluate facilities on the 

clinical quality of care: 

• To evaluate anemia management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure 

Æ Patient Informed Consent for 

Anemia Treatment, a clinical 

measure* 

Æ Pediatric Iron Therapy, a reporting 

measure* 

Æ Anemia Management, a reporting 

measure (revised) 

• To evaluate dialysis adequacy: 

Æ A Kt/V measure for adult 

hemodialysis patients, a clinical 

measure 

Æ A Kt/V measure for adult peritoneal 

dialysis patients, a clinical measure 

Æ A Kt/V measure for pediatric 

hemodialysis patients, a clinical 

measure 

• To determine whether patients are 

treated using the most beneficial type of 

vascular access: 

Æ An arterial venous (AV) fistula 

measure, a clinical measure 

Æ A catheter measure, a clinical 

measure 

• To address effective bone mineral 

metabolism management: 

Æ Hypercalcemia, a clinical measure* 

Æ Mineral Metabolism, a reporting 

measure (revised) 

• To address patient safety: 

Æ National Healthcare Safety Network 

(NHSN) Bloodstream Infection in 

Hemodialysis Outpatients, a 

clinical measure* 

• To address patient-centered 

experience: 

Æ In-Center Hemodialysis Consumer 

Assessment of Healthcare Providers 

and Systems (ICH CAHPS), a 

reporting measure** 

• To gather data regarding 

comorbidities: 

Æ Comorbidity, a reporting measure* 

* Indicates that the proposed measure 

would be new to the ESRD QIP. 

** Indicates that the proposed 

measure is newly expanded in the ESRD 

QIP. 

At that time, we did not propose to 

adopt measures that address care 

coordination, efficiency, population and 

community health, or cost of care. 

However, we solicited comments on 

potential measures that would cover 

these areas. Our responses to these 

comments are discussed in section 

III.C.4 below. 

3. Measures Application Partnership 

Review 

Section 1890A(a)(1) of the Act, as 

added by section 3014(b) of the 

Affordable Care Act, requires the entity 

with a contract (currently the NQF) 

under section 1890(a) of the Act to 

convene multi-stakeholder groups to 

provide input to the Secretary on the 

selection of quality and efficiency 

measures for use in certain programs. 

Section 1890A(a)(2) of the Act requires 

the Secretary to make available to the 

public (not later than December 1 of 

each year) a list of quality and efficiency 

measures that are under consideration 

for use in certain programs. Section 

1890A(a)(3) of the Act requires the 

entity with a contract under section 

1890(a) of the Act to transmit the input 

of the multi-stakeholder groups to the 

Secretary not later than February 1 of 

each year, beginning in 2012. Section 

1890A(a)(4) of the Act requires the 

Secretary to take into consideration the 

input of the multi-stakeholder groups in 

selecting quality and efficiency 

measures. The Measures Application 

Partnership is the public/private 

partnership comprised of multistakeholder groups convened by NQF 

for the primary purpose of providing 

input on measures as required by 

sections 1890A(a)(1) and (3) of the Act. 

The Measures Application Partnership’s 

input on the quality and efficiency 

measures under consideration for 

adoption in CY 2013 was transmitted to 

the Secretary on February 1, 2013, and 

is available at (http:// 

www.qualityforum.org/ 

Setting_Priorities/Partnership/ 

MAP_Final_Reports.aspx). As required 

by section 1890A(a)(4) of the Act, we 

considered these recommendations in 

selecting quality and efficiency 

measures for the ESRD QIP. 

We publicly made available a number 

of measures in accordance with section 

1890A(a)(2) of the Act, and these 

measures were reviewed by the 

Measures Application Partnership. Of 

these measures, a subset is related to a 

number of proposed new measures for 

the PY 2016 ESRD QIP (one each for 

anemia management, hypercalcemia, 

infection monitoring, comorbidity 

reporting, and ESA usage). The 

Measures Application Partnership 

supported the following: 

• NQF-endorsed measure NQF #1454: 

Proportion of patients with 

hypercalcemia 

• NQF-endorsed measure NQF #1433: 

Use of Iron Therapy for Pediatric 

Patients (which forms the basis for the 

proposed Pediatric Iron Therapy 

reporting measure) 

• NQF-endorsed measure NQF #1460: 

National Healthcare Safety Network 

(NHSN) Bloodstream Infection Measure 

(which forms the basis for the proposed 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure) 

• NQF-endorsed measure NQF #0369: 

Dialysis Facility Risk-adjusted 

Standardized Mortality Ratio (the 

proposed Comorbidity reporting 

measure may assist in calculating 

performance on this measure, should we 

propose to adopt it in the future) 

The Measures Application 

Partnership supported the direction of 

the following measures: 

• NQF-endorsed measure NQF #1463: 

Standardized Hospitalization Ratio for 

Admissions (the proposed Comorbidity 

reporting measure may assist in 

calculating performance on this 

measure, should we propose to adopt it 

in the future) 

• M2774: Blood Transfusion 

Appropriateness (which forms the basis 

for the Patient Informed Consent for 

Anemia Treatment clinical measure) 

We have taken comments from the 

Measures Application Partnership and 

the NQF into consideration for the PY 

2016 ESRD QIP. In addition, we 

received several other comments on the 

Measures Application Partnership, and 

the measures development process in 

general. These comments and our 

responses are set forth below. 

Comment: Several commenters noted 

that four of the five new measures 

proposed for the PY 2016 ESRD QIP are 

not endorsed by the NQF. These 

commenters were also concerned that 

there are NQF-endorsed versions of 

some of these measures, and that the 


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MAP reviewed the NQF-endorsed 

versions during its pre-rulemaking 

activities. The commenters believe that 

by proposing to adopt measures that the 

MAP did not actually review, CMS has 

not acted in accordance with the prerulemaking process set forth at section 

1890A(a) of the Act. Commenters also 

believe that measures ‘‘based on’’ NQFendorsed measures lack credibility. 

Some commenters recommended 

adopting the NQF-endorsed versions of 

the measures instead of the versions that 

we proposed to adopt in the proposed 

rule. Other commenters recommended 

that if CMS makes modifications to 

NQF-endorsed measures, CMS should 

resubmit the modified measures to the 

NQF for endorsement before proposing 

to adopt them for the ESRD QIP. 

Response: We agree that consensusbuilding is an essential part of measure 

development and implementation, but 

we disagree that the new measures 

proposed for the PY 2016 program 

circumvented the MAP pre-rulemaking 

review process. We note that one of the 

five newly proposed clinical measures, 

Hypercalcemia, has been NQF-endorsed 

(NQF #1454). Another one of the newly 

proposed clinical measures, NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients, is not substantively 

different than NQF-endorsed measure 

#1460. As described in more detail 

below, the only differences between the 

NQF-endorsed NHSN measure and the 

proposed NHSN measure involve 

programmatic implementation (i.e., the 

requirement to complete the NHSN 

Dialysis Event Protocol and the 

requirement to submit 12 months of 

data to NHSN). 

As explained more fully below, we 

have decided not to finalize the 

Comorbidity reporting measure due to 

concerns raised in public comments 

submitted in response to the PY 2016 

ESRD QIP proposed rule. However, we 

note that the measure would have 

required facilities to report data that 

could be incorporated into two NQFendorsed measures that were reviewed 

by the MAP. 

A fourth measure, the Patient 

Informed Consent for Anemia Treatment 

clinical measure, is not being finalized 

due to concerns raised in public 

comments submitted in response to the 

proposed rule (explained in more detail 

below). Nevertheless, this measure did 

receive feedback from the MAP in 

February 2013, which voted to support 

the direction of the measure, pending 

further measure development. 

The proposed Pediatric Iron Therapy 

reporting measure is also not being 

finalized in this final rule in response to 

comments received on the proposed 

rule (explained in more detail below). 

This measure, however, would have 

been based on NQF #1433, which 

received a time-limited endorsement 

from NQF and was supported by the 

MAP. 

Comment: Several commenters 

disapproved of the current processes 

used for measure development because 

(1) the current process is neither 

transparent nor consensus based; and 

(2) it was impossible to provide 

meaningful comment on the future 

measures described in the proposed rule 

because the preamble did not provide 

sufficient information to understand 

what CMS was proposing to do in the 

future. These commenters urged CMS to 

establish a systematic, phased-in 

process for incorporating new measures 

into the ESRD QIP, and to work with the 

community to identify a few domains 

that can be appropriately and explicitly 

prioritized. 

Response: We currently develop 

measures using the Measures 

Management System Blueprint 

(Blueprint), which is described in detail 

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

Quality-Initiatives-Patient-AssessmentInstruments/MMS/

MeasuresManagement

SystemBlueprint.html. This process was 

used to develop some of the quality 

measures for use in the ESRD QIP. The 

development process we use is designed 

to be transparent and result in 

consensus-based measures that are 

appropriate for inclusion in our quality 

reporting and pay-for-performance 

programs. For example, we conduct 

extensive environmental scans and 

research other relevant evidence as part 

of measure development. We also seek 

advice from Technical Expert Panels 

(TEPs), which provide independent 

guidance on measures under 

development, and from the public 

through a comment solicitation process. 

We also ask the NQF to endorse many 

of the measures we develop, which 

gives the public another opportunity to 

provide input into the measures we are 

considering for our programs. When we 

consider adopting measures that we did 

not develop, we routinely consider 

measures that are NQF-endorsed 

because the NQF endorsement process 

ensures that measure specifications and 

testing remain transparent to the public. 

The NQF also provides the public with 

an opportunity to provide input and 

feedback prior to measure endorsement. 

We recognize that our list of potential 

future measures does not typically 

contain detailed information about 

measures that we are considering for 

future use. However, we nonetheless 

believe that the list further makes 

transparent our future policy goals. We 

also note that before we can adopt any 

measure on that list, we must complete 

the measure development process 

outlined above. We are always 

interested in hearing from the 

community regarding what measures 

should be prioritized for development 

and implementation and encourage a 

continued dialog. 

Comment: Several commenters 

recommended that nephrology nurses 

should be part of every TEP because, 

compared with physicians, they have a 

better understanding of the practical 

aspects of collecting and entering data. 

Response: We make an effort to 

include in our measure development 

process input from a variety of 

stakeholders, including nephrology 

nurses, who provide care to the ESRD 

population. We plan to continue this 

approach as we continue our measure 

development activities. 

D. Measures for the PY 2016 ESRD QIP 

and Subsequent PYs of the ESRD QIP 

We previously finalized ten measures 

in the CY 2013 ESRD PPS final rule for 

the PY 2015 ESRD QIP and future PYs 

(77 FR 67471), and these measures are 

summarized in Table 6 below. We 

proposed to continue to use nine of the 

ten measures for the PY 2016 ESRD QIP 

and future payment years, modifying 

three of the measures as follows: 

• ICH CAHPS (reporting measure): 

Expand 

• Mineral Metabolism (reporting 

measure): Revise 

• Anemia Management (reporting 

measure): Revise 

For the PY 2016 ESRD QIP and future 

payment years, we proposed to add 

three new clinical measures (Patient 

Informed Consent for Anemia 

Treatment, Hypercalcemia, and NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients) and two new reporting 

measures (Pediatric Iron Therapy, and 

Comorbidity). (See Table 7.) We believe 

that, collectively, these measures will 

continue to promote improvement in 

dialysis care in the PY 2016 ESRD QIP 

and in future payment years. 


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TABLE 6—MEASURES ADOPTED FOR THE PY 2015 ESRD QIP AND FUTURE PAYMENT YEARS

NQF # Measure title and description 

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

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

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

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

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

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

period. 

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

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

0257 ....... Vascular Access Type: Arterial Venous (AV) Fistula. 

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

with two needles. 

0256 ....... Vascular Access Type: Catheter >= 90 days. 

Percentage of patient-months for patients on hemodialysis during the last hemodialysis treatment of month with a catheter continuously for 90 days or longer prior to the last hemodialysis session. 

N/A1 ....... National Healthcare Safety Network (NHSN) Dialysis Event Reporting. 

Number of months for which facility reports NHSN Dialysis Event data to the Centers for Disease Control and Prevention (CDC). 

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

Attestation that facility administered survey in accordance with specifications. 

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

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

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

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

1We note that an NQF-endorsed bloodstream infection measure (NQF#1460) exists. 

2We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258). It is our intention to use this measure in 

future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to implement NQF#0258. 3We note that this measure is based upon a current NQF-endorsed serum phosphorus measure (#0255), and a calcium monitoring measure 

that NQF had previously endorsed (#0261). + Indicates a measure we are proposing to revise for PY 2016 and future years of the ESRD QIP. 

TABLE 7—NEW MEASURES PROPOSED FOR THE PY 2016 ESRD QIP AND FUTURE PAYMENT YEARS

NQF # Measure title 

N/A ......... Anemia of chronic kidney disease: Patient Informed Consent for Anemia Treatment. 

N/A1 ....... Use of Iron Therapy for Pediatric Patients Reporting. 

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

N/A2 ....... NHSN Bloodstream Infection in Hemodialysis Outpatients. 

N/A3 ....... Comorbidity Reporting. 

1We note that the NQF has previously endorsed a pediatric iron therapy measure (#1433) upon which this measure is based. 

2We note that the NQF has previously endorsed a National Healthcare Safety Network (NHSN) bloodstream infection measure (#1460) upon 

which this measure is based. 3We note that the NQF has previously endorsed risk-adjusted hospitalization and mortality measures (#1463 and #0369). The proposed Comorbidity reporting measure may assist in calculating performance on these measures, should we propose to adopt them in the future. 

We received several comments on 

proposed measures for the PY 2016 

ESRD QIP and future payment years. 

The comments and our responses are set 

forth below. 

Comment: One commenter urged 

CMS to find a way to incentivize quality 

attainment and improvement rather 

than solely focusing on penalizing 

facilities. 

Response: We do not have the 

statutory authority to award bonus 

payments to facilities for high 

performance under the ESRD QIP. 

Furthermore, we continue to believe 

that the structure of the ESRD QIP 

appropriately incentivizes 

improvements in the quality of care for 

patients with ESRD. 

Comment: Several commenters stated 

that the ESRD QIP should have 

consistent exclusions for all measures 

unless there is a specific clinical or 

operational reason to do otherwise. 

These commenters recommended the 

following exclusions for PY 2014, PY 

2015, and subsequent years: (i) 

beneficiaries who are regularly treated 

at the facility and who fit into one of 

these categories: (a) beneficiaries who 

die within the applicable month, (b) incenter hemodialysis patients who 

receive fewer than 7 treatments in a 

month (or home peritoneal dialysis 

patients with fewer than 14 days of 

treatment) because it is difficult to affect 

outcomes with fewer treatments or less 

treatment time, as patients may miss 

draws, and it is difficult to predict a 

hospitalization, and (c) beneficiaries 

receiving home dialysis therapy who 

miss their in-center appointments when 

there is a documented, good-faith effort 

to have them participate in such a visit 

during the applicable month because it 

may be difficult for facilities to procure 

adherence, but the good-faith exception 

ensures that facilities will attempt to 

ensure proper patient education and 

compliance; (ii) transient dialysis 

patients; (iii) pediatric patients (unless 

the measure is specific to this 

population); and (iv) kidney transplant 

recipients with a functioning graft. 

These commenters stated that their 

recommended exclusions are 

‘‘consistent with CMS’ own measures 

that were NQF-endorsed in 2007, 

CROWNWeb, and the URR reporting 

specifications.’’ Additionally, these 

commenters believe that their 

recommended exclusions would hold 

facilities accountable only for those 

patients to whom they regularly furnish 

care. 


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Response: We thank the commenters 

for their recommendations regarding the 

uniform application of exclusion criteria 

to the ESRD QIP. We interpret the 

commenter’s statement about CMS 

measures that were NQF-endorsed in 

2007 to mean the Hemodialysis 

Adequacy (NQF #0249), Peritoneal 

Adequacy (NQF #0318), Vascular 

Access Type: Fistula (NQF #0257) and 

Vascular Access Type: Catheter (NQF 

#0256) measures. While we generally 

agree that exclusion criteria should be 

consistent where feasible, we also 

believe that exclusions should take into 

account the population to which a given 

measure applies. In addition, we believe 

that exclusions should take into account 

the settings (for example, in-center 

hemodialysis as opposed to home 

hemodialysis) for which the measures 

were developed. We will continue to 

look for ways to align exclusion criteria 

for measures in the ESRD QIP in future 

payment years as long as there is 

evidence to support such consistency. 

Comment: Several commenters 

expressed concerns that the ESRD QIP 

is adopting too many measures. These 

commenters noted that as more 

measures are adopted, the importance of 

any single measure to a facility’s 

payment is reduced. The commenters 

also noted that CMS established criteria 

for retiring an ESRD QIP measure in the 

PY 2015 ESRD QIP, and the commenter 

is concerned that CMS has yet to 

propose the removal or retirement of 

any ESRD QIP measure while 

simultaneously continuing to propose 

the inclusion of new measures with 

little relative impact on patient 

outcomes (that is, patient informed 

consent of anemia treatment and 

reporting of comorbidities). 

Response: We recognize that as more 

measures are added to the ESRD QIP, 

the significance of a facility’s score on 

any single measure in relation to the 

overall TPS is reduced. In the CY 2013 

ESRD PPS final rule (77 FR 67475), we 

finalized a list of criteria we will use to 

make determinations about whether to 

remove or replace a measure: ‘‘(1) 

measure performance among the 

majority of ESRD facilities is so high 

and unvarying that meaningful 

distinctions in improvements or 

performance can no longer be made; (2) 

performance or improvement on a 

measure does not result in better or the 

intended patient outcomes; (3) a 

measure no longer aligns with current 

clinical guidelines or practice; (4) a 

more broadly applicable (across settings, 

populations, or conditions) measure for 

the topic becomes available; (5) a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic becomes available; (6) a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic becomes available; or 

(7) collection or public reporting of a 

measure leads to negative unintended 

consequences.’’ We are currently in the 

process of evaluating all of our ESRD 

QIP measures against these criteria, and 

based on our findings, we will consider 

removing or replacing one or more 

measures next year. 

Comment: One commenter expressed 

concerns that laboratory measures 

continue to be proposed for the ESRD 

QIP without reference to the sources, 

magnitude, and implications of 

unavoidable analytical variation. This 

commenter believes that betweenlaboratory variation renders laboratorybased clinical performance measures 

poor candidates for inclusion in a 

quality incentive program. The 

commenter recommended that the 

results of the same-sample, betweenlaboratory analysis should be shared 

with any TEP considering a laboratorybased performance measure. 

Response: In April 2013, CMS 

convened a mineral bone disease TEP 

that reached conclusions similar to 

those pointed out by this commenter, 

and recommended that CMS convene an 

additional TEP for the purpose of 

addressing the issue of variability in all 

laboratory-based measures. We are 

continuing to consider how this issue 

might best be addressed through future 

measure development. 

1. PY 2015 Measures Continuing in PY 

2016 and Future Payment Years 

We are continuing using six measures 

adopted in the CY 2013 ESRD PPS final 

rule for the PY 2016 ESRD QIP and 

future payment years of the program. 

We are also continuing to use two 

measure topics adopted. Our policies 

regarding the scoring of these measures 

are discussed in sections III.C.5 through 

III.C.11 and III.C.13. For the reasons 

stated in the CY 2012 ESRD PPS final 

rule (76 FR 70262, 70264 through 

70265, 70269) and in the CY 2013 ESRD 

PPS final rule (77 FR 67478 through 

67480, 67487 through 67490), we will 

continue using: 

• The Hemoglobin Greater than 12 g/ 

dL measure. 

The Dialysis Adequacy measure topic, 

which is comprised of 

• Hemodialysis Adequacy Clinical 

Performance Measure III: Hemodialysis 

Adequacy—HD Adequacy—Minimum 

Delivered Hemodialysis Dose (NQF # 

0249), 

• Peritoneal Dialysis Adequacy 

Clinical Performance Measure III— 

Delivered Dose of Peritoneal Dialysis 

Above Minimum (NQF #0318); 

• Minimum spKt/V for Pediatric 

Hemodialysis Patients (NQF #423); and 

The Vascular Access Type measure 

topic, which is comprised of 

• Vascular Access Type: Arterial 

Venous (AV) Fistula (NQF #0257); and 

• Vascular Access Type: Catheter >= 

90 days (NQF #0256). 

The technical specifications for these 

measures can be found at: http://

www.dialysisreports.org/

ESRDMeasures.aspx. 

We received the following comments 

on measures continuing in the PY 2016 

ESRD QIP: 

Comment: One commenter noted that 

measures appropriate for in-center 

hemodialysis are not necessarily 

appropriate for peritoneal dialysis or 

home hemodialysis. The commenter 

recommended accounting more fully for 

these distinctions in existing measure 

specifications, as well as the adoption of 

quality measures that focus on home 

hemodialysis. 

Response: We agree that the needs of 

patients receiving dialysis through 

different modalities must be considered 

while implementing quality measures, 

and we seek to take these issues into 

account through TEP feedback during 

measure development and maintenance, 

as well as via public feedback. We 

continue to pursue additional quality 

measures that will support quality 

assessment and improvement for all 

modalities. 

Comment: Many commenters 

expressed concerns that the ESRD QIP 

includes catheter and fistula measures 

without including a graft measure. 

These commenters stated that this 

creates a disincentive for using a 

clinically appropriate access (that is, a 

graft) even when it is in the best interest 

of a patient. 

Response: We are aware of the 

concern relating to the lack of a graft 

measure in the ESRD QIP measure set. 

We are in the process of determining 

whether to propose to revise the current 

Vascular Access Type measures, and/or 

whether it is feasible to develop and 

propose to adopt an independent graft 

measure. 

Comment: One commenter expressed 

concerns that the low performance 

standard and benchmark for the 

hemoglobin greater than 12 g/dL 

measure places facilities with large 

numbers of home peritoneal dialysis 

patients at a disadvantage. The 

commenter stated that home peritoneal 

dialysis patients are more likely than incenter hemodialysis patients to have 

hemoglobin levels greater than 12 g/dL, 

so facilities with large numbers of home 


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2Please note that the proposed rule initially 

included a typographical error, such that the 

measure was referred to as NQF #0285 instead of 

NQF #0258. We have revised the text here in 

response to a public comment, which is discussed 

below. 

peritoneal dialysis patients are 

disproportionately likely to have more 

than 1.2 percent of their patients with 

a hemoglobin level greater than 12 g/dL. 

Response: We disagree that the 

apparent difference in average 

hemoglobin levels for in-center 

hemodialysis and home peritoneal 

dialysis patients warrants a revision to 

the measure specifications for the 

Hemoglobin Greater Than 12 g/dL 

measure. First, the FDA-approved 

labeling for ESAs does not differentiate 

appropriate hemoglobin levels based on 

dialysis modality. In addition, we are 

not aware of evidence-based support for 

the assertion that it is acceptable for a 

greater proportion of ESA-treated 

peritoneal dialysis patients to achieve 

hemoglobin levels greater than 12 g/dL. 

For these reasons, we continue to 

believe that the Hemoglobin Greater 

Than 12 g/dL measure does not place 

certain types of facilities at a 

disadvantage. 

Comment: One commenter supported 

the continuation of the hemoglobin 

greater than 12 g/dL measure because of 

the potential problems stemming from 

the over-prescription of ESAs. However, 

the commenter stated that fewer ESRD 

QIP measures may be more effective in 

accurately and efficiently monitoring 

the quality of care delivered by dialysis 

facilities, and that CMS should focus 

more on a Hemoglobin Less Than 10g/ 

dL measure as a means to monitor 

anemia management. 

Response: We agree that quality 

measurement and assessment should 

contribute to the ESRD QIP as 

parsimoniously as is feasible while 

capturing quality for the complex 

treatment of dialysis patients. We will 

continue to take this into consideration 

in future rulemaking. Our rationale for 

removing the Hemoglobin Less Than 10 

g/dL measure was published in the CY 

2012 ESRD PPS proposed rule (76 FR 

40519), and we believe those concerns 

remain sufficiently valid to merit not 

reintroducing the measure to the ESRD 

QIP at this time. 

Comment: Several commenters 

recommended retiring the Hemoglobin 

Greater Than 12 g/dL measure. These 

commenters noted that the benchmark 

for the measure is 0 percent and the 

performance standard is 1.2 percent. 

The commenters believe that such a 

condensed performance range means 

the measure is incapable of 

distinguishing performance between 

facilities. The commenters also stated 

that the measure is no longer needed 

because facilities no longer have an 

incentive to overuse ESAs under the 

PPS. 

Response: We recognize that facility 

performance for the Hemoglobin Greater 

Than 12 g/dL measure is very high 

overall, and that this is likely a 

consequence of including ESAs in the 

ESRD PPS bundled payment. We 

decided to continue using the measure 

in the PY 2016 program because we 

continue to believe that overprescription of ESA constitutes a 

significant risk for patients with ESRD, 

and we continue to believe that the 

Hemoglobin Greater than 12 g/dL 

measure helps ensure that patients are 

not over-prescribed ESAs. 

2. Expansion of One PY 2015 Measure 

and Revision of Two PY 2015 Measures 

for PY 2016 and Subsequent Payment 

Years 

As stated earlier, we believe it is 

important to continue using measures 

from one payment year to the next 

payment year of the program to 

encourage continued improvements in 

patient care. Therefore, we proposed to 

expand and revise the measures 

discussed below that we finalized in the 

CY 2013 ESRD PPS final rule. For all 

measures except for the ICH CAHPS 

reporting measure, these proposed 

requirements would apply to the 

measures for PY 2016 and future 

payment years. For the ICH CAHPS 

measure, certain proposed expanded 

requirements would apply to PY 2016, 

and some additional proposed 

requirements would apply to PY 2017 

and future payment years. 

a. Expanded ICH CAHPS Reporting 

Measure 

Patient-centered experience is an 

important measure of the quality of 

patient care. It is a component of the 

National Quality Strategy. The NQF 

endorses and the Measures Application 

Partnership supports a clinical measure 

on this topic, NQF #0258 2 CAHPS InCenter Hemodialysis Survey, which is 

based on how facilities perform on the 

ICH CAHPS survey. In PY 2015, we 

continued to use a reporting measure 

related to the ICH CAHPS survey, 

requiring that facilities attest they had 

administered the survey according to 

the specifications set by the Agency for 

Healthcare Research and Quality 

(AHRQ), but not requiring the 

submission of survey data. We required 

that facilities attest by January 31, 2014, 

to administering the ICH CAHPS survey 

during the performance period (77 FR 

67480 through 67481). 

We are taking several steps to develop 

the baseline data necessary to propose 

and implement NQF #0258 as a clinical 

measure in the PY 2018 ESRD QIP. We 

expect to be able to certify ICH CAHPS 

survey vendors beginning in early CY 

2014. We are also building the capacity 

to accept survey data; developing 

detailed specifications for administering 

the ICH–CAHPS survey in light of 

questions vendors asked about previous 

procedures; and developing 

specifications for submitting data to 

CMS, such as file specifications, 

structure and instructions that the 

survey vendors will use. We have taken 

these steps in order to make it possible 

for facilities to contract with third-party 

vendors to transfer survey data results to 

CMS, so that we might collect the 

baseline data necessary to propose and 

implement NQF #0258. 

For PY 2016, we proposed that each 

facility arrange by July 2014 for a CMSapproved vendor to conduct the ICH 

CAHPS survey according to CMS (rather 

than AHRQ) specifications, available at 

the ICH CAHPS Web site (https://

ichcahps.org). Facilities will need to 

register on the https://ichcahps.org Web 

site in order to authorize the CMSapproved vendor to administer the 

survey and submit data on their behalf. 

Each facility must administer (via its 

vendor) the survey once during the 

performance period and, by 11:59 ET on 

January 28, 2015, report the survey data 

to CMS using the specifications on the 

ICH CAHPS Web site. 

For PY 2017 and subsequent payment 

years, we proposed similar requirements 

except that each facility must arrange to 

have the survey administered twice 

during each performance period and 

must report the data (via its CMSapproved vendor) to CMS by the date 

specified on the ICH CAHPS Web site. 

Although we have required that other 

types of providers, including home 

health agencies and acute care hospitals, 

administer and submit CAHPS survey 

data on a monthly, continuous basis, we 

recognize that there are generally low 

rates of turnover in dialysis-facility 

patient populations. For this reason, we 

do not see the same need to require 

facilities to administer the survey as 

frequently and, as proposed above, we 

would require facilities to administer 

the survey once during the performance 

period for PY 2016 (in order to allow 

facilities enough time to select a vendor) 

and twice for subsequent payment 

years. We believe that this frequency of 

survey administration will enable us to 

gather sufficient data to adopt in future 

rulemaking a clinical version of this 


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measure without unduly burdening 

facilities. The technical specifications 

for this proposed measure are located at 

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

public-measures/ICHCAHPS– 

2016NPRM.pdf. 

We requested comments on this 

proposal. The comments we received on 

these proposals and our responses are 

set forth below. 

Comment: Many commenters 

supported monitoring patients’ 

experiences. However, these 

commenters stated that the ICH CAHPS 

survey is too burdensome and lengthy 

for patients to complete. Commenters 

suggested that the ICH CAHPS survey be 

divided into three parts, with each 

patient receiving one of these parts and 

a group of core questions. 

Response: We do not agree that the 

ICH CAHPS survey is overly 

burdensome and we clarify that only 38 

core survey questions are applicable to 

all respondents, plus 21 questions in the 

‘‘About You’’ section. To be considered 

as complete, 19 of the 38 core questions 

must be answered. As we noted in the 

CY 2012 ESRD PPS final rule (76 FR 

70269 through 70270) and the CY 2013 

ESRD PPS final rule (77 FR 67480), we 

continue to believe that assessing the 

experiences of patients is vital to quality 

care. Patient surveys can, and should, 

draw a facility’s attention to issues that 

can only be raised by those receiving 

care. Although commenters may 

consider the survey to be burdensome to 

patients, the ICH CAHPS tool went 

through extensive testing during 

development including focus groups 

and one-on-one patient sessions which 

assessed this burden and created 

specifications accordingly. Furthermore, 

we believe that concerns about patient 

burden can be at least partially 

mitigated without decreasing the 

number of questions on the survey or 

how the survey is administered. For 

example, as the specifications indicate, 

patients may take a break during the 

administration of the survey or take the 

survey in multiple sittings if they feel 

that the number of questions is too great 

to answer at one time. 

Additionally, there are no plans to 

change the measure specifications used 

in the AHRQ version, which received 

NQF endorsement in 2007. The ICH 

CAHPS survey underwent rigorous 

testing when it was being developed, 

and the testing refers to the survey in its 

entirety. The suggestion to parse the 

survey into three parts would make 

implementation too complex. In 

addition, the survey is designed to 

address many aspects of a patient’s 

experience with in-center hemodialysis. 

Breaking the survey up into three 

separate components would mean that 

any single patient would not be asked 

about the full range of their experience. 

Comment: One commenter sought 

clarification on the measure 

specifications for the ICH CAHPS 

measure. The commenter asked if the 

case minimum for the measure pertains 

to total patients, eligible patients, or 

respondents to the survey. Another 

commenter requested clarification on 

the 30-case minimum for the ICH 

CAHPS measure. One commenter 

wanted to know the period of time used 

to determine numbers of eligible 

patients treated (for example, between 

January and the end of April). 

Response: The case minimum 

pertains to patients who are eligible for 

the survey, and patients over the age of 

eighteen with at least 3 months of 

experience on hemodialysis at their 

current facility are eligible. We further 

clarify that the performance period (for 

example, January through December 

2014 for PY 2016) is the period of time 

that should be used to determine 

numbers of eligible patients. 

Comment: One commenter did not 

agree that the target number of 

completed ICH CAHPS surveys should 

be 200. The commenter stated this target 

number makes no sense, regardless of 

clinic size, and should be removed. 

Response: We selected 200 as the 

target number of completed surveys 

because we found that this was the 

number needed to reach a confidence 

interval of +/¥0.07—a range that we 

believe ensures that facility scores will 

be accurate and comparable between 

facilities. We recognize that it will be 

difficult for smaller facilities to reach 

this target. We clarify that there are no 

penalties if a facility submits less than 

200 complete surveys. 

Comment: A few commenters raised 

concerns about the inclusion of 

homeless persons and nursing home 

patients with respect to eligibility for 

the ICH CAHPS survey because these 

patients may be difficult to contact for 

purposes of administering the survey. 

Response: We are aware that it might 

be difficult to contact homeless and 

nursing home patients for any survey. 

However, these subgroups are important 

groups of people who may have 

different concerns than other dialysis 

patients. Although we have identified 

200 completed surveys as a target 

response rate, there is no required 

minimum number of surveys that a 

facility must submit in order to satisfy 

the reporting requirements for the 

measure. 

Comment: Several commenters stated 

that facilities should not be held 

accountable, leading to a penalty, for 

low response rates from such 

populations for which CMS’s contact 

information may be inaccurate and/or 

out-of-date or based on the number of 

responses in the survey. Some 

commenters stated that facilities have 

no way to ensure that patients’ contact 

information is as accurate and up-todate as possible because the survey is 

administered by a third-party vendor. 

Other commenters did not support the 

ICH CAHPS measure specifications that 

require each patient to fill out at least 

half of the survey for the survey to count 

as complete. Commenters were also 

concerned because patients often skip or 

refuse to answer survey questions, and 

the commenters do not believe that 

facilities should be penalized for this. 

Response: Facilities do not face any 

penalties for low-response rates. Survey 

vendors will receive contact information 

for patients sampled from a facility 

directly from CMS and its contractor, 

which will extract addresses and 

telephone numbers from CROWNWeb. 

There are only 38 core survey 

questions that are applicable to all 

respondents, plus 21 questions in the 

‘‘About You’’ section. To be considered 

as complete, 19 of the 38 core questions 

must be answered. Answering the 

survey is voluntary, and respondents 

may refuse to answer specific questions. 

With pre-notification by the vendor of 

the importance of their input, we hope 

that sampled patients will be willing to 

participate. Nevertheless, we clarify that 

facilities will not be penalized if they 

submit incomplete surveys. 

Comment: Several commenters sought 

clarity on the ICH CAHPS measure 

specifications, which read that ‘‘survey 

responses will not be shared with 

individual facilities, even if the 

respondent were to provide permission 

to do so.’’ These commenters 

recommended that the specifications 

should clearly state that aggregate 

responses will be provided, but 

individual survey responses will not be 

shared. 

Response: In an effort to protect the 

confidentiality of responses to the 

survey among this highly vulnerable 

population, in-center hemodialysis 

facilities must hire a third-party vendor 

to administer the survey. In addition, 

CMS will not allow vendors to share the 

responses of individual patients with incenter hemodialysis facilities. Vendors 

may provide aggregate results to 

facilities, but these results cannot 

include demographic data or other 

information that could be used to match 

patients and their survey responses. 

These measure specifications are 

consistent with the AHRQ specifications 


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for fielding the survey and handling the 

survey responses. 

Comment: Several commenters did 

not support the proposal to adopt the 

ICH CAHPS measure because it is not 

appropriate to publicly publish scores 

that aggregate survey results when 

facilities have no means to impact 

responses to some of the questions. For 

example, cuts to the ESRD PPS payment 

rates may result in physicians spending 

less time with patients, and patients are 

also asked in the survey to comment on 

physicians that are not associated with 

the facility. Some commenters 

recommended including the physician 

component of the ICH CAHPS measure 

in the Physician Quality Reporting 

System instead of in the ESRD QIP. 

Response: We believe that the survey 

results, in the aggregate, will be 

sufficient to promote quality 

improvement and, as we explain above, 

also believe that the interest in 

protecting patient anonymity and 

confidentiality outweighs the cost of 

making public individual survey 

responses. We also note that ICH 

CAHPS has been in the public domain 

since 2007, and dialysis facilities are 

already using the survey (with the 

ARHQ specifications) to meet the 

requirements for the PY 2014 ESRD QIP. 

Questions about physicians are only 

one component of the ICH CAHPS 

survey, but we believe that the 

experience patients have with their 

physicians is critical to understanding 

and measuring their experience at the 

facility overall. We continue to believe 

that facilities can impact their 

performance on the physician 

component of the survey by encouraging 

physicians who see the facilities’ 

patients to improve the quality of care 

they provide. 

Comment: Many commenters 

discussed the impact of facility size on 

survey administration. Some 

commenters stated that small facilities 

would likely have low response rates 

that could skew results. Other 

commenters did not support the 

proposal to exclude facilities with fewer 

than 30 eligible patients from ICH 

CAHPS survey. These commenters 

stated that in CY 2011, nearly 20 

percent of all in-center dialysis facilities 

would have been excluded from the 

measure; that CMS should evaluate 

patient experience of care in small 

facilities; and that CMS should develop 

further methodologies to collect reliable 

data from small facilities. Commenters 

also did not support the measure 

specifications for the ICH CAHPS 

measure. Specifically, these commenters 

noted that while the measure 

specifications require facilities with 

more than 200 patients to minimize 

overlap between the random sample of 

patients who receive each semi-annual 

survey, it will be difficult for facilities 

with close to 200 patients to minimize 

sampling overlap because many patients 

will likely be sampled in both of the biannual surveys. 

Response: For our survey measures, 

we want to ensure that we are 

measuring true performance. In any 

measurement system there is a mixture 

of signal (true performance) and noise 

(random error). By using a case 

minimum of 30, we can increase 

reliability of the ICH CAHPS measure 

and the likelihood that it is measuring 

signal and not noise. Facilities with 

fewer than 30 eligible cases are 

excluded from the ICH CAHPS survey 

because results from these facilities 

might not be reliable. We recognize that 

when facilities have close to 200 

patients, most of these patients will 

receive both of the semi-annual surveys 

in PY 2017 and future payment years. 

Nevertheless, these facilities should 

attempt to minimize overlapping 

patients by removing patients from the 

second survey if they were sampled in 

the first survey, and most facilities serve 

99 or fewer unique patients per year. 

Comment: Many commenters did not 

support the proposal to require facilities 

to administer the ICH CAHPS survey 

twice annually, starting in PY 2017, 

particularly in light of the proposed cuts 

to the ESRD PPS. Some of these 

commenters stated that it makes sense 

for hospitals to conduct the survey 

regularly because they generally do not 

treat the same patients more than once; 

however, dialysis facilities see the same 

patients over the course of the year, so 

there is no need to conduct a second 

survey. Commenters also stated that 

there are no data demonstrating that 

semi-annual surveys improve the 

validity of survey results. Additionally, 

many commenters did not support the 

proposal to administer the ICH CAHPS 

survey twice annually because doing so 

will lead to ‘‘survey fatigue’’ by 

decreasing the response rates to the ICH 

CAHPS survey, and other surveys 

administered by dialysis facilities, 

including the Kidney Disease Quality of 

Life-36 survey, which commenter states 

are required by the ESRD Conditions for 

Coverage (CfC) regulations. These 

commenters recommended fielding the 

survey once annually. 

Response: We decided to require 

semi-annual administration of the 

survey in order to collect data about 

patients’ experiences with dialysis care 

at different points in the calendar year, 

to ensure that patients could accurately 

recall their experience of care, and to 

ensure that survey responses were 

collected in timely fashion. Conducting 

the survey on an annual basis increases 

the likelihood of collecting outdated or 

inaccurate information, while making it 

more difficult to solicit information that 

accurately reflects the experiences of 

patients. Although we recognize that the 

requirement to conduct a second, semiannual ICH CAHPS survey may 

decrease response rates to other surveys 

that facilities are required to complete 

(such as the Kidney Disease Quality of 

Life-36 survey), we believe that the 

drawbacks associated with the 

possibility of survey fatigue are 

outweighed by improvements in the 

reliability of the data collected through 

the ICH CAHPS survey. 

Comment: Several commenters 

disagreed with the proposal to adopt the 

expanded ICH CAHPS measure because 

the survey is too expensive to 

administer. 

Response: Although we acknowledge 

that there is a cost to administer the ICH 

CAHPS survey, we suggest that dialysis 

facilities compare several vendors 

before deciding on a vendor. We 

strongly believe that the information 

facilities gain from the ICH CAHPS 

survey outweighs the costs to 

administer the survey, because facilities 

can use this information to improve the 

care provided to patients with ESRD. 

Furthermore, as stated in the CY 2013 

ESRD PPS final rule (77 FR 67481), 

‘‘Facilities may report allowable 

operating expenses in their Medicare 

cost reports. We believe that it is 

consistent with this payment policy for 

facilities to include the ICH CAHPS 

costs on their cost reports because they 

are allowable operating expenses.’’ 

Comment: Some commenters 

suggested that CMS redesign the survey 

to account for special populations (for 

example, low literacy, hearing and 

vision impaired, elderly, and physically 

handicapped). Other commenters stated 

that the ICH CAHPS survey should not 

be administered in languages other than 

English and Spanish, as proper 

translation of surveys requires a 

complicated forward and backward 

translation process, and it is unlikely 

that surveys conducted in other 

languages can be properly compared to 

surveys conducted in English and 

Spanish because of the complexity of 

the translation process. 

Response: The survey administration 

procedures take into account the needs 

of special populations such as low 

literacy, hearing and vision impaired, 

elderly, and physically handicapped. 

Patients can get assistance in answering 

the survey as long as they, and not the 

assistor, actually answer the questions. 


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In addition, for telephone as well as inperson interviews, the interviewer will 

be instructed to permit respondents to 

take breaks as needed and to call back 

at another time if a respondent becomes 

fatigued. Finally, participation in the 

survey is completely voluntary on the 

part of the patients. They may refuse to 

participate or refuse to answer any 

questions they do not wish to answer. 

Facilities are not required to administer 

the survey in languages other than 

English and Spanish. However, CMSapproved vendors may use other 

approved translations that are 

authorized and developed by CMS. 

Comment: A few commenters raised 

concerns about the administration of the 

survey and ways to ensure that sampled 

patients would/could complete the 

survey, especially those who may have 

lost their mail version of the survey or 

those with cognitive and/or language 

barriers. 

Response: Responsiveness might vary 

by survey mode, language barriers, 

cognitive issues, literacy, and health 

issues. We believe that the ICH CAHPS 

measure is designed to maximize 

patient response rates while retaining its 

voluntary nature. Every sampled patient 

will receive a pre-notification letter 

from CMS (on its letterhead) prior to 

receipt of the mail survey or initial 

telephone call. This letter will describe 

the survey and the patient’s role in 

providing feedback to improve the 

quality of care at the facility. The survey 

methodology also allows for assistance 

for patients who might have difficulty 

completing the survey. 

The measure specifications suggest 

that survey vendors use current best 

practices to enhance response rates by 

(1) standardizing the survey materials; 

(2) improving readability; (3) allowing 

multiple contacts (up to 5) for follow-up 

in the telephone or mixed-mode; (4) 

offering call back times that are best 

suited for the sample patient; and/or (5) 

breaking up the survey over multiple 

calls. 

In all three modes of administration 

(mail-only, telephone-only, and mixed 

modes), a pre-notification letter will 

include both email addresses and 

telephone numbers to call CMS or its 

ICH CAHPS contractor if the respondent 

has questions or problems with the 

survey. For the mail-only sample 

patients, cover letters will include the 

contact information of the CMSapproved survey vendors, who can 

replace lost surveys. Lost surveys 

should not be an issue for the 

telephone-only mode. For the other 

modes, sample patients will receive 

multiple surveys during the follow-up 

period or may contact the vendor for 

replacements. 

Comment: A few commenters 

suggested making the survey available 

for patients online. 

Response: We are aware that online 

surveys are popular, but this capability 

does not currently exist. We will 

continue to investigate new modes of 

administration, and in the meantime 

will continue with more traditional 

efforts to reach patients. 

Comment: Many commenters 

expressed concerns that the ICH CAHPS 

survey only covers in-center 

hemodialysis patients. Many of these 

commenters recommended that CMS 

assess the experience of home dialysis 

patients and peritoneal dialysis patients 

as well. 

Response: We thank commenters for 

their feedback. Eighty-nine percent of 

all ESRD patients receive in-center 

hemodialysis. Even those receiving 

peritoneal or home dialysis, have their 

initial care at an in-center hemodialysis 

facility. Therefore, this survey was 

specifically designed to capture the 

experience of in-center hemodialysis 

patients. Surveys for peritoneal and 

home dialysis patients may be 

considered for future development. 

Comment: One commenter stated that 

there is a discrepancy between the 

proposed rule and the measure 

specifications for the ICH CAHPS 

measure. Specifically, the measure 

specifications establishes the survey 

periodicity for CY 2014 as ‘‘twice 

annually,’’ yet the proposed rule 

establishes the survey periodicity for CY 

2014 as annually. 

Response: We proposed that facilities 

would only have to administer the ICH 

CAHPS survey once in CY 2014. This is 

consistent with the measure 

specifications that appear at https://

ichcahps.org/Portals/0/ICH_Differences

BtwAHRQandICHCAHPS

SurveySpecs.pdf. 

Comment: One commenter noted that 

on page 40857, second column, 

subsection a, there is a typographical 

error. NQF #285 should be NQF #258. 

Response: We thank the commenter 

for pointing out this typographical error. 

We have corrected it above. 

Comment: Several commenters 

requested clarification about whether 

each facility will need to register on the 

www.ichcahps.org Web site, or if 

umbrella organizations that include a 

number of facilities will be able to 

authorize a selected vendor to 

administer the survey and submit data 

on behalf of each its facilities. These 

commenters stated that the contracting 

for this process will be centralized, and 

it would be inefficient for individual 

facilities to complete these steps when 

they could be done on an organizationwide basis. Concerns were also raised 

about having time to meet the system 

requirements for submitting ICH CAHPS 

data to CMS. 

Response: Dialysis organizations may 

hire and authorize a single vendor to 

conduct the survey and submit data for 

all facilities under the corporate 

umbrella of the organization, but the 

corporate umbrella must report facilitylevel data to ensure that results can be 

attributed to individual facilities. The 

vendor may batch data from several 

facilities into a single zip file for 

submission. 

Because third-party vendors are 

already conducting ICH CAHPS surveys 

on behalf of multi-facility organizations, 

we believe that the facilities will be able 

to timely meet the system requirements 

for administering the survey. 

Comment: One commenter did not 

support the proposal to change the 

measure specifications for the ICH 

CAHPS measure from the AHRQ version 

to the CMS version. This commenter 

stated that doing so will make it hard to 

compare results between the two 

versions of the survey, and also cause 

confusion for facilities. 

Response: Changes to the AHRQ 

measure specifications, which received 

NQF endorsement in 2007, are not 

substantive. Rather, the CMS measure 

specifications provide more details 

about the field operations and data 

submission in order to standardize the 

procedures used by third-party vendors. 

These non-substantive changes to the 

measure specifications were made in 

response to requests for this 

standardization. We have found that it 

is easier for vendors to administer the 

survey when they have detailed 

specifications, and we believe that this 

standardization helps ensure that the 

data will be comparable across all 

facilities. 

For these reasons, we are finalizing 

the expanded ICH CAHPS reporting 

measure as proposed for the PY 2016 

ESRD QIP and for future payment years. 

The technical specifications for this 

finalized measure can be found at 

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

public-measures/ICHCAHPS2016FR.pdf. 

b. Revised Mineral Metabolism 

Reporting Measure 

Adequate management of bone 

mineral metabolism and disease in 

patients with ESRD continues to be a 

high priority because it can cause severe 

consequences such as osteoporosis, 

osteomalacia, and hyperparathyroidism. 

The PY 2015 ESRD QIP has a reporting 


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3Carothers, JE et. al. Clinical Chemistry, volume 

22, Issue 11, 1976 (Table 3). 

measure focused on mineral metabolism 

(77 FR 67484 through 67487). We 

proposed two changes for PY 2016 and 

future payment years. First, when we 

finalized the measure in the CY 2013 

ESRD PPS final rule, we inadvertently 

excluded home peritoneal dialysis 

patients from the measure 

specifications. For PY 2016 and future 

payment years, we proposed to include 

home peritoneal dialysis patients in the 

Mineral Metabolism reporting measure. 

Therefore, we proposed that a qualifying 

case for this measure will be defined as 

(i) an in-center Medicare patient who 

had been treated at least seven times by 

the facility; and (ii) a home dialysis 

Medicare patient for whom the facility 

submitted a claim at least once per 

month. 

Second, if the proposed 

Hypercalcemia clinical measure 

(described below) is finalized based on 

public comment, then we believe it 

would be redundant, and unduly 

burdensome, for facilities to also 

continue reporting serum calcium levels 

as part of the Mineral Metabolism 

reporting measure. Accordingly, in light 

of our proposal to adopt the 

Hypercalcemia measure, we proposed to 

change the specifications for the 

Mineral Metabolism measure such that 

it no longer requires facilities to report 

serum calcium levels. We solicited 

comments on this proposal, and in 

particular on whether we should retain 

the reporting of serum calcium levels as 

part of the Mineral Metabolism 

reporting measure if the proposed 

Hypercalcemia measure was not 

finalized. 

As described in more detail below 

(Proposed Minimum Data for Scoring 

Measures), we also proposed to 

eliminate the 11-case minimum for this 

measure, which was finalized in the CY 

2013 ESRD PPS final rule (77 FR 67486). 

Because of the proposed revised case 

minimum, and because there are 

circumstances that might make it 

challenging for a facility to draw a 

sample from certain patients, such as 

those who are admitted to hospital 

during the month, we proposed that, in 

order to receive full points on this 

measure, facilities that treat 11 or more 

qualifying cases over the entire 

performance period will have to report 

at the lesser of the 50th percentile of 

facilities in CY 2013 or 97 percent per 

month, on a monthly basis, for each 

month of the performance period. We 

further proposed that facilities that treat 

fewer than 11 qualifying cases during 

the performance period will have to 

report on a monthly basis the specified 

levels for all but one qualifying case. If 

a facility only has one qualifying case 

during the entire performance period, a 

facility will have to attest to that fact in 

CROWNWeb by January 31 of the year 

following the performance period in 

order to avoid being scored on the 

measure. We made this proposal 

because we seek to ensure the highest 

quality of care regardless of facility size, 

and because we seek to mitigate cherrypicking by ensuring that one patient 

does not skew a facility’s score (77 FR 

67474). 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Several commenters 

supported the proposal to include home 

peritoneal dialysis patients in the 

Mineral Metabolism reporting measure. 

Response: We thank the commenters 

for their support. 

Comment: Many commenters 

supported removing calcium from the 

reporting requirements of the Mineral 

Metabolism reporting measure if the 

Hypercalcemia measure is finalized, and 

retaining calcium in the Mineral 

Metabolism measure if the 

Hypercalcemia measure is not finalized. 

Response: We thank the commenters 

for their support. 

Comment: One commenter supported 

the proposal to modify the Mineral 

Metabolism measure and asked whether 

the revised Mineral Metabolism 

reporting measure would also include 

home hemodialysis patients. 

Response: We thank the commenter 

for the support. We clarify that the 

measure includes home hemodialysis 

patients, as well as home peritoneal 

dialysis patients. 

Comment: Some commenters stated 

the Mineral Metabolism reporting 

measure should include an exclusion 

for patients not on chronic dialysis to 

make the measure consistent with the 

anemia management reporting measure. 

Response: We clarify that patients not 

on chronic dialysis have always been 

excluded from the Mineral Metabolism 

reporting measure, which is appropriate 

because the measure was designed for 

patients on chronic dialysis. We have 

updated the measure specifications to 

state this explicitly. 

Comment: Several commenters noted 

that there is an inconsistency between 

the proposed rule and the measure 

specifications for the Mineral 

Metabolism reporting measure. The 

proposed rule states that ‘‘if a facility 

only has 1 qualifying case during the 

entire performance period, a facility will 

have to attest to that fact in CROWNWeb 

by January 31 of the year following the 

performance period in order to avoid 

being scored on the measure.’’ By 

contrast, the measure specifications 

state that ‘‘fewer than 1 patient during 

the performance period who are (i) incenter Medicare patients who have been 

treated at least 7 times by the facility 

during the reporting month; or (ii) home 

dialysis Medicare patients for whom the 

facility submits a claim during the 

reporting month must attest to this fact 

in CROWNWeb to not be scored on this 

measure.’’ 

Response: We thank commenters for 

identifying this discrepancy. We have 

changed the measure specifications to 

state that the case minimum is one 

eligible patient. Facilities with two or 

more eligible patients will be scored on 

the measure, and facilities with one 

eligible patient will be scored on the 

measure unless they attest to this fact in 

CROWNWeb. We made this proposal to 

enable us to gather data on patients in 

small facilities. 

Comment: One commenter 

recommended that the Mineral 

Metabolism reporting measure 

specifications be modified to indicate 

that plasma and serum should both be 

acceptable blood samples for the 

measurement of calcium. The 

commenter stated that plasma testing is 

more stable and requires less 

manipulation, has been used since 2006, 

has been validated for most clinical 

chemistry analyzers, and has been 

deemed acceptable and equivalent by 

analyzer manufacturers. 

Response: We disagree that the 

measure specification should be 

modified to include plasma calcium 

measurements. This issue was discussed 

at length during the April 2013 mineral 

bone disease TEP (http://www.cms.gov/ 

Medicare/End-Stage-Renal-Disease/

CPMProject/index.html). Overall, TEP 

members determined that there is a lack 

of strong evidence supporting the 

acceptance of measurements of serum 

phosphorus on plasma (vs. serum). 

Published literature indicates that the 

difference in phosphorus levels 

measured on plasma vs. serum are not 

trivial and may be as high as 10 

percent.3 Based on these observations, 

TEP members voted and unanimously 

recommended to keep the measure 

unchanged, such that facilities are 

required to report serum levels. 

Comment: One commenter stated that 

the Mineral Metabolism measure will 

not improve patient care because it does 

not measure outcomes. The commenter 

recommended adopting an outcomesbased phosphorus measure in future 

payment years. 

Response: As stated in the CY 2013 

ESRD PPS final rule (77 FR 67486), we 


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4 KDIGO recommends measurement of serum 

phosphorus every 1–3 months in Chapter 3, KDIGO 

Clinical Practice Guideline for the Diagnosis, 

Evaluation, Prevention, and Treatment of Chronic 

Kidney Disease-Mineral and Bone Disorders (CKD– 

MBD) Kidney International vol 76, supplement 113, 

August 2009. 

continue to believe that the Mineral 

Metabolism reporting measure will help 

improve patient outcomes. Kidney 

Disease Improving Global Outcomes 

(KDIGO) recommends monthly 

measurements and emphasizes the 

importance of following trends versus 

single measurements, thus supporting 

relatively frequent measurements (for 

example, monthly).4 There is evidence 

that extreme phosphorus levels may be 

associated with poor clinical outcomes. 

Monthly measurements will identify 

elevated levels of serum phosphorus 

and trigger therapeutic interventions, 

thus contributing to high-quality care. 

Comment: Many commenters 

supported the inclusion of home 

dialysis patients in the Mineral 

Metabolism reporting measure. 

However, these commenters expressed 

concern that the inclusion of these 

patients will discourage home 

hemodialysis, force home dialysis 

patients to visit a facility too frequently 

or otherwise present greater challenges 

for regular blood draws, and cause 

difficulties for small facilities that only 

treat home dialysis patients. 

Response: We disagree that the 

inclusion of home peritoneal dialysis 

patients in the Mineral Metabolism 

measure will force the patients to visit 

their dialysis facility too frequently, or 

otherwise discourage patients from 

receiving dialysis at home. Between 

May 2012 and March 2013, a large 

percentage of patients had blood testing 

performed each month. The percentage 

of patients with monthly testing varied 

by modality and specific blood test, but 

all populations provided data for 

between 72 percent and 89 percent of 

qualifying patients. Furthermore, the 

ESRD CfCs, implemented in October 

2008, require monthly testing for some 

labs (for example, Albumin, 

Hemoglobin/Hematocrit at § 494.90(a)(2) 

and § 494.90(a)(4), respectively) and 

require that all patients (including home 

dialysis patients) see a practitioner (for 

example, a physician, physician’s 

assistant, or nurse practitioner) at least 

monthly as specified at § 494.90(b)(4). 

Therefore, we do not believe that 

requiring monthly measurements of 

serum phosphorus will discourage 

patients from receiving dialysis at home, 

since the vast majority of home dialysis 

patients already receive monthly blood 

tests, and facilities are already required 

under the CfCs to conduct some other 

lab tests on a monthly basis. 

Comment: One commenter stated that 

the language used to finalize the 

Mineral Metabolism reporting measure 

in the CY 2013 ESRD PPS was unclear 

about what was meant by ‘‘monthly 

basis.’’ The commenter asked whether 

this means the percent of complete 

months in which 96 percent of eligible 

patients were tested, or if this means the 

percent of eligible patients for that 

facility who had monthly testing in 

excess of 96 percent. The commenter 

also sought clarification with respect to 

the equation used to calculate scores on 

the Mineral Metabolism measure. 

Response: By ‘‘monthly basis,’’ we 

mean meeting the reporting threshold 

for each month during the performance 

period. Facilities are scored on the 

measure based on the number of months 

in which the facility successfully meets 

this reporting threshold. Measure scores 

are not determined by the percent of 

months in which the facility meets this 

reporting threshold, but rather 

according to the equation below, which 

appears in the CY 2013 ESRD PPS final 

rule (77 FR 67506). We also affirm that 

this methodology will be used to 

calculate scores on the Mineral 

Metabolism measure in the PY 2015 and 

PY 2016 programs, as well as future 

payment years. 

For the reasons stated above, and the 

reasons stated in section III.C.10 below, 

we are finalizing the Mineral 

Metabolism reporting measure for the 

PY 2016 ESRD QIP and for future 

payment years. Additionally, because 

we are finalizing the Hypercalcemia 

clinical measure (see Section III.C.3.b 

below), we are also finalizing the 

proposal to change the specifications for 

the Mineral Metabolism measure such 

that the measure no longer requires 

facilities to report serum calcium levels. 

Technical specifications for the revised 

Mineral Metabolism reporting measure 

can be found at: http://

www.dialysisreports.org/pdf/esrd/

public-measures/MineralMetabolismReporting-2016FR.pdf. 

c. Revised Anemia Management 

Reporting Measure 

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

‘‘measures on anemia management that 

reflect the labeling approved by the 

Food and Drug Administration for such 

management.’’ In the CY 2013 ESRD 

PPS final rule, we finalized an Anemia 

Management reporting measure for the 

reasons stated in that final rule (77 FR 

67491 through 67495). However, we 

inadvertently excluded home peritoneal 

patients from the measure 

specifications. For PY 2016 and future 

payment years, we proposed to include 

home peritoneal patients in the Anemia 

Management reporting measure. 

Therefore, we proposed that a qualifying 

case for this measure will be defined as 

(i) an in-center Medicare patient who 

had been treated at least seven times by 

the facility; and (ii) a home dialysis 

Medicare patient for whom the facility 

submitted a claim at least once per 

month. 

We believe that there are 

circumstances that might make it 

challenging to draw a sample from 

certain patients. Therefore we proposed 

that, in order to receive full points on 

this measure, facilities that treat 11 or 

more qualifying cases over the entire 

performance period must report at the 

lesser of the 50th percentile of facilities 

in CY 2013 or 99 percent per month, on 

a monthly basis for each month of the 

performance period. In addition, we 

proposed that, in order to receive full 

points on this measure, facilities that 

treat fewer than 11 qualifying cases 

during the performance period must 

report on a monthly basis the specified 

levels for all but one qualifying case. If 


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5http://www.fda.gov/Drugs/DrugSafety/

ucm259639.htm. 

6 Kidney Disease: Improving Global Outcomes 

(KDIGO) Anemia Work Group. KDIGO Clinical 

Practice Guideline for Anemia in Chronic Kidney 

Disease. Kidney inter., Suppl. 2012 (2): 279–335. 

a facility only has one qualifying case 

during the entire performance period, a 

facility will have to attest to that fact in 

CROWNWeb by January 31 of the year 

following the performance period in 

order to avoid being scored on the 

measure. We made this proposal 

because we seek to ensure the highest 

quality of care regardless of facility size, 

and because we seek to mitigate cherrypicking by ensuring that one patient 

does not skew a facility’s score (77 FR 

67474). 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

supported the proposal to include home 

peritoneal dialysis patients in the 

Anemia Management reporting measure. 

Response: We thank the commenters 

for their support. 

Comment: Several commenters 

supported the inclusion of home 

peritoneal dialysis patients in the 

Anemia Management reporting measure. 

However, these commenters expressed 

some concern that the inclusion of these 

patients will discourage home 

hemodialysis, force home dialysis 

patients to visit a facility too frequently, 

and cause difficulties for small facilities 

that only treat home dialysis patients. 

Response: We disagree that the 

inclusion of home peritoneal dialysis 

patients in the Anemia Management 

reporting measure will force the patients 

to visit their dialysis facility too 

frequently, or otherwise discourage 

patients from receiving dialysis at home. 

Most home dialysis patients, including 

peritoneal dialysis patients, receive 

blood testing on a monthly basis. 

Furthermore, the CfCs require monthly 

testing for some labs (for example, 

Albumin, Hemoglobin/Hematocrit at 

§ 494.90(a)(2) and § 494.90(a)(4), 

respectively) and require that all 

patients (including home dialysis 

patients) see a practitioner (for example, 

a physician, physician’s assistant, nurse 

practitioner) at least monthly as 

specified at § 494.90(b)(4). Therefore, we 

do not believe the inclusion of home 

peritoneal dialysis patients will 

discourage home dialysis, because most 

home dialysis patients already visit 

dialysis facilities for monthly blood 

tests, and because facilities are already 

required to conduct monthly 

hemoglobin/hematocrit tests for all 

dialysis patients. 

Comment: Several commenters noted 

that there is an inconsistency between 

the proposed rule and the measure 

specifications for the Anemia 

Management reporting measure. The 

proposed rule states that ‘‘if a facility 

only has 1 qualifying case during the 

entire performance period, a facility will 

have to attest to that fact in CROWNWeb 

by January 31 of the year following the 

performance period in order to avoid 

being scored on the measure.’’ By 

contrast, the measure specifications 

state that ‘‘fewer than 1 patient during 

the performance period who are (i) incenter Medicare patients who have been 

treated at least 7 times by the facility 

during the reporting month; or (ii) home 

dialysis Medicare patients for whom the 

facility submits a claim during the 

reporting month, must attest to this fact 

in CROWNWeb to not be scored on this 

measure.’’ 

Response: We thank commenters for 

identifying this discrepancy. We have 

changed the measure specifications to 

state that the case minimum is one 

eligible patient. Facilities with two or 

more eligible patients will be scored on 

the measure, and facilities with one 

eligible patient will be scored on the 

measure until they attest to this in 

CROWNWeb. We made this proposal to 

enable us to gather data on patients in 

small facilities. 

For these reasons, and the reasons 

stated in section III.C.10 below, we are 

finalizing the Anemia Management 

reporting measure as proposed for the 

PY 2016 ESRD QIP and for future 

payment years. Technical specifications 

for this proposed measure can be found 

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

esrd/public-measures/

AnemiaManagement-Reporting2016FR.pdf. 

3. New Measures for PY 2016 and 

Subsequent Payment Years of the ESRD 

QIP 

As the program evolves, we believe it 

is important to continue to evaluate and 

expand the measures selected for the 

ESRD QIP. Therefore, for the PY 2016 

ESRD QIP and future payment years, we 

proposed to adopt five new measures. 

The proposed new measures include 

two measures on anemia management, 

one measure on mineral metabolism, 

one measure on bloodstream infection 

monitoring, and one measure on 

comorbidities. 

a. Anemia Management Clinical 

Measure Topic and Measures 

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

states that the measures specified for the 

ESRD QIP are required to include 

measures on ‘‘anemia management that 

reflect the labeling approved by the 

Food and Drug Administration for such 

management.’’ For PY 2016 and future 

payment years, we proposed to create a 

new anemia management clinical 

measure topic, which consists of one 

measure initially finalized in the PY 

2012 ESRD QIP final rule and most 

recently finalized for PY 2015 and 

future PYs in the CY 2013 ESRD PPS 

final rule, and one new proposed 

measure, described below. We note that, 

like other measure topics, we proposed 

that the Anemia Management clinical 

measure topic consist only of clinical 

and not reporting measures. 

i. Anemia Management: Hgb > 12 

For the PY 2016 ESRD QIP and future 

payment years of the program, we 

proposed to include the current Hgb > 

12 measure in a new Anemia 

Management Clinical measure topic. In 

the event that the Patient Informed 

Consent for Anemia Treatment measure 

described below is not finalized, we 

proposed to retain the Hgb > 12 measure 

as an independent measure. We 

solicited comments on this proposal. 

We did not receive any comments on 

these proposals. 

ii. Anemia of Chronic Kidney Disease: 

Patient Informed Consent for Anemia 

Treatment 

This is a measure of the proportion of 

dialysis patients for whom a facility 

attests that risks, potential benefits, and 

alternative treatment options for anemia 

were evaluated, and that the patient 

participated in the decision-making 

regarding an anemia treatment strategy. 

We believe that this measure is 

consistent with recent changes to the 

FDA-approved labeling 5 for ESAs and 

Kidney Disease: Improving Global 

Outcomes (KDIGO) Anemia 

Management Guidelines 6 that highlight 

the evolving understanding of risks 

associated with ESA therapy, as 

required in section 1881(h)(2)(A)(i) of 

the Act. We believe it is appropriate for 

facilities and physicians to ensure that 

steps are taken to make patients aware 

of those potential risks within the 

context of treatment for anemia. For 

these reasons, we proposed to adopt this 

measure (Anemia of Chronic Kidney 

Disease: Patient Informed Consent for 

Anemia Treatment) for the ESRD QIP in 

PY 2016 and future payment years of 

the program. In order to meet the 

requirements of this proposed measure, 

facilities must attest in CROWNWeb for 

each qualifying patient, on an annual 

basis, that informed consent was 

obtained from that patient, or that 

patient’s legally authorized 

representative, during the performance 

period. We proposed that qualifying 


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7Wang A, Woo J, Law C, et al. Cardiac Valve 

Calcification as an Important Predictor for AllCause Mortality and Cardiovascular Mortality in 

Long-Term Peritoneal Dialysis Patients: A 

Prospective Study. J Am. S. Nephrology 2011 (14/ 

1): 159–168. 

8Wang A, Ho S, Wang M, et al. Cardiac Valvular 

Calcification as a Marker of Atherosclerosis and 

Arterial Calcification in End-stage Renal Disease. 

JAMA 2005 (165/3): 327–332. 

cases for this measure would be defined 

as patients who received dialysis in the 

facility for 30 days or more. The 

proposed deadline for reporting these 

attestations for the PY 2016 ESRD QIP 

would be January 31, 2015, or, if that is 

not a regular business day, the first 

business day thereafter. Missing 

attestation data for a patient would be 

interpreted as failure to obtain informed 

consent from that patient. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Many commenters 

expressed a variety of concerns about 

the proposed Patient Informed Consent 

of Anemia Treatment clinical measure 

and did not support its adoption for the 

ESRD QIP. Some commenters stated that 

obtaining informed patient consent is 

already a standard of clinical care, and 

that the measure would therefore not 

promote quality care, but would instead 

add more, unnecessary recordkeeping. 

Other commenters stated that the 

informed consent measure would be 

duplicative and possibly inconsistent 

with the FDA’s Risk Evaluation and 

Mitigation Strategy (REMS) for ESAs, 

which already requires physicians to 

discuss with patients the risks of ESA 

therapy. Other commenters expressed 

conflicting opinions about the proposed 

measure. One group of commenters 

stated that nephrologists, not dialysis 

facilities, prescribe ESAs, so it would be 

unreasonable to expect facilities to 

obtain informed consent from patients. 

A different group of commenters noted 

that obtaining informed patient consent 

is already an ESRD CfC for dialysis 

facilities, so it would be unnecessary for 

the ESRD QIP to adopt a measure on the 

topic. 

Response: We appreciate the 

commenters’ concerns. We continue to 

believe that this measure is a useful 

complement to the other anemia 

management measures currently used in 

the ESRD QIP, as those measures focus 

exclusively on hemoglobin levels and 

not the patient’s knowledge of the risks 

and benefits of anemia treatment. We 

also believe that it is essential to 

provide patients with this information, 

in light of the lack of scientific evidence 

regarding ESAs and ideal hemoglobin 

levels in this patient population. 

Additionally, we disagree that this 

measures and the FDA REMS 

accomplish the same goal. The FDA 

REMS program is focused on ensuring 

that patients are aware of the risks 

associated with aspects of ESA use in 

overall anemia management, 

particularly in the setting of cancer 

chemotherapy. The informed consent 

measure, by contrast, would require 

facilities to provide a balanced 

discussion of both the risks and the 

potential benefits of a contemplated 

treatment. 

However, we agree with commenters 

who noted that providing informed 

consent is already a standard of care 

that is at least partially regulated 

through the ESRD CfCs. We do not want 

to create additional recordkeeping 

requirements for facilities when there is 

already an existing standard that 

facilities are required to meet. For this 

reason, we are not finalizing the Patient 

Informed Consent for Anemia Treatment 

clinical measure at this time. Because 

we are not finalizing this measure, we 

are also not finalizing the proposed 

Anemia Management Clinical measure 

topic. Instead, the Hemoglobin Greater 

Than 12 g/dL clinical measure will 

remain an independent clinical 

measure, unassociated with a clinical 

measure topic, as it has in previous 

payment years. Technical specifications 

for the Hemoglobin Greater Than 12 g/ 

dL measure can be found at http://

www.dialysisreports.org/pdf/esrd/

public-measures/AnemiaManagementHGB-2016FR.pdf. 

b. Hypercalcemia 

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

states that the measures specified for the 

ESRD QIP shall include other measures 

as the Secretary specifies, including, to 

the extent feasible, measures of bone 

mineral metabolism. Abnormalities of 

bone mineral metabolism are 

exceedingly common, and contribute 

significantly to morbidity and mortality 

in patients with advanced Chronic 

Kidney Disease (CKD). Many studies 

have associated disorders of mineral 

metabolism with mortality, fractures, 

cardiovascular disease, and other 

morbidities. Therefore, we believe it is 

critical to adopt a clinical measure that 

encourages adequate management of 

bone mineral metabolism and disease in 

patients with ESRD. 

Elevated serum calcium level (or 

hypercalcemia) has been shown to be 

significantly associated with increased 

all-cause mortality in patients with 

advanced CKD. Both KDIGO Clinical 

Practice Guideline for the Diagnosis, 

Evaluation, Prevention, and Treatment 

of Chronic Kidney Disease–Mineral and 

Bone Disorder (CKD–MBD) and the 

National Kidney Foundation’s Kidney 

Disease Outcomes Quality Initiative 

(KDOQI) support maintaining serum 

calcium levels within reference ranges. 

Hypercalcemia is also a proxy for 

vascular and/or valvular calcification 7 8

and subsequent risk for cardiovascular 

deaths. We previously proposed a 

hypercalcemia clinical measure for the 

PY 2015 ESRD QIP (77 FR 40973 

through 40974), but decided not to 

finalize the measure because we lacked 

baseline data that could be used to 

calculate performance standards, 

achievement thresholds, and 

benchmarks (77 FR 67490 through 

67491). We now possess enough 

baseline data to calculate these values. 

Therefore, we proposed to adopt the 

NQF-endorsed measure NQF #1454: 

Proportion of Patients with 

Hypercalcemia, for PY 2016 and future 

payment years of the ESRD QIP. 

The proposed Hypercalcemia measure 

assesses the number of patients with 

uncorrected serum calcium greater than 

10.2 mg/dL for a 3-month rolling 

average. (‘‘Uncorrected’’ means not 

corrected for serum albumin 

concentration.) In order to enable us to 

calculate this measure, each facility will 

be required to enter in CROWNWeb, on 

a monthly basis, an uncorrected calcium 

level for each in-center and home 

dialysis patient over the age of eighteen. 

Performance on this measure is 

expressed as a proportion of patientmonths for which the 3-month rolling 

average exceeds 10.2 mg/dL. The 

numerator is the total number of eligible 

patient-months where the 3-month 

rolling average is greater than 10.2 mg/ 

dL, and the denominator is the total 

number of eligible patient-months. We 

proposed that facilities would begin to 

submit data on this measure based on 

January 2014 uncorrected serum 

calcium levels but that we would 

calculate the first 3-month rolling 

average for each eligible patient in 

March 2014 using January, February, 

and March 2014 data. We would then 

calculate a new 3-month rolling average 

each successive eligible patient-month 

(April through December measure 

calculations) by dropping the oldest 

month’s data and using instead the 

newest month’s data in the 3-month 

period. The facility’s performance will 

be determined by calculating the 

proportion of the 3-month averages 

calculated monthly (March through 

December, each time using the latest 3 


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months of data) for all eligible patients 

that was greater than 10.2 mg/dL. 

Because we proposed to adopt this 

measure not only for PY 2016, but also 

for subsequent payment years, we also 

proposed that, beginning with the PY 

2017 program, we would measure 

hypercalcemia beginning in January of 

the applicable performance period. This 

will allow us to have a 3-month rolling 

average for all months in the 

performance period. We proposed that 

the 3-month rolling average rate for 

January would be calculated using the 

rates from November and December of 

the previous year, as well as January of 

that year. Likewise, we proposed that 

the rate for February would be 

calculated using the rates from 

December, January, and February to 

calculate the 3-month rolling average, 

and so on. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: One commenter supported 

the proposal to adopt the hypercalcemia 

measure because ‘‘this measure 

represents an incentive for maintaining 

this important standard of care and 

protecting patients’’ in light of the 

‘‘intention to include oral drugs, such as 

phosphorus binders, in the PPS in 

2016.’’ The commenter also stated that 

there is no clinical rationale for needing 

a full year of baseline data for 

improvement and achievement scoring. 

Response: We thank the commenter 

for the support. 

Comment: Several commenters 

strongly supported the inclusion of 

mineral metabolism measures in the 

ESRD QIP, including the proposal to 

adopt the hypercalcemia measure. 

These commenters also supported the 

adoption of other mineral metabolism 

measures (for example, PTH and 

phosphorus), in future payment years 

because oral drugs used to regulate 

mineral metabolism are moving from 

Medicare Part D to the ESRD PPS 

bundled payment in CY 2016. 

Response: We thank the commenters 

for their support. Additionally, we agree 

that we should explore other measures 

to assess mineral metabolism for future 

payment years. We are currently 

developing such measures, and will 

continue to do so. 

Comment: Many commenters 

supported the proposal to adopt the 

hypercalcemia measure. However, some 

of these commenters stated that patients 

who present with other non-ESRD 

conditions that may cause 

hypercalcemia should be excluded from 

the 3-month rolling average. 

Commenters also stated that patients 

treated fewer than seven times by a 

facility should be excluded from the 

measure. Additionally, one commenter 

noted that the 10.2 mg/dL threshold 

used to evaluate the hypercalcemia 

measure is higher than the KDOQI and 

KDIGO guidelines, which recommend a 

threshold of 9.5 mg/dL. This commenter 

prefers the 9.5 threshold, but supports 

the adoption of the hypercalcemia 

measure because having an upper target 

for calcium is a valuable addition to the 

ESRD QIP. 

Response: We thank the commenters 

for the support. While we acknowledge 

that calcium levels in dialysis patients 

might be impacted by conditions 

unrelated to ESRD, we also believe it is 

appropriate to monitor and minimize 

the prevalence of hypercalcemia in all 

patients with ESRD, since mineral and 

bone disorder are highly prevalent in 

this population, and because some 

dialysis-related treatments impact 

serum calcium levels. 

We further note that patients are 

included in the denominator only if 

they are on dialysis for at least 90 days 

as of the first day of the most recent 

month of the ‘‘measurement period’’ 

(that is, the 3-month period used to 

calculate the rolling average for the 

measure) and are in the facility for at 

least 30 days as of the last day of the 

most recent month of the measurement 

period. These NQF-endorsed exclusion 

criteria will exclude the vast majority of 

in-center patients who are treated fewer 

than seven times by a facility. However, 

the NQF-endorsed exclusion criteria are 

broad enough to include home dialysis 

patients. We believe that the NQFendorsed exclusion criteria are more 

appropriate because they will not 

exclude home dialysis patients, who are 

rarely treated at a facility seven or more 

times in a month. 

Finally, the 10.2 threshold is 

consistent with KDIGO guideline 4.1.2 

[2009] ‘‘In patients with CKD stages 3– 

5D, we suggest maintaining serum 

calcium in the normal range,’’ since 10.2 

mg/dL is considered the upper limit of 

the normal range in the majority of 

clinical laboratories. This threshold is 

also consistent with the value discussed 

and supported by the 2006 TEP. The 

hypercalcemia measure using the 10.2 

threshold was developed by the 2010 

TEP as summarized in the final TEP 

report posted by CMS at http://

www.cms.gov/Medicare/End-StageRenal-Disease/CPMProject/index.html. 

Comment: Several commenters did 

not support the proposal to adopt the 

hypercalcemia measure. These 

commenters stated that this metric is 

not the best measure in the mineral 

metabolism domain to impact patient 

outcomes, in the absence of clinical 

metrics for other related mineral 

disturbances, such as phosphorus and 

PTH. Some of these commenters 

recommended adopting the 

hypercalcemia measure as a reporting 

measure. 

Response: We believe that the 

hypercalcemia measure is the best 

measure supported by current evidence 

available for implementation in the 

ESRD QIP at this time. CMS has 

convened three discrete TEPs since 

2006 charged with developing quality 

measures related to management of bone 

and mineral disorders in chronic 

dialysis patients. The 3-month rolling 

average hypercalcemia measure is the 

first outcome measure developed in this 

topic area that has received NQF 

endorsement. The measure is important 

because it addresses a potential 

healthcare-associated condition, 

hypercalcemia, that may result from 

treatments chosen by dialysis providers 

to treat CKD-related bone disease. 

However, we are currently exploring the 

feasibility of adopting in the future 

additional measures to address PTH 

monitoring to ensure that dialysis 

patients’ bone and mineral disease 

laboratory outcomes are monitored at a 

frequency consistent with clinical 

consensus guidelines. 

Comment: Some commenters did not 

support the proposal to adopt the 

hypercalcemia measure because there is 

no consensus that the measure is 

appropriate. These commenters also 

stated that the measure should only 

apply to Medicare patients because CMS 

should not collect data on patients who 

are not enrolled in Medicare. 

Commenters recommended that calcium 

and phosphorus data continue to be 

collected via the mineral metabolism 

reporting measure. 

Response: The Hypercalcemia 

measure (NQF# 1454) has been 

endorsed by the NQF, and we believe 

that this endorsement reflects broad 

consensus that the measure is 

appropriate for assessing hypercalcemia 

within the ESRD population. In 

addition, the collection of all-patient 

data on this measure allows us to assess 

the quality of care provided to Medicare 

patients with ESRD, in part, by 

analyzing how that care compares to the 

quality of care provided to the ESRD 

population overall. Because we are 

finalizing the adoption of the 

Hypercalcemia measure for the ESRD 

QIP, facilities will not be required to 

submit calcium data for the Mineral 

Metabolism reporting measure. 

Comment: One commenter did not 

support the proposal to adopt the 

hypercalcemia measure because there is 


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9National Kidney Foundation: K/DOQI Clinical 

Practice Guidelines for Bone Metabolism and 

Disease in Chronic Kidney Disease. American 

Journal of Kidney Disease 2003 42:S1–S202 (suppl 

3). 

10 Kidney Disease: Improving Global Outcomes 

(KDIGO) CKD–MBD Work Group: KDIGO Clinical 

Practice Guideline for the Diagnosis, Evaluation, 

Prevention, and Treatment of Chronic Kidney 

Disease-Mineral and Bone Disorder (CKD–MBD). 

Kidney International 2009 76 (Suppl 113): S1–S130. 

11Block GA, Klassen PS, Lazarus JM, et al. 

Mineral metabolism, mortality, and morbidity in 

maintenance hemodialysis. Journal of the American 

Society of Nephrology: JASN 2004 15:2208–18. 

12 Young EW, Albert JM, Satayathum S, et al. 

Predictors and consequences of altered mineral 

metabolism: the Dialysis Outcomes and Practice 

Patterns Study. Kidney international 2005 67:1179– 

87. 

13 Kalantar-Zadeh K, Kuwae N, Regidor DL, et al. 

Survival predictability of time-varying indicators of 

bone disease in maintenance hemodialysis patients. 

Kidney international 2006 70:771–80. 

no evidence that facilities are not 

adequately managing hypercalcemia, 

and because there is no agreement on 

how calcium should be adjusted (if at 

all) for albumin levels. 

Response: The published literature 

indicates that large numbers of patients 

with ESRD are affected by 

hypercalcemia.9 10 11 12 13 In addition, 

patient-level analysis of CROWNWeb 

data collected for July 2012 shows that 

of 441,681 patients, 81.9 percent had 

uncorrected serum calcium reported 

during the month, 59.8 percent met the 

denominator for this proposed measure, 

and 3.0 percent had hypercalcemia 

based on a rolling-average from May 

2012 through July 2012. We agree that 

there is lack of agreement on the need 

to correct serum calcium for serum 

albumin concentration. Furthermore, 

there is lack of agreement on the 

accuracy of different available methods 

for correction of serum calcium for 

albumin concentration. We are therefore 

using uncorrected calcium to score the 

Hypercalcemia clinical measure, instead 

of scoring the measure on the basis of 

corrected calcium. 

Comment: Several commenters did 

not support the proposal to adopt the 

hypercalcemia measure because it may 

lead to unintended consequences (for 

example, sudden cardiac death) and 

because it will incentivize facilities to 

decrease calcium levels in patients with 

serum calcium levels near 10.2 mg/dL. 

Response: Although patients with 

serum calcium concentrations below the 

lower limit of normal may be at 

increased risk for cardiac arrhythmias, 

the available literature reviewed by 

KDIGO suggests that the risk of 

hypocalcemia occurs below 8.4 mg/dl 

calcium concentration, if at all. While 

facilities are incentivized to prevent 

patients from developing extremely high 

levels of calcium, we believe the 

threshold is sufficiently high that it is 

unlikely to incentivize facilities to cause 

hypocalcemia in patients. Therefore we 

do not anticipate an increased risk for 

sudden death, provided that clinicians 

properly monitor calcium levels. 

Comment: One commenter did not 

support the proposal to adopt the 

Hypercalcemia measure for a number of 

reasons: (1) The measure should 

exclude patients not on dialysis for at 

least 90 days to ensure that the 3-month 

rolling average is calculated using a 

consistent methodology; (2) the measure 

should provide a method for calculating 

a 3-month rolling average when data is 

only reported for months 1 and 3; and 

(3) the measure should specify that 

values were obtained during the current 

dialysis facility admission, and that 

samples must be obtained before 

hemodialysis treatment. The commenter 

recommends retaining the Mineral 

Metabolism reporting measure (to 

include reporting of serum calcium) 

until these issues are addressed. 

Response: We will respond to each 

issue in turn. 

First, the measure excludes patients 

not on dialysis for less than 90 days, as 

described in the proposed measure 

specifications. Patients are included in 

the denominator if they are 18 years or 

older as of the first day of the most 

recent month of the measurement 

period, are on dialysis for at least 90 

days as of the first day of the most 

recent month of the measurement 

period, are in the facility for at least 30 

days as of the last day of the most recent 

month of the measurement period, and 

have at least one serum calcium 

measurement within the measurement 

period. 

Second, the patient must have at least 

one serum calcium measurement in the 

three month period. If the patient only 

had one serum calcium measurement in 

the three month period, then the average 

serum calcium would be that value. If 

the patient only had serum calcium 

measurement for months 1 and 3 within 

the three month period, then the average 

would only use these two values. 

Third, the measure specifies that only 

patients who have been at the facility 

for at least 30 days should be included. 

In addition, this measure uses serum 

calcium concentrations reported in 

CROWNWeb. CROWNWeb data 

dictionary directions specify reporting 

of pre-dialysis serum calcium only. 

While not stated in the measure 

specifications, it is well understood that 

the vast majority of blood samples for 

serum calcium testing are drawn before 

the patient receives hemodialysis 

treatment on a particular treatment day. 

Comment: Several commenters did 

not support the proposal to adopt the 

Hypercalcemia measure. Commenters 

stated that CMS has not collected a full 

year of data that would support the 

performance standards, achievement 

thresholds, and benchmarks for the 

measure. These commenters stated that 

having at least one year of reporting data 

is a core criterion for moving structural 

reporting measures to clinical measures. 

Some of the commenters recommended 

adopting the Hypercalcemia measure as 

a reporting measure. 

Response: As stated in the CY 2013 

ESRD PPS final rule (77 FR 67488), we 

believe that achievement thresholds, 

benchmarks, and performance standards 

should be based on a full year of data 

whenever possible. However, we also 

believe that in certain circumstances it 

is not practical or necessary to use a full 

year of baseline data. In this case, we 

only have data for the Hypercalcemia 

measure starting in May 2012 because 

that was when CROWNWeb was rolled 

out nationally. In this case, we believe 

that it is appropriate to use 7 months of 

baseline data because serum calcium 

levels are not subject to seasonal 

variations, and because the 7-month 

time window offers a consistent 

representation of national facility 

performance. Based on CROWNWeb 

data, monthly patient-level uncorrected 

serum calcium averages were stable 

during May 2012 through March 2013, 

with averages ranging from 8.99 mg/dL 

to 9.06 mg/dL. 

Comment: One commenter did not 

support the proposal to adopt the 

Hypercalcemia measure because 

manually reporting calcium values is 

overly burdensome. 

Response: We do not agree that 

entering patients’ calcium phosphorus 

levels into CROWNWeb on a monthly 

basis is overly burdensome. The Mineral 

Metabolism measure finalized in the CY 

2012 ESRD PPS final rule (76 FR 70271) 

required facilities to enter this 

information, so the Hypercalcemia 

measure does not impose any additional 

burden for facilities. 

Comment: One commenter expressed 

concerns that CROWNWeb will not be 

able to accurately capture data needed 

to calculate the Hypercalcemia measure 

because it cannot handle situations 

when a patient switches modalities in 

the middle of a month, and because 

CROWNWeb is lacking data for roughly 

10 percent of patients. 

Response: We recognize that 

CROWNWeb is currently experiencing 

issues if a patient switches modalities 

during a clinical month and the facility 

attempts to indicate this through the 

submission of batch data. This is a 


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14Seeherunvong W, Rubio L, Abitbol CL, et al. 

Identification of poor responders to erythropoietin 

among children undergoing hemodialysis. J Pediatr 

2001 (138/5):710–714. 

15Warady BA, Zobrist RH, Wu J, Finan E. Sodium 

ferric gluconate complex therapy in anemic 

children on hemodialysis. Pediatr Nephrol 20: 

1320–7, 2005. 

16Frankenfield DL, Neu AM, Warady BA, et al. 

Anemia in pediatric hemodialysis patients: results 

from the 2001 Clinical Performance Measures 

Project. Kidney International 64:1120–4, 2003. 

serious concern, and we are working to 

address it. However, this issue does not 

affect patient data when facilities 

manually enter the data. We therefore 

recommend that facilities manually 

enter patient data when patients switch 

modalities during a clinical month. 

Furthermore, we are currently 

conducting an analysis to determine 

what percentage of patient data are 

missing data in CROWNWeb. We 

recognize that CROWNWeb should not 

lack data for a high percentage of 

patients. Nevertheless, we continue to 

believe that CROWNWeb possesses 

valid data for the vast majority of 

patients, and we continue to affirm that 

facilities are responsible for ensuring 

that patient data are accurately reflected 

in CROWNWeb. For these reasons, we 

believe it is appropriate to use 

CROWNWeb as the primary data source 

for the Hypercalcemia clinical measure. 

For these reasons, we are finalizing 

the Hypercalcemia clinical measure 

(NQF #1454) as proposed for the PY 

2016 ESRD QIP and for future payment 

years. Technical specifications for this 

measure can be found at http://

www.dialysisreports.org/pdf/esrd/

public-measures/MineralMetabolismHypercalcemia-2016FR.pdf 

c. Use of Iron Therapy for Pediatric 

Patients Reporting Measure 

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

ESRD QIP must include measures on 

‘‘anemia management that reflect the 

labeling approved by the Food and Drug 

Administration for such management.’’ 

Appropriate anemia management 

requires the presence of sufficient stores 

of iron.14 Iron deficiency is a leading 

cause of non-response to ESA therapy, 

and several studies suggest that 

providing oral or IV iron is effective in 

correcting iron deficiency in the 

pediatric population.15 16 Pediatric 

patients have previously been excluded 

from all anemia management measures, 

limiting the participation of dialysis 

facilities with substantial numbers of 

pediatric patients in the ESRD QIP. In 

an effort to address this issue, and 

account for the quality of care dialysis 

facilities provide to pediatric patients, 

we proposed to adopt a pediatric iron 

therapy measure for the ESRD QIP in PY 

2016 and future payment years of the 

program. 

We considered proposing an NQFendorsed clinical measure on the use of 

iron therapy for pediatric patients as 

part of the proposed Anemia 

Management clinical measure topic 

(NQF #1433: Use of Iron Therapy for 

Pediatric Patients). This measure is an 

assessment of the percentage of all 

pediatric hemodialysis and peritoneal 

dialysis patients who received IV iron or 

were prescribed oral iron within three 

months of attaining the following 

conditions: (i) Patient had hemoglobin 

less than 11.0 g/dL; (ii) patient had 

simultaneous values of serum ferritin 

concentration less than 11.0; and (iii) 

patient’s transferrin saturation (TSAT) 

was less than 20 percent. Upon 

investigation, we discovered that there 

were not enough patients who would 

qualify for this measure to establish 

reliable baseline data that would allow 

us to propose to adopt this measure as 

a clinical measure for PY 2016. We also 

note that the clinical measure currently 

presents other issues related to the 

minimum number of cases that would 

need to be reported for scoring, and we 

are considering the use of an adjuster 

that could be applied where the sample 

size is small. While we continue to 

consider these and other issues related 

to the adoption of a pediatric iron 

therapy clinical measure, we proposed a 

related reporting measure for PY 2016 

and future payment years in order to 

acquire a sufficient amount of baseline 

data for the development of a clinical 

measure in the future. 

For PY 2016 and future payment 

years, we proposed that facilities must 

enter in CROWNWeb on a quarterly 

basis, for each qualifying case (defined 

in the next sentence): (i) Patient admit/ 

discharge date; (ii) hemoglobin levels; 

(iii) serum ferritin levels; (iv) TSAT 

percentages; (v) the dates that the lab 

measurements were taken for items (ii)– 

(iv); (vi) intravenous IV iron received or 

oral iron prescribed (if applicable); and 

(vii) the date that the IV iron was 

received or oral iron was prescribed (if 

applicable). We proposed that 

qualifying cases for this measure would 

be defined as in-center and home 

dialysis patients under the age of 

eighteen. 

We proposed that each facility must 

report data on the Use of Iron Therapy 

for Pediatric Patients measure if it treats 

one or more qualifying cases during the 

performance period. Because this 

reporting measure requires that a facility 

enter data in CROWNWeb only once per 

quarter for each patient, we believe that 

the burden is appropriate and will not 

unduly impact small facilities, since it 

is proportionate to the number of 

patients that facilities treat. However, 

for the same reasons stated in the final 

description of the PY 2014 ESRD QIP 

Mineral Metabolism measure (which 

had a one patient minimum) (77 FR 

67472 through 67474), we proposed 

that, in order to receive full points on 

this measure, facilities that treat 11 or 

more qualifying cases over the 

performance period will have to report 

at the lesser of the 50th percentile of 

facilities in CY 2013 or 97 percent per 

quarter, for each quarter of the 

performance period. We proposed that 

facilities that treat fewer than 11 

qualifying cases during the performance 

period will have to report on a quarterly 

basis the specified data elements for all 

but one qualifying case. If a facility only 

has one qualifying case during the entire 

performance period, a facility will have 

to attest to that fact in CROWNWeb by 

January 31 of the year following the 

performance period in order to avoid 

being scored on the measure. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters 

expressed concerns about the proposal 

to adopt the pediatric iron therapy 

reporting measure. Some commenters 

recommended that facilities should only 

be required to report that they 

prescribed oral iron therapy or 

administered IV iron, since patients 

typically take over-the-counter iron 

supplements and the facility would not 

be able to verify that patients obtained 

non-prescription medications. Other 

commenters stated that the measure 

would unduly burden pediatric 

facilities, which are typically small and 

do not use batch data submissions. 

Response: We thank commenters for 

raising these concerns. We will consider 

alternate implementation of quality 

reporting for pediatric patients and 

facilities relating to iron therapy 

through future rulemaking. Independent 

of these concerns, we conducted an 

analysis of the scope and impact of the 

proposed pediatric iron therapy 

measure. Over the course of the 

analysis, we determined that fewer than 

100 patients would be eligible for this 

measure if it was adopted as a clinical 

measure. We also determined that 

facilities would not be required to report 

data for many of these patients because 

the proposed measure specifications for 

the reporting measure excluded 

facilities with one or fewer eligible 

patients. The purpose of adopting the 

reporting measure would have been to 

collect the baseline data needed to 

adopt a clinical measure in future 


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payment years, but our analysis suggests 

that this would not be feasible. These 

data were not available through 

CROWNWeb at the time the measure 

was proposed. Accordingly, we are not 

finalizing this measure for the ESRD 

QIP. 

Comment: Several commenters 

supported the proposal to adopt the 

Pediatric Iron Therapy reporting 

measure because it is important for 

measures in the ESRD QIP to cover 

pediatric patients. 

Response: We appreciate the 

commenters’ support. However, we 

have concluded that it is not feasible to 

adopt the measure because very few 

patients would be eligible for the 

measure. 

For the reasons noted above, we are 

not finalizing the Pediatric Iron Therapy 

reporting measure at this time. 

However, we will continue to 

investigate measures on anemia 

management for pediatric patients, and 

we intend to adopt a measure on this 

topic in future payment years. 

d. NHSN Bloodstream Infection in 

Hemodialysis Outpatients Clinical 

Measure 

Healthcare-acquired infections (HAI) 

are a leading cause of preventable 

mortality and morbidity across different 

settings in the healthcare sector, 

including dialysis facilities. 

Bloodstream infections are a pressing 

concern in a population where 

individuals are frequently 

immunocompromised and depend on 

regular vascular access to facilitate 

dialysis therapy. In a national effort to 

reduce infection rates, CMS has 

partnered with the CDC to encourage 

facilities to report to the NHSN as a way 

to track and facilitate action intended to 

reduce HAIs. The NHSN is a secure, 

internet-based surveillance system that 

is managed by the Division of 

Healthcare Quality Promotion at the 

CDC. NHSN has been operational since 

2006, and tracks data from acute care 

hospitals, long-term care hospitals, 

psychiatric hospitals, rehabilitation 

hospitals, outpatient dialysis centers, 

ambulatory surgery centers, and longterm care facilities. We continue to 

believe that accurately reporting dialysis 

events to the NHSN by these facilities 

supports national goals for patient 

safety, particularly goals for the 

reduction of HAIs. In addition, we 

believe that undertaking other activities 

designed to reduce the number of HAIs 

supports national goals for patient 

safety. For further information regarding 

the NHSN’s dialysis event reporting 

protocols, please see http://

www.cdc.gov/nhsn/dialysis/index.html. 

We have worked during the past 2 

years to help dialysis facilities become 

familiar with the NHSN system through 

the adoption of an NHSN Dialysis Event 

reporting measure. We now believe that 

facilities are sufficiently versed in 

reporting this measure to the NHSN. In 

light of the importance of monitoring 

and preventing infections in the ESRD 

population, and because a clinical 

measure would have a greater impact on 

clinical practice by holding facilities 

accountable for their actual 

performance, we proposed to replace 

the NHSN Dialysis Event reporting 

measure that we adopted in the CY 2013 

ESRD PPS final rule (77 FR 67481 

through 67484) with a new clinical 

measure for PY 2016 and future 

payment years. This proposed measure, 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients, is based 

closely on NQF #1460 in that it 

evaluates the number of hemodialysis 

outpatients with positive blood cultures 

per 100 hemodialysis patient-months. 

We proposed that facilities must 

submit 12 months of accurately reported 

dialysis event data (defined in the next 

sentence) to NHSN on a quarterly basis. 

In order to ensure that a facility submits 

data that can be used to identify the 

source of bloodstream infections, to 

preserve the internal validity of 

bloodstream infection data, and to help 

prevent future bloodstream infections, 

we proposed to define ‘‘accurately 

reported dialysis event data’’ as data 

reported by facilities that follow the 

NHSN enrollment and training 

guidelines specified by the CDC 

(available at http://www.cdc.gov/nhsn/

dialysis/enroll.html and http://

www.cdc.gov/nhsn/Training/dialysis/

index.html), according to the reporting 

requirements specified within the 

NHSN Dialysis Event Protocol. (This 

protocol, which facilities are already 

using to meet the requirements of the 

NHSN Dialysis Event reporting measure, 

includes information about IV 

antimicrobial starts and evidence of 

vascular access site infection, as well as 

information about the presence of a 

bloodstream infection.) 

Additionally, we proposed that each 

quarter’s data would be due 3 months 

after the end of that quarter. For 

example, data from January 1 through 

March 31, 2014 would need to be 

entered by June 30, 2014; data from 

April 1 through June 30, 2014 would 

need to be submitted by September 30, 

2014; data from July 1 through 

September 30, 2014 would need to be 

submitted by December 31, 2014; and 

data from October 1 through December 

31, 2014, would need to be submitted by 

March 31, 2015. If facilities do not 

report 12 months of these data 

according to the requirements and the 

deadlines specified above, we proposed 

that they would receive a score of zero 

on the measure. We also proposed that 

facilities with a CCN open date after 

January 1, 2014 will be excluded from 

the measure. We note that in previous 

payment years we have awarded partial 

credit to facilities that submitted less 

than 12 months of data to encourage 

them to enroll in and report data in the 

NHSN system. However, we proposed to 

require 12 months of data on this 

clinical measure because infection rates 

vary through different seasons of the 

year. 

We note that this proposed measure 

only applies to facilities treating incenter hemodialysis patients (both adult 

and pediatric). We will determine 

whether a facility treats in-center 

patients by referencing the facility’s 

information in the Standard Information 

Management System and CROWNWeb. 

We recognize that the CDC has 

published Core Interventions for BSI 

Prevention in Dialysis, which are listed 

at http://www.cdc.gov/dialysis/

prevention-tools/coreinterventions.html. We encourage 

facilities to adopt the nine listed 

interventions in order to help prevent 

infections, but did not propose to 

require facilities to adopt any of these 

interventions at this time. 

We requested comments on this 

proposal, and in particular on the issue 

of whether it is appropriate at this time 

to convert the current NHSN Dialysis 

Event Reporting measure into a clinical 

measure. The comments we received on 

these proposals and our responses are 

set forth below. 

Comment: Several commenters 

supported the proposal to adopt the 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure. These commenters stated that 

the monitoring of bloodstream 

infections and the adoption of CDC’s 

core prevention interventions will 

reduce healthcare acquired infections in 

the ESRD patient population. 

Response: We thank the commenters 

for their support. 

Comment: Several commenters did 

not support the proposal to adopt the 

NHSN clinical measure because they 

believe that the measure does not reflect 

actual patient-exposure time each 

month. Specifically, these commenters 

stated that using a monthly census on 

the first two working days of the month 

ignores patient hospitalization during 

the month, and can be adversely 

impacted by an influx of new patients 

after the first two working days of the 

month. 


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Response: CDC has conducted pilot 

validation work with a group of dialysis 

facilities and found that the census on 

the first two working days of the month 

was an accurate predictor of the entire 

month’s census. The alternative of 

counting denominator data on a daily 

basis has been required in inpatient 

settings, but was determined by CDC to 

be unacceptably burdensome for the 

dialysis facility setting because this 

setting has a relatively stable patient 

population. Although patients with 

ESRD may be hospitalized at various 

times during a month, we have no 

reason to believe this would 

systematically be more likely to occur at 

a certain time relative to the first two 

working days of the month. Similarly, 

we are unaware of admission or transfer 

patterns whereby there is an increased 

likelihood of patient influx after the first 

two working days of the month. 

Comment: Many commenters 

expressed concerns that the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure will 

misattribute infections to a dialysis 

facility. Some of these commenters 

stated that the measurement of positive 

blood cultures is not specific enough to 

detect HAIs contracted at another 

facility, and may include blood cultures 

associated with another site or 

contaminated samples. Commenters 

also raised concerns that these types of 

issues will result in an overestimate of 

the number of dialysis-related 

bloodstream infections, limit the 

capacity to develop reliable benchmark 

data, and may increase the possibility 

that facilities will be improperly 

penalized. 

Other commenters stated that elderly, 

newly diagnosed dialysis patients with 

other chronic conditions and wounds 

are particularly likely to have infections 

that are unrelated to vascular access. 

Some commenters worried that 

infections in these patients will be 

inappropriately attributed to dialysis 

facilities because the NHSN measure 

does not focus on access-related 

bloodstream infections. Commenters 

also expressed concerns that the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure does not 

risk adjust for common comorbidities in 

the ESRD patient population. 

Another commenter stated that the 

rate of positive blood cultures should be 

interpreted in the context of the 

facility’s rate of empiric antibiotic 

treatment, also recorded by NHSN, since 

some physicians and facilities may treat 

empirically rather than on the basis of 

culture results. 

Several commenters stated that 

culture results needed to designate the 

event as a bloodstream infection for 

NHSN reporting purposes are frequently 

not available to facilities. Therefore, 

between-facility differences in NHSNreported BSI rates currently reflect 

differences not in infection rates, but 

rather in the availability and capture of 

blood culture results. Given this, the 

commenters believe that the measure 

will incentivize under-reporting of 

blood culture results, thereby undoing 

the great benefit that the current NHSN 

reporting metric has afforded dialysis 

facilities. 

One commenter stated that sufficient 

knowledge and infrastructure does not 

exist to determine the type of vascular 

access to which the infection was 

related. This commenter further stated 

that the TEP that reviewed the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure concluded 

that the ‘‘vascular access infection CPMs 

should not be used for reimbursement 

purposes.’’ 

Commenters provided several 

recommendations in light of these 

perceived issues. Some commenters 

recommended retaining the NHSN 

reporting measure until these technical 

issues are resolved. Other commenters 

stated that it would be inappropriate to 

adopt the NHSN Bloodstream Infection 

in Hemodialysis Outpatients clinical 

measure under any circumstances. 

Another commenter recommended 

adopting, in a staggered manner, three 

alternative HAI measures: Local access 

site infection, access-related 

bloodstream infection, and vascular 

access infection. 

Response: We do not believe that 

misattribution is a significant enough 

issue to warrant a delay in the adoption 

of the NHSN clinical measure. The 

NHSH Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure tracks infection events that 

present real dangers to patients. We 

believe that tracking these infection 

events and rewarding facilities for 

minimizing these events is of critical 

importance to protecting patient safety 

and improving the quality of care 

provided to patients with ESRD. 

First, NQF endorsed a bloodstream 

infection measure (NQF #1460, the 

measure upon which the proposed 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure is based) because bloodstream 

infections can be objectively identified. 

By contrast, NQF raised concerns about 

an access-related bloodstream infection 

measure because determining the source 

of infections (for example, determining 

whether an infection was related to 

vascular access) requires subjective 

assessments. The NHSH Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure avoids this subjectivity 

by including all positive blood cultures. 

This makes it simpler and more reliable 

than an access-related bloodstream 

infection measure. While we recognize 

that the NHSH Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure may occasionally misattribute 

bloodstream infections to dialysis 

facilities, we believe that the measure’s 

objectivity, simplicity, and reliability 

make it the most appropriate measure 

for assessing facility performance. 

NHSN relies upon use of standard 

definitions to ensure that infection 

events are reported in the same manner 

across facilities. The vast majority of 

reported bloodstream infection events 

represent true, HAIs that are not the 

result of misclassification or 

misattribution. Therefore, considering 

the benefits to patients associated with 

strong incentives to reduce bloodstream 

infections, we believe that these 

technical issues are not significant 

enough to warrant a delay in adopting 

the NHSH Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure. CDC will continue to assess 

the possibility that certain facilityrelated factors could systematically 

overestimate infection rates, and it will 

consider risk-adjusting the measure to 

take these factors into account. 

Second, our goal is to eliminate all 

preventable HAIs, including those in 

elderly patients and patients with 

certain comorbidities. Therefore, we do 

not believe it is appropriate to riskadjust the measure to account for those 

patient characteristics. 

Third, regardless of whether 

antibiotics are started before culture 

results become available, facilities are 

required to report positive blood culture 

results to NHSN. We recognize that 

additional information reported to 

NHSN, including antibiotic starts, 

provide useful contextual information to 

help interpret rates and facilitate 

prevention efforts. We believe that this 

information is important for identifying 

strategies to reduce bloodstream 

infections. 

Fourth, with respect to concerns 

about between-facility differences in 

NHSN-reported BSI rates, we are 

legitimately concerned about this issue 

of differential capture rate and the 

potential impact it could have on valid 

inter-facility comparisons. Facilities are 

expected to follow the NHSN reporting 

protocol, which includes reporting all 

positive blood cultures drawn from their 

patients in the outpatient setting or 

within one calendar day after a hospital 

admission. In both of these scenarios, 

facilities should have access to blood 


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culture results to properly diagnose and 

treat patients under their care, and to 

include in the patient’s medical record. 

Although results of blood cultures that 

were drawn outside of the dialysis 

center can sometimes be challenging to 

retrieve, facilities should be working to 

develop systems to enable complete 

capture of all positive blood cultures 

that meet reporting criteria. 

Fifth, we agree with the commenters’ 

concerns about determining the type of 

vascular access to which the infection 

was related, and we reiterate that NQF 

endorsed a bloodstream infection 

measure and not an access-related 

bloodstream infection measure. The 

NQF endorsement process includes an 

expert review assessing the feasibility of 

implementing of the measure. The NQF 

determined that the infrastructure and 

clinical expertise needed to determine 

the source of bloodstream infections do 

exist in the dialysis-facility setting. 

Therefore, the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure only requires facilities 

to report positive blood culture results. 

It does not involve a clinical diagnosis 

of infection, nor does it rely upon a 

determination of vascular accessrelatedness or identification of the 

access to which the infection is related. 

When an event is reported to NHSN, all 

vascular accesses the patient has in 

place at the time of the event are 

reported. The user is not asked to 

attribute the event to a particular access. 

This is consistent with the 

recommendations of the TEP that the 

commenter cited. 

Finally, we appreciate the 

commenters’ recommendations. In light 

of the responses detailed above, and the 

urgent need to provide facilities with 

strong incentives to improve patient 

safety, we believe that the technical 

issues raised by commenters are not 

significant enough to warrant a delay in 

the adoption of the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure. 

Comment: Many commenters 

expressed concerns about the 

methodology used to score the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure. Some 

commenters did not support the 

proposal to use CY 2014 as the 

performance period for the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure. These 

commenters stated that under the 

proposed timeline, a facility will not be 

able to determine whether it is meeting 

the goals of the measures or still need 

to improve. Other commenters urged 

CMS to wait to penalize facilities until 

there are established performance 

standards, until facilities have a chance 

to adopt practices that demonstrably 

reduce infection rates, and until CMS 

has collected the data needed to 

calculate improvement scores. Other 

commenters did not support the 

proposal to use CY 2014 as the 

performance period and the baseline 

period for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, and to define the 

performance standard as the 50th 

percentile of facility performance in CY 

2014. These commenters stated that this 

methodology guarantees a 50-percent 

‘‘failure rate,’’ which is inconsistent 

with quality improvement approaches 

to medicine. In light of these concerns, 

some commenters recommended 

postponing the adoption of the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure until CMS 

has collected one year of baseline data. 

Response: We appreciate the 

commenters’ concerns about penalizing 

facilities for their performance on the 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure before we have collected the 

data needed to establish both the 

achievement and improvement 

performance standards. We also 

recognize that, in so doing, we are 

deviating somewhat from the scoring 

methodology used in the PY 2014 and 

PY 2015 programs. However, as stated 

in the PY 2016 proposed rule (78 FR 

40863), we believe it is important to 

begin assessing facilities on the number 

of these events as soon as possible, 

rather than on merely whether they 

report these events, because of the 

abnormally large impact HAIs have 

upon patients and the healthcare 

industry. 

Furthermore, when calculating the 

minimum TPS facilities need to achieve 

in order to avoid a payment reduction, 

we set the number low enough that a 

facility can meet the minimum TPS 

even if it receives zero achievement 

points on the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, as long as it meets or 

exceeds the performance standard for 

each of the other finalized clinical 

measures and scores 5 points on each of 

the finalized reporting measures. We 

did this to balance our policy goal to 

provide facilities with strong incentives 

to improve patient safety as soon as 

possible against our recognition that we 

will not initially have enough data to 

award improvement points to facilities. 

In some circumstances, a facility may 

score zero points on the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients and receive a payment 

reduction. Nevertheless, the payment 

reduction a facility would receive in 

these circumstances (using the scoring 

methodology we are finalizing for the 

measure) would necessarily be no more 

than the payment reduction it would 

have received if the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure was not included in 

the minimum TPS calculations. 

Therefore, we strongly believe that these 

considerations should alleviate 

concerns associated with the atypical 

scoring methodology. 

Comment: One commenter approved 

of CMS’s support of CDC’s core 

prevention interventions, but stated that 

CMS should require facilities to follow 

core interventions 7 and 8 (that is (i) the 

use of alcohol-based chlorhexidine >0.5 

percent, the first line skin antiseptic for 

central line insertions and dressing 

changes, and (ii) reducing risk of 

intraluminal biofilm by ‘‘scrubbing 

hubs’’ prior to accession or 

disconnection). 

Response: We thank the commenter 

for the support. We continue to 

encourage facilities to adopt all of CDC’s 

core prevention interventions. However, 

they are not required under the ESRD 

QIP because we do not believe it is 

feasible at this time to design a 

performance measure that would 

accurately evaluate facility compliance. 

Comment: One commenter raised 

concerns that the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, as proposed, will 

unduly penalize small facilities because 

these facilities will be 

disproportionately impacted by a small 

number of infections. Instead, the 

commenter recommends using the 

Standardized Infection Rate riskadjustment method, along with the 

development of a publicized data 

validation process for NHSN data. 

Response: As stated in the proposed 

measure specifications, the measure will 

be calculated using a Standardized 

Infection Ratio with adjustment for 

volume of exposure to address this 

issue. We also agree with the need for 

a publicized data validation process for 

the NHSN data. As stated in the PY 

2016 ESRD QIP proposed rule (78 FR 

40872), we are considering a feasibility 

study for validating NHSN data, and we 

will publicize the data validation 

process after the conclusion of the 

feasibility study. 

Comment: Several commenters did 

not support the proposal that facilities 

must submit 12 months of data or 

receive a score of 0 on the NHSN 

measure. These commenters stated that 

facilities cannot improve in such an allor-nothing environment. 


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17United States Renal Data System, 2012 USRDS 

Annual Data Report, Volume 2: Atlas of End-Stage 

Renal Disease in the United States, pg. 240. 

Response: We disagree that the 

requirement to report 12 months of 

NHSN data is an unreasonable 

expectation. Facilities began reporting 

NHSN data for the PY 2014 program 

during CY 2012, so they will have had 

two years of experience at the beginning 

of the performance period for the PY 

2016 program. We strongly believe that 

two years is a sufficient amount of time 

for facilities to become acclimated to the 

NHSN system. We also note that it 

would be inappropriate to score 

facilities on less than 12 months of data 

because HAIs are subject to seasonal 

variability. Furthermore, given the 

critical importance of reducing HAIs 

and the NHSN system’s capacity to 

address this pressing issue, we believe 

that it is appropriate to provide facilities 

with the strongest possible incentives to 

report NHSN data. 

Comment: One commenter did not 

support the proposal to adopt the NHSN 

clinical measure because NHSN was 

intended to be a surveillance system, 

not for scoring facilities on the ESRD 

QIP. 

Response: We believe that the NHSN 

system can be used for the purposes of 

incentivizing quality improvement. 

HAIs are implicated in significant 

clinical problems for patients, and they 

are an important source of increased 

medical costs. Given the importance of 

HAIs for patients and providers, we 

strongly believe that reducing HAIs is a 

central pillar in efforts to improve the 

quality of healthcare offered in the 

dialysis setting, and we continue to 

believe that facilities have the strongest 

incentive to improve when their 

performance is linked to payment. 

Furthermore, we note that facilities are 

scored based on their performance on 

NHSN infection measures in the 

Hospital Value Based Purchasing 

Program. 

Comment: One commenter 

recommends aligning the Vascular 

Access Type measure topic and census 

requirement for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure to reduce 

administrative burden. Commenter 

notes that the Vascular Access Type 

measure topic is based on the last 

treatment of the month, while the NHSN 

census is based on the ESRD facility’s 

first two working days of the month. 

Response: We appreciate the 

comment, and will further investigate 

whether the divergent dates for the two 

measures increases the reporting burden 

for facilities. 

Comment: One commenter did not 

agree with CMS’s position that the 

urgency of reducing bloodstream 

infections warrants the adoption of the 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure before two years of baseline 

data are available to calculate 

achievement and improvement scores. 

The commenter stated that central 

venous catheters present the greatest 

risk for bloodstream infections in the 

ESRD patient population, and that the 

ESRD QIP already has a measure that 

addresses this issue (Vascular Access 

Type—Catheter greater than 90 Days). 

Response: According to the 2012 

Annual Data Report of the United States 

Renal Data System, hemodialysis 

patients experienced an adjusted 

hospitalization rate of 103 per 1,000 due 

to vascular access infection in 2010. We 

recognize that these rates have declined 

since 2005, but we believe they are still 

unacceptably high. Additionally, rates 

of adjusted hospitalizations due to 

bacteremia/sepsis in hemodialysis 

patients have increased significantly 

since 2000, rising to 116 per 1,000 in 

2010.17 These and other indicators have 

led to the inclusion of ESRD facilities in 

the Assistant Secretary for Health’s 

National Action Plan to Prevent Health 

Care-Associated Infections, and the 

inclusion of dialysis facilities in this 

report reflects the urgency of reducing 

HAIs in patients with ESRD. We agree 

with the commenter’s observation that 

central venous catheters present the 

greatest risk for bloodstream infections 

in the ESRD patient population. 

However, considering that these rates 

increased at same time as the Fistula 

First Breakthrough Initiative sought to 

reduce the use of catheters, we do not 

believe that the Vascular Access Type 

measure topic is sufficient to reduce 

rates of HAIs. Additionally, for the 

reasons stated above, we believe the 

significance of HAIs warrants adopting 

a clinical measure before we have 

collected the baseline data needed to 

calculate achievement and improvement 

scores. Therefore, we strongly believe 

that Vascular Access Type measure 

topic and the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure are complimentary, not 

duplicative, because they address 

infections in different and equally valid 

ways. 

Comment: Some commenters did not 

support the proposal to adopt the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure because 

the measure is dependent upon 

voluntary reporting of data that is often 

subjective. These commenters stated 

that the identification of positive 

bloodstream infections often relies upon 

subjective assessments of whether a 

bacteremia is access-related. The 

commenters believed that facilities will 

be less likely to identify and report 

positive bloodstream infections if they 

will be financially penalized for doing 

so. 

Response: The NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure is an objective measure 

based solely on the presence of a 

positive blood culture. Although NHSN 

collects information on accessrelatedness to provide additional 

information that is of use for prevention 

purposes, the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure does not rely upon 

assessments of whether the bloodstream 

infection was access-related. There may 

still be perceived disincentives to 

conduct thorough surveillance to 

identify all positive blood cultures that 

meet the bloodstream infection 

definitional criteria. For this reason, it is 

important that the data be validated in 

a rigorous manner, and we are in the 

process of evaluating the feasibility of 

launching a pilot program to validate 

NHSN data. 

For these reasons, we are finalizing 

the NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure for the PY 2016 ESRD QIP and 

for future payment years. The technical 

specifications for this measure are 

located at http://

www.dialysisreports.org/pdf/esrd/

public-measures/

NHSNBloodstreamInfection2016FR.pdf. 

e. Comorbidity Reporting Measure 

The NQF endorsed a clinical measure 

for Dialysis Facility Risk-Adjusted 

Standardized Mortality Ratio (#0369) in 

2008, and a clinical measure for 

Standardized Hospitalization Ratio for 

Admissions (#1463) in 2011. We have 

long been interested in adding a 

Standardized Mortality Ratio (SMR) 

measure and a Standardized 

Hospitalization Ratio (SHR) measure to 

the ESRD QIP. As articulated in the CY 

2013 ESRD PPS final rule, ‘‘We believe 

that dialysis facilities own partial 

responsibility for the rate at which their 

patients are hospitalized, in particular 

when that rate is substantially higher 

than at other peer facilities and may not 

be explained by variation in the illness 

of patients’’ (77 FR 67496). Similarly, 

we continue to believe that the ‘‘SMR 

may help distinguish the quality of care 

offered by dialysis facilities as 

determined by mortality, a key health 

care outcome used to assess quality of 


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care in other settings, such as hospitals’’ 

(77 FR 67497). 

Although we believe that SHR and 

SMR capture important indicators of 

morbidity and mortality, we are 

considering whether and how we might 

be able to adopt them through future 

rulemaking in a way that properly takes 

into account the effect that 

comorbidities have on hospitalization 

and mortality rates for the ESRD 

population. We also acknowledge 

concerns raised by commenters in the 

past that the NQF-endorsed SMR and 

SHR measures are not adequately riskadjusted (77 FR 67496). Currently, 

information about patient comorbidities 

is collected by CMS via the Medical 

Evidence Reporting Form 2728, which 

is typically only submitted by facilities 

to CMS when a new patient first begins 

to receive dialysis treatment. We also 

use Form 2728 to capture the date of 

first dialysis in order to help determine 

patient exclusions for all of the clinical 

measures finalized in the PY 2013 ESRD 

PPS final rule. However, facilities are 

not required to update this form, which 

makes it difficult to capture information 

about comorbidities that develop after 

the initiation of dialysis treatment. We 

acknowledge the concerns of 

commenters who stated that ‘‘there is 

currently no mechanism either for 

correcting or updating patient 

comorbidity data on CMS’ Medical 

Evidence Reporting Form 2728, and 

these comorbidities affect the 

calculation of the measure’’ (76 FR 

70267). 

We proposed to adopt a Comorbidity 

reporting measure for the PY 2016 ESRD 

QIP and future payment years of the 

ESRD QIP. The purpose of this measure 

is two-fold. First, the proposed reporting 

measure offers a mechanism for 

collecting annual information about 

patient comorbidities, thereby providing 

a reliable source of data that we can use 

to develop a risk-adjustment 

methodology for the SHR and SMR 

clinical measures, should we propose to 

adopt such measures in the future. 

Second, the reporting measure will 

make it possible to improve our 

understanding of the risk factors that 

contribute to morbidity and mortality in 

the ESRD patient population. The data 

we gather will enable us to develop riskadjustment methodologies for possible 

use in calculating the SHR and SMR 

measures, should we propose to adopt 

those measures in the future, and 

therefore more reliably calculate 

expected hospitalization and mortality 

rates in future payment years of the 

ESRD QIP. When we examine updated 

data on comorbidities, we will 

determine the appropriateness of 

including that data as additional riskadjustment factors for the SMR and SHR 

measures by considering the extent to 

which each comorbidity may be 

influenced by the quality of dialysis 

facility care, as opposed to factors 

outside of a facility’s control. 

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

requires that, unless the exception set 

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

Act applies, the measures specified for 

the ESRD QIP under section 

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

been endorsed by the entity with a 

contract under section 1890(a) of the 

Act (which is currently NQF). Under the 

exception set forth in section 

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

of a specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

entity with a contract under section 

1890(a) of the Act, the Secretary may 

specify a measure that is not so 

endorsed, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

NQF has not endorsed a measure for 

updating comorbidity information for 

patients with ESRD. We have given due 

consideration to endorsed measures, as 

well as those adopted by a consensus 

organization, and we are proposing this 

measure under the authority of 

1881(h)(2)(B)(ii) of the Act. We believe 

that the proposed measure’s potential to 

improve clinical understanding and 

practice outweighs the minimal burden 

it would impose upon facilities. 

Additionally, we believe that this 

measure will provide data that is 

currently unavailable through Form 

2728 because the measure accounts for 

the most recent information about 

patient risk factors, which may change 

over time as a patient continues 

receiving dialysis. 

For this proposed reporting measure, 

we proposed each facility will annually 

update in CROWNWeb up to 24 

comorbidities, or indicate ‘‘none of the 

above,’’ for each qualifying case. For the 

purposes of this measure, we proposed 

to define a ‘‘qualifying case’’ as a 

hemodialysis or peritoneal dialysis 

patient being treated at the facility as of 

December 31 of the performance period, 

according to admit and discharge dates 

entered into CROWNWeb. In fulfilling 

this reporting requirement, facilities 

would select one or more of the 

following for each qualifying case. 

• Congestive heart failure • Diabetes, on oral medications • Drug dependence 

• Atherosclerotic heart disease (ASHD) • Diabetes, without medications • Inability to ambulate 

• Other cardiac disease • Diabetic retinopathy • Inability to transfer 

• Cerebrovascular disease (CVA, TIA) • Chronic obstructive pulmonary disease • Needs assistance with daily activities 

• Peripheral vascular disease • Tobacco use (current smoker) • Institutionalization—Assisted Living 

• History of hypertension • Malignant neoplasm, Cancer • Institutionalization—Nursing Home 

• Amputation • Toxic nephropathy • Institutionalization—Other Institution 

• Diabetes, currently on insulin • Alcohol dependence • Non-renal congenital abnormality 

• None of the above 

Therefore, to receive full points on 

this measure, we proposed that facilities 

would be required to provide the 

updates in CROWNWeb by January 31, 

2015, or, if that is not a regular business 

day, the first business day thereafter. 

While we proposed to require facilities 

to report a single annual update per 

patient, we encourage facilities to 

update this information more frequently 

in order to more closely monitor their 

patients’ risk factors, and to improve the 

quality of the data. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: While several commenters 

supported the proposal to adopt the 

Comorbidity reporting measure and the 

decision to collect more information 

before adopting the SMR and SHR 

measures, many commenters did not 

support the proposal. Several 

commenters stated that they did not 

think the Comorbidity reporting 

measure was a quality measure and 

expressed a concern that it had never 

been developed nor endorsed by a 

consensus-based organization or 

reviewed by the MAP. Commenters also 

stated that CMS should either use the 

ESRD CfCs or revise Form 2728 to 

accomplish this data collection, rather 


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than using the ESRD QIP for this 

purpose. 

Response: We appreciate the many 

comments we received on the 

Comorbidity reporting measure. As a 

result of the significant concerns 

expressed about the measure, we have 

decided not to finalize the measure at 

this time. We will consider whether 

there is a better way to update this 

important comorbidity information, 

including the suggestion to collect 

comorbidity data under the CfCs, in the 

future. 

For these reasons, we are not 

finalizing the Comorbidity reporting 

measure as proposed for the PY 2016 

ESRD QIP and for future payment years. 

4. Other Measures Under Development 

As part of our effort to continuously 

improve the ESRD QIP, we continue to 

work on developing additional robust 

measures that provide valid assessments 

of the quality of care furnished by 

facilities to patients with ESRD. We are 

considering the feasibility of developing 

quality measures in other topic areas 

(for example, blood transfusions, kidney 

transplantation, quality of life, and 

health information technology) for 

quality improvement at the point of care 

as well as for the electronic exchange of 

information in support of care 

coordination across providers and 

settings. Additional areas of potential 

interest include residual renal function, 

complications associated with ESRD, 

and frequently comorbid conditions (for 

example, diabetes and heart disease). 

We requested comments on these 

potential areas of future measurement, 

and welcomed suggestions on other 

topics for measure development. The 

comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

provided recommendations on potential 

areas of future measurement. Some 

commenters urged CMS to adopt 

measures on patient education 

(covering, for example, renal 

replacement therapies, diet, and access 

placements), health information 

technology, kidney transplants, fluid 

management, blood transfusions, quality 

of life, care coordination, symptom 

management, clinical depression, pain 

screening, dyspnea, advanced care 

planning, emergency department use, 

30-day hospital readmissions, use of 

home dialysis, hospitalization rates, and 

mortality rates. Other commenters urged 

CMS to not adopt measures on blood 

transfusions, hospitalization rates, 

mortality rates, 30-day hospitalization 

readmissions, quality of life, kidney 

transplants, and care coordination. 

Response: We thank the commenters 

for their recommendations and will 

consider them as we develop our 

policies for future years of the ESRD 

QIP. 

Comment: Many commenters urged 

CMS to adopt a hemoglobin measure 

that establishes a minimum safe 

hemoglobin level for patients. These 

commenters stated that the use of the 

Hemoglobin Greater Than 12 g/dL 

measure has led to an increase in 

transfusions, which are not covered in 

the ESRD PPS bundled payment but 

remain an expense for Medicare. Some 

commenters believe that there is a 

consensus in the field that keeping 

hemoglobin levels above 10 g/dL yields 

optimal patient outcomes. 

Response: Using a Hemoglobin Less 

Than 10 g/dL measure without a 

corresponding measure that targeted 

high hemoglobin levels might place 

patients at increased risk for 

complications of aggressive ESA 

therapy. Furthermore, we note that 

randomized, controlled trials targeting 

patients to higher, rather than lower 

hemoglobin levels, or comparing the 

effect of ESAs against a placebo have 

indicated an increased risk of 

myocardial infarction, stroke, venous 

thromboembolism, thrombosis of 

vascular access, and overall mortality, 

and in patients with a history of cancer, 

tumor progression or recurrence. 

Because we cannot yet identify which 

patients would be included in this 

subset (and accordingly exclude them 

from the specifications of a Hemoglobin 

Less Than 10g/dL measure) we have 

concluded that it is not appropriate at 

this time to include such a measure in 

the ESRD QIP. Finally, we note that our 

rationale for removing the Hemoglobin 

Less Than 10 g/dL was published in the 

PY 2013 ESRD QIP proposed rule (76 FR 

40519), and we believe those concerns 

remain sufficiently valid to merit not 

reintroducing the measure to the ESRD 

QIP at this time. 

5. Scoring for the PY 2016 ESRD QIP 

and Future Payment Years 

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

requires the Secretary to develop a 

methodology for assessing the total 

performance of each facility based on 

the performance standards established 

with respect to the measures selected for 

the performance period. We believe that 

the methodology set forth in the CY 

2013 ESRD PPS final rule incentivizes 

facilities to meet the goals of the ESRD 

QIP; therefore, with the exception of the 

proposed changes further discussed in 

the applicable section below, we 

proposed to adopt a scoring 

methodology for the PY 2016 ESRD QIP 

and future payment years that is nearly 

identical to the one finalized in the CY 

2013 ESRD PPS final rule. To the extent 

that the scoring methodology differs, 

those differences are discussed below. 

Comment: Many commenters 

recommended adding a provision to the 

rule to exempt facilities forced to close 

temporarily due to natural disaster or 

other extenuating circumstances from 

the requirements of all of the clinical 

and reporting measures (and the NHSN 

measure in particular). These 

commenters stated that such a provision 

exists in the Hospital Inpatient Quality 

Reporting Program. The commenters 

stated that adopting a similar policy for 

the ESRD QIP would allow facilities to 

avoid payment reductions due to 

circumstances they cannot control. 

Response: We agree that there are 

times when facilities are unable to 

submit required quality data due to 

extraordinary circumstances that are not 

within their control, and we do not wish 

to penalize facilities for such 

circumstances or unduly increase their 

burden during these times. We are 

developing a disaster/extraordinary 

circumstances exception process, and 

we intend to propose to adopt such a 

process in future rulemaking. 

6. Performance Period for the PY 2016 

ESRD QIP 

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

requires the Secretary to establish the 

performance period with respect to a 

year, and that the performance period 

occur prior to the beginning of such 

year. In the CY 2013 ESRD PPS final 

rule, we finalized a performance period 

of CY 2013. We stated our belief that, for 

most measures, a 12-month performance 

period is the most appropriate for the 

program because this period accounts 

for any potential seasonal variations that 

might affect a facility’s score on some of 

the measures, and also provides 

adequate incentive and feedback for 

facilities and Medicare beneficiaries. 

For the reasons outlined in the CY 2013 

ESRD PPS final rule (77 FR 67500), we 

have determined for PY 2016 that CY 

2014 is the latest period of time during 

which we can collect a full 12 months 

of data and still implement the payment 

reductions beginning with renal dialysis 

services furnished on January 1, 2016. 

Therefore, for the PY 2016 ESRD QIP, 

we proposed to establish CY 2014 as the 

performance period for all of the 

measures. 

We requested comment on this 

proposal. We did not receive any 

comments on this proposal. We will, 

therefore, finalize that CY 2014 is the 

performance period for the PY 2016 

ESRD QIP. 


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7. Performance Standards for the PY 

2016 ESRD QIP and Future Payment 

Years 

We proposed to adopt performance 

standards for the PY 2016 ESRD QIP 

measures that are similar to what we 

finalized in the CY 2013 ESRD PPS final 

rule. Section 1881(h)(4)(A) provides that 

‘‘the Secretary shall establish 

performance standards with respect to 

measures selected . . . for a 

performance period with respect to a 

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

further provides that the ‘‘performance 

standards . . . shall include levels of 

achievement and improvement, as 

determined appropriate by the 

Secretary.’’ We use the performance 

standards to establish the minimum 

score a facility must achieve to avoid a 

Medicare payment reduction. 

We received several comments on 

performance standards for the PY 2016 

ESRD QIP and future payment years. 

The comments and our responses are set 

forth below. 

Comment: Many commenters 

registered their concern with CMS’s 

reliance on CROWNWeb data to 

establish performance benchmarks for 

achievement and improvement, 

particularly for the Hypercalcemia 

measure. These commenters stated that 

CROWNWeb is unreliable because (1) 

frequent changes to the business 

requirements have resulted in an 

inconsistent set of rules under which 

data are collected, making the data 

collected unreliable for setting 

performance standards and benchmarks; 

(2) CROWNWeb collects less than 100% 

of facility data, and a facility could be 

found not to meet the ESRD QIP 

performance standard because the 

CROWNWeb system ‘‘kicks out’’ a 

particular patient and/or data for a 

particular patient; (3) CROWNWeb 

defects open the possibility of ‘‘gaming 

the system’’ by manually and 

preferentially excluding the data for 

patients who fail to meet a particular 

goal; and (4) there is still a problem with 

accurate reconciliation with dialysis 

census data and the patient counts in 

CROWNWeb, which could result in the 

misattribution of patients to facilities. 

The commenters recommended that 

CROWNWeb should not be relied upon 

for setting performance standards and 

benchmarks or to collect individual 

patient-level data until (1) facility and 

CROWNWeb patient attribution lists are 

identical; (2) only 1 percent of the data 

are ‘‘kicked out’’ by CROWNWeb; and 

(3) clear business rules remain in place 

for at least one year to allow for the 

consistent collection data before the 

data are used for the ESRD QIP. 

Commenters also recommended that (1) 

CMS establish a CROWNWeb Help Desk 

to assist them in real time to resolve 

roster data discrepancies; (2) new data 

definitions be shared with the provider 

community for comment well in 

advance of including them in 

CROWNWeb; (3) CMS initiate a formal 

quality assessment and process 

improvement program that would fieldtest each CROWNWeb update before it 

is scheduled for general release; and (4) 

current CROWNWeb data not be shared 

for the purpose of measure development 

with CMS TEPs until and unless the 

recorded data have been carefully 

evaluated for completeness, accuracy, 

and reliability. 

Response: We appreciate commenters’ 

concerns about CROWNWeb and we 

welcome the opportunity to respond. 

We will address each issue in turn. 

First, CROWNWeb has been updated 

six times since the national rollout in 

June 2012. We recognize that facilities 

received revised information for 

entering data with every release of 

CROWNWeb. Nevertheless, we note that 

the clinical fields in the single user 

interface and batch submissions have 

stayed the same. We believe that this 

continuity in the clinical fields has 

minimized data inconsistencies 

resulting from changes to the business 

requirements, and we will continue to 

correct and standardize the business 

requirements for data submission, 

collection, and reporting. 

Second, CROWNWeb does not ‘‘kick 

out’’ patients or data once the patients 

have been entered into the CROWNWeb. 

Rather, patient data (such as, 

demographic information, clinical 

values, and information about vascular 

access) may not be allowed into 

CROWNWeb via the batch submission 

process if CROWNWeb determines that 

the data are inconsistent or invalid. 

Facilities entering data manually do not 

experience such issues, and we note 

that electronic data interchange (EDI) 

users are able to view and correct data 

that do not pass validations testing. We 

have already implemented two 

successful patches to alleviate 

CROWNWeb systems barriers to EDI, 

and we will continue to release patches 

to address additional areas of concern. 

Nevertheless, we affirm that facilities 

are responsible for ensuring that their 

patient censuses and patient clinical 

data in CROWNWeb is complete and 

accurate. 

Third, we understand there are 

concerns about ‘‘gaming the system,’’ 

possibly due to the fact that facilities are 

not required to enter clinical data 

elements in order to proceed in the 

CROWNWeb system. We do not believe 

this is a system defect; in certain 

instances, it might not be appropriate to 

enter such data, and the system is not 

designed to make these determinations. 

Additionally, we are not aware of any 

defects that allow facilities to 

preferentially exclude patients. If 

facilities and submission organizations 

are aware of other defects, we encourage 

them to report this to the QualityNet 

Helpdesk or on EDI Data Discrepancy 

Support calls. If we receive such 

reports, we will investigate them 

immediately and prioritize patches for 

the next available CROWNWeb patch 

release. 

Fourth, we are aware that 

CROWNWeb is currently experiencing 

some issues related to the attribution of 

patients to facilities. We are in the 

process of implementing new business 

requirements that should address this 

known defect. We continue to 

encourage facilities to ensure that their 

patient censuses are accurately reflected 

in CROWNWeb. 

With respect to commenters’ 

recommendations for improving the 

accuracy of CROWNWeb data, we agree 

that facility attribution lists should 

match patient censuses in CROWNWeb. 

As stated above, we are actively working 

to resolve this issue, and we encourage 

facilities to review their patient 

censuses in CROWNWeb to ensure that 

they match their attribution lists. 

Additionally, we agree that 

CROWNWeb should minimize the 

amount of accurate data that does not 

pass validation testing while ensuring 

that inaccurate data is not used to 

calculate scores on ESRD QIP clinical 

performance measures. As stated above, 

we affirm that facilities are responsible 

for ensuring that patient data is 

accurately reflected in CROWNWeb 

while we continue to improve the EDI 

submission process. Furthermore, we do 

not agree that business rules need to 

remain in place for one year before the 

data can be used to calculate scores on 

ESRD QIP clinical performance 

measures, as long as changes to the 

business rules are not significant 

enough to render data from the baseline 

period incomparable with data from the 

performance period. Finally, we note 

that facilities are able to report concerns 

about roster-data discrepancies to the 

QualityNet helpdesk. We note that new 

data definitions are regularly provided 

to the ESRD community. 

We appreciate the recommendation to 

not share CROWNWeb data with any 

CMS TEPs due to concerns about 

completeness, accuracy, and reliability. 

We will consider these concerns before 

sharing CROWNWeb data with CMS 

TEPs in the future. We also appreciate 


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the recommendation to field-test 

CROWNWeb updates before they are 

scheduled for general release, and we 

are working on a process that would 

allow users and ‘‘beta testers’’ to test 

system functionalities in real-world 

settings. 

Comment: One commenter did not 

support the addition of other measures 

to the ESRD QIP until concerns about 

the program’s complexity and the 

reliability of CROWNWeb are alleviated. 

Response: We appreciate the 

commenter’s concerns about the 

complexity of the ESRD QIP and the 

reliability of CROWNWeb. We make 

every effort (e.g., through National 

Provider Calls, CROWN Memos, and 

other educational programs) to ensure 

that facilities receive the information 

they need to understand the ESRD QIP. 

We also work diligently to make 

reporting requirements and 

measurement methodologies as simple 

as possible. Additionally, we appreciate 

the commenter’s concerns about the 

reliability of CROWNWeb, and we are 

working to address related concerns that 

have been raised by the ESRD 

community. However, given the fact 

that facilities are able to ensure that 

their data is accurately represented in 

CROWNWeb at any time, as well as the 

fact that CMS and its contractors check 

the validity of CROWNWeb data when 

calculating measure scores, we believe 

that there are processes in place to 

ensure that technical issues with 

CROWNWeb do not impact the measure 

scores that facilities receive. We 

therefore do not believe it is appropriate 

or necessary to postpone programmatic 

developments until these technical 

issues are completely resolved. 

Comment: Several commenters asked 

CMS to provide sufficient data and 

explanation to allow the kidney care 

community to understand the 

methodology underlying the models 

used to estimate ESRD QIP payment 

adjustments and the minimum TPS. 

These commenters stated that without 

this data, it is difficult to know the 

assumptions CMS uses in its modeling 

and to offer meaningful comments on 

the proposed rule. 

Response: We appreciate commenters’ 

request. We will make publicly 

available facility-level data that is used 

to estimate ESRD QIP payment 

adjustments and the minimum TPS. 

Information used to estimate these 

values in the CY 2014 ESRD PPS 

proposed rule will be released by 

December 31, 2013. Information used to 

estimate these values in proposed rules 

for future payment years will be 

released within two weeks of the 

publication of the applicable proposed 

rule. However, since this data is 

preliminary, individual facility 

identifiers will be removed before the 

data is released so that it will not be 

possible to connect estimated measure 

scores to individual facilities. 

Additionally, final data used to 

determine finalized ESRD QIP payment 

adjustments and the finalized minimum 

TPS will continue to be posted on a 

CMS Web site every year in December. 

Comment: Some commenters noted 

that many of the measure specifications 

list SIMS as a data source. These 

commenters sought clarity on this, as 

SIMS has been decommissioned. 

Response: We thank commenters for 

noting this discrepancy. When the 

proposed rule was published, it was not 

clear that SIMS would be 

decommissioned. We have updated the 

final measure specifications to reflect 

the fact that SIMS has been 

decommissioned. 

a. Clinical Measure Performance 

Standards 

For the same reasons stated in the CY 

2013 ESRD PPS final rule (77 FR 67500 

through 76502), we proposed for PY 

2016 to set the performance standards 

(both achievement and improvement) 

based on the national performance rate 

(that is, the 50th percentile) of facility 

performance in CY 2012, except as 

specified below. 

With respect to the proposed NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure, we 

proposed to begin data collection 

beginning with CY 2014 events. We do 

not have data prior to CY 2014 for 

purposes of setting a performance 

standard based on the national 

performance rate of facility performance 

in CY 2012. For that reason, we 

proposed that the performance standard 

for the NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure for PY 2016 be the 50th 

percentile of the national performance 

rate on the measure during CY 2014. 

Because we lack the baseline data 

needed to calculate an improvement 

score, we also proposed that, for PY 

2016, facilities be scored only on 

achievement for this measure, and not 

on the basis of improvement. Although 

we recognize that with other measures 

that lacked baseline data we instituted 

a reporting measure to ensure that both 

an achievement and improvement score 

could be assessed, we believe that it is 

appropriate, in this case, to adopt a 

clinical measure without the baseline 

data necessary for an improvement 

score. Hospital Acquired Infections 

(HAIs) are a leading cause of 

preventable mortality and morbidity 

across different settings in the 

healthcare sector, including dialysis 

facilities, costing patient lives and 

billions of dollars. CMS has recognized 

that reducing HAIs is critically 

important to the Agency’s three main 

goals of improving healthcare, 

improving health, and reducing 

healthcare costs. Because of the 

abnormally great impact HAIs have 

upon patients and the healthcare 

industry, we believe it is important to 

begin assessing facilities on the number 

of these events as soon as possible, 

rather than on merely whether they 

report these events. Additionally, the 

NHSN measure has been a reporting 

measure since PY 2014, which will give 

facilities 2 years to report data before 

they are scored on the data results. 

Thus, although we do not yet have 

complete baseline data to give 

improvement scores in PY 2016, we 

believe it is appropriate to implement 

this measure using only achievement 

scores because of the urgency in 

reducing these events and the time 

facilities have had to prepare 

themselves for such a measure. Finally, 

we proposed that facilities would 

receive a score of zero on the NHSN 

clinical measure if they do not submit 

12 months of data, as defined in Section 

III.C.3.d above, and by the deadlines 

specified in Section III.C.3.d above. 

For the proposed Patient Informed 

Consent for Anemia Treatment, we 

stated that we believed that facilities 

should meet the standard 100 percent of 

the time. However, we recognized that 

unexpected events might make a 100 

percent standard difficult to meet, so we 

proposed that facilities should be 

allowed to meet the standard for less 

than 100 percent of their patients. 

Because prior data are unavailable for 

the establishment of a performance 

standard, benchmark, and achievement 

threshold, we developed a methodology 

to determine appropriate achievement 

standards. As described in Section 

III.C.10 of the proposed rule, we 

proposed that a small facility adjuster 

would be applied to facilities with 

between 11 and 25 qualifying patients. 

Since facilities with between 11 and 25 

patients would be subject to the 

favorable scoring modifications applied 

by the small-facility adjuster, these 

facilities would have an easier time 

achieving the proposed achievement 

standards. Therefore, the minimum 

number of cases a facility may have and 

not benefit from a small-facility adjuster 

would be 26. We calculated that if a 

facility with 26 cases failed to obtain 

consent for two qualifying cases, it 

would have obtained consent 92 percent 


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of the time (rounded). If the facility 

failed to obtain consent for one case, it 

would have obtained consent 96 percent 

of the time (rounded). We believed that 

these values (92 and 96 percent) 

encourage a high consistency of care for 

patients with ESRD that is reasonably 

attainable by all facilities, while 

accounting for the possibility that 

facilities would be unable to obtain 

informed consent for reasons beyond 

their control. Therefore, we proposed 

that the achievement threshold be 

defined as obtaining informed consent 

for 92 percent of qualifying cases during 

the performance period, and that the 

benchmark would be defined as 

obtaining informed consent for 96 

percent of such cases. Furthermore, we 

proposed to calculate the proposed 

performance standard using the average 

of the benchmark and achievement 

threshold, which is 94 percent. We 

sought comments on this performance 

standard. 

Because we lack the baseline data 

needed to calculate improvement scores 

for the Patient Informed Consent for 

Anemia Treatment measure, we also 

proposed that for PY 2016, facilities be 

scored only on achievement for this 

measure, and not on the basis of 

improvement. We recognized that with 

other measures where we lacked 

baseline data, we adopted a reporting 

measure to ensure that both an 

achievement and improvement score 

could be assessed. However, we stated 

that we believe that it is appropriate, in 

this case, to adopt a clinical measure 

without the baseline data necessary for 

an improvement score. Anemia 

management is a topic highlighted in 

the ESRD QIP authorizing statute, 

requiring measures that reflect labeling 

approved by the Food and Drug 

Administration. (See section 

1881(h)(2)(A) of the Act.) The inclusion 

of the topic in statue highlights its 

importance to CMS and to dialysis 

patients. ESA labeling has changed over 

time as additional safety information 

has become available, and the informed 

consent process is designed to ensure 

that the most current safety information 

is communicated to patients before 

ESAs are administered. In addition, 

obtaining informed consent for anemia 

treatment is a standard of practice that 

should already be in place at dialysis 

facilities, so facilities should already 

have procedures in place to support the 

measure. Thus, although we did not yet 

have complete baseline data to give 

improvement scores in PY 2016, we 

stated that we believed it would be 

appropriate to implement this measure 

using only achievement scores because 

of the importance of providing patients 

with current information about the risks 

and benefits of anemia therapy, and 

because this is already a standard 

clinical practice. 

For the proposed Hypercalcemia 

measure, the first month that we can use 

to establish the baseline is May 2012. 

This is because the Hypercalcemia 

measure relies on CROWNWeb as its 

data source, CROWNWeb was first 

rolled out nationally in May 2012, and 

data submitted to CROWNWeb before 

that time is considered test or pilot data. 

For that reason, we proposed to set the 

performance standard as the 50th 

percentile of national performance from 

May 2012 through November 2012. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters stated 

that measures should have at least one 

year of reporting data available using 

consistent, well-defined data elements 

before being adopted as clinical 

measures. 

Response: As stated in the CY 2013 

ESRD PPS final rule (77 FR 67488), we 

believe that achievement thresholds, 

benchmarks, and performance standards 

should be based on a full year of data 

whenever possible. However, we also 

believe that, in certain circumstances, it 

not practical or necessary to use a full 

year of baseline data. For example, as 

stated in the proposed rule, we believe 

the clinical importance of reducing 

HAIs warrants the adoption of the 

NHSN clinical measure without a full 

year of baseline data. Similarly, we 

believe that it is appropriate to use 

seven months of baseline data for the 

Hypercalcemia measure because serum 

calcium levels are not subject to 

seasonal variations, and because the 

seven-month time window offers a 

reliable representation of national 

facility performance. 

Comment: Several commenters stated 

that measures that lack the baseline data 

to calculate achievement and 

improvement scores should not be part 

of the ESRD QIP. 

Response: Although we believe that 

achievement and improvement scores 

should generally be based on two years 

of baseline data, we also believe that 

other considerations may warrant the 

adoption of clinical measures before this 

baseline data is available. In particular, 

we believe that the urgency of 

addressing substantial gaps in the 

quality of clinical care may outweigh 

the benefits associated with using two 

years of baseline data if these gaps 

present safety concerns for patients. 

Given the significant increases in 

healthcare acquired infections in 

dialysis patients discussed above, we 

believe the NHSN Bloodstream Infection 

in Hemodialysis Outpatients clinical 

measure meets this criterion. As we 

explained above, we have taken steps to 

minimize the financial impact on 

facilities associated with adopting this 

measure in the PY 2016 ESRD QIP, and 

we will propose to award both 

achievement and improvement points to 

facilities on this measure as soon as the 

baseline data is available. We also note 

that the ESRD QIP has used reporting 

measures since the PY 2014 program. 

These measures are not scored on the 

basis of achievement and improvement. 

Rather, they exist in order to help 

facilities become familiar with different 

reporting mechanisms, ensure that 

facilities capture data that can improve 

the quality of care they provide, and 

collect the baseline data needed to 

calculate achievement and improvement 

scores. 

Comment: One commenter approved 

of the ESRD QIP overall. However, the 

commenter urged CMS to use measures 

that have been tested for reliability and 

validity, and that all clinical data 

should be retrieved from a single source. 

Response: We thank the commenter 

and affirm that all the measures in the 

ESRD QIP have been tested for 

reliability and validity. With respect to 

the suggestion that we limit clinical data 

to a single data collection source, it is 

infeasible at this time to collect all 

ESRD QIP data from a single source. 

Although we are mindful of the 

reporting burden for facilities, we strive 

to make use of existing data collection 

systems, and we consider the benefits 

and drawbacks of collecting data in 

different reporting systems. 

After consideration of the comments, 

we are finalizing the following 

performance standards for all of the PY 

2016 clinical measures, except the 

Patient Informed Consent for Anemia 

Management clinical measure. We are 

not finalizing a performance standard 

for the Patient Informed Consent for 

Anemia Management clinical measure 

because we are not adopting that 

measure for the ESRD QIP. 


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18Medicare claims data from 2012 were used to 

calculate the performance standard for the 

Hemoglobin > 12 g/dL, Dialysis Adequacy, and 

Vascular Access Type clinical measures. 

CROWNWeb data from May 2012 through 

December 2012 were used to estimate the 

performance standard for the Hypercalcemia 

clinical measure. 

b. Performance Standards for Clinical 

Measures 

TABLE 8—FINALIZED NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2016 ESRD QIP 

CLINICAL MEASURES USING THE

MOST RECENTLY AVAILABLE DATA 18

Measure Performance 

Standard 

Vascular Access 

Type: 

%Fistula ............. 62.3% 

%Catheter .......... 10.6% 

Kt/V: 

Adult Hemodialysis.93.4% 

Adult Peritoneal 

Dialysis.

85.7% 

Pediatric Hemodialysis.93% 1

Hemoglobin > 12 g/dL 0% 

Hypercalcemia .......... 1.7% 

NHSN Bloodstream 

Infection in Hemodialysis Outpatients.

50th percentile of eligible facilities’ performance during 

the performance 

period. 

1According to the most recent data available, the performance standard for the Kt/V 

Pediatric Hemodialysis Adequacy measure is 

91.9%. Because this is lower than the performance standard of 93% from the PY 2015 

ESRD QIP, we are finalizing a performance 

standard of 93%. 

If the final numerical values for the 

PY 2016 performance standards are 

worse than PY 2015 for a measure, then 

we proposed to substitute the PY 2015 

performance standard for that measure. 

We stated our belief that the ESRD QIP 

should not have lower standards than in 

previous years. 

We requested comment on this 

proposal. We did not receive any 

comments on this proposal. Using the 

most recent available data, we 

determined that the performance 

standard for the Kt/V Pediatric 

Hemodialysis Adequacy measure is 

91.9%. Because this is lower than the 

performance standard of 93 percent 

from the PY 2015 ESRD QIP, we are 

finalizing a performance standard of 93 

percent for the PY 2016 ESRD QIP. The 

finalized performance standards for the 

PY 2016 ESRD QIP clinical measures are 

set forth above in Table 8. 

c. Performance Standards for Reporting 

Measures 

For the proposed ICH CAHPS 

reporting measure, we proposed to set 

the performance standard for PY 2016 as 

the facility’s successful submission, by 

January 28, 2015, of ICH CAHPS survey 

data collected during the performance 

period in accordance with the measure 

CMS specifications at https://

ichcahps.org. For PY 2017 and future 

payment years, we proposed that the PY 

2016 performance standard continue 

except that, in each performance period, 

facilities are required to submit data 

from the two surveys conducted during 

the performance period, rather than one, 

and that the survey data must be 

submitted by the dates specified by 

CMS at https://ichcahps.org. 

For the proposed Mineral Metabolism 

reporting measure, we proposed to set 

the performance standard as 

successfully reporting the measure for 

the number of qualifying cases specified 

in Section III.C.2.b for each month of the 

12-month duration of the performance 

period. 

For the proposed Anemia 

Management reporting measure, we 

proposed to set the performance 

standard as successfully reporting the 

measure for the number of qualifying 

cases specified in Section III.C.2.c for 

each month of the 12-month duration of 

the performance period. 

For the proposed Anemia 

Management: Pediatric Iron Therapy 

reporting measure, we proposed to set 

the performance standard as 

successfully reporting for each 

qualifying case each quarter the 

following: (i) patient admit/discharge 

date; (ii) hemoglobin levels; (iii) serum 

ferritin levels; (iv) TSAT percentages; 

(v) the dates that the lab measurements 

were taken for items (ii)–(iv); (vi) 

intravenous IV iron prescribed or oral 

iron prescribed (if applicable); and (vii) 

the date that the IV iron or oral iron was 

prescribed (if applicable). 

For the proposed Comorbidity 

reporting measure, we proposed to set 

the performance standard as 

successfully updating in CROWNWeb at 

least once during the performance 

period for each qualifying case, the 

patient’s comorbidities. We also 

proposed that the update be entered into 

CROWNWeb by the January 31 

following the conclusion of the 

performance period or, if that is not a 

regular business day, the first business 

day thereafter. 

We requested comment on these 

proposals. We did not receive any 

comments on these proposals. We will 

therefore finalize the reporting measure 

performance standards as proposed 

except for the Anemia Management: 

Pediatric Iron Therapy and the 

Comorbidity reporting measures, which 

we are not finalizing for adoption in the 

ESRD QIP. 

8. Scoring for the PY 2016 ESRD QIP 

Measures 

In order to assess whether a facility 

has met the performance standards, we 

finalized a methodology for the PY 2014 

ESRD QIP under which we separately 

score each clinical and reporting 

measure. We score facilities based on an 

achievement and improvement scoring 

methodology for the purposes of 

assessing their performance on the 

clinical measures (76 FR 70272 through 

70273). We proposed to use a similar 

methodology for the purposes of scoring 

facility performance on each of the 

clinical measures for the PY 2016 ESRD 

QIP and future payment years, except 

that we proposed that there will only be 

an achievement score for the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients and Patient Informed 

Consent for Anemia Treatment clinical 

measures, because data are not available 

to calculate an improvement score. 

In determining a facility’s 

achievement score for the PY 2016 

program and future payment years, we 

proposed to continue using the current 

methodology described above, under 

which facilities would receive points 

along an achievement range based on 

their performance during the proposed 

performance period for each measure, 

which we define as a scale between the 

achievement threshold and the 

benchmark explained below. We 

proposed to define the achievement 

threshold for each of the proposed 

clinical measures as the 15th percentile 

of the national performance rate during 

CY 2012, except as otherwise specified 

below for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, the Patient Informed 

Consent for Anemia Treatment clinical 

measure, and the Hypercalcemia 

clinical measure. We believe that this 

achievement threshold will provide an 

incentive for facilities to continuously 

improve their performance, while not 

reducing incentives to facilities that 

score at or above the national 

performance rate for the clinical 

measures (77 FR 67503). We proposed 

to define the benchmark as the 90th 

percentile of the national performance 

rate during CY 2012, except as proposed 

below for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure and the Patient 

Informed Consent for Anemia Treatment 

clinical measure, because it represents a 


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demonstrably high but achievable 

standard of quality that the high 

performing facilities reached. 

For the proposed NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, we proposed that the 

achievement threshold and benchmark 

be the 15th and 90th percentiles, 

respectively, of national performance 

during CY 2014. 

For the proposed Patient Informed 

Consent for Anemia Treatment clinical 

measure, and for the reasons described 

in Section III.C.7.a, we proposed that 

the achievement threshold be defined as 

obtaining informed consent for 92 

percent of qualifying cases during the 

performance period, and that the 

benchmark be defined as obtaining 

informed consent for 96 percent of such 

cases. 

For the reasons described above, the 

first month that we can use to establish 

the baseline for the proposed 

Hypercalcemia measure is May 2012. 

Therefore, we proposed to set the 

achievement threshold as the 15th 

percentile of national performance and 

the benchmark as the 90th percentile of 

national performance from May 2012 

through November 2012. 

With the exception of the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure and the 

Patient Informed Consent Anemia 

Treatment clinical measure, we 

proposed that facilities receive points 

along an improvement range, defined as 

a scale running between the 

improvement threshold and the 

benchmark. We proposed to define the 

improvement threshold as the facility’s 

performance on the measure during CY 

2013. The facility’s improvement score 

would be calculated by comparing its 

performance on the measure during CY 

2014 (the proposed performance period) 

to its performance rate on the measure 

during CY 2013. Because we lack the 

baseline data needed to calculate 

improvement scores for the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure and the 

Patient Informed Consent for Anemia 

Treatment clinical measure, we 

proposed that facilities will not receive 

improvement scores for these measures 

for PY 2016. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters 

supported the achievement/

improvement scoring methodology that 

is carried over from the PY 2015 

program. 

Response: We thank the commenters 

for their support. 

Comment: Several commenters 

believed that the achievement/

improvement scoring methodology is 

inappropriate for measures with 

compressed performance ranges. These 

commenters stated that in such cases, 

noncompliance for a single patient can 

easily result in a facility receiving 0 

points instead of 10, resulting in a 

standard of perfection that is impossible 

to meet. In such cases, the commenters 

recommended giving a facility a pass for 

one noncompliant patient or otherwise 

altering the scoring methodology to 

award higher scores to facilities with 

very few noncompliant patients.. 

Response: We recognize that measures 

with compressed performance scores, 

such as the Hemoglobin Greater Than 12 

g/dL measure, present special 

challenges for the achievement/

improvement methodology finalized in 

the CY 2013 ESRD PPS final rule. We 

will consider the commenters’ 

suggestion as we work to address these 

challenges in future payment years. 

Comment: One commenter 

recommended that new facilities should 

be scored the first year they are open on 

all of the clinical and reporting 

measures, and that their scores should 

be publicly reported, but that they 

should not be eligible to receive a 

payment reduction. The commenter 

stated that this is a fair way to handle 

new facilities, because they will have to 

post a Performance Score Certificate, but 

they would not experience adverse 

financial consequences. 

Response: We appreciate the 

commenter’s concerns about the 

difficulties new facilities face when 

meeting the requirements of the ESRD 

QIP. It is because of these concerns that 

facilities with CCN open dates after July 

1 of the performance period are 

excluded from the reporting measures 

and are therefore not eligible to receive 

a TPS. However, we disagree that it is 

unfair for a facility to be eligible for a 

payment reduction if it has a CCN open 

date before July 1 of the performance 

period because we believe that 6 months 

is enough time to become familiarized 

with the ESRD QIP requirements, and 

because we believe that financial 

incentives provide the strongest 

enticement to improve the quality of 

care provided to patients with ESRD. 

Comment: One commenter 

recommended that facilities be given a 

monthly report that previews the 

facility’s performance rate on each of 

the measures in the ESRD QIP. The 

commenter believes this would provide 

facilities with a better opportunity to 

monitor and improve performance. 

Response: We appreciate the 

commenter’s request for CMS to provide 

timely information about facilities’ 

performance on the ESRD QIP. 

However, we believe that offering a 

monthly preview of a facility’s 

performance rate may not provide an 

accurate estimate of a facility’s actual 

score during the performance period. 

Most clinical measures require at least 

four months of data, and a monthly 

preview may not include enough data 

for the first several months. 

Additionally, case minimums for the 

clinical and reporting measures are 

based on numbers of patients treated 

during the performance period, so it 

would not be possible to determine if a 

facility were eligible to receive a score 

on each of the measures until the 

conclusion of the performance period. 

Furthermore, attestations through 

CROWNWeb are due by January 31 of 

the year following the performance 

period, and this information could not 

be incorporated into the monthly 

reporting. 

After consideration of the comments, 

we are finalizing the achievement 

thresholds, benchmarks, and 

improvement thresholds for the PY 2016 

ESRD QIP clinical measures that are 

listed below. We are not finalizing 

achievement thresholds, benchmarks, 

and improvement thresholds for the 

Informed Consent for Anemia 

Management clinical measure because 

we are not adopting that measure for the 

ESRD QIP. We have calculated the 

numerical values for the achievement 

threshold and benchmarks based on 

data from the dates described above; we 

will calculate the numerical values for 

the improvement thresholds (where 

applicable) based on individual 

facilities’ data from CY 2013. The 

numerical values for the achievement 

thresholds and benchmarks for the PY 

2016 ESRD QIP clinical measures are set 

forth below in Table 9. 


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19Medicare claims data from 2012 were used to 

calculate the achievement threshold and benchmark 

for the Hemoglobin > 12 g/dL, Dialysis Adequacy, 

and Vascular Access Type clinical measures. 

CROWNWeb data from May 2012 through 

December 2012 were used to estimate the 

percentiles for the Hypercalcemia clinical measure. 

TABLE 9—FINALIZED ACHIEVEMENT THRESHOLDS AND BENCHMARKS FOR THE PY 2016 ESRD QIP CLINICAL MEASURES

USING THE MOST RECENTLY AVAILABLE DATA 19

Measure Achievement threshold Benchmark 

%Fistula .............................................................. 49.9% ............................................................... 77.0% 

%Catheter ........................................................... 19.9% ............................................................... 2.8% 

Kt/V: 

Adult Hemodialysis ......................................... 86%1 ................................................................ 97.4% 

Adult, Peritoneal Dialysis ................................ 67.8% ............................................................... 94.8% 

Pediatric Hemodialysis .................................... 83%2 ................................................................ 97.1% 

Hemoglobin > 12 g/dL ........................................ 1.2% ................................................................. 0% 

Hypercalcemia .................................................... 5.4% ................................................................. 0% 

NHSN Bloodstream Infection in Hemodialysis 

Outpatients.

15th percentile of eligible facilities’ performance during the performance period.90th percentile of eligible facilities’ performance during the performance period. 

1According to the most recent data available, the achievement threshold for the Adult Hemodialysis Adequacy measure is 85.6%. Because 

this is lower than the achievement threshold of 86% from the PY 2015 ESRD QIP, we are finalizing an achievement threshold of 86%. 2According to the most recent data available, the achievement threshold for the Pediatric Hemodialysis Adequacy measure is 71.3%. Because 

this is lower than the achievement threshold of 83% from the PY 2015 ESRD QIP, we are finalizing an achievement threshold of 83%. 

We proposed that if the final PY 2016 

numerical values for the achievement 

thresholds and benchmarks are worse 

than PY 2015 for a given measure, we 

will substitute the PY 2015 achievement 

thresholds and benchmarks for that 

measure. We stated our belief that the 

ESRD QIP should not have lower 

standards than previous years. 

We requested comments on this 

proposal. We did not receive any 

comments on this proposal. Using the 

most recent available data, we 

determined that the achievement 

threshold for the Kt/V Adult 

Hemodialysis Adequacy measure is 85.6 

percent. Because this is lower than the 

achievement threshold of 86 percent 

from the PY 2015 ESRD QIP, we are 

finalizing an achievement threshold of 

86 percent for the PY 2016 ESRD QIP. 

Using the most recent available data, we 

determined that the achievement 

threshold for the Kt/V Pediatric 

Hemodialysis Adequacy measure is 71.3 

percent. Because this is lower than the 

achievement threshold of 83 percent 

from the PY 2015 ESRD QIP, we are 

finalizing an achievement threshold of 

83 percent for the PY 2016 ESRD QIP. 

We will, therefore, finalize the 

achievement thresholds and 

benchmarks set forth above in Table 9 

for the PY 2016 ESRD QIP clinical 

measures. 

a. Scoring Facility Performance on 

Clinical Measures Based on 

Achievement 

Using the same methodology we 

finalized in the CY 2013 ESRD PPS final 

rule, we proposed to award between 0 

and 10 points for each of the proposed 

clinical measures (77 FR 67504). As 

noted, we proposed that the score for 

each of these clinical measures will be 

based upon the higher of an 

achievement or improvement score on 

each of the clinical measures, except for 

the NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure and the Patient Informed 

Consent for Anemia Treatment clinical 

measure, which we proposed to score 

on achievement alone. For purposes of 

calculating achievement scores for the 

clinical measures, we proposed to base 

the score on where a facility’s 

performance rate falls relative to the 

achievement threshold and the 

benchmark for that measure. 

(Performance standards do not enter 

into the calculation of improvement or 

achievement scores.) Identical to what 

we finalized in the CY 2013 ESRD PPS 

final rule, we proposed that if a facility’s 

performance rate during the 

performance period is: 

• Equal to or greater than the 

benchmark, then the facility would 

receive 10 points for achievement; 

• Less than the achievement 

threshold, then the facility would 

receive 0 points for achievement; or 

• Equal to or greater than the 

achievement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

achievement score: 

[9 * ((Facility’s performance period 

rate—achievement threshold)/

(benchmark—achievement threshold))] 

+ .5, with all scores rounded to the 

nearest integer, with half rounded up. 

Using this formula, a facility would 

receive a score of 1 to 9 points for a 

clinical measure based on a linear scale 

distributing all points proportionately 

between the achievement threshold and 

the benchmark, so that the interval in 

the performance between the score for a 

given number of achievement points 

and one additional achievement point is 

the same throughout the range of 

performance from the achievement 

threshold to the benchmark. 

We did not receive any comments on 

this proposal. Therefore, we are 

finalizing the achievement scoring 

methodology for the PY 2016 ESRD QIP 

and future payment years, with the 

exception of the Informed Consent for 

Anemia Management clinical measure, 

because we are not adopting that 

measure for the ESRD QIP. 

b. Scoring Facility Performance on 

Clinical Measures Based on 

Improvement 

Using the same methodology we have 

previously finalized for the ESRD QIP, 

we proposed that facilities would earn 

between 0 and 9 points for each of the 

clinical measures that will have an 

improvement score (that is, all clinical 

measures except the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure and the Patient 

Informed Consent for Anemia 

Treatment), based on how much their 

performance on the measure during CY 

2014 improved from their performance 

on the measure during CY 2013 (77 FR 

67504). A specific improvement range 

for each measure would be established 

for each facility. We proposed that if a 

facility’s performance rate on a measure 

during the performance period is: 

• Less than the improvement 

threshold, then the facility would 

receive 0 points for improvement; or 

• Equal to or greater than the 

improvement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

improvement score: 

[10 * ((Facility performance period 

rate—Improvement threshold)/

(Benchmark—Improvement 


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

to the nearest integer, with half rounded 

up. 

Note that if the facility score is equal 

to or greater than the benchmark, then 

it would receive 10 points on the 

measure based on the achievement score 

methodology discussed above. 

We did not receive any comments on 

this proposal. We will therefore finalize 

the improvement scoring methodology 

for the PY 2016 ESRD QIP and future 

payment years with the exception of the 

Informed Consent for Anemia 

Management clinical measure, because 

we are not adopting that measure for the 

ESRD QIP. 

c. Calculating Facility Performance on 

Reporting Measures 

As noted above, reporting measures 

differ from clinical measures in that 

they are not scored based on clinical 

values; rather, they are scored based on 

whether facilities are successful in 

achieving the reporting requirements 

associated with each of these proposed 

measures. The criteria that we proposed 

would apply to each reporting measure 

are discussed below. 

With respect to the proposed Anemia 

Management reporting measure and the 

proposed Mineral Metabolism reporting 

measure, we proposed to award points 

to facilities using the same formula that 

we finalized in the CY 2013 ESRD PPS 

final rule for Mineral Metabolism and 

Anemia Management (77 FR 67506): 

With respect to the proposed Use of 

Iron Therapy for Pediatric Patients 

reporting measure, we proposed to 

award points to facilities using the 

following formula: 

We proposed to score the Pediatric 

Iron Therapy measure differently than 

the proposed Anemia Management 

reporting measure and the proposed 

Mineral Metabolism reporting measure 

because it requires quarterly rather than 

monthly reporting; therefore, scoring 

based on monthly reporting rates is not 

feasible. 

With respect to the proposed ICH 

CAHPS reporting measure and 

Comorbidity reporting measure, we 

proposed that a facility receive a score 

of 10 points if it satisfies the 

performance standard for the measure, 

and 0 points if it does not. We proposed 

to score these reporting measures 

differently than the other reporting 

measures because these measures 

require annual or biannual reporting, 

and therefore scoring based on monthly 

or quarterly reporting rates is not 

feasible. 

We requested comments on the 

proposed methodology for scoring the 

PY 2016 ESRD QIP reporting measures. 

We did not receive any comments on 

this proposal. We will, therefore, 

finalize the scoring methodology for the 

reporting measures as proposed, with 

the exception of the Pediatric Iron 

Therapy and Comorbidity reporting 

measures, because we are not adopting 

those measures for the ESRD QIP. 

9. Weighting the PY 2016 ESRD QIP 

Measures and Calculating the PY 2016 

ESRD QIP Total Performance Score 

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

provides that the methodology for 

calculating the facility TPS shall 

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 facilities 

have strong incentives to meet or exceed 

anemia management and dialysis 

adequacy performance standards, as 

determined appropriate by the 

Secretary. In determining how to 

appropriately weight the PY 2016 ESRD 

QIP measures for purposes of 

calculating the TPS, we considered two 

criteria: (1) the number of measures we 

proposed to include in the PY 2016 

ESRD QIP; and (2) the National Quality 

Strategy priorities. 

a. Weighting Individual Measures To 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy Measure Topic, 

the Vascular Access Type Measure 

Topic, and the Anemia Management 

Clinical Measure Topic 

In the CY 2013 ESRD PPS final rule, 

we established a methodology for 

deriving the overall scores for measure 

topics (77 FR 67507). For the reasons 

described in the CY 2013 ESRD PPS 

final rule, we proposed to use the same 

methodology in PY 2016 and future 

payment years to calculate the scores for 

the three measure topics. After 

calculating the individual measure 

scores within a measure topic, we 

proposed to calculate a measure topic 

score using the following steps: (i) 

Dividing the number of patients in the 

denominator of each measure by the 

sum of the number of patients in each 

denominator for all of the applicable 

measures in the measure topic; (ii) 

multiplying that figure by the facility’s 

score on the measure; (iii) summing the 

results achieved for each measure; and 

(iv) rounding this sum (with half 

rounded up). We proposed that if a 

facility does not have enough patients to 

receive a score on one of the measures 

in the measure topic (as discussed 

below), then that measure would not be 

included in the measure topic score for 

that facility. Only one measure within 

the measure topic needs to have enough 

cases to be scored in order for the 

measure topic to be scored and included 

in the calculation of the TPS. We also 

proposed that the measure topic score 

would be equal to one clinical measure 

in the calculation of the TPS. For an 

additional explanation, see the 

examples provided at 77 FR 67507. 

We did not receive any comments on 

this proposal. We will therefore finalize 

this methodology of weighting 

individual measure scores to derive a 

measure topic score for the PY 2016 

ESRD QIP and future payment years 

with the exception of the Anemia 

Management Clinical measure topic, 

because we are not adopting that 

measure topic for the ESRD QIP. 

b. Weighting the Total Performance 

Score 

We continue to believe that weighting 

the clinical measures/measure topics 

equally will incentivize facilities to 

improve and achieve high levels of 


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performance across all of these 

measures, resulting in overall 

improvement in the quality of care 

provided to patients with ESRD. We 

also continue to believe that, while the 

reporting measures are valuable, the 

clinical measures evaluate actual patient 

outcomes and therefore justify a higher 

combined weight (77 FR 67506 through 

67508). For the reasons outlined in the 

CY 2013 ESRD PPS final rule, we 

proposed to continue weighting clinical 

measures as 75 percent and reporting 

measures as 25 percent of the TPS. We 

requested comments on this proposed 

methodology for weighting the clinical 

and reporting measures. 

We have also considered the issue of 

awarding a TPS to facilities that do not 

report data on the proposed minimum 

number of cases with respect to one or 

more of the measures or measure topics. 

For the reasons stated in the CY 2013 

ESRD PPS final rule, for PY 2016 and 

future payment years, we proposed to 

continue to require a facility to have at 

least one clinical and one reporting 

measure score to receive a TPS (77 FR 

67508). We requested comments on our 

proposals to require a facility to be 

eligible for a score on at least one 

reporting and one clinical measure in 

order to receive a TPS. 

Finally, we proposed that the TPSs be 

rounded to the nearest integer, with half 

of an integer being rounded up. We 

requested comments on this proposal. 

For further examples regarding measure 

and TPS calculations, we refer readers 

to the figures below. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters 

supported the proposed methodology 

for weighting measures in the TPS. 

Response: We thank the commenters 

for their support. 

Comment: One commenter did not 

support the adoption of the 

Hypercalcemia measure because 

hypercalcemia might not be an 

important clinical indicator, and the 

measure would dilute the effectiveness 

of the ESRD QIP by reducing the weight 

of other clinical measures. Other 

commenters did not support the 

adoption of the Hypercalcemia measure 

but recommended weighting it at 10 

percent of the TPS if the measure was 

adopted. 

Response: Given commenters’ 

concerns about the clinical significance 

of the Hypercalcemia measure (see 

Section III.C.3.b above), particularly 

because the measure does not 

incorporate other indicators of mineral 

metabolism, we agree with the 

recommendation to decrease the 

measure’s weight in the TPS. We note 

that if the Hypercalcemia measure were 

weighted at 10 percent of the TPS, and 

the clinical measures continued to 

comprise 75 percent of the TPS overall, 

then the weight of the Hypercalcemia 

measure would be receive roughly twothirds the weight of the four other 

clinical measures. We believe that 

decreasing the Hypercalcemia measure’s 

weight by one-third appropriately 

reflects the fact that in the absence of 

other information about mineral 

management, the Hypercalcemia 

measure is less clinically significant 

than the other clinical measures. 

Therefore, for PY 2016 and future 

payment years, we are finalizing that the 

Hypercalcemia measure will weighted 

at two-thirds the weight of the other 

clinical measures, and that the clinical 

measures will continue to constitute 75 

percent of the TPS. If a facility is not 

eligible for one or more of the clinical 

measures, we are finalizing that the 

Hypercalcemia measure will still be 

weighted at two-thirds the weight of the 

other clinical measures, and that the 

other measures will be equally 

weighted, such that the clinical 

measures comprise 75 percent of the 

TPS. 

Comment: Several commenters did 

not support either the proposal to 

equally weight all clinical measures or 

the proposal to equally weight all 

reporting measures. These commenters 

expressed concerns that this 

methodology over-weights new 

measures and may not place enough 

emphasis on measures that have the 

most clinical importance. The 

commenters recommended establishing 

a set of weighting principles that take 

into account (1) how long the measure 

has been included in the ESRD QIP; (2) 

whether room for improvement exists; 

(3) the measure’s clinical significance; 

and (4) the number of patients affected 

by the measure. The commenters also 

recommended that CMS should 

collaborate with the MAP to determine 

measure weights. 

Response: We agree that it is not 

appropriate to equally weight all of the 

clinical measures if their clinical 

significance is not equal. That is why 

we are reducing the weight of the 

Hypercalcemia clinical measure, as 

explained above. Using this criterion, 

we do not agree that the reporting 

measures should be weighted differently 

because the reporting measures have 

similar clinical significance. 

Furthermore, we appreciate the 

recommended principles for weighting 

the measures’ contribution to the TPS. 

We will consider these 

recommendations in future rulemaking 

except for the recommendation to 

collaborate with the MAP on measure 

weighting. 

Although the MAP provides input on 

measures under consideration, its 

statutorily authorized function does not 

include commenting on Medicare 

quality incentive program 

implementation policy. 

Comment: One commenter 

recommended that the clinical measures 

should constitute 90 percent of the TPS 

and the reporting measures should 

constitute 10 percent. The commenter 

stated that the ESRD QIP should 

evaluate providers’ performance rather 

than their ability to track and report 

information, and that a 90 percent/10 

percent weighting methodology would 

accomplish that. 

Response: We agree that it is 

important to weight the clinical 

measures significantly more than the 

reporting measures because the clinical 

measures evaluate provider’s clinical 

performance, rather than their ability to 

track and report information. However, 

we also believe that the reporting 

measures should carry enough weight to 

provide facilities with an incentive to 

report data to CMS. We are finalizing 5 

clinical measures/measure topics and 3 

reporting measures. Since this ratio is 

not significantly different than our 

proposal to adopt 6 clinical measures/

measure topics and 5 reporting 

measures we continue to believe that 

the 75 percent/25 percent distribution 

appropriately balances the need to 

incentivize performance with the need 

to incentive the reporting of data. 

For these reasons, we are finalizing 

that the clinical measures will be 

weighted at 75 percent of the TPS and 

that the reporting measures will be 

weighted at 25 percent of the TPS. We 

are also finalizing that the 

Hypercalcemia clinical measure will be 

weighted at two-thirds the weight of the 

other clinical measures, and that the 

reporting measures will be weighted 

equally. 

c. Examples of the PY 2016 ESRD QIP 

Scoring Methodology 

In this section, we provide examples 

to illustrate the scoring methodology for 

PY 2016. Figures 1–3 illustrate the 

scoring for the Vascular Access Type— 

Fistula measure. Figure 1 shows Facility 

A’s performance on the measure. Note 

that for this example, the facility has 

performed very well. The example 

benchmark (the 90th percentile of 

performance nationally in CY 2012) 

calculated for this clinical measure is 77 

percent, and the example achievement 

threshold (which is the 15th percentile 


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of performance nationally in CY 2012) 

is 50 percent. Therefore, Facility A’s 

performance of 86 percent on the 

clinical measure during the performance 

period exceeds the benchmark of 77 

percent, so Facility A would earn 10 

points (the maximum) for achievement 

for this measure. (Because, in this 

example, Facility A has earned the 

maximum number of points possible for 

this measure, its improvement score is 

irrelevant.) 

Figure 2 shows an example of scoring 

for another facility, Facility B. As 

illustrated below, the facility’s 

performance on the Vascular Access 

Type—Fistula measure improved from 

26 percent in CY 2013 to 54 percent 

during the performance period. The 

achievement threshold is 50 percent and 

the achievement benchmark is 77 

percent. Because the facility’s 

performance during the performance 

period is within the achievement range 

and the improvement range, we must 

calculate the improvement and 

achievement scores to determine the 

Vascular Access Type—Fistula measure. 

To calculate the achievement score, 

we would apply the formula discussed 

above. The result of this formula for this 

example is [9 * ((54—50)/(77—50))] + .5, 

which equals 1.83, and we round to the 

nearest integer, which is 2. 

Likewise, to calculate the 

improvement score, we apply the 

improvement formula discussed above. 

The result of this formula for this is 

example is [10 * ((54—26)/(77—26))]— 

.5, which equals 4.99 and we round to 

the nearest integer, which is 5. 

Therefore, for the Vascular Access 

Type—Fistula measure, Facility B’s 

achievement score is 3, and its 

improvement score is 5. We award 

Facility B the higher of the two scores 

for this clinical measure. Thus, Facility 

B’s score on this measure is 5. 


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In Figure 3, Facility C’s performance 

on the Vascular Access Type—Fistula 

measure drops from 26 percent in CY 

2013 to 23 percent during the 

performance period, a decline of 3 

percent. Because Facility C’s 

performance during the performance 

period falls below the achievement 

threshold of 26 percent, it receives 0 

points for achievement. Facility C also 

receives 0 points for improvement, 

because its performance during the 

performance period was lower than its 

performance during CY 2013. Therefore, 

in this example, Facility C would 

receive 0 points for the Vascular Access 

Type—Fistula measure. 


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The methods illustrated above would 

be applied to each clinical measure in 

order to obtain a score for each measure. 

(Scores for reporting measures are 

calculated based upon their individual 

criteria, as discussed earlier.) 

After calculating the scores for each 

measure, we would calculate the TPS. 

As an example, by applying the 

weighting criteria to a facility that 

receives a score on all finalized 

measures, we would calculate the 

facility’s TPS using the following 

formula: 

Total Performance Score = [(.161 * 

Vascular Access Type Measure Topic) + 

(.161 * Kt/V Dialysis Adequacy Measure 

Topic) + (.161 * Hemoglobin Greater 

Than 12 g/dL) + (.107 * Hypercalcemia 

Measure) + (.161 * NHSN Bloodstream 

Infection in Hemodialysis Outpatients) 

+ (.083 * ICH CAHPS Survey Reporting 

Measure) + (.083 * Mineral Metabolism 

Reporting Measure) + (.083 * Anemia 

Management Reporting Measure)] * 10. 

The TPS would be rounded to the 

nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

The formula changes in the event that 

a facility does not receive a score on a 

particular measure. If, for example, a 

facility did not receive a score (that is, 

did not have enough qualifying cases) 

on the NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure, then the facility’s TPS would 

be calculated as follows: 

Total Performance Score = [(.205 * 

Vascular Access Type Measure Topic) + 

(.205 * Kt/V Dialysis Adequacy Measure 

Topic) + (.205 * Hemoglobin Greater 

Than 12 g/dL) + (.137 * Hypercalcemia) 

+ (.083 * ICH CAHPS Survey Reporting 

Measure) + (.083 * Mineral Metabolism 

Reporting Measure) + (.083 * Anemia 

Management Reporting Measure)] * 10. 

Again, the TPS would be rounded to the 

nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

If, for example, a facility did not 

receive a score (that is, did not have 

enough qualifying cases) on the 

Hypercalcemia clinical measure, then 

the facility’s TPS would be calculated as 

follows: 

Total Performance Score = [(.188 * 

Vascular Access Type Measure Topic) + 

(.188 * Kt/V Dialysis Adequacy Measure 

Topic) + (.188 * Hemoglobin Greater 

Than 12 g/dL) + (.188 * NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients) + (.083 * ICH CAHPS 

Survey Reporting Measure) + (.083 * 

Mineral Metabolism Reporting Measure) 

+ (.083 * Anemia Management 

Reporting Measure)] * 10. 

If a facility is eligible for only two of 

the reporting measures, then the 

facility’s TPS would be calculated as 

follows: 

Total Performance Score = [(.161 * 

Vascular Access Type Measure Topic) + 

(.161 * Kt/V Dialysis Adequacy Measure 

Topic) + (.161 * Hemoglobin Greater 

Than 12 g/dL) + (.107 * Hypercalcemia 

Measure) + (.161 * NHSN Bloodstream 

Infection in Hemodialysis Outpatients) 

+ (.125 * ICH CAHPS Survey Reporting 

Measure) + (.125 * Anemia Management 

Reporting Measure)] * 10. 

Again, the TPS would be rounded to 

the nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

10. Minimum Data for Scoring Measures 

for the PY 2016 ESRD QIP and Future 

Payment Years 

For the same reasons described in the 

CY 2013 ESRD PPS final rule (77 FR 

67510 through 67512), for PY 2016 and 

future payment years, we proposed to 

only score facilities on clinical and 

reporting measures for which they have 

a minimum number of qualifying cases 

during the performance period. For PY 

2016 and future payment years, we 

proposed that a facility must have a 

threshold of at least 11 qualifying cases 

for the entire performance period in 

order to be scored on a clinical measure. 

We proposed that reporting measures 

other than ICH CAHPS will have a 

threshold of one qualifying case during 

the performance period. The 11- 

qualifying case minimum was intended 

to reduce burden on facilities with 


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limited qualifying cases for earlier 

reporting measures (77 FR 67480, 

67483, 67486 and 67493). We proposed 

to set the reporting measure case 

minimums at one because we plan to 

use data to permit future 

implementation of clinical measures. If 

patients in small facilities are 

systematically excluded, then we will 

not be able to gather the robust data we 

need to support the performance 

standard, benchmark, and achievement 

threshold calculations in future 

payment years. For those reasons, we 

proposed that the case minimum for all 

reporting measures except for ICH 

CAHPS be one. 

For the proposed expanded ICH 

CAHPS reporting measure, we proposed 

that facilities with fewer than 30 

qualifying cases during the performance 

period not be scored on the measure. In 

the CY 2013 ESRD PPS final rule, we 

excluded facilities with 10 or fewer 

adult in-center hemodialysis patients 

from the ICH CAHPS measure because 

we recognized that, for many small 

dialysis facilities, hiring a third-party 

administrator to fulfill the ICH CAHPS 

survey requirements would have been 

impractical or prohibitively costly (77 

FR 67480). As we move toward 

developing a clinical measure, we have 

determined that the survey results are 

more reliable if there are at least 30 

surveys submitted per facility. 

Therefore, we proposed that for PY 2016 

and future payment years, facilities that 

treat fewer than 30 qualifying cases 

(defined as adult in-center hemodialysis 

patients) during the performance period 

will be excluded from this measure. We 

further proposed that we will consider 

a facility to have met the 30-patient 

threshold unless it affirmatively attests 

in CROWNWeb by January 31 of the 

year prior to the year in which payment 

reductions will be made (for example, 

January 31, 2015, for the PY 2016 ESRD 

QIP) that it treated 29 or fewer adult incenter hemodialysis patients during the 

performance period. 

For the same reasons described in the 

CY 2013 ESRD PPS final rule (77 FR 

67510 through 67512), for PY 2016 and 

future payment years, we proposed to 

apply to each clinical measure score for 

which a facility has between 11 and 25 

qualifying cases the same adjustment 

factor we finalized in the CY 2013 ESRD 

PPS final rule (77 FR 67511). We 

solicited public comment on these 

proposals. 

For the PY 2016 ESRD QIP and future 

payment years, we also proposed to 

continue to begin counting the number 

of months or quarters, as applicable, for 

which a facility is open on the first day 

of the month after the facility’s CCN 

open date. With the exception of the 

ICH CAHPS expanded reporting 

measure, we proposed that only 

facilities with a CCN open date before 

July 1, 2014, be scored on the proposed 

reporting measures. Under the 

specifications for the proposed ICH 

CAHPS reporting measure, facilities 

would need to administer the survey 

(via a CMS-approved, third-party 

vendor) during the performance period. 

Because arranging such an agreement 

takes time, we proposed that only 

facilities with a CCN open date before 

January 1 of the performance period to 

be scored on this measure. Additionally, 

we proposed that facilities with CCN 

open dates after January 1, 2014 will not 

be scored on the NHSN. We note that in 

previous payment years we have 

awarded partial credit to facilities that 

submitted less than 12 months of data 

to encourage them to enroll in and 

report data in the NHSN system. 

However, we proposed to collect 12 

months of data on this clinical measure 

because infection rates vary through 

different seasons of the year. 

As discussed above, we proposed that 

a facility will not receive a TPS unless 

it receives a score on at least one 

clinical and one reporting measure. We 

noted that finalizing this proposal 

would result in facilities not being 

eligible for a payment reduction for the 

PY 2016 ESRD QIP and future payment 

years if they have a CCN open date on 

or after July 1 of the performance period 

(CY 2014 for the PY 2016 ESRD QIP). 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters 

supported the proposed performance 

standards for the reporting measures, 

including the 30-case minimum for the 

ICH CAHPS reporting measure. 

Response: We thank the commenters 

for their support. 

Comment: Several commenters did 

not support the proposed reporting 

threshold of 97 and 99 percent for the 

Mineral Metabolism and Anemia 

Management reporting measures. These 

commenters stated that the threshold 

will unduly penalize small facilities. 

The commenters did not believe that 

that this possibility is mitigated by the 

alternative threshold of the 50th 

percentile of facility reporting in CY 

2013, or by the requirement for facilities 

with fewer than 11 patients to report for 

all but one patient. 

Response: We disagree that the 

proposed reporting threshold for the 

mineral metabolism and anemia 

management reporting measures unduly 

penalizes small facilities. In proposing 

that facilities with between 10 and 2 

eligible patients must report monthly 

serum phosphorus and hemoglobin/

hematocrit levels for all but one patient, 

we effectively created a reporting 

threshold of 90 percent for facilities 

with 10 patients, and a reporting 

threshold of less than 90 percent for 

facilities with 9 or fewer patients. 

Because facilities with fewer than 11 

patients must meet lower reporting 

thresholds than facilities with more 

than 11 patients, we believe that this 

provision adequately addresses the 

possibility that a small facility will not 

be able to report data for certain patients 

for reasons that are beyond the facility’s 

control. 

Comment: Several commenters 

recommended applying a consistent 

case minimum (of either 11 or 26) to all 

ESRD QIP measures. 

Response: We disagree that it is 

appropriate to establish a consistent 

case minimum for all of the ESRD QIP 

measures. As stated in the CY 2014 

ESRD PPS proposed rule (78 FR 40871), 

we proposed to ‘‘set the reporting 

measure case minimums at one because 

we plan to use data to permit future 

implementation of clinical measures. If 

patients in small facilities are 

systematically excluded, then we will 

not be able to gather the robust data we 

need to support the performance 

standard, benchmark, and achievement 

threshold calculations in future 

payment years.’’ Additionally, due to 

the considerations about the reliability 

of ICH CAHPS data discussed above, we 

decided that 30 was the appropriate 

case minimum for the ICH CAHPS 

reporting measure. We therefore do not 

believe that an 11- or 26-case minimum 

is appropriate for any of the reporting 

measures. 

As stated in the CY 2013 ESRD PPS 

final rule (77 FR 67510 through 67511), 

we adopted an 11-case minimum for the 

clinical measures based on the 

minimum number of cases needed to 

protect patient privacy, which could be 

compromised by the public reporting of 

data for small facilities. Given our goal 

to encourage quality improvement, we 

want to ensure the full participation of 

as many facilities as possible in the 

program. We therefore do not believe 

that a 26 case minimum is appropriate 

for the clinical measures. 

Comment: One commenter expressed 

concerns that the 11-case minimum for 

the clinical measures excludes virtually 

all of the pediatric dialysis facilities 

from participation in the ESRD QIP. The 

commenter recognizes the this case 

minimum is important for the purposes 

of protecting patient confidentiality, but 

the commenter remained concerned that 


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pediatric facilities will not have an 

opportunity to use the ESRD QIP to 

improve performance. 

Response: We are cognizant of the 

issues relating to inclusion of pediatric 

dialysis facilities in the ESRD QIP and 

continue to consider pathways to ensure 

that they are not excluded from 

participation. We appreciate the 

commenter’s concerns and will 

continue to consider new pathways for 

incorporating pediatric dialysis facilities 

in the ESRD QIP. 

Comment: Some commenters did not 

support the proposal to use the smallfacility adjuster for facilities with 11 to 

26 patients. These commenters stated 

that (1) the volatility associated with 

small sample sizes may create 

unintended and harmful consequences 

for facilities; (2) the methodology to 

adjust results for small samples sizes is 

complex and opaque; and (3) very small 

differences in both sample size and SE 

(xi) can cause the achievement score to 

‘‘jump’’ from 10 to 0 points (or vice 

versa). 

Response: We do not agree that the 

small-facility adjuster will create 

harmful consequences for facilities, or 

that small differences in sample size 

and SE (xi) can result in significant 

disparities in measure scores. While we 

recognize that the adjustment 

methodology is complex, we disagree 

that it is opaque. First, as illustrated 

below, the proposed small facility 

adjuster could only improve a facility’s 

individual component score and will 

not create unintended and harmful 

consequences for small facilities (or 

facilities of any size). Second, the 

adjuster is transparent and 

straightforward, in that the adjustment 

explicitly depends on a facility’s size 

(number of patients eligible for the 

measure), the unadjusted measure rate, 

and the standard error for that measure 

at the facility, which quantifies the 

amount of uncertainty in the unadjusted 

measure rate. Thirdly, even with small 

differences in both sample size and SE 

(xi), the adjustment will still be applied 

in favor of the facility, and it is 

impossible for a facility’s measure score 

to be reduced as a result of the 

application of the adjuster. The 

following example illustrates how the 

small facility adjustment impacts the 

achievement score for the AV fistula 

measure. 

In the example above, the smallfacility adjustment increased the AV 

fistula performance rate from 55 percent 

to 69 percent and the achievement score 

from 2 to 7. 

For these reasons, we are finalizing as 

proposed the minimum data 

requirements for scoring measures for 

the PY 2016 ESRD QIP and future 

payment years. 

11. Payment Reductions for the PY 2016 

ESRD QIP and Future Payment Years 

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

requires the Secretary to ensure that the 

application of the scoring methodology 

results in an appropriate distribution of 

payment reductions across facilities, 


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20Medicare claims data from 2012 were used to 

calculate the achievement threshold, benchmark, 

and performance standard for the Hemoglobin > 12 

g/dL, Dialysis Adequacy, and Vascular Access Type 

clinical measures. CROWNWeb data from May 2012 

through December 2012 were used to estimate the 

percentiles for the Hypercalcemia clinical measure. 

such that facilities achieving the lowest 

TPSs receive the largest payment 

reductions. For PY 2016, we proposed 

that a facility would not receive a 

payment reduction if it achieves a 

minimum TPS that is equal to or greater 

than the total of the points it would 

have received if: (i) it performed at the 

performance standard for each clinical 

measure; (ii) it received zero points for 

each clinical measure that did not have 

a numerical value for the performance 

standard published with the PY 2016 

final rule; and (iii) it received five 

points for each reporting measure. We 

requested comments on these proposals. 

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

requires that facilities achieving the 

lowest TPSs receive the largest payment 

reductions. For PY 2016 and future 

payment years, we proposed that the 

payment reduction scale be the same as 

the PY 2015 ESRD QIP (77 FR 67514 

through 67516). We proposed that, for 

every 10 points a facility falls below the 

minimum TPS, the facility would 

receive an additional 0.5 percent 

reduction on its ESRD PPS payments for 

PY 2016 and future payment years, with 

a maximum reduction of 2.0 percent. As 

we stated in the CY 2012 ESRD PPS 

final rule, we believe that such a sliding 

scale will incentivize facilities to meet 

the performance standards established 

and continue to improve their 

performance; even if a facility fails to 

achieve the minimum TPS, such a 

facility will still be incentivized to 

strive for and attain better performance 

rates in order to reduce the percentage 

of its payment reduction (76 FR 70281). 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters 

supported the payment reduction scale. 

However, these commenters remained 

concerned that ‘‘when a facility has a 

small number of patients, its TPS can be 

quickly reduced, causing financial harm 

to the facility.’’ 

Response: We are aware that small 

facilities are more susceptible to the 

effects of outliers, due to their small 

sample sizes, and that this creates a real 

potential for them to be unfairly scored 

on measures in the ESRD QIP. It is for 

this reason that the ESRD QIP includes 

a small facility adjustment on the 

clinical measures for facilities that treat 

between 11 and 25 patients. We 

continue to believe that this adjustment 

provides a fairer and more precise way 

to account for the effects of outliers that 

could otherwise impact a small facility’s 

TPS. 

For the reasons stated above, we are 

finalizing our proposals for calculating 

payment reductions for PY 2016 and 

future payment years. Based on this 

approach, the minimum TPS for PY 

2016 is 54 points. Facilities failing to 

meet this minimum will receive 

payment reductions in the amounts 

indicated in Table 10 below. 

TABLE 10—FINALIZED PAYMENT REDUCTION SCALE FOR PY 2016 

BASED ON THE MOST RECENTLY

AVAILABLE DATA 20

Total performance score Reduction 

(percent) 

100–54 ...................................... 0 

53–44 ........................................ 0.5 

43–34 ........................................ 1.0 

33–24 ........................................ 1.5 

23–0 .......................................... 2.0 

12. Data Validation 

One of the critical elements of the 

ESRD QIP’s success is ensuring that the 

data submitted to calculate measure 

scores and TPSs are accurate. We began 

a pilot data-validation program in CY 

2013 for the ESRD QIP, and we are now 

in the process of procuring the services 

of a data-validation contractor, who will 

be tasked with validating a national 

sample of facilities’ records as they 

report CY 2013 data to CROWNWeb. 

The first priority will be to develop a 

methodology for validating data 

submitted to CROWNWeb under the 

pilot data-validation program; once this 

methodology has been developed, CMS 

will publicize it through a CROWN 

Memo and solicit public comment. As 

part of the CY 2013 ESRD QIP PPS final 

rule (77 FR 67522 through 67523), we 

finalized a requirement to sample 

approximately 10 records from 750 

randomly selected facilities; these 

facilities will have 60 days to comply 

once they receive requests for records. 

We proposed to extend this pilot datavalidation program to include analysis 

of data submitted to CROWNWeb 

during CY 2014. For the PY 2016 ESRD 

QIP, sampled facilities will be 

reimbursed by our validation contractor 

for the costs associated with copying 

and mailing the requested records. 

Additionally, we proposed to reduce the 

annual random sample size from 750 to 

300. We believe that this smaller sample 

size will still yield a sufficiently precise 

estimate of ESRD QIP reliability while 

imposing a smaller burden on ESRD 

QIP-eligible facilities and CMS alike. 

We proposed to extend our policy that 

no facility will receive a payment 

reduction resulting from the validation 

process for CY 2014 during PY 2016. 

Once we have gathered additional 

information based on these initial 

validation efforts, we will propose 

further procedures for validating data 

submitted in future years of the ESRD 

QIP. These procedures may include a 

method for scoring facilities based on 

the accuracy of the data they submit to 

CROWNWeb, and a method to assign 

penalties for submitting inaccurate data. 

We solicited comments on these 

proposals. 

We are also considering a feasibility 

study for validating data reported to 

CDC’s NHSN Dialysis Event Module. 

Although this is still in the early stages 

of development, we anticipate that this 

study may incorporate the methodology 

used by CMS’s Hospital Inpatient 

Quality Reporting Program (77 FR 53539 

through 53553), as well as additional 

input from CDC. The feasibility study 

will likely: (i) Estimate the burden and 

associated costs to ESRD QIP-eligible 

facilities for participating in an NHSN 

validation program; (ii) assess the costs 

to CMS to implement an NHSN 

validation program on a statistically 

relevant scale; and (iii) develop and test 

a protocol to validate NHSN data in 

nine ESRD QIP-eligible facilities. 

Facilities would be selected on a 

voluntary basis. Based on the results of 

this study, we intend to propose more 

detailed requirements for validating 

NHSN data used in the ESRD QIP in the 

future. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: Several commenters urged 

CMS to validate NHSN data and to 

publish the processes that will be used 

for data validation. 

Response: As noted above, we are 

considering a feasibility study for 

validating NHSN data submitted by 

facilities. If we proceed with the study, 

then we will publish the process used 

to validate NHSN data before the study 

is conducted. 

Comment: Several commenters 

supported the proposal to extend the 

data-validation pilot, to reduce the 

sample size from 750 to 300 facilities, 

and to not penalize facilities for 

submitting invalid data (particularly 

until CROWNWeb is fully functional). 

These commenters also appreciated the 

opportunity to comment on future 

validations methodologies. However, 

some commenters urged CMS to 

reimburse facilities for staff time, as 


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well as for costs associated with copying 

and mailing patient records. 

Response: We thank the commenter 

for the support. Additionally, we note 

that CMS has not historically 

reimbursed provider staff or contractors 

for staff time spent in connection with 

copying and mailing patient records, 

and we believe these costs are minimal 

in comparison with the value of 

validating data used in the ESRD QIP. 

For the reasons stated above, we are 

finalizing our proposal to extend the 

data validation pilot as proposed, and 

we will post the methodology, 

procedures and results of the PY 2016 

pilot on http://www.dialysisreports.org. 

13. Scoring Facilities Whose Ownership 

Has Changed 

During PY 2012 (our first 

implementation year for the ESRD QIP), 

facilities requested guidance regarding 

how a change in ownership affects any 

applicable ESRD QIP payment 

reductions. Starting with the 

implementation of the PY 2015 ESRD 

QIP (the performance period of which is 

CY 2013), the application of an ESRD 

QIP payment reduction depended on 

whether the facility retained its CCN 

after the ownership transfer. If the 

facility’s CCN remained the same after 

the facility was transferred, then we 

considered the facility to be the same 

facility (despite the change in 

ownership) for the purposes of the 

ESRD QIP, and we applied any ESRD 

QIP payment reductions that would 

have applied to the transferor to the 

transferee. Likewise, as long as the 

facility retained the same CCN, we 

calculated the measure scores using the 

data submitted during the applicable 

period, regardless of whether the 

ownership changed during one of these 

periods. If, however, a facility received 

a new CCN as a result of a change in 

ownership, then we treated the facility 

as a new facility for purposes of the 

ESRD QIP based on the new facility’s 

CCN open date. We believe that these 

policies are the most operationally 

efficient, and will allow facilities the 

greatest amount of certainty when they 

change ownership. We proposed to 

continue applying these rules during the 

PY 2016 ESRD QIP and future years of 

the program, and we requested public 

comments on this proposal. 

We did not receive any comments on 

this proposal. Therefore, we are 

finalizing our proposals for scoring 

facilities whose ownership has changed 

for the PY 2016 ESRD QIP and for future 

payment years. 

14. Public Reporting Requirements 

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

requires the Secretary to establish 

procedures for making information 

available to the public about facility 

performance under the ESRD QIP, 

including information on the TPS (along 

with appropriate comparisons of 

facilities to the national average with 

respect to such scores) and scores for 

individual measures achieved by each 

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

further requires that a facility have an 

opportunity to review the information to 

be made public with respect to that 

facility prior to publication. In addition, 

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

the Secretary to provide each facility 

with a certificate containing its TPS to 

post in patient areas within the facility. 

Finally, section 1881(h)(6)(D) of the Act 

requires the Secretary to post a list of 

facilities and performance-score data on 

a CMS Web site. 

In the PY 2012 ESRD QIP final rule, 

we adopted uniform requirements based 

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

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

establishing procedures for facilities to 

review the information to be made 

public and for informing the public 

through facility-posted certificates. We 

proposed to maintain the public 

reporting requirements as finalized in 

the CY 2013 ESRD PPS final rule, except 

regarding the timing of when facilities 

must post their certificates. 

For PYs prior to PY 2014, we required 

facilities to post certificates within 5 

business days of us making these 

certificates available for download from 

dialysisreports.org in accordance with 

section 1881(h)(6)(C) of the Act. (77 FR 

67516 and 76 FR 637) In the CY 2013 

ESRD PPS final rule, we noted that 

many individuals responsible for 

posting the certificates were away on 

holiday during the December time 

period when certificates typically 

become available, and finalized that, 

beginning in PY 2014, a facility must 

post copies of its certificates by the first 

business day after January 1 of the 

payment year. (77 FR 67517) We also 

noted that certificates are typically 

available for download on or around 

December 15 of each year, and stated 

that we believe that this two week time 

period is enough to allow facilities to 

post them. 

Since the CY 2013 ESRD PPS final 

rule was finalized, we have noted that 

a posting deadline of the first business 

day after January 1 could create 

difficulties for facilities if it were ever 

the case that certificates were not 

available for download in the typical 

timeframe. We want to ensure that 

facilities have adequate time to post 

certificates as required in this 

circumstance, and that the required 

timing accommodates the December 

holidays. Therefore, we proposed that, 

beginning in CY 2014, facilities must 

post certificates within fifteen business 

days of CMS making these certificates 

available for download from 

dialysisreports.org in accordance with 

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

The comments we received on these 

proposals and our response are set forth 

below. 

Comment: Several commenters 

supported the public-reporting proposal 

to require facilities to post performance 

score certificates fifteen business days 

after they are made available. 

Response: We thank the commenters 

for the support. 

For this reason, we are finalizing the 

public reporting requirements as 

proposed for the PY 2016 ESRD QIP and 

for future payment years. 

IV. Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

A. Background 

1. Background for DME 

Title XVIII of the Social Security Act 

(the Act) governs the administration of 

the Medicare program. The statute 

provides coverage for broad categories 

of benefits, including, but not limited to, 

inpatient and outpatient hospital care, 

skilled nursing facility care, home 

health care, physician services, and 

DME. ‘‘Medical and other health 

services,’’ which is defined under 

section 1861(s)(6) of the Act to include 

DME, is a separate Medicare Part B 

benefit for which payment is authorized 

by section 1832 of the Act. In 

accordance with section 1861(n) of the 

Act, the term ‘‘durable medical 

equipment’’ includes iron lungs, oxygen 

tents, hospital beds, and wheelchairs 

used in the beneficiary’s home, 

including an institution used as his or 

her home other than an institution that 

meets the requirements of section 

1861(e)(1) or section 1819(a)(1) of the 

Act. 

Section 1834(a) of the Act, as added 

by section 4062 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA 87), 

Public Law 100–203, sets forth the 

payment rules for DME furnished on or 

after January 1, 1989. The Medicare 

payment amount for a DME item is 

generally equal to 80 percent of the 

lesser of the actual charge or the fee 

schedule amount for the item, less any 

unmet Part B deductible. The 

beneficiary’s coinsurance for such items 

is generally equal to 20 percent of the 


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lesser of the actual charge or the fee 

schedule amount for the item once the 

deductible is met. The fee schedule 

amounts are generally calculated using 

average allowed charges from a base 

period and then increased by annual 

update factors. Sections 1834(a)(2) 

through (a)(7) of the Act set forth 

separate classes of DME and separate 

payment rules for each class. The six 

classes of items are: inexpensive and 

other routinely purchased DME; items 

requiring frequent and substantial 

servicing; customized items; oxygen and 

oxygen equipment; other covered items 

(other than DME); and other items of 

DME, also referred to as capped rental 

items. The class for inexpensive and 

other routinely purchased DME also 

includes accessories used in 

conjunction with nebulizers, aspirators, 

continuous positive airway pressure 

devices and respiratory assist devices. 

Items of DME fall under the class for 

other items of DME (capped rental 

items) if they do not meet the 

definitions established in the statute 

and regulations for the other classes of 

DME. 

2. Medicare Guidance and Rulemaking 

Regarding Definition of Routinely 

Purchased DME 

On July 14, 1988, CMS issued a 

program memorandum containing 

guidance for carriers to follow in 

developing a data base that would be 

used in identifying other routinely 

purchased DME for the purpose of 

implementing section 1834(a)(2)(A)(ii) 

of the Act. For the purpose of 

identifying routinely purchased items, 

the carriers were instructed via the 

program memorandum to ‘‘compute the 

unduplicated count of beneficiaries who 

purchased the item, by Health Care 

Financing Administration (HCFA) 

Common Procedure Coding System 

(HCPCS) code (now the Healthcare 

Common Procedure Coding System), 

and a count of those who only rented 

the item during the 7/1/86–6/30/87 

period.’’ The carriers were instructed to 

include purchase of new and used items 

and beneficiaries who purchased an 

item that was initially rented in the 

count of beneficiaries who purchased 

the item. The carriers made 

determinations regarding whether DME 

furnished during this period would be 

rented (non-capped) or purchased based 

on which payment method was more 

economical. 

In November 1988, CMS revised Part 

3 (Claims Process) of the Medicare 

Carriers Manual (HCFA Pub. 14–3) via 

transmittal number 1279, by adding 

section 5102 and detailed instructions 

for implementation of the fee schedules 

and payment classes for DME mandated 

by section 4062 of OBRA 87. The new 

implementing instructions were 

effective for services furnished on or 

after January 1, 1989. Section 5102.1.A.2 

indicated that carriers would be 

provided with a listing of the equipment 

in the routinely purchased DME 

category. The initial classifications were 

implemented on January 1, 1989, in 

accordance with the program 

instructions, and included a listing of 

HCPCS codes for base equipment such 

as canes and walkers, as well as HCPCS 

codes for replacement accessories such 

as cane tips, walker leg extensions, and 

power wheelchair batteries for use with 

medically necessary, patient-owned 

base equipment (canes, walkers, and 

power wheelchairs). In the case of 

expensive accessories that were not 

routinely purchased during July 1986 

through June 1987, such as a wheelchair 

attachment to convert any wheelchair to 

one arm drive, these items fell under the 

listing of HCPCS codes for capped rental 

items. Medicare payment for DME 

extends to payment for replacement of 

essential accessories used with patientowned equipment or accessories, 

attachments, or options that modify base 

equipment, such as the addition of 

elevating leg rests to a manual 

wheelchair. 

The Medicare definition of routinely 

purchased equipment under 42 CFR 

§ 414.220(a)(2) specifies that routinely 

purchased equipment means 

‘‘equipment that was acquired by 

purchase on a national basis at least 75 

percent of the time during the period 

July 1986 through June 1987. This 

definition was promulgated via an 

interim final rule (IFC) on December 7, 

1992 (57 FR 57675), remaining 

consistent with Medicare program 

guidance in effect beginning in 1988 

and discussed above, and finalized on 

July 10, 1995 (60 FR 35492). In the 

preamble of the 1992 IFC (57 FR 57679), 

we discussed how items were classified 

as routinely purchased DME based on 

data from July 1986 through June 1987, 

‘‘in the absence of a statutory directive 

that defines the period for determining 

which items are routinely purchased.’’ 

CMS indicated that it ‘‘selected the 

period July 1, 1986 through June 30, 

1987, because it is the same 12-month 

period required by section 

1834(a)(2)(B)(i) of the Act for calculating 

the base fee schedule amount for 

routinely purchased equipment.’’ (57 FR 

57679) This period was therefore 

established as the period from which 

data was used for identifying the items 

that had been acquired on a purchase 

basis 75 percent of the time or more 

under the Medicare rent/purchase 

program. 

3. Payment for Inexpensive or Routinely 

Purchased Items and Capped Rental 

Items 

Under § 414.220(b), payment for 

inexpensive or routinely purchased 

DME is made on a purchase or rental 

basis, with total payments being limited 

to the purchase fee schedule amount for 

the item. If an item is initially rented 

and then purchased, the allowed 

purchase charge is based on the lower 

of the actual charge or fee schedule 

amount for purchase of the item minus 

the cumulative allowed charge for 

previously paid rental claims. Under 

§ 414.229(f), payment for capped rental 

items is made on a monthly rental basis 

for up to 13 months of continuous use. 

The supplier must transfer title to the 

equipment to the beneficiary on the first 

day following the 13th month of 

continuous use. 

B. Current Issues 

Concerns have been raised about the 

application of the definition of and 

payment for routinely purchased DME, 

as it applies to expensive DME 

accessories. For example, recently one 

manufacturer of a new, expensive 

wheelchair accessory, included under a 

HCPCS code that would result in a 

corresponding Medicare fee schedule 

amount of approximately $3,000, if 

purchased, questioned why the HCPCS 

code describing their product was 

classified as capped rental DME. They 

pointed out that codes added to the 

HCPCS in recent years for other similar 

and more expensive wheelchair 

accessories costing $4,000 to $10,000 

were classified as routinely purchased 

DME even though the items were not 

purchased under Medicare during the 

period specified in § 414.220(b). As a 

result, we began a review of expensive 

items that have been classified as 

routinely purchased equipment since 

1989, that is, new codes added to the 

HCPCS after 1989 for items costing more 

than $150, to address this apparent 

inconsistency. 

As a result of this review, we found 

some codes that are not classified 

consistent with the regulatory definition 

of routinely purchased equipment at 

section § 414.220(a)(2). We found that 

HCPCS codes added after 1989 for 

expensive, durable accessories used 

with base equipment, such as 

wheelchairs, have been classified as 

routinely purchased equipment. While 

section 1834(a)(2)(A)(iii) of the Act and 

42 CFR § 414.220(a)(3) of the regulations 

allow payment for the purchase of 

accessories used in conjunction with 


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nebulizers, aspirators, continuous 

positive airway pressure devices 

(CPAP), other items covered under the 

DME benefit, including DME other than 

nebulizers, aspirators, CPAP devices, 

respiratory assist devices and 

accessories used in conjunction with 

those items, are paid for in accordance 

with the rules at section 1834(a) of the 

Act and are classified under sections 

1834(a)(3) thru (7) of the Act as 

inexpensive and other routinely 

purchased DME, items requiring 

frequent and substantial servicing, 

certain customized items, oxygen and 

oxygen equipment, other covered items 

other than DME, or other covered items 

of DME. 

Additionally, we found that in some 

cases, expensive items of DME were 

classified as routinely purchased based 

on information suggesting that payers 

other than Medicare were routinely 

making payment for the items on a 

purchase basis. We believe that 

classifying an item as routinely 

purchased equipment based on data and 

information from other payers for the 

purposes of implementing § 414.220(b) 

is inappropriate because other payers do 

not operate under the same payment 

rules as Medicare. Other payers may 

decide to purchase expensive items for 

reasons other than achieving a more 

economical alternative to rental, the 

basis Medicare contractors used in 

deciding whether to purchase items 

during July 1986 through June 1987. In 

other cases, expensive items of DME 

were classified as routinely purchased 

equipment based on requests from 

manufacturers of equipment primarily 

used by Medicaid beneficiaries. We do 

not believe we should classify an item 

as routinely purchased equipment for 

the purposes of implementing 

§ 414.220(b) of the Medicare regulations 

based on how this might affect other 

payers such as Medicaid state agencies 

because such classifications are not 

consistent with the regulations. After 

reviewing this issue, we do not think 

the regulation supports the 

classification of expensive DME as 

routinely purchased equipment based 

on whether other payers routinely pay 

for the item on a purchase basis or how 

manufacturers would prefer that other 

payers pay for the item. The 

classification of HCPCS codes for 

expensive equipment added after 1989 

as routinely purchased equipment based 

on this kind of information does not 

comply with the Medicare definition of 

routinely purchased equipment and 

defeats a fundamental purpose of the 

capped rental payment methodology to 

avoid paying the full purchase price of 

costly equipment when used only a 

short time. 

DME and accessories used in 

conjunction with DME are paid for 

under the DME benefit and in 

accordance with the rules at section 

1834(a) of the Act. In the proposed rule 

(78 FR 40874), we proposed to clarify 

the existing definition of routinely 

purchased equipment at § 414.220(a)(2) 

and provide notice that certain HCPCS 

codes for DME and DME accessories 

added to the HCPCS after 1989 that are 

currently classified as routinely 

purchased equipment would be 

reclassified as capped rental items (see 

Table 11 below). Under our proposal, 

this would apply to all expensive items 

for which Medicare claims data from 

July 1986 through June 1987 does not 

exist or does not indicate that the item 

was acquired by purchase on a national 

basis at least 75 percent of the time. In 

the case of expensive accessories that 

are furnished for use with complex 

rehabilitative power wheelchairs, we 

proposed that the purchase option for 

complex rehabilitative power 

wheelchairs at section 1834(a)(7)(A)(iii) 

of the Act would also apply to these 

accessories. For any wheelchair 

accessory classified as a capped rental 

item and furnished for use with a 

complex rehabilitative power 

wheelchair (that is, furnished to be used 

as part of the complex rehabilitative 

power wheelchair), the supplier must 

give the beneficiary the option of 

purchasing these accessories at the time 

they are furnished. These items would 

be considered as part of the complex 

rehabilitative power wheelchair and 

associated purchase option set forth at 

§ 414.229(a)(5). 

We also solicited comments on the 

effective date(s) for reclassifying items 

previously classified as routinely 

purchased equipment to the capped 

rental payment class in order to be in 

compliance with current regulations. 

(78 FR 40874) Given that some items 

(HCPCS codes) may be included in the 

Round 2 and/or Round 1 Recompete 

phases of the competitive bidding 

program (CBP), we indicated we do not 

believe we could change the 

classification for items furnished under 

these programs until the contracts 

awarded based on these competitions 

expire on July 1, 2016, and January 1, 

2017, respectively, regardless of 

whether the item is provided in an area 

subject to competitive bidding or not. 

We proposed that the reclassification of 

items previously classified as routinely 

purchased equipment to the capped 

rental payment class be effective 

January 1, 2014, for all items that are not 

included in either a Round 2 or Round 

1 Recompete CBP established in 

accordance with § 414.400. For any item 

currently under a Round 2 CBP, instead 

of a January 1, 2014, effective date we 

proposed July 1, 2016, for these 

reclassifications, which would apply to 

all items furnished in all areas of the 

country, with the exception of items 

furnished in a Round 1 Recompete CBP. 

For items furnished in a Round 1 

Recompete CBP, we proposed an 

effective date of January 1, 2017, which 

would only apply to items furnished in 

the nine Round 1 Recompete areas. 

Therefore, we proposed to generally 

base the effective dates on when the 

CBPs end. To summarize, the proposed 

effective dates for the reclassifications of 

these items from the routinely 

purchased DME class to the capped 

rental DME class would be: 

• January 1, 2014, for items furnished 

in all areas of the country if the item is 

not included in Round 2 or Round 1 

Recompete CBP; 

• July 1, 2016, for items furnished in 

all areas of the country if the item is 

included in a Round 2 CBP and not a 

Round 1 Recompete CBP and for items 

included in a Round 1 Recompete CBP 

but furnished in an area other than one 

of the 9 Round 1 Recompete areas; and 

• January 1, 2017, for items included 

in a Round 1 Recompete CBP and 

furnished in one of the nine Round 1 

Recompete areas. 

We noted that this implementation 

strategy would allow the item to be 

moved to the payment class for capped 

rental items at the same time in all areas 

of the country without disrupting CBPs 

currently underway. For Round 1 

Recompete items furnished in nine 

areas of the country for the six-month 

period from July 1, 2016, thru December 

31, 2016, Medicare payment would be 

on a capped rental basis in all parts of 

the country other than these nine areas. 

Alternatively, we noted the effective 

date for the reclassifications could be 

January 1, 2014, for all items paid under 

the fee schedule (78 FR 40875). In other 

words, the reclassification would not 

affect payments for items furnished 

under the Round 2 or Round 1 

Recompete CBPs in the respective 

competitive bidding areas (CBAs) until 

the contract entered into under these 

programs expire on July 1, 2016, and 

January 1, 2017, respectively. However, 

such an alternative would result in an 

extensive two and a half year period 

from January 2014 through June 2016, 

where Medicare payment would be on 

a capped rental basis for the items in 

half of the country (non-CBAs) and on 

a purchase basis in the other half of the 

country (109 Round 2 and/or Round 1 

Recompete CBAs). We believed that this 


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bifurcation in payment classifications 

would create confusion and would be 

difficult to implement, but we solicited 

comments on this alternative 

implementation strategy. 

For this final rule, we have identified 

78 HCPCS codes that will require 

reclassification from the inexpensive or 

routinely purchased DME payment class 

to the capped rental DME payment class 

(78 FR 40875 through 40876). The codes 

are shown in Table 11 below. As shown 

in Table 11, Column A of the table 

shows the type of DME, Columns B and 

C indicate the HCPCS level II codes and 

the short descriptor. The long descriptor 

for each code is available at http://

www.cms.gov/Medicare/Coding/

HCPCSReleaseCodeSets/AlphaNumeric-HCPCS.html. 

As shown in Column A, the majority 

of codes relate to manual wheelchairs 

and wheelchair accessories. In the case 

of accessories used with complex 

rehabilitative power wheelchairs, the 

purchase option for complex 

rehabilitative power wheelchairs 

applies to these accessories because 

they are part of the complex 

rehabilitative power wheelchair. 

TABLE 11—ROUTINELY PURCHASED ITEMS RECLASSIFIED TO CAPPED RENTAL

Group category HCPCS Descriptor 

Automatic External Defibrillator ...................................................... K0607 Repl battery for AED. 

Canes/Crutches .............................................................................. E0117 Underarm spring assist crutch. 

Glucose Monitor ............................................................................. E0620 Capillary blood skin piercing device laser. 

High Frequency Chest Wall Oscillation Device (HFCWO) ............ A7025 Replace chest compress vest. 

Hospital Beds/Accessories ............................................................. E0300 Enclosed ped crib hosp grade. 

Misc. DMEPOS ............................................................................... A4639 Infrared ht sys replacement pad. 

E0762 Trans elec jt stim dev sys. 

E1700 Jaw motion rehab system. 

Nebulizers & Related Drugs ........................................................... K0730 Ctrl dose inh drug deliv system. 

* * * * * * * 

Other Neuromuscular Stimulators .................................................. E0740 Incontinence treatment system. 

E0764 Functional neuromuscular stimulation. 

Pneumatic Compression Device .................................................... E0656 Segmental pneumatic trunk. 

E0657 Segmental pneumatic chest. 

Power Operated Vehicles (POV) ................................................... E0984 Add pwr tiller. 

* * * * * * * 

Speech Generating Devices ........................................................... E2500 SGD digitized pre-rec <= 8 min. 

E2502 SGD prerec msg >8 min <= 20 min. 

E2504 SGD prerec msg >20 min <= 40 min. 

E2506 SGD prerec msg > 40 min. 

E2508 SGD spelling phys contact. 

E2510 SGD w multi methods messg/access. 

Support Surfaces ............................................................................ E0197 * Air pressure pad for mattress. 

E0198 Water pressure pad for mattress. 

Traction Equipment ........................................................................ E0849 Cervical pneum traction equip. 

E0855 Cervical traction equipment. 

E0856 Cervical collar w air bladder. 

Walkers ........................................................................................... E0140 * Walker w trunk support. 

E0144 Enclosed walker w rear seat. 

E0149 * Heavy duty wheeled walker. 

Wheelchairs Manual ....................................................................... E1161 Manual adult wc w tiltinspac. 

E1232 Folding ped wc tilt-in-space. 

E1233 Rig ped wc tltnspc w/o seat. 

E1234 Fld ped wc tltnspc w/o seat. 

E1235 Rigid ped wc adjustable. 

E1236 Folding ped wc adjustable. 

E1237 Rgd ped wc adjstabl w/o seat. 

E1238 Fld ped wc adjstabl w/o seat. 

Wheelchairs Options/Accessories 

E0985 * W/c seat lift mechanism. 

E0986 Man w/c push-rim pow assist. 

E1002 ∧ Pwr seat tilt. 

E1003 ∧ Pwr seat recline. 

E1004 ∧ Pwr seat recline mech. 

E1005 ∧ Pwr seat recline pwr. 

E1006 ∧ Pwr seat combo w/o shear. 

E1007 ∧ Pwr seat combo w/shear. 

E1008 ∧ Pwr seat combo pwr shear. 

E1010 ∧ Add pwr leg elevation. 

E1014 Reclining back add ped w/c. 

E1020 * Residual limb support system. 

E1028 * W/c manual swingaway. 

E1029 W/c vent tray fixed. 

E1030 ∧ W/c vent tray gimbaled. 

E2227 Gear reduction drive wheel. 

E2228 * Mwc acc, wheelchair brake. 

E2310 ∧ Electro connect btw control. 

E2311 ∧ Electro connect btw 2 sys. 


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TABLE 11—ROUTINELY PURCHASED ITEMS RECLASSIFIED TO CAPPED RENTAL—Continued 

Group category HCPCS Descriptor 

E2312 ∧ Mini-prop remote joystick. 

E2313 ∧ PWC harness, expand control. 

E2321 ∧ Hand interface joystick. 

E2322 ∧ Mult mech switches. 

E2325 ∧ Sip and puff interface. 

E2326 ∧ Breath tube kit. 

E2327 ∧ Head control interface mech. 

E2328 ∧ Head/extremity control interface. 

E2329 ∧ Head control interface nonproportional. 

E2330 ∧ Head control proximity switch. 

E2351 ∧ Electronic SGD interface. 

E2368 * Pwr wc drivewheel motor replace. 

E2369 * Pwr wc drivewheel gear box replace. 

E2370 * Pwr wc dr wh motor/gear comb. 

E2373 ∧ Hand/chin ctrl spec joystick. 

E2374 ∧ Hand/chin ctrl std joystick. 

E2375 * Non-expandable controller. 

E2376 ∧ Expandable controller, replace. 

E2377 ∧ Expandable controller, initial. 

E2378 Pw actuator replacement. 

K0015 * Detach non-adjus hght armrst. 

K0070 * Rear whl complete pneum tire. 

Wheelchairs Seating ....................................................................... E0955 * Cushioned headrest. 

* Effective July 1, 2016. If the item is furnished in CBAs in accordance with contracts entered into as part of the Round 1 Recompete of 

DMEPOS CBP, then effective January 1, 2017. 

∧ Item billable with Complex Rehabilitative Power Wheelchair codes K0835—K0864. 

** Code E0760 not included in final list based on comments received on proposed list. 

*** Code E0457 not included in final list as code has been made invalid for Medicare effective January 1, 2014. 

In summary, we provided notice that 

certain HCPCS codes we proposed 

would be reclassified as capped rental 

items. We invited comments on this 

section. 

C. Responses to Comments on the 

Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

We received approximately 172 

comments regarding the clarification of 

the definition of Routinely Purchased 

DME. CMS received comments from 

DME suppliers, manufacturers, 

professional, state and national trade 

associations, physicians, physical 

therapists (PTs), speech pathologists, 

occupational therapists (OTs), 

beneficiaries and their caregivers, the 

Veterans Administration (VA), and a 

state government representative. The 

comments and our responses are 

summarized below. 

Comment: Several commenters noted 

the clarification of the definition of 

routinely purchased durable medical 

equipment relies on 1986/87 as the base 

year and instead suggested using 2010/ 

11 as a base year for determining new 

items classified under routinely 

purchased category. 

Response: We do not agree with this 

comment. In this final rule, we are not 

revising the definition given our 

longstanding interpretation regarding 

section 1834(a)(2) of the Act. Although 

there have been numerous amendments 

to section 1834(a) over the years to 

address payment of certain DME, there 

have been no amendments to revise the 

definition of routinely purchased DME. 

Payment on a capped rental basis avoids 

lump sum purchases of expensive 

equipment that is only needed on a 

short term basis and is more economical 

than purchase. If the equipment is 

needed on a long term basis, 

beneficiaries will take over ownership 

following 13 months of continuous use. 

In addition, we did not propose to 

revise the base period in the definition 

for routinely purchased DME at 42 CFR 

§ 414.220(a)(2). We are therefore not 

adopting this suggestion to revise the 

base period for the definition of 

routinely purchased DME equipment 

under 42 CFR § 414.220(a)(2). 

Comment: Many commenters 

contended that reclassifying certain 

codes from the routinely purchased 

DME category to capped rental DME 

would result in additional 

administrative burden for suppliers. 

Commenters reacted unfavorably to 

repeated billings for monthly rental 

claims for as long as the item is 

medically necessary up until title 

transfers at the end of the 13th month 

rental period. 

Response: While we understand 

certain billing procedures for capped 

rental items differ from and may be 

more administratively burdensome than 

billing procedures for routinely 

purchased items, this does not negate 

the fact that items must be classified in 

accordance with the rules of the statute 

and regulations. 

Comment: One commenter requested 

a delay in the implementation of the 

reclassification of the list of codes in our 

table from routinely purchased DME to 

capped rental DME. The commenter 

stated that more time is needed to 

educate practitioners and patients along 

with receipt of adequate program 

guidance. Another comment from a 

manufacturer requested a substantial 

delay in implementation of the capped 

rental system for Speech Generating 

Devices (SGDs). 

Response: Items that are not in 

compliance with the existing definition 

of routinely purchased DME will be 

classified as capped rental items and 

paid for in accordance with the rules set 

forth in 42 CFR 414.229 for items not 

currently included in a CBP that are 

furnished on or after April 1, 2014. The 

dates for re-classification of items 

affected by this rule that are currently 

included in a CBP will be discussed 

later in the preamble. We do not agree 

with the comment that a substantial 

delay in implementation of the 

reclassification of SGDs is necessary. 

Suppliers and practitioners will have 

more than three months to become 

familiar with payment rules and billing 

procedures related to capped rental 


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items and to prepare for this change in 

classification. In addition, this change 

in classification only affects payments 

for these items on or after April 1, 2014. 

We recognize that consumers, 

occupational and physical therapists 

and disability advocacy groups have 

expressed concerns with these changes 

to acquisition policy for some durable 

medical equipment which persons with 

disabilities rely upon, including 

specialized wheelchairs and speech 

generating devices. Although we do not 

anticipate disruptions resulting from the 

transition from purchase to a capped 

rental, we understand the important role 

that this technology plays in 

maximizing the independence of 

persons with disabilities and their 

ability to direct their own care. 

Accordingly, CMS is committed to 

carefully monitoring beneficiary access 

using real-time claims data to ensure 

that there isn’t an adverse impact. 

Comment: Several commenters noted 

some of the codes proposed for 

reclassification include the term 

‘‘replacement only’’, such as code E2376 

Expandable controller, replacement and 

K0607 Automatic external defibrillator 

part; thus, the codes are most likely 

submitted for payment for beneficiary 

owned DME instead of DME owned by 

the supplier during a 13-month capped 

rental period. Commenters felt it was 

unrealistic to expect a supplier to rent 

these items and disable the patient 

owned equipment should the 

beneficiary become ineligible for 

Medicare payment. Another commenter 

mentioned that some of the 

transitioning codes are not covered or 

have lower utilization under Medicare. 

Response: We do not agree with these 

comments. The statute does not 

differentiate between items paid for 

under the DME benefit that are base 

equipment versus items paid for under 

the DME benefit that are replacement 

parts for base equipment. With the 

exception of drugs, which are paid in 

accordance with a separate payment 

methodology, all items covered under 

the DME benefit category are subject to 

the payment rules mandated by section 

1834(a) of the Act. An item is not 

classified based on utilization, and, 

under our regulation at 42 CFR 

414.229(f), if the beneficiary needs the 

item for 13 continuous months, title to 

the item is transferred to the beneficiary 

after 13 months. Lastly, our review of 

the codes for reclassification from 

routinely purchased DME to capped 

rental indicates coverage under 

Medicare although the extent of 

coverage differs by item. 

Comment: One commenter noted 

several of the listed codes have limited 

coverage under Medicare and so 

continuing to pay on a lump sum 

purchase basis for these items will have 

a minimal impact on Medicare 

expenditures. 

Response: The statute does not 

provide direction or discretion to 

classify items under section 1834(a)(2) 

thru (7) of the Act based on magnitude 

of expenditures. 

Comment: Numerous commenters 

opposed reclassifying the HCPCS codes 

for pediatric manual wheelchairs (codes 

E1232–E1238) and manual tilt in space 

wheelchairs (code E1161) from the 

payment class for inexpensive or 

routinely purchased items to the 

payment class for capped rental items. 

Some commenters stated many adult tilt 

in space wheelchair users require 

customization of equipment and require 

adjustment to reflect their unique 

postural and mobility needs. The 

commenters stated a concern that 

payment on a rental basis for these 

items will increase the risk for 

orthopedic deformities due to improper 

support, increase the risk of pressure 

sores from poorly managed skin 

integrity, and will contribute to overall 

costs of medical care. Many commenters 

stated these items are used for chronic 

conditions or permanent disabilities, 

such as quadriplegia, paraplegia, 

multiple sclerosis, head and spinal 

injuries, requiring wheelchairs and 

wheelchair accessories that are 

constructed of components that are not 

mass produced which reduces the profit 

margin compared to the furnishing of 

power mobility and acute adult manual 

wheelchairs. 

Response: Claims for ‘‘youth’’ or 

‘‘pediatric’’ wheelchairs were submitted 

using HCPCS code E1091 (Youth 

Wheelchair, Any Type) from July 1986 

through June 1987, and this equipment 

was paid on a purchase basis 25 percent 

of the time during this time. This is well 

below the 75 percent threshold 

established in the statute; and therefore, 

classification of pediatric or youth 

wheelchairs (HCPCS codes E1232– 

E1238) as capped rental items is 

required by the regulations. The data 

from July 1986 through June 1987 also 

indicates that only 30 percent of all 

manual wheelchairs were purchased for 

Medicare beneficiaries during this time. 

As Medicare claims data from July 1986 

through June 1987 does not exist for 

adult tilt in space wheelchairs (HCPCS 

code E1161), the data required by the 

regulation to classify these items as 

routinely purchased equipment does not 

exist and these items will therefore be 

classified as capped rental items in 

accordance with this rule. We agree that 

some items may have a higher cost 

because they are not mass produced; 

however, such costs are accounted for in 

the fee schedule amounts that have been 

set based on supplier charges or price 

lists. We note that the fee schedule 

amounts for the pediatric and adult tilt 

in space manual wheelchairs are more 

than double, and in some cases triple, 

the fee schedule amounts established for 

other manual wheelchairs. We recognize 

that commenters have expressed 

concerns with these changes to payment 

policy for some durable medical 

equipment which persons with 

disabilities rely upon, including 

specialized wheelchairs. Although we 

do not anticipate disruptions resulting 

from the transition from purchase to a 

capped rental, we understand the 

important role that this equipment plays 

in maximizing the independence of 

persons with disabilities and their 

ability to direct their own care. 

Accordingly, CMS is committed to 

carefully monitoring beneficiary access 

using real-time claims data to ensure 

that there isn’t an adverse impact. 

Comment: One commenter raised 

concern that suppliers spend multiple 

hours on supplies, labor and parts to 

customize a wheelchair; therefore, if 

patients become temporarily 

institutionalized, regress and need new 

customized parts, or pass away so that 

the wheelchair is returned to the 

supplier, the supplier would have a 

need to readjust and customize the chair 

to fit the needs of the next patient. 

Response: This rule has no impact on 

items that meet the definition of 

customized items at 42 CFR 414.224. 

For items that are affected by this rule, 

we agree that some items may have a 

higher cost because they are not mass 

produced; however, such costs are 

accounted for in the fee schedule 

amounts that have been set based on 

supplier charges or price lists. We 

appreciate hearing about the concerns 

with these changes to payment policy 

for some durable medical equipment 

which persons with disabilities rely 

upon, including specialized 

wheelchairs. Although we do not 

anticipate disruptions resulting from the 

transition from purchase to a capped 

rental, we understand the important role 

that this technology plays in 

maximizing the independence of 

persons with disabilities and their 

ability to direct their own care. 

Accordingly, CMS is committed to 

carefully monitoring beneficiary access 

using real-time claims data to ensure 

that there isn’t an adverse impact. 

Comment: There were concerns raised 

by many commenters regarding 

reclassification of wheelchair options 

and accessories added to individually 


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configure wheelchairs to meet long-term 

mobility needs. 

Response: In this final rule, an 

exception is established so that 

wheelchair options and accessories 

furnished for use with purchased 

complex rehabilitative power 

wheelchairs can be paid under a 

routinely purchased basis consistent 

with 42 CFR 414.229(a)(5). Other 

expensive wheelchair options and 

accessories that are paid separate from 

the rental payments for the wheelchair 

base and were not routinely purchased 

from July 1986 through June 1987 fall 

under the payment category for capped 

rental items. Payment will therefore be 

made on a capped rental basis for the 

options and accessories furnished for 

use with the rented wheelchair base. As 

a result, when payment for less than 13 

months of continuous use is made for 

the wheelchair and associated options 

and accessories, the supplier can 

furnish the equipment to other patients 

and receive additional payment for the 

equipment. If payment is made for 13 

months of continuous use of the 

wheelchair, then title to the wheelchair 

and all options and accessories will 

transfer to the beneficiary. 

Comment: One commenter 

recommended CMS should establish 

that all manual wheelchairs should 

remain in the routinely purchased 

category and that options and 

accessories provided with/for a 

‘‘routinely purchased’’ wheelchair base 

should be considered ‘‘routinely 

purchased’’ as well. 

Response: With the exception of 

ultralightweight manual wheelchairs, 

manual wheelchairs were not routinely 

purchased under the Medicare program 

from July 1986 through June 1987. The 

data from July 1986 through June 1987 

indicates that only 30 percent of manual 

wheelchairs and 55 percent of power 

wheelchairs were purchased for 

Medicare beneficiaries during this time. 

These percentages are well below the 75 

percent threshold established in the 

statute. As discussed above. an 

exception is established so that 

wheelchair options and accessories 

furnished for use with purchased 

complex rehabilitative power 

wheelchairs can be paid under a 

routinely purchased basis consistent 

with 42 CFR 414.229(a)(5). Wheelchair 

options and accessories falling under 

the payment category for capped rental 

items will be paid for on a rental basis 

when they are furnished with other 

wheelchair bases, with title to the 

equipment transferring to the 

beneficiary after 13 months of 

continuous use. 

Comment: Many commenters 

complained that a capped rental 

payment method will result in a 

significant financial burden for 

suppliers who may face challenges 

securing capital/lines of credit in the 

current economic environment. 

Response: We do not agree with this 

comment. The capped rental payment 

method allows suppliers to reclaim 

capital equipment that is not needed for 

13 months of continuous use. While 

Medicare payments may total 105 

percent of the historic purchase price 

over 13 months of continuous use by a 

single beneficiary, the item could be 

rented for significantly more than 13 

monthly payments and significantly 

more than 105 percent of the historic 

purchase price if it is used by multiple 

beneficiaries who do not need the item 

for the full 13 months. 

Comment: Commenters stated that the 

proposed change in payment rules will 

be adopted by payers other than 

Medicare and therefore should not be 

adopted. 

Response: Speculation about how 

other payers will pay for items that are 

also paid for by Medicare is beyond the 

scope of this rule and we have not taken 

such things into consideration when 

finalizing our policies. We must comply 

with the requirements of section 

1834(a)(2) through (7) of the Act 

regarding how we classify and pay for 

DME items. 

Comment: Various commenters 

argued that since the ultralightweight 

wheelchair (HCPCS code K0005) is 

classified as routinely purchased 

equipment, other complex rehabilitative 

manual wheelchairs (HCPCS codes 

E1161 and E1232 through E1238) 

should similarly be classified as 

routinely purchased equipment. 

Response: The ultralightweight 

wheelchair was classified as routinely 

purchased equipment based on the 

regulatory standard (that is, it was 

acquired for purchase on a national 

basis at least 75 percent of the time from 

July 1986 through June 1987). Other 

manual wheelchairs have not been 

routinely purchased under the Medicare 

program. Claims for ‘‘youth’’ or 

‘‘pediatric’’ wheelchairs were submitted 

using HCPCS code E1091 (Youth 

Wheelchair, Any Type) from July 1986 

through June 1987, and this equipment 

was paid on a purchase basis 25 percent 

of the time during this time. This is well 

below the 75 percent threshold 

established in the statute; and therefore, 

classification of pediatric or youth 

wheelchairs (HCPCS codes E1232— 

E1238) as capped rental items is 

required by the regulations. The data 

from July 1986 through June 1987 also 

indicates that only 30 percent of all 

manual wheelchairs were purchased for 

Medicare beneficiaries during this time. 

As Medicare claims data from July 1986 

through June 1987 does not exist for 

adult tilt in space wheelchairs (HCPCS 

code E1161), these items will be 

classified as capped rental items in 

accordance with this rule, and this is 

consistent with the classification of 

youth or pediatric wheelchairs and for 

manual wheelchairs in general based on 

Medicare claims data from July 1986 

through June 1987. 

Comment: One commenter concurred 

with our proposal by indicating it is a 

waste for patients at end stage of life to 

purchase complex wheelchairs which 

they then would not use for more than 

1–2 years, due to various life ending 

diseases or due to regression in 

function, or at an older terminal age. 

The commenter noted it is advisable to 

have a system of rental and return, so 

that the same equipment can be 

modified, then rented to someone else. 

This will greatly reduce waste in this 

area of assistive technology/wheelchair 

supply and demand. 

Response: We appreciate this 

comment. 

Comment: Several commenters 

supported our proposal permitting a 

supplier to give the beneficiary the 

option of purchasing a wheelchair 

accessory classified as a capped rental 

item and furnished for use with a 

complex rehabilitative power 

wheelchair (that is, furnished to be used 

as part of the complex rehabilitative 

power wheelchair) at the time the 

accessory is furnished. These 

wheelchair accessory items would be 

considered as part of the complex 

rehabilitative power wheelchair and 

associated purchase option set forth at 

§ 414.229(a)(5). 

Response: We appreciate this 

comment. 

Comment: Several commenters urged 

CMS to extend our proposal to permit 

a supplier to give the beneficiary the 

option of purchasing a wheelchair 

accessory classified as a capped rental 

item and furnished for use with a 

complex rehabilitative power 

wheelchair (that is, furnished to be used 

as part of the complex rehabilitative 

power wheelchair) to accessories 

furnished for use with standard power 

wheelchairs. 

Response: We disagree with this 

comment. The statute does not provide 

a purchase option for standard power 

wheelchairs. Section 1834(a)(7)(A)(iii) 

provides the purchase agreement option 

only for complex, rehabilitative, powerdriven wheelchairs. 


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Comment: Some commenters were 

concerned that Part B coverage and 

payment for rented DME is no longer 

allowed when a beneficiary enters a 

hospital, so the beneficiary will be 

billed for equipment during the time the 

beneficiary is in the hospital because 

the provider would not be able to 

remove a tilt mechanism from their 

wheelchair without rendering their 

chair non-functional. 

Response: The Part B benefit for DME 

and the payment rules at section 1834(a) 

of the Act do not extend to DME items 

furnished for use in hospitals. 

Classification of items under the 

payment classes established in sections 

1834(a)(2) through (7) is not affected by 

whether or not the item will later be 

available for use in a hospital. Medicare 

benefit payments for items used in 

hospitals may be available under other 

parts of the program other than the Part 

B benefit for DME. In addition, 

suppliers are responsible for submitting 

claims for payment under the Medicare 

Part B DMEPOS fee schedule in 

compliance with our regulations and 

program instructions, such as those in 

the Medicare Claims Processing Manual 

(Pub 100.04), chapter 20, section 30.5.4 

which address such temporary 

interruptions 

Comment: Several commenters argued 

that the estimated program savings are 

not accurate primarily because the 8 

month average use assumed for the 

items moved from routinely purchased 

to capped rental is in error because the 

8 month average use was established for 

existing capped rental items, not 

routinely purchased. 

Response: We believe that Medicare 

data on the average number of monthly 

rental claims paid for items currently 

classified as capped rental items is a 

reasonable proxy for the average number 

of monthly rental claims that will be 

paid for items reclassified as a result of 

this rule and provides an accurate 

estimate of the impact of this 

rulemaking on Medicare part B 

expenditures for DME. Most of the items 

being reclassified are either wheelchairs 

or wheelchair accessories. In reviewing 

the data used to determine that an 

average of 8 monthly rental payments 

are made for items currently classified 

as capped rental items, the average 

number of paid monthly rental claims 

per beneficiary drops to 7 when only 

wheelchairs and wheelchair accessories 

currently classified as capped rental 

item are considered. Our goal is to 

create a reasonable model by which to 

estimate the fiscal impact of the policy. 

The method used to calculate the 

savings is as follows: 

• Sum the 2011 allowed charges for 

the HCPCS that are affected 

• Increase the allowed charges by 

Medicare Advantage add-on 

• Apply the annual increases for feefor-service Medicare Part B population 

and for fee update to the total 

expenditures through the year 2023 

• Based on claims data, the average 

duration of use of capped rental 

equipment is approximately 8 months, 

which is 2/3 of purchase price. 

• So it is assumed that moving an 

item from routinely purchased to 

capped rental will on average save 33 

percent of the purchased price, which is 

the factor applied to allowed charges to 

generate the savings indicated in the 

proposed rule. 

Comment: Several commenters argued 

that the estimated savings in the rule 

does not consider the cost of possible 

increased institutional care. 

Response: We do not believe the 

policy described in this final rule would 

increase the use of institutional care. We 

are not reducing the number of items 

that would be covered or reducing 

payment for certain DME items such 

that more institutional care may be 

needed. 

Comment: Some commenters 

recommended classifying equipment as 

routinely purchased equipment if any of 

the following conditions are met: 1) the 

item is routinely needed for a period 

exceeding 13 months; 2) the item is 

intended for use by people with 

permanent disabilities; 3) the item is 

designed, manufactured, or assembled 

for a single individual (not intended to 

be used by multiple individuals); 4) the 

item was previously classified as 

routinely purchased equipment; and 5) 

other payers routinely pay for the item 

on a purchase basis. 

Response: We disagree with this 

suggestion. We have interpreted the 

statutory definition of routinely 

purchased equipment, as set forth in the 

regulations, as ‘‘equipment that was 

acquired by purchase on a national basis 

at least 75 percent of the time during the 

period July 1986 through June 1987.’’ 

The statute does not contemplate use of 

additional factors in making 

determinations regarding whether 

equipment is routinely purchased, such 

as the ones raised by the commenters,. 

Also, we see no reason to revise the 

longstanding definition of routinely 

purchased equipment, but we may 

reconsider the issue in the future if 

necessary. 

Comment: One commenter noted the 

United States Supreme Court held in 

Olmstead v. L.C. (527 US 581 (1991)) 

that unjustified segregation of persons 

with disabilities constitutes 

discrimination in violation of title II of 

the Americans with Disabilities Act. As 

noted by the commenter, the Court held 

that public entities must provide 

community-based services to persons 

with disabilities to support them to live 

independently in the community. The 

commenter asserts a change in the terms 

of usage of assistive devices jeopardizes 

the spirit of the decision made in the 

Olmstead case. A person can be in a 

position of not having these devices at 

time of need. 

Response: We do not concur that 

changing the payment classification of 

certain codes from routinely purchased 

DME to capped rental DME jeopardizes 

the spirit of the decision made in the 

Olmstead case. Our proposal is not 

designed to undermine payment of the 

items; rather it is clarifying the 

definition of routinely purchased 

equipment set forth at section 

§ 414.220(a)(2) and reclassifying some 

codes that are not presently classified 

consistent with the regulatory 

definition. In addition, the proposal is 

not designed to have any impact on 

coverage of items and services under the 

Medicare Part B benefit for DME. Such 

items and services would continue to be 

available consistent with the statute and 

regulations. This rule is designed to 

clarify the payment provisions 

applicable to accessories used in 

conjunction with items paid for under 

section 1834(a) of the Act. 

Comment: Some commenters stated 

that speech generating devices (SGDs) 

(HCPCS codes E2500–E2510) should not 

be covered as DME but instead as 

prosthetic devices. 

Response: These comments are 

outside the scope of the proposed rule, 

and therefore are not addressed in this 

final rule. The process for reviewing 

coverage/benefit category for an item is 

not addressed in this rule. Information 

on the process can be found at the Web 

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

Coverage/DeterminationProcess/

index.html 

Comment: Several commenters stated 

that certain patients may benefit from 

renting SGDs. One commenter wrote 

once an individual has the initial 

assessment, there is often a trial period 

with one or more devices. The average 

time for trials is 90 days. One 

commenter stated a rental may be 

appropriate for short-term use such as a 

temporary loss of natural speech due to 

a surgical procedure or when waiting to 

purchase one. Another commenter 

indicated patients may benefit from 

renting a device for up to 1 year. 

Furthermore, one commenter supported 

implementation of a rental payment 

basis for certain DME to prevent abuse 


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of the purchase basis system and to help 

keep co-insurance costs lower when 

extended over the number of rental 

months. 

Response: We thank the commenters 

for their helpful comments and agree 

about the potential benefits of our 

capped rental policy. We are aware that 

some manufacturers make their SGC 

products available on a rental basis so 

that patients can try out the products to 

figure out which one best meets their 

needs. Under the capped rental payment 

system, the patient will have the ability 

to obtain a new physician order and 

change equipment during the rental 

period to equipment that better meets 

their medical needs while Medicare 

rental payments continue up to the 

point where title to the equipment 

transfers to the beneficiary after 13 

months of continuous use. 

Comment: Numerous commenters 

opposed reclassification of SGDs, 

indicating that these devices are 

individually programmed based on each 

patient’s need and access method (that 

is, eye-gaze, touch screen, switch) and 

language skills. The commenters stated 

that these devices are not similar to 

wheelchairs which are primarily generic 

in their design and can be used by a 

wide variety of individuals without 

significant modifications. Also, the 

commenters reviewed that patients’ 

caregivers may be accustomed to 

specific devices used by their patients. 

One commenter suggested that a SGD is 

more appropriately analyzed as a 

complex rehabilitation tool, and as part 

of that analysis, the importance of 

integration and customization with the 

other rehab tools and medical needs of 

the patient must be considered. Other 

commenters reiterated that SGDs assist 

with communication that is essential for 

an individual’s independence and 

functional living. Another commenter 

described an analysis of the diagnoses of 

the patients using SGDs, which shows 

that an estimate of eight months for a 

rental is unrealistic given that many 

SGD patients have a long term need for 

the device. 

Response: We recognize that patients 

may use long term DME such as SGDs 

because of chronic conditions or 

permanent disabilities; however, we 

believe assigning the appropriate 

payment category in accordance with 

the statute and regulations ensures 

appropriate payment, supplier 

responsibilities, and beneficiary 

safeguards. Our final policy is not 

designed to interfere with patient care 

or a practitioner’s efforts to program 

SGDs. 

Comment: Many commenters claimed 

that reclassifying SGDs from routinely 

purchased DME to capped rental DME 

would cause suppliers to limit the 

amount of time and attention given to 

furnishing quality SGDs. Several 

commenters are concerned suppliers 

will require patients to switch devices 

and the devices would be taken away 

from patients who need them when the 

patient has reached maximum rental 

fees. Another commenter raised 

concerns that suppliers will not furnish 

SGDs that adequately serves patients 

who move from one location to another. 

Response: The HCPCS codes for SGDs 

and other DME describe different 

categories of items. The supplier must 

furnish the item ordered by the 

physician to meet the patient’s medical 

needs as required by 42 CFR 

424.57(c)(4). Suppliers that are found 

not in compliance with the DMEPOS 

supplier standards are not allowed to 

possess a supplier number and receive 

Medicare payment for DME in 

accordance with section 1834(j) of the 

Act. These standards and requirements 

are not affected by the methodology 

used to pay for the item. In addition, 

regulations at 42 CFR 414.229(g) require 

that suppliers furnishing capped rental 

items continue to furnish the item for 

the full 13-month capped rental period 

with very limited exceptions and are 

prohibited from switching the patient’s 

equipment unless the physician orders 

different equipment, the beneficiary 

chooses to obtain a newer technology 

item or an upgraded item, or the 

equipment is replaced because of loss, 

theft, or irreparable damage or wear. If 

the device is used for 13 continuous 

months, then the supplier is required to 

transfer title to the equipment to the 

beneficiary. Regarding patients who 

relocate near the end of the capped 

rental period and need to find a new 

supplier, CMS has been able to work 

with suppliers of capped rental items in 

the past to ensure beneficiary access in 

these situations. 

Comment: Numerous comments were 

concerned that a rental payment method 

would impact access to SGDs in certain 

settings such as a hospital or nursing 

facility. As a result, commenters were 

concerned because the patient should 

not need to worry that the device will 

be taken away when circumstances 

require the patient to communicate to 

practitioners in the facilities. 

Commenters explained the patient may 

be forced to accept an inappropriate 

device because the right one for them is 

not available while in a facility resulting 

in practitioners and caregivers having 

difficulty in understanding the patient. 

Response: In accordance with the 

statute, we do not establish payment 

rules for DME based on how the item is 

furnished in institutional settings, 

especially in light of the definition of 

DME in section 1861(n) of the Act, 

which defines DME as equipment used 

in a patient’s home. 

Comment: One commenter expressed 

concern that our proposal did not 

include codes for Accessory for Speech 

Generating Device, Not Otherwise 

Classified (HCPCS code E2599) and 

Accessory for Speech Generating 

Device, Mounting System (HCPCS code 

E2512). 

Response: We appreciate this 

comment, but we are not including 

codes E2599 and E2512 in our list of 

codes for reclassification at this time 

because fee schedule amounts for these 

codes have not been established. When 

fee schedules are developed, we will 

review the data for these accessory 

codes to ensure compliance with the 

Medicare definition of routinely 

purchased equipment set forth at 42 

CFR § 414.220(a). If a change in 

payment category is required in the 

future, CMS expects to provide notice 

via program instructions. 

Comment: Some commenters 

recommended that the low volume of 

services for SGDs should exempt these 

codes from our proposal for 

reclassification from routinely 

purchased to capped rental. One 

commenter stated the proposal from 

CMS reports $20,170,612 in payments 

for SGDs in 2012 at an average cost of 

$7,356 for 2,742 services. The 

commenter also stated this represents 

.000008 of the United States population 

utilizing data from the census bureau. 

Response: The payment rules at 

section 1834(a) of the Act do not classify 

items under the payment classes based 

on volume of services. As discussed 

above, the Medicare definition of 

routinely purchased equipment is set 

forth at 42 CFR § 414.220(a)(2) and 

specifies that routinely purchased 

equipment means equipment that was 

acquired by purchase on a national basis 

at least 75 percent of the time during the 

period July 1986 through June 1987. As 

a result of clarifying and reaffirming this 

definition, equipment for which claims 

data did not exist during the 1986/87 

period cannot be classified as routinely 

purchased equipment. This results in 

such codes being reclassified as capped 

rental items if they do not fall under any 

of the other DME payment classes. 

Comment: One commenter stated that 

the pneumatic compression trunk 

appliance (HCPCS code E0656) and the 

pneumatic compression chest appliance 

(HCPCS code E0657), both used in 

conjunction with pneumatic 

compression pumps for treatment of 

lymphedema, are considered routinely 


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purchased because the common 

diagnosis that allows reimbursement is 

lymphedema. The commenter states 

lymphedema is not curable and can 

only be managed. When a person has 

been diagnosed with lymphedema and a 

pneumatic compression pump has been 

prescribed, it is never for short term use. 

Thus, the items should not be 

reclassified from routinely purchased to 

capped rental payment method. 

Response: The payment rules at 

section 1834(a) of the Act do not classify 

items under the payment classes based 

on diagnosis and intended use. As 

discussed above, the Medicare 

definition of routinely purchased 

equipment is set forth at 42 CFR 

§ 414.220(a)(2) and specifies that 

routinely purchased equipment means 

equipment that was acquired by 

purchase on a national basis at least 75 

percent of the time during the period 

July 1986 through June 1987. In this 

final rule, we are reclassifying DME that 

was not acquired during the period July 

1986 through June 1987 or was not 

acquired by purchase on a national basis 

at least 75 percent of the time during the 

period July 1986 through June 1987, and 

therefore cannot be classified as 

routinely purchased DME under 42 CFR 

414.220(a). This results in certain codes 

receiving reclassification to capped 

rental DME if the codes do not fall 

under any of the other DME payment 

classes. We do note that only some of 

the codes in use during July 1986 

through June 1987 that describe 

pneumatic compression appliances for 

the arm and leg met the definition of 

routinely purchased equipment. 

However, the appliances that were not 

routinely purchased met the definition 

of inexpensive equipment under 

§ 414.220(a)(1). The codes for pneumatic 

compression appliances for the trunk 

and chest are considerable more 

expensive than the pneumatic 

compression appliances for the arm and 

leg and were not acquired on a purchase 

basis at least 75 percent of the time 

during July 1986 through June 1987. 

Payment will therefore made on a 

capped rental basis for pneumatic 

compression appliances for the trunk 

and chest furnished for use with 

pneumatic compression pumps. Thus, 

under the capped rental category 

whether the pneumatic compression 

chest appliance device is used short 

term or long term, payment is made in 

alignment with the number of months 

for which the equipment was in use, 

until the beneficiary no longer needs the 

device or the rental period has ended. 

Comment: One commenter requested 

reclassification of code K0730 

controlled dose inhalation drug delivery 

system from the routinely purchased to 

the frequently serviced payment 

category. The commenter also requested 

CMS reclassify code E0574, which also 

describes a nebulizer item, to the 

frequently serviced payment category. 

Response: We are not adopting this 

suggestion to reclassify codes K0730 

and E0574 to the frequently serviced 

payment category. Section 13543 of the 

Omnibus Budget Reconciliation Act of 

1993 (OBRA 93) removed nebulizers 

from the statutory list of items classified 

under the frequent and substantial 

servicing payment class effective with 

respect to items furnished on or after 

January 1, 1994. In accordance with 

these provisions, we continue to believe 

that these devices should not be 

classified as items under the payment 

category for items requiring frequent 

and substantial servicing under 

§ 1834(a)(3)(A) of the Act. As such, we 

are implementing our proposal to 

reclassify these codes to the capped 

rental payment category. 

Comment: One commenter opposed 

reclassification of code E0762 

transcutaneous electrical joint 

stimulation system from the routinely 

purchased to the capped rental payment 

category because while significant relief 

is provided by the system within a short 

period of time, more significant results 

are achieved with increased use of the 

device. 

Response: We continue to believe it is 

appropriate to reclassify code E0762 

from the routinely purchased to the 

capped rental payment category. As 

discussed above, the Medicare 

definition of routinely purchased 

equipment is set forth 42 CFR 

§ 414.220(a)(2) and specifies that 

routinely purchased equipment means 

equipment that was acquired by 

purchase on a national basis at least 75 

percent of the time during the period 

July 1986 through June 1987. Therefore, 

DME, including code E0762, for which 

claims data did not exist during the 

1986/87 period cannot be classified as 

routinely purchased equipment. This 

results in such codes being reclassified 

as capped rental items if they do not fall 

under any of the other DME payment 

classes. Furthermore, under the capped 

rental payment method, the supplier 

owns the equipment during the rental 

period and title to the equipment 

transfers to the beneficiary at the end of 

a 13th month rental period. Thus, 

whether the device is used short term or 

long term, payment is made in 

alignment with the number of months 

until the beneficiary no longer needs the 

device or the rental period has ended. 

Comment: One commenter stated jaw 

motion rehabilitation system from 

Dynasplint (HCPCS code E1700) should 

not remain routinely purchased because 

it was previously billed under a capped 

rental miscellaneous code and it was 

assigned by the Medicare Pricing, Data 

Analysis and Coding (PDAC) contractor 

to code E1700 which contains other less 

expensive items. 

Response: Since HCPCS code 

assignment is outside the scope of the 

proposed rule which only concerns the 

reclassification of code E1700 from the 

routinely purchased payment category 

to the capped rental payment category, 

and we are not addressing this comment 

in this final rule. 

Comment: Some commenters stated 

that code E0760 for Osteogenesis 

Ultrasound Stimulator is not DME but is 

a therapeutic intervention similar to a 

drug treatment. 

Response: These comments are 

outside the scope of the proposed rule, 

and therefore are not addressed in this 

final rule. The process for reviewing 

coverage/benefit category for an item is 

not addressed in this rule. Information 

on the process can be found at the Web 

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

Coverage/DeterminationProcess/

index.html 

Comment: Many commenters raised 

concerns that code E0760 for 

Osteogenesis Ultrasound Stimulator 

remains comparable to electric bone 

growth stimulators (codes E0747 and 

E0748) that also treat established 

nonunion of fractures of long bones and 

as adjunctive therapy to spinal fusion to 

improve fusion success rates, which are 

assigned to the routinely purchased 

category in accordance with the existing 

regulatory definition of routinely 

purchased items. Commenters pointed 

out the code used to describe 

osteogenesis stimulators in 1986 

through 1987 did not specify the type of 

stimulator Medicare purchased. Also, 

commenters noted that code E0760 was 

initially classified as capped rental DME 

and reclassified by Medicare to 

routinely purchased DME based on data 

from other payers and claims submitted 

to Medicare. 

Response: We recognize the 

commenters’ concerns and in this final 

rule, we will revise the list of codes by 

removing code E0760 from the final list 

of codes for reclassification to the 

capped rental DME. We agree that 

HCPCS codes used to routinely pay for 

the purchase of osteogenesis stimulators 

in 1986 and 1987 did not differentiate 

between types of osteogenesis 

stimulators and therefore, believe that 

the general category of osteogenesis 

stimulator are correctly classified as 

routinely purchase equipment in 


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accordance with current regulations 

§ 414.220(a)(2). 

Comment: Commenters noted that the 

proposed list of HCPCS codes that 

would be reclassified as capped rental 

items includes HCPCS codes that 

describe products cleared by the FDA 

for single patient use. Commenters 

stated that reclassifying these devices as 

capped rental items goes against their 

labeling as single patient use devices by 

the FDA and that some of these devices 

cannot be cleaned or refurbished for 

another patient’s use. A commenter 

noted that a change in payment category 

could affect various levels of market 

availability including FDA clearance, 

product marketing or the company’s 

business model. Commenters stated a 

significant investment of resources and 

time is required to seek a new FDA label 

to allow these items to be rented to 

multiple patients. One commenter 

objected that reclassification would 

essentially force devices currently 

labeled for single patient use to be used 

off-label as rental equipment. 

Additionally, one commenter 

recommended that we amend our 

regulation to provide that all devices 

cleared by the FDA as class III devices 

under the Federal Food, Drug, and 

Cosmetic Act are classified as routinely 

purchased equipment. 

Response: The payment rules under 

section 1834(a) of the Act do not classify 

items under the payment classes based 

on how they are cleared by the FDA. As 

discussed above, the Medicare 

definition of routinely purchased 

equipment under § 414.220(a)(2) 

specifies that routinely purchased 

equipment means equipment that was 

acquired by purchase on a national basis 

at least 75 percent of the time during the 

period July 1986 through June 1987. As 

a result of our clarification of this 

definition, equipment that was not 

acquired at all during the period July 

1986 through June 1987, was not 

acquired by purchase on a national basis 

at least 75 percent of the time during the 

period July 1986 through June 1987, and 

therefore, cannot be classified as 

routinely purchased equipment. This 

results in such codes being reclassified 

as capped rental items if they do not fall 

under any of the other DME payment 

classes. We agree that manufacturers 

and suppliers of products should be in 

compliance with FDA requirements, but 

we do not believe that FDA 

requirements dictate how items should 

be classified under sections 1834(a)(2) 

through (7) of the Act. 

After consideration of comments 

received on the proposed rule and for 

the reasons we discussed above and in 

the proposed rule, we are finalizing our 

proposals and reclassifying certain 

items identified in this final rule with 

the exception of code E0760 which will 

remain classified as routinely purchased 

equipment. We did not receive 

comments regarding the effective dates 

for the reclassifications of these items 

from the routinely purchased DME 

category to capped rental DME. For the 

reasons discussed in the proposed rule 

(78 FR 40875), we are finalizing the 

effective dates for the changes of this 

section in compliance with the required 

regulatory process as follows: 

• April 1, 2014, for items furnished in 

all areas of the country if the item is not 

included in Round 2 or Round 1 

Recompete CBP; 

• July 1, 2016, for items furnished in 

all areas of the country if the item is 

included in a Round 2 CBP and not a 

Round 1 Recompete CBP and for items 

included in a Round 1 Recompete CBP 

but furnished in an area other than one 

of the 9 Round 1 Recompete areas; and 

• January 1, 2017, for items included 

in a Round 1 Recompete CBP and 

furnished in one of the nine Round 1 

Recompete areas. 

The April 1, 2014, effective date was 

selected in order to ensure that these 

changes do not occur sooner than 60 

days after publication of the final rule 

for claims processing purposes. 

V. Clarification of the 3-Year Minimum 

Lifetime Requirement (MLR) for DME 

DME is covered by Medicare based, in 

part, upon section 1832(a) of the Act, 

which describes the scope of benefits 

under the supplementary medical 

insurance program (Medicare Part B), to 

include ‘‘medical and other health 

services,’’ which is further defined 

under section 1861(s)(6) of the Act to 

include DME. In addition, section 

1861(m)(5) of the Act specifically 

includes DME in the definition of the 

term ‘‘home health services.’’ In 

accordance with section 1861(n) of the 

Act, the term ‘‘durable medical 

equipment’’ includes iron lungs, oxygen 

tents, hospital beds, and wheelchairs 

used in the patient’s home whether 

furnished on a rental basis or 

purchased. The patient’s home includes 

an institution used as his or her home 

other than an institution that meets the 

requirements of section 1861(e)(1) or 

section 1819(a)(1) of the Act. Besides 

being subject to this provision, the 

coverage of DME must meet the 

requirements of section 1862(a)(1)(A) of 

the Act, which in general excludes from 

payment any items or services that are 

not reasonable and necessary for the 

diagnosis or treatment of illness or 

injury or to improve the functioning of 

a malformed body member, and section 

1862(a)(6) of the Act, which (except for 

certain specified exceptions) precludes 

payment for personal comfort items. 

Section 414.202 defines DME as 

equipment furnished by a supplier or a 

home health agency that meets the 

following conditions: (1) Can withstand 

repeated use; (2) effective with respect 

to items classified as DME after January 

1, 2012, has an expected life of at least 

3 years; (3) is primarily and customarily 

used to serve a medical purpose; (4) 

generally is not useful to an individual 

in the absence of an illness or injury; 

and is appropriate for use in the home. 

Prior to 2012, the definition for DME 

did not contain a 3-year minimum 

lifetime requirement (MLR) although 

Section 110.1 of chapter 15 of the 

Medicare Benefit Policy Manual (CMSPub. 100–02) provided further guidance 

with regard to the definition of DME 

and durability of an item that is when 

an item is considered durable. 

A. Current Issues 

On November 10, 2011, CMS issued a 

final rule in which it revised the 

definition of DME at § 414.200 by 

adding a 3-year MLR effective January 1, 

2012, that must be met by an item or 

device in order to be considered durable 

for the purpose of classifying the item 

under the Medicare benefit category for 

DME (76 FR 70228 (November 10, 

2011)). Specifically, an additional 

condition under § 414.200 is that DME 

must be equipment furnished by a 

supplier or a home health agency that, 

effective with respect to items classified 

as DME after January 1, 2012, has an 

expected life of at least 3 years. The 

change to the regulation was designed to 

further clarify the meaning of the term 

‘‘durable’’ and provide an interpretation 

of the statute generally consistent with 

the DME payment and coverage 

provisions, including, Medicare 

program guidance at section 280.1 of 

chapter 1, part 4 of the Medicare 

National Coverage Determinations 

Manual (Pub. 100–03) which specifies 

that an item can withstand repeated use 

means that the item could normally be 

rented and used by successive patients. 

The 3-year MLR is intended to specify 

that durable equipment is equipment 

that can withstand repeated use over an 

extended period of time. Since the vast 

majority of items covered under the 

DME benefit over the years last for 3 or 

more years, the MLR is intended to 

clarify the scope of the DME benefit 

primarily for new items coming on the 

market or in the process of being 

developed. The standard set forth in 

regulations gives manufacturers and the 

public a clear understanding of how 

long an item would need to withstand 


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repeated use in order the meet the 

durability requirement for DME. The 

rule also provides clear guidance to 

CMS and other stakeholders for making 

consistent informal benefit category 

determinations (BCDs) and national 

coverage determinations (NCDs) for 

DME. 

The 3-year MLR is designed to 

represent a minimum threshold for a 

determination of durability for a piece 

of equipment. The 3-year MLR is not an 

indication of the typical or average 

lifespan of DME, which in many cases 

is far longer than 3 years. The 3-year 

MLR does not apply to disposable 

supplies or accessories covered for use 

with DME such as masks, tubing, and 

blood glucose test strips. The 3-year 

MLR is prospective only and does not 

apply to equipment classified as DME 

before the regulation was effective, that 

is, January 1, 2012. 

We also determined that the 3-year 

MLR should not apply to equipment 

classified as DME before the effective 

date to allow for continued coverage of 

such equipment that healthcare industry 

and beneficiaries have come to rely on, 

regardless of whether those items met 

the 3-year MLR set forth at 42 CFR 

414.202 (76 FR70288). Given that 

reliance, we indicated we did not intend 

to reopen those prior decisions and 

reclassify the equipment in light of the 

3-year standard. We believe that 

continuing Medicare coverage for items 

that qualified as DME prior to the 

effective date helps avoid disrupting the 

continuity of care for the beneficiaries 

that received such items for medical 

treatment prior to January 1, 2012. 

Beneficiaries have been relying on 

these items for their treatment to the 

extent that the items have been covered 

as DME under Medicare. Furthermore, 

we believed that a vast majority of the 

categories of items that were classified 

as DME before January 1, 2012, did 

function for 3 or more years. We also 

noted that the 3-year durability rule 

would only apply to new products, and, 

to the extent that a modified product is 

not a new product, the 3-year MLR 

would not be applicable. 

In response to the public comments 

that requested further clarification on 

the application of the grandfathering 

provision for the 3-year MLR, we noted 

that we would consider issuing 

additional guidance to provide further 

clarification, if necessary (76 FR 70290). 

For purposes of providing additional 

guidance on the scope of the 

grandfathered items under the 

provision, we invited public comments 

on this issue. 

B. Scope of the 3-Year MLR for DME 

Under § 414.202, effective with 

respect to items classified as DME after 

January 1, 2012, an item is not 

considered durable unless it has an 

expected life of at least 3 years. 

Therefore, the 3-year MLR applies to 

new items after January 1, 2012, and 

does not apply to items covered under 

the DME benefit on or prior to January 

1, 2012. Items classified as DME on or 

before January 1, 2012, are considered 

‘‘grandfathered items’’ for the purpose 

of this requirement, regardless of 

whether they meet the 3-year rule. 

For the purpose of providing further 

guidance on the scope of the 3-year 

MLR, in the proposed rule (78 FR 

40877), we provided clarification about 

how we would regard grandfathered 

items covered as DME prior to the 

effective date and we requested 

comments on that clarification. We 

proposed that if the product is modified 

(upgraded, refined, reengineered, etc.) 

after January 1, 2012, the item would 

still be classified as DME as a 

grandfathered item unless the modified 

product now has an expected life that is 

shorter than the expected lifetime for 

the item covered as DME prior to 

January 1, 2012. In this case, we would 

consider the item, as modified, to be a 

new item that is subject to the 3-year 

MLR. For example, equipment covered 

prior to January 1, 2012, and described 

by code X has a life of at least 2 years. 

If, after January 1, 2012, that item is 

modified such that it is less durable, 

such that it no longer lasts for the 2 year 

period, that modification would render 

the item ‘‘new’’ and it would be subject 

to the 3-year MLR. Therefore, since the 

new (modified) product does not last 3 

years, it would not meet the definition 

of DME under the regulation and could 

not be covered or be billed using the 

code that described the item before it 

was modified. 

We sought comments on this 

proposed clarification. 

C. Response to Comments on the 3-Year 

MLR for DME 

We received approximately 13 

comments on the proposed regulation 

(78FR 40876–40877) regarding 

clarification of the grandfathering 

provision of the 3-year MLR for DME. 

Commenters included medical device 

manufacturers, suppliers, advocacy 

groups and coalitions. 

Comment: Most commenters 

acknowledged and appreciated that 

CMS proposed the clarification of the 

grandfathering provision of the 3-year 

MLR for DME. 

Response: We thank the commenters 

for their input and support. We note 

that the clarification regarding 

grandfathered items that are modified 

relates to the durability of the item 

under the definition, and in particular, 

whether the modified item has a shorter 

useful life than the expected lifetime for 

the items covered prior to January 1, 

2012. 

Comment: Two commenters 

supported our clarification in the 

proposed rule of the grandfathering 

provision of the 3-year MLR for DME. 

The commenters believed that the 

proposed clarification to continue to 

cover grandfathered items if modified as 

long as the modification did not shorten 

its useful life was reasonable and 

encouraged CMS to adopt it. 

Response: We thank the commenters 

for their support. However, we wish to 

clarify that the proposed rule addressed 

how we would regard grandfathered 

items covered as DME prior to the 

effective date. We proposed that if a 

grandfathered product is modified 

(upgraded, refined, reengineered, etc.), 

the item would still be classified as a 

grandfathered item unless the product 

has been modified to be less durable, 

such that it now has an expected life 

that is shorter than the expected lifetime 

for the item covered as DME prior to 

January 1, 2012. In this case, we would 

consider the item, as modified, to lose 

its grandfathered status and thus it 

would be treated as a new item that is 

subject to the 3-year MLR. 

Comment: Several commenters 

indicated that the proposed rule still 

leaves great uncertainty regarding which 

modifications will result in products 

that continue to be, or are no longer, 

grandfathered. Without specific 

vignettes or parameters that illustrate 

how CMS will address these matters 

when certain new products come onto 

the market, the guidance in the 

proposed rule will not resolve the 

questions that remain. Specifically, 

1. If application of new technology 

renders a product more effective but 

reduces its minimum lifetime; will the 

3-year requirement be applied? 

2. It does not provide further details 

regarding the extent of changes that 

could be made to an existing DME 

product such that it would still be 

subject to grandfathering provision. 

3. Must a modified item fall within 

the same HCPCS code and/or DME 

product category as a grandfathered 

item in order for it to also fall within the 

grandfathering provision and not be 

considered a new item? 

4. If a modification of an existing 

product results in the designation of 

another HCPCS code; will this trigger 

the 3-year requirement? 


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Response: We thank the commenters 

for their input. As noted in the final rule 

(76 FR 70289, 70290 (November 10, 

2011)), the 3-year MLR for DME is 

applied on a prospective basis. That is, 

the 3-year MLR only applies to new 

items, meaning items that were not 

covered as DME on or prior to January 

1, 2012. We clarified in the proposed 

rule (78 FR 40877) that items paid for 

as DME on or before January 1, 2012, are 

considered ‘‘grandfathered items’’ for 

the purpose of the 3-year MLR for DME, 

regardless of whether they meet the 3- 

year rule. If a grandfathered item is 

modified (upgraded, refined, 

reengineered, etc.) after January 1, 2012, 

the item would still be considered a 

grandfathered item unless the item has 

been modified to be less durable, such 

that it now has an expected life that is 

shorter than the lifetime for the 

grandfathered item, which was covered 

as DME on or prior to January 1, 2012. 

Therefore, if application of new 

technology renders a product more 

effective but reduces its durability; then 

the product would lose its 

grandfathered status and the 3-year 

requirement would apply. 

The change we made to the regulation 

to establish a 3-year MLR for DME was 

designed to further clarify the meaning 

of the term ‘‘durable.’’ Based on our 

experience with the Medicare program, 

the vast majority of items covered as 

DME last for 3 years or longer; however, 

the purpose of the grandfathering 

provision is to ensure continued 

coverage for the items that were paid as 

DME before the effective date of the 

MLR requirement and, to avoid 

disruption of the continuity of care for 

the beneficiaries using such equipment. 

. . . In response to the specific concerns 

of the commenters, the parameters of 

the grandfathering provision are: 

1. An item paid for as DME on or 

before January 1, 2012, is considered a 

grandfathered item for the purpose of 

the 3-year MLR for DME, regardless of 

whether they meet the 3-year rule; and 

2. A grandfathered item that is 

modified (upgraded, refined, 

reengineered, etc.), is still considered a 

grandfathered item rather than a new 

item unless the item is less durable, 

such that it now has an expected life 

that is shorter than the expected lifetime 

for the item covered as DME on or prior 

to January 1, 2012. 

Making individual determinations 

about whether a modified version of an 

item that was paid as DME on or prior 

to January 1, 2012, lasts as long as the 

item that was paid as DME on or prior 

to January 1, 2012, involves a case-bycase review of the relevant facts. 

Therefore, specific vignettes or 

parameters that illustrate how CMS will 

make these individual determinations 

could be misleading since it is not 

possible to illustrate every possible 

scenario addressing various items paid 

for as DME in the past and how they 

could be modified in the future. With 

regard to comments regarding HCPCS 

codes, there are a variety of coding 

changes. A code could be added for a 

completely new category of items that 

have never been paid for by Medicare 

and therefore these items would be 

subject to the 3-year MLR. Alternatively, 

a new code could be the result of a 

coding action whereby existing codes 

are revised to form a new code or codes. 

In these cases, the determination 

regarding whether an item is a 

grandfathered item not subject to the 3- 

year MLR will depend on whether the 

item was paid for as DME on or prior 

to January 1, 2012, under codes in effect 

on or prior to January 1, 2012. 

Comment: Some commenters stated 

that the proposed rule does not provide 

clarity on what is a completely ‘‘new 

product’’ that would never be subject to 

the grandfathering provision. 

Response: A new product is a product 

that was not paid for as DME on or prior 

to January 1, 2012, or a grandfathered 

item that loses its grandfathered status. 

Comment: Some commenters 

indicated that it is unclear what would 

be considered a modified product that 

would be subject to the grandfathering 

provision provided that the 

modifications do not result in a reduced 

minimum lifetime of the product. 

Would a premarket approval product 

approved after January 1, 2012, that is 

similar in structure and function to 

grandfathered products be considered a 

modified version of the grandfathered 

products? Is newly cleared 510(k) 

product considered to be a modified 

version of the predicate device? It is 

unclear whether a new product cleared 

by the FDA through the Premarket 

Approval (PMA) process as opposed to 

a PMA supplement approved after 

January 1, 2012, can be considered to be 

a modification of a grandfathered 

product or whether a new product 

cleared by the FDA through the 510(k) 

process as substantially equivalent to 

other, previously cleared, predicate 

products is considered to be a 

modification of a predicate device. 

Response: A grandfathered product is 

a specific product (make, manufacturer, 

model, model number, etc.) that was 

covered and paid for as DME on or prior 

to January 1, 2012. Any product that is 

not a grandfathered product or a 

grandfathered product that is modified 

so that it is less durable, such that it 

now has an expected lifetime that is 

shorter than the expected lifetime of the 

product covered as DME on or prior to 

January 1, 2012, is subject to the 3-year 

MLR. CMS will continue to consider 

these issues and provide additional 

guidance if necessary. 

Comment: Several commenters voiced 

concerns that the final rule will serve as 

a major deterrent to future investments 

in new technologies. There may be 

desirable innovations made to a 

grandfathered product that would 

reduce the minimum lifetime of the 

product. If changes to a product that 

result in a different HCPCS code 

assignment or DME product category by 

definition do not fall within the 

grandfathering provision then 

manufacturers do not have the incentive 

to research and develop a grandfathered 

product’s safety and effectiveness in 

treating. By eliminating reimbursement 

under Medicare DME benefit for 

modified grandfathered products 

containing innovations that are 

clinically beneficial to the patients but 

may reduce the minimum lifetime of 

those products, the proposed 

clarification discourages innovation of 

existing technologies. 

Response: We believe that the 3-year 

MLR to clarify the term durable and the 

grandfathering provision are reasonable 

given the 5 year reasonable lifetime 

requirement, general DME payment 

rules and industry standards which 

support the fact that DME items should 

be able to withstand repeated use. We 

do not believe the rule is a deterrent. 

The rule is designed to clarify the 

grandfathering provision and ensure 

that such products are not modified to 

be less durable. 

Based upon our experience with the 

Medicare program, the vast majority of 

items covered as DME last for 3 years or 

longer. The purpose of the 

grandfathering provision is to continue 

the Medicare coverage for the items that 

were paid as DME on or prior to the 

effective date, in order to avoid 

disruption of the continuity of care for 

the beneficiaries that had received items 

for medical treatment on or prior to 

January 1, 2012. 

Comment: A few commenters 

suggested that instead of using the MLR 

to determine whether modified DME is 

a ‘‘new’’ device, CMS should focus on 

whether the modified device has the 

same clinical application as the 

grandfathered DME. This criterion 

would be a better measure of whether 

the device is ‘‘new’’ than whether it 

meets what a few commenters 

characterized as an arbitrary MLR rule. 

CMS should instead establish 

reasonable parameters under which 

products should be considered 


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comparable to existing DME products in 

order to be subject to the grandfathering 

provision-any modification, upgrade, 

redesign, improvement or new 

indication of an existing DME product 

that maintains the product’s core 

clinical technology or mechanism of 

action should be eligible for 

reimbursement under the DME benefit 

category. 

Response: We thank the commenters 

for their input. However, our proposal 

regarding the 3-year MLR with regard to 

the definition of DME was to clarify the 

issue of durability as it relates to 

grandfathering status. Our proposal 

centered on the lifetime of the product 

as a result modification (upgraded, 

refined, reengineered, etc.). We do not 

believe that issues such as core clinical 

technology or clinical application to 

determine whether a modified 

grandfathered item is a new DME as 

suggested by the commenters, speaks to 

the issue of durability with regard to our 

interpretation of the statutory DME 

provisions. 

Comment: A few commenters 

expressed concerns that the proposed 

rule will require manufacturers to 

undertake expensive testing to 

demonstrate that their equipment 

continues to qualify under the 

grandfathering provision. They 

questioned whether there is a 

benchmark for deciding whether the 

modified device has an MLR that is 

shorter than the grandfathered device 

(e.g., is it an MLR that is a year shorter, 

90 days shorter, or a day shorter than 

that of the grandfathered DME?). 

Commenters believe that, instead of 

providing clarity, CMS has injected 

even more subjectivity and ambiguity 

into the Medicare coverage and coding 

process and provides virtually no 

guidance when the minimum lifetime of 

a modified device does not conclusively 

meet the 3-year threshold. Commenters 

stated that, in the past, CMS has stated 

that it will base these decisions on a 

review of existing data, but the outcome 

in these cases ultimately will hinge on 

subjective interpretation of the data. The 

commenters note that this type of 

analysis will be useless in assessing new 

technologies, which typically are not 

included in independent comparative 

studies of the type CMS has said it plans 

to consult. 

Response: We thank the commenters 

for their input but do not believe that 

the proposed regulation injects 

subjectivity and ambiguity into the 

Medicare coverage and coding process. 

We are not proposing a new process to 

determine whether a modified device 

has an expected life that is shorter than 

the original grandfathered device; 

therefore, no new types of tests are 

needed to make determinations 

regarding the expected lifetime of 

products. As discussed previously, we 

will continue to follow the current BCD 

process to determine on an individual 

consideration basis if a modified 

grandfathered item falls within the 

grandfathering provision. We will 

review information and evidence, which 

a supplier/manufacturer may submit, 

consistent with the current BCD process 

to determine the expected life of the 

equipment. As discussed previously, the 

BCD process typically involves 

reviewing information from various 

sources including but not limited to 

information related to FDA pre-market 

clearance, product manuals, operating 

guides, warranty documents, and 

standardized test results. The NCD 

process is available at http://

www.cms.gov/DeterminationProcess/

Downloads/FR09262003.pdf. See also, 

68 FR 55638 (September 23, 2003). 

Additionally, we routinely collect 

information regarding durability of new 

products as part of the HCPCS editorial 

process in order to identify categories of 

new DME subject to the procedures 

established in accordance with the 

mandate of section 531(b) of the 

Medicare, Medicaid and SCHIP Benefit 

Improvement and Protection Act of 

2000 (BIPA 2000), Public Law 106–554. 

Based on our experience with the 

program, this information has been 

readily available from the manufacturers 

of these items and other entities 

submitting requests for changes to the 

HCPCS. Information on the HCPCS 

Level II coding process is available at: 

http://www.cms.gov/

MedHCPCSGenInfo/Downloads/2013_

HCPCS_Application.pdf and http://

www.cms.gov/MedHCPCSGenInfo/08_

HCPCSPublicMeetings.asp#TopOfPage. 

Comment: Some commenters argued 

that in this case, CMS’ original concern 

about disrupting patient care continues 

to hold true. Commenters claim that the 

proposal to modify the grandfathering 

provision of § 414.202 will disrupt the 

care of beneficiaries using the 

grandfathered DME. Beneficiaries who 

have been using the grandfathered DME 

will no longer have Medicare coverage 

for the medically necessary device they 

depend on. Physicians and other 

practitioners will be unable to order 

devices that have been proven 

therapeutically effective for the patients 

they treat. For these beneficiaries and 

providers, it will almost certainly be 

true that they will be left without an 

equally effective alternative for 

continuing their care. 

Response: We thank the commenters 

for their input, but we do not agree with 

the above comment. We note that the 

proposed rule was designed to clarify 

the grandfathering provision. The 

proposed clarification of the 

grandfathering provision is designed to 

address how grandfathered products 

could be modified without losing their 

grandfathered status. The commenters 

concerns that beneficiaries who have 

been using the grandfathered DME will 

no longer have Medicare coverage for 

the medically necessary device they 

depend on or that physicians will be 

unable to order devices that have been 

proven therapeutically effective for the 

patients are inaccurate. On the contrary, 

the purpose of the grandfathering 

provision for the 3-year MLR was to 

continue Medicare coverage for items 

that were classified as DME on or prior 

to the effective date, in order to avoid 

disruption of the continuity of care for 

the beneficiaries that had already 

received these items for medical 

treatment. For the reasons stated above, 

we do not believe that the clarification 

of the grandfathering provision will 

disrupt the continuing care for 

beneficiaries that are using the 

grandfathered DME. 

Comment: Some commenters urged 

CMS to convene a study panel to allow 

stakeholders to collaborate with the 

agency to examine a few central 

questions such as whether a modified 

item must fall within the same HCPCS 

code and/or DME product category as a 

grandfathered item in order for it to also 

fall within the grandfathering provision. 

Commenters asked CMS to consider 

convening a stakeholder meeting to 

solicit views from patients, healthcare 

providers, DME manufacturers and 

other health policy experts. 

Response: We appreciate the 

comment. We established the 3-year 

MLR effective with respect to items 

classified as DME on or after January 1, 

2012, via notice and comment 

rulemaking. We are clarifying the 

grandfathering provision for the 3-year 

MLR via notice and comment 

rulemaking. In addition, we will 

continue to follow the current processes 

including BCD, NCD, Local Coverage 

Determinations (LCD), and HCPCS 

codes to implement the 3-year MLR and 

the grandfathering provision. These 

processes include meetings with 

manufacturers in addition to the public 

where we seek input from the 

stakeholders. We will continue to 

receive input from stakeholders 

consistent with the BCD and NCD 

process when applying the 3-year MLR 

and the grandfathering provision. See 68 

FR 55634 (September 26, 2003); and 

http://www.Cms.gov/

DeterminationProcess/Downloads/ 


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FR09262003.pdf. See also, information 

on the HCPCS Level II coding process 

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

MedHCPCSGenInfo/Downloads/2013_

HCPCS_Application.pdf. http://

www.cms.gov/MedHCPCSGenInfo/08_

HCPCSPublicMeetings.asp#TopOfPage. 

Comment: Some commenters stated 

that as other payers follow Medicare 

guidelines, it is important to revise illconceived Medicare policy now before 

regulations that harm people with 

disabilities and chronic conditions are 

replicated at the State level. 

Response: This comment is outside 

the scope of the proposed rule. 

Comment: One commenter stated that 

CMS proposes to clarify the scope and 

application of the MLR 

‘‘grandfathering’’ provision by 

stipulating that products will lose the 

grandfather status if the modified 

product will have an expected life that 

is shorter than three years. In other 

words, the commenter believes the 

proposed rule would result in noncoverage of any grandfathered item that 

is modified. 

Response: We thank the commenter 

for the input. However, the statement in 

the above comment that a modified 

product that has an expected life that is 

shorter than three years will no longer 

be grandfathered and therefore, lose 

coverage status is inaccurate. We 

proposed that a product covered as DME 

prior to 2012 that is modified would 

still be grandfathered as long as the 

expected lifetime of the product is equal 

to or greater than the lifetime of the 

product covered prior to 2012. Under 

this proposal, if the product lost 

grandfathered status (because the 

modification reduced the expected 

lifetime of the product covered prior to 

2012), the product would be subject to 

the 3-year MLR. The application of 3- 

year MLR would determine whether 

product would be otherwise covered 

under the definition. For grandfathered 

items that have a lifetime shorter than 

3-years, modifications that reduce such 

lifetime generally would result in the 

product no longer meeting the 

definition given the application of the 3- 

year MLR (because the grandfathered 

status was lost). However, for 

grandfathered products that have a 

lifetime greater than 3 years, 

modifications that shorten such lifetime 

may or may not result in non-coverage 

under the definition when the 3-year 

MLR is applied. For example, if a 

grandfathered product covered as DME 

prior to 2012 with a lifetime of four 

years is modified, resulting in a product 

with a lifetime of two and a half years 

(and thereby losing grandfathering 

status), the product would no longer 

meet the definition of DME, because the 

3-year MLR is not met given that the 

lifetime of the modified product is less 

than three years. In the same example, 

if the modification resulted in a reduced 

lifetime of the product to 3.5 years, the 

product, even though it lost 

grandfathering status, would satisfy the 

3-year rule, and continue meet the 

definition of DME. 

After consideration of comments 

received on the proposed rule, we are 

finalizing the clarification of the 

grandfathering provision of the 3-year 

MLR for DME. The 3-year MLR applies, 

effective January 1, 2012, but does not 

apply to items covered under the DME 

benefit on or prior to January 1, 2012 

(‘‘grandfathered items’’). However, 

effective April 1, 2014, if the 

grandfathered item is modified 

(upgraded, refined, reengineered, etc.), 

and the modified item now has an 

expected life that is shorter than the 

expected lifetime for the item covered as 

DME prior to January 1, 2012, the 

modified item will lose grandfathered 

status. In this case, we would consider 

the item, as modified, to be a new item 

that is subject to the 3-year MLR. 

VI. Implementation of Budget-Neutral 

Fee Schedules for Splints, Casts and 

Intraocular Lenses (IOLs) 

A. Background 

1. Payment Under Reasonable Charges 

Payment for most items and services 

furnished under Part B of the Medicare 

program is made through contractors 

known as Medicare Administrative 

Contractors (MACs). These contractors 

were previously referred to as carriers. 

Prior to 1988, in accordance with 

section 1842(b) of the Act, payment for 

most of these items and services was 

made on a reasonable charge basis by 

these contractors, with the criteria for 

determining reasonable charges set forth 

at 42 CFR part 405, subpart E of our 

regulations. 

Under this general methodology, 

several factors or ‘‘charge screens’’ were 

developed for determining the 

reasonable charge for an item or service. 

In accordance with § 405.503, each 

supplier’s ‘‘customary charge’’ for an 

item or service, or the 50th percentile of 

charges for an item or service over a 12- 

month period, was one factor used in 

determining the reasonable charge. In 

accordance with § 405.504, the 

‘‘prevailing charge’’ in a local area, or 

the 75th percentile of suppliers’ 

customary charges for the item in the 

locality, was also used in determining 

the reasonable charge. For the purpose 

of calculating prevailing charges, a 

‘‘locality’’ is defined at § 405.505 of our 

regulations and ‘‘may be a State 

(including the District of Columbia, a 

territory, or a Commonwealth), a 

political or economic subdivision of a 

State, or a group of States.’’ The 

regulation further specifies that the 

locality ‘‘should include a cross section 

of the population with respect to 

economic and other characteristics.’’ In 

accordance with § 405.506, for certain 

items, such as parenteral and enteral 

nutrients, supplies, and equipment, an 

additional factor referred to as the 

‘‘lowest charge level’’ was used in 

determining the reasonable charge for 

an item or service. In accordance with 

section 5025 of the Medicare Carriers 

Manual (HCFA Pub. 14–3) and 

§ 405.509 of our regulations, effective 

for items furnished on or after October 

1, 1985, an additional factor, the 

‘‘inflation-indexed charge (IIC),’’ was 

added to the factors taken into 

consideration in determining the 

reasonable charge for certain items and 

services. The IIC is defined in 

§ 405.509(a) as the lowest of the fee 

screens used to determine reasonable 

charges for items and services, 

including supplies, and equipment 

reimbursed on a reasonable charge basis 

(excluding physicians’ services) that is 

in effect on December 31 of the previous 

fee screen year, updated by the inflation 

adjustment factor. The inflation 

adjustment factor is based on the 

current percentage increase in the 

consumer price index for all urban 

consumers (United States city average) 

(CPI–U) for the 12-month period ending 

June 30. The reasonable charge is 

generally set based on the lowest of the 

actual charge for the item or service or 

the factors described above. 

2. Payment Under Fee Schedules 

Specific provisions have been added 

to the Act mandating replacement of the 

reasonable charge payment 

methodology with fee schedules for 

most items and services furnished under 

Part B of the Medicare program. The 

phase in of fee schedules to replace 

reasonable charges for Medicare 

payment purposes began with the fee 

schedule for clinical diagnostic 

laboratory tests in 1988. As of 1997, 

very few items and services were still 

paid on a reasonable charge basis, 

which is a very time consuming and 

laborious process. Contractors must 

collect new charge data each year, 

perform the various calculations, and 

maintain pricing files and claims 

processing edits for the various charge 

screens. For each item that is paid on a 

reasonable charge basis, administrative 

funding must be provided to contractors 

for the purpose of performing these 


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calculations and maintaining these 

pricing files. Therefore, replacing 

reasonable charge payments with fee 

schedules eliminates the need to fund 

these efforts and saves money that can 

be used to implement other parts of the 

program. Section 4315 of the Balanced 

Budget Act of 1997 (BBA) amended the 

Act at section 1842 by adding a new 

subsection (s). Section 1842(s) of the Act 

provides authority for implementing 

statewide or other area wide fee 

schedules to be used for payment of the 

following services that were previously 

on a reasonable charge basis: 

• Medical supplies. 

• Home dialysis supplies and 

equipment (as defined in section 

1881(b)(8) of the Act). 

• Therapeutic shoes. 

• Parenteral and enteral nutrients, 

equipment, and supplies (PEN). 

• Electromyogram devices. 

• Salivation devices. 

• Blood products. 

• Transfusion medicine. 

For Medicare payment purposes, we 

interpret the category ‘‘medical 

supplies’’ under section 1842(s) of the 

Act to include all other items paid on 

a reasonable charge basis as of 1997 that 

do not fall under any of the other 

categories listed in section 1842(s) of the 

Act. We believe that section 1842(s) of 

the Act is intended to provide authority 

for establishing fee schedules for all of 

the remaining, and relatively small 

number of items and services still paid 

for on a reasonable charge basis at the 

time of enactment in 1997. In light of 

this provision, we generally consider 

‘‘intraocular lenses’’ to be paid as 

‘‘medical supplies.’’ Therefore, in 

addition to including splints and casts 

under this category, we also proposed to 

include intraocular lenses inserted in a 

physician’s office for the purpose of 

implementing this specific section. 

Although we recognize the terms 

‘‘intraocular lenses’’ and ‘‘medical 

supplies’’ are separately identified 

under § 414.202, we note that such 

terms are listed for purposes of defining 

what constitutes orthotic and prosthetic 

devices (that is, these terms are 

excluded from such definition), and not 

intended to suggest these are mutually 

exclusive things. Accordingly, we do 

not believe we are precluded from 

establishing fee schedules for IOLs 

under the category of medical supplies 

under section 1842(s) of the Act. 

Section 1842(s)(1) of the Act provides 

that the fee schedules for the services 

listed above are to be updated on an 

annual basis by the percentage increase 

in the CPI–U (United States city 

average) for the 12-month period ending 

with June of the preceding year, reduced 

by the productivity adjustment 

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

of the Act. Total payments for the initial 

year of the fee schedules must be 

budget-neutral, or approximately equal 

to the estimated total payments that 

would have been made under the 

reasonable charge payment 

methodology. As explained below, we 

used this authority to establish fee 

schedules for parental and enteral 

nutrition (PEN) items and services for 

use in paying claims with dates of 

service on or after January 1, 2002. 

On July 27, 1999, we published a 

notice of proposed rulemaking (64 FR 

40534) to establish fee schedules for 

PEN items and services, splints and 

casts, intraocular lenses (IOLs) inserted 

in a physician’s office, and various other 

items and services for which section 

1842(s) of the Act provided authority for 

replacing the reasonable charge 

payment methodology with fee 

schedules. After reviewing public 

comments on the proposed rule, we 

decided to move ahead with a final rule 

establishing fee schedules for the 

Parenteral and Enteral Nutrition (PEN) 

items and services, but not the other 

items and services, primarily related to 

concerns regarding data used for 

calculating fee schedule amounts for 

items and service that are no longer paid 

on a reasonable charge basis. The final 

rule for implementing the fee schedules 

for PEN items and services was 

published on August 28, 2001 (66 FR 

45173). For splints and casts, national 

reasonable charge amounts, updated on 

an annual basis by the IIC, have been 

used to pay for the splint and cast 

materials. Converting these amounts to 

national fee schedule amounts that are 

updated by the same index factor used 

in updating the reasonable charge 

amounts would result in no change in 

payment, or 100 percent budgetneutrality. Currently, very few IOLs are 

inserted in a physician’s office 

nationally. In 2011, total allowed 

charges for 437 IOLs furnished to 287 

beneficiaries equaled $75,914. Since 

IOLs are considerably low volume items 

furnished by very few suppliers 

nationally, there are some states where 

none of these items are furnished; 

therefore, charge data for use in 

calculating prevailing charges, even at 

the state level, are not available and 

budget-neutrality is not an issue. If the 

national average allowed amount for 

these items were used as the fee 

schedule amount for the few IOLs that 

are still inserted in a physician’s office, 

we did not believe that total allowed 

charges in the first year of the fee 

schedule would be significantly 

different than what would otherwise be 

paid nationally under the current 

reasonable charge payment 

methodology. For 2011, the national 

average allowed charge for covered 

claims for the 287 beneficiaries 

receiving IOLs inserted in a physician’s 

office was $174 ($75,914 ÷ 437). In some 

cases, the allowed charge for specific 

claims in 2011 was less than $174 and 

in other cases the allowed charge was 

more than $174. However, given the low 

volume of items furnished nationally, 

the budget impact of paying all of the 

approximately 437 claims based on the 

national average allowed amount would 

be negligible. We believe establishing 

budget-neutral fee schedule amounts for 

splints and casts, and IOLs inserted in 

a physician’s office would save 

government resources in calculating the 

reasonable charge payment for the low 

volume items. Therefore, in the 

proposed rule (78 FR 40878 through 

40879), we proposed to establish fee 

schedules for these items effective for 

paying claims with dates of service on 

or after January 1, 2014. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Implementation of Budget Neutral Fee 

Schedules for Splints, Casts and IOLs 

For the reasons we articulated above, 

we proposed (78 FR 40879), under 

section 1842(s) of the Act, to implement 

fee schedules for splints and casts, and 

IOLs inserted in a physician’s office 

falling under the category of medical 

supplies. In addendum C of the 

proposed rule (78 FR 40879), which can 

be found on http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/Downloads/

CMS-1526-P-Addendum-C.pdf, we 

inserted the current 2013 reasonable 

charge amounts for splints, casts and 

IOLs inserted in a physician’s office. 

The 2013 reasonable charge amounts for 

splints and casts are gap-filled 

reasonable charges updated by the CPIU factor ending with June of the 

preceding year, in this case June 2012. 

The 2013 reasonable charge amounts for 

IOLs inserted in a physician’s office that 

are described by HCPCS code V2632 are 

estimates of the 2012 average allowed 

charges for these items and services. 

With regard to other HCPCS codes for 

IOLs inserted in a physician’s office, 

Medicare payment was made for one 

claim for code V2631 over the past ten 

years and ten claims for code V2630 

over the past 6 years. We indicated in 

Appendix C of the proposed rule that 

we would gap-fill the fee schedule 

amounts for HCPCS codes V2630 and 

V2631. In the case of fee schedule 

amounts for other prosthetic devices 


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paid for in accordance with the rules at 

section 1834(h) of the Act, the fee 

schedule amounts are gap-filled using 

fee schedule amounts for comparable 

items or supplier price lists in 

accordance with program instructions 

related to gap-filling fee schedule 

amounts for DMEPOS items and 

services located at section 60.3 of 

chapter 23 of the Medicare Claims 

Processing Manual (Pub. 100–04). We 

would not have the entire calendar year 

estimates for 2013 average allowed 

charge for IOLs inserted in a physician’s 

office in order to implement the fee 

schedule amounts for these items 

effective for paying claims with dates of 

service on or after January 1, 2014; 

therefore, we stated we would use the 

estimate of the 2012 average allowed 

charge including the percentage 

increase in the CPI–U for the 24-month 

period ending with June of 2012, which 

is 1.7 percent, and June of 2013, which 

is 1.8 percent, to update the feeschedule amounts for splints and casts 

(78 FR 40879). Specifically, we 

proposed to amend 42 CFR § 414.106 

and § 414.100 to include the general 

rule for updating the fee schedules for 

splints, casts and IOLs inserted in a 

physician’s office. We also proposed to 

add § 414.106 and § 414.108 to set forth 

the fee schedule methodology and 

updates as explained above for splints, 

casts, and IOLs inserted in a physician’s 

office. Subject to coinsurance and 

deductible rules, Medicare payment for 

these services is to be equal to the lower 

of the actual charge for the item or the 

amount determined under the 

applicable fee schedule payment 

methodology. 

For splints and casts, we proposed 

national fee schedule amounts for items 

furnished from January 1, 2014, thru 

December 31, 2014, based on 2013 

reasonable charges updated by the 

percentage increase in the consumer 

price index for all urban consumers 

(United States city average) for the 12- 

month period ending with June 2013 (78 

FR 40879). For subsequent years, we 

proposed that the fee schedule amounts 

would be updated by the percentage 

increase in the consumer price index for 

all urban consumers (United States city 

average) for the 12-month period ending 

with June of the preceding year, reduced 

by the productivity adjustment as 

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

of the Act (78 FR 40879). 

For IOLs inserted in a physician’s 

office, we proposed national fee 

schedule amounts for items furnished 

from January 1, 2014, thru December 31, 

2014, based on the national average 

allowed charge for the item from 

January 1, 2012 through December 31, 

2012, updated by the percentage 

increase in the consumer price index for 

all urban consumers (United States city 

average) for the 24-month period ending 

with June 2013. For subsequent years, 

the fee schedule amounts would be 

updated by the percentage increase in 

the consumer price index for all urban 

consumers (United States city average) 

for the 12-month period ending with 

June of the preceding year, reduced by 

the productivity adjustment as 

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

of the Act. 

We received one comment on the 

proposal to implement budget-neutral 

fee schedules for splints, casts and IOLs 

inserted in a physician’s office from an 

advocacy group representing doctors of 

optometry. The issues raised in the 

comment were specifically in regard to 

IOLs. We received no comments on the 

topic of splints and casts. 

Comment: The commenter indicated 

that the statute does not provide specific 

authority for implementing fee 

schedules for IOLs as part of the 

authority for implementing fee 

schedules for the general category of 

‘‘medical supplies’’ listed under section 

1842(s) of the Act. The commenter 

indicates that under 42 CFR 414.202, 

the list of items not considered 

prosthetics or orthotics separately 

identifies ‘‘medical supplies’’ and 

‘‘intraocular lenses,’’ and that if 

intraocular lenses were considered 

‘‘medical supplies,’’ they would not 

need to be separately listed in § 414.202. 

Response: We disagree with this 

comment. The terms ‘‘medical supplies’’ 

and ‘‘intraocular lenses’’ are listed in 42 

CFR 414.202 for the purpose of 

implementing section 1834(h)(4)(C) of 

the Act. The regulation clearly states 

that the definitions in 42 CFR 414.202 

are for the purposes of Subpart D— 

Payment for Durable Medical 

Equipment and Prosthetic and Orthotic 

Devices. The term ‘‘medical supplies’’ 

referred to in section 1834(h)(4)(C) of 

the Act include catheters, catheter 

supplies, ostomy bags, and supplies 

related to ostomy care that are 

specifically furnished by a home health 

agency. As a result, we implemented 

§ 414.202 consistent with the payment 

rules under section 1834(h) of the Act, 

which identifies a different group of 

items of ‘‘medical supplies’’ than those 

addressed under section 1842(s) of the 

Act. As we stated in the proposed rule 

(78 FR 40878), although the terms 

‘‘intraocular lenses’’ and ‘‘medical 

supplies’’ are separately identified 

under § 414.202 for purposes of defining 

what constitutes orthotic and prosthetic 

devices, the regulation is not intended 

to suggest these are mutually exclusive 

items. Indeed, under the Medicare 

statute and regulations, items and 

services are identified specifically and 

generally, as part of larger categories. 

We believe our interpretation of this 

statutory authority is reasonable and 

that we have been consistent in our 

interpretation of section 1842(s) of the 

Act in the past. As we noted above, we 

proposed to adopt fee schedules for 

IOLs under this authority in 1999, 

though we declined to finalize this 

proposal (64 FR 40534 (July 27, 1999). 

We continue to interpret the category 

‘‘medical supplies’’ to include IOLs, 

splints and casts, and other items paid 

for on a reasonable charge basis that are 

not specifically listed as separate 

categories under section 1842(s). We 

believe that the intent of section 1842(s) 

is to provide authority for phasing out 

reasonable charge payments for those 

few items and services still paid in 

accordance with these old payment 

rules, and therefore, we generally 

consider ‘‘intraocular lenses’’ to be paid 

as ‘‘medical supplies.’’ Accordingly, we 

do not believe we are precluded from 

establishing fee schedules for IOLs 

under the category of medical supplies 

under section 1842(s) of the Act. 

Comment: The commenter also 

suggested that if we continue with 

converting the IOLs to fee schedule 

amounts, then we should delay 

implementation of the fee schedule 

amounts so that suppliers of IOLs have 

more time to learn about and prepare for 

the change in payment. 

Response: We disagree that extra time 

is needed to prepare for implementation 

of fee schedule amounts that the statute 

specifies must be initially budget 

neutral. Our review of CY 2012 

submitted charge data indicates that 

there is little variation in the charges 

submitted for the items that have 

enough claims data information to 

implement the fee schedule amounts. 

Comment: The commenter agreed 

with us that fee schedule amounts 

should be a national amount rather than 

local because several states have no 

suppliers of IOLs. 

Response: We appreciate this 

comment and have made the fee 

schedules of IOLs a national fee 

schedule amount. 

After careful review of the comment 

received and for the reasons we 

discussed previously, we are finalizing 

the implementation of budget-neutral 

fee schedules for splints, casts and IOLs 

inserted in a physician’s office. Part 414, 

Subpart C of the regulations at 42 CFR 

are being revised to indicate that the fee 

schedule amounts for payment for 

splints and casts furnished in 2014, 

effective April 1, 2014, is the reasonable 


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charge amount for 2013, updated by the 

percentage increase in the CPI–U for the 

12-month period ending with June of 

2013. We will start paying the national 

fee schedule amounts specified in Table 

11 below for these items on April 1, 

2014. Part 414, Subpart C of the 

regulations at 42 CFR are being revised 

to indicate that the fee schedule 

amounts for payment for splints and 

casts furnished on April 1, 2014, is the 

reasonable charge amount for 2013, 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of 2013, and that the 

fee schedule amounts for payment for 

IOL inserted in a physician’s office on 

April 1, 2014, is the national average 

allowed charge for the IOL furnished in 

calendar year 2012, updated by the 

percentage increase in the CPI–U for the 

24-month period ending with June of 

2013. For each year subsequent to 2014 

for splints and casts, and IOLs inserted 

in a physician’s office, the fee schedule 

amounts of the preceding year are 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of the preceding year, 

reduced by the productivity adjustment 

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

of the Act. 

TABLE 11—FINAL FEE SCHEDULE AMOUNTS EFFECTIVE APRIL 1, 2014 

2014 Fee Schedule Amounts for Splints and Casts 

A4565 ........................ $8.41 Q4013 ....................... $15.40 Q4026 ....................... $115.34 Q4039 ....................... $8.05 

Q4001 ....................... 47.85 Q4014 ....................... 25.97 Q4027 ....................... 18.48 Q4040 ....................... 20.13 

Q4002 ....................... 180.82 Q4015 ....................... 7.71 Q4028 ....................... 57.69 Q4041 ....................... 19.55 

Q4003 ....................... 34.36 Q4016 ....................... 12.98 Q4029 ....................... 28.25 Q4042 ....................... 33.37 

Q4004 ....................... 118.96 Q4017 ....................... 8.91 Q4030 ....................... 74.36 Q4043 ....................... 9.78 

Q4005 ....................... 12.67 Q4018 ....................... 14.19 Q4031 ....................... 14.12 Q4044 ....................... 16.69 

Q4006 ....................... 28.55 Q4019 ....................... 4.46 Q4032 ....................... 37.18 Q4045 ....................... 11.35 

Q4007 ....................... 6.34 Q4020 ....................... 7.11 Q4033 ....................... 26.35 Q4046 ....................... 18.25 

Q4008 ....................... 14.27 Q4021 ....................... 6.59 Q4034 ....................... 65.54 Q4047 ....................... 5.66 

Q4009 ....................... 8.46 Q4022 ....................... 11.89 Q4035 ....................... 13.17 Q4048 ....................... 9.13 

Q4010 ....................... 19.04 Q4023 ....................... 3.31 Q4036 ....................... 32.78 Q4049 ....................... 2.07 

Q4011 ....................... 4.22 Q4024 ....................... 5.95 Q4037 ....................... 16.07 ................................... ................

Q4012 ....................... 9.53 Q4025 ....................... 36.94 Q4038 ....................... 40.27 ................................... ................

2014 Fee Schedule Amounts for Intraocular Lenses Implanted in a Physician’s Office 

V2630 ........................ *** V2631 ....................... *** V2632 ....................... 111.81 ................................... ................

*** No claims submitted in 2012 

Note: These fee schedule amounts are effective April 1, 2014. 

VII. DMEPOS Technical Amendments 

and a Correction 

A. Background 

Medicare pays for various DMEPOS 

items and services based on payment 

rules that are set forth in section 1834 

of the Act and 42 CFR Part 414, Subpart 

D. We proposed to make three minor, 

conforming technical amendments to 

the existing DMEPOS payment 

regulations (the title of Subpart D and 

42 CFR § 414.200 and § 414.226) (78 FR 

40879 through 40880). 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

Proposed Technical Amendments and a 

Correction 

We proposed to make three minor, 

conforming technical amendments and 

a correction to the existing DMEPOS 

payment regulations as follows (78 FR 

40879 through 40880): 

• We proposed to modify the title of 

‘‘Subpart D—Payment for Durable 

Medical Equipment, Prosthetic and 

Orthotic Devices’’ to read ‘‘Subpart D— 

Payment for Durable Medical 

Equipment, Prosthetic and Orthotic 

Devices, and Surgical Dressings’’ to 

reflect that payment for surgical 

dressings is addressed under this 

subpart at § 414.220(g). 

• In subpart § 414.200, we proposed 

to modify the phrase ‘‘This subpart 

implements sections 1834 (a) and (h) of 

the Act by specifying how payments are 

made for the purchase or rental of new 

and used durable medical equipment 

and prosthetic and orthotic devices for 

Medicare beneficiaries.’’ as follows: 

‘‘This subpart implements sections 1834 

(a), (h), and (i) of the Act by specifying 

how payments are made for the 

purchase or rental of new and used 

durable medical equipment, prosthetic 

and orthotic devices, and surgical 

dressings for Medicare beneficiaries.’’ 

The Omnibus Budget Reconciliation Act 

of 1993 amended section 1834 of the 

Act by adding subsection (i), mandating 

payment on a fee schedule basis for 

surgical dressings. Although 

§ 414.220(g) addresses this requirement, 

the regulation at § 414.200 was not 

updated to indicate that this subpart 

implements section 1834(i) in addition 

to sections 1834(a) and (h) of the Act. 

• Section 1834(a)(9)(D) of the Act 

provides authority for creating separate 

classes of oxygen and oxygen 

equipment. Section 1834(a)(9)(D)(ii) of 

the Act prohibits CMS from creating 

separate classes of oxygen and oxygen 

equipment that result in expenditures 

for any year that are more or less than 

expenditures which would have been 

made if the separate classes had not 

been created. In other words, the new 

classes and payment amounts for 

oxygen and oxygen equipment must be 

established so that creating the new 

classes is annually budget-neutral. In 

November 2006, we published a final 

rule (CMS–1304–F) establishing 

separate classes for oxygen and oxygen 

equipment and included a methodology 

for meeting the requirements of section 

1834(a)(9)(D)(ii) of the Act by applying 

annual reductions to the monthly fee 

schedule amounts for the stationary 

oxygen equipment class at 

§ 414.226(c)(1)(i) in order to establish 

budget neutrality for total oxygen and 

oxygen expenditures for all oxygen 

classes. Increases in expenditures for 

oxygen and oxygen equipment that are 

attributed to higher payment amounts 

established for new classes of oxygen 

and oxygen equipment are offset by 

reducing the monthly payment amount 

for stationary oxygen equipment. Due to 

a drafting error in the regulation text 

portion of the November 2006 final rule, 

CMS–1304–F (71 FR 65933), 42 CFR 

§ 414.226(c)(6) needs to be corrected. 

The regulation text at § 414.226(c)(6) 

mistakenly states that budget neutrality 

should be achieved by adjusting all 


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oxygen class rates. Section 414.226(c)(6) 

should read that only the stationary 

oxygen equipment rate should be 

adjusted to achieve budget neutrality. 

Therefore, we proposed to revise 

§ 414.226(c)(6) to read as follows: 

‘‘Beginning in 2008, CMS makes an 

annual adjustment to the national 

limited monthly payment rate for items 

described in paragraph (c)(1)(i) of this 

section to ensure that such payment 

rates do not result in expenditures for 

any year that are more or less than the 

expenditures that would have been 

made if such classes had not been 

established.’’ 

• We also proposed a technical 

correction to existing 42 CFR 

§ 414.102(c) to conform the regulation 

governing parenteral and enteral (PEN) 

nutrients, equipment and supplies 

covered item fee schedule update with 

the statute. Although section 

1842(s)(1)(B)(ii) of the Act is selfimplementing, the PEN nutrients, 

equipment and supplies payment 

regulations at 42 CFR 414 Subpart C 

were not updated to reflect the 

application of the multifactor 

productivity adjustment to the CPI–U 

update factor for 2011 and subsequent 

calendar years. Therefore, we are 

revising § 414.102(c) of our regulations 

to specify that for years 2003 through 

2010, the PEN items and services fee 

schedule amounts of the preceding year 

are updated by the percentage increase 

in the CPI–U for the 12-month period 

ending with June of the preceding year. 

For each year subsequent to 2010, the 

PEN items and services fee schedule 

amounts of the preceding year are 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of the preceding year, 

reduced by the productivity adjustment 

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

of the Act. 

We received no public comments on 

the DMEPOS proposals for technical 

amendments and a correction. 

Therefore, for the reasons we previously 

explained, we are finalizing our 

proposed modifications to the above 

regulations. 

VIII. Waiver of Delayed Effective Date 

In the absence of an appropriation for 

FY 2014 or a Continuing Resolution, the 

federal government funding lapsed on 

October 1, 2013. During the funding 

lapse, which lasted from October 1, 

2013 through October 16, 2013, only 

excepted operations continued, which 

largely excluded work on this final rule. 

Accordingly, most of the work on this 

final rule was not completed in 

accordance with our usual schedule for 

final CY payment rules, which aims for 

an issuance date of November 1 

followed by an effective date of January 

1 to ensure that the policies are effective 

at the start of the calendar year to which 

they apply. 

We ordinarily provide a 60-day delay 

in the effective date of final rules after 

the date they are issued. The 60-day 

delay in effective date can be waived, 

however, if the agency finds for good 

cause that the delay is impracticable, 

unnecessary, or contrary to the public 

interest, and the agency incorporates a 

statement of the findings and its reasons 

in the rule issued. We believe it would 

be contrary to the public interest to 

delay the effective date of the ESRD PPS 

and ESRD QIP portions of this final rule. 

The ESRD PPS is a calendar-year 

payment system, and we typically issue 

the final rule by November 1 of each 

year to ensure that the payment policies 

for the system are effective on January 

1, the first day of the calendar year to 

which the policies are intended to 

apply. CMS also includes in the ESRD 

PPS final rule its policies for the ESRD 

QIP because the performance of dialysis 

facilities under the ESRD QIP has a 

direct effect on that facility’s payment 

under the ESRD PPS. A dialysis 

facility’s ESRD PPS payment in 2016 

will be based, in part, on the policies 

finalized in this final rule, including the 

requirement that the facility report 

certain quality measures beginning 

January 1, 2014. If the effective date of 

this final rule is delayed by 60 days, the 

ESRD PPS and the ESRD QIP policies 

adopted in this final rule will not be 

effective until after January 1, 2014. 

This would be contrary to the public’s 

interest in ensuring that dialysis 

facilities receive appropriate payments 

in a timely manner, and that their 

payments in 2016 properly and 

completely reflect their performance on 

quality measures in 2014. In addition, in 

the case of the ESRD PPS, section 

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

section 632(a) of the ATRA, requires 

that, for services furnished on or after 

January 1, 2014, the Secretary shall 

make reductions to the single payment 

for renal dialysis services to reflect the 

Secretary’s estimate of the change in 

utilization of ESRD-related drugs and 

biologicals (excluding oral-only ESRDrelated drugs) by comparing per patient 

utilization data from 2007 with such 

data from 2012. We are finalizing the 

drug utilization adjustment in this final 

rule, and in order to adhere to the 

statutory requirement that the 

adjustment apply to services furnished 

on or after January 1, 2014, this final 

rule must be effective on that date. We 

note that our waiver of the delayed 

effective date only applies to the ESRD 

PPS and ESRD QIP policies that are 

adopted in this final rule. The delayed 

effective date for the DMEPOS policies 

is not waived and these policies will be 

effective on April 1, 2014, for provisions 

that clarify the grandfathering provision 

related to the 3-year MLR for DME, the 

clarification of the definition of 

routinely purchased DME, fee schedules 

for splints and casts, and IOLs inserted 

in a physician’s office, and technical 

amendments and corrections to existing 

regulations related to payment for 

DMEPOS items and services. For the 

items that we identified that will be 

reclassified as capped rental items and 

paid for in accordance with the rules set 

forth in 42 CFR 414.229, such 

reclassifications will be effective in 

three phases beginning on or after April 

1, 2014. Items will be reclassified as 

capped rental items effective April 1, 

2014, in all areas of the country if the 

item is not included in a Round 2 or 

Round 1 Recompete DMEPOS CBP. 

Items will be reclassified as capped 

rental items effective July 1, 2016, in all 

areas of the country if the item is 

included in a Round 2 CBP and not a 

Round 1 Recompete CBP. Items will be 

classified as capped rental items 

effective July 1, 2016, when it is 

furnished in any area of the country that 

is not in one of the 9 Round 1 

Recompete areas if the item is included 

in a Round 1 Recompete CBP. Finally, 

items will be classified as capped rental 

items effective January 1, 2017, when it 

is furnished in one of the 9 Round 1 

Recompete areas if the item is included 

in a Round 1 Recompete CBP. 

IX. Collection of Information 

Requirements 

A. Legislative Requirement for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

requirement should be approved by 

OMB, section 3506(c)(2)(A) of the 

Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 


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• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

B. Requirements in Regulation Text 

In section II.D. of this final rule, we 

changed the regulatory text for the ESRD 

PPS in CY 2014. However, the changes 

that are being made do not impose any 

new information collection 

requirements. 

C. Additional Information Collection 

Requirements 

This final rule does not impose any 

new information collection 

requirements in the regulation text, as 

specified above. However, this final rule 

does make reference to several 

associated information collections that 

are not discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections. 

1. ESRD QIP 

a. Expanded ICH CAHPS Reporting 

Measure for PY 2016 and Future 

Payment Years of the ESRD QIP 

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

this final rule, we proposed to include 

in the PY 2016 ESRD QIP an expanded 

ICH CAHPS reporting measure, which 

assesses facility usage of the ICH 

CAHPS survey. Unlike the ICH CAHPS 

reporting measure finalized in the CY 

2013 ESRD PPS final rule (77 FR 67480 

through 67481), the proposed expanded 

ICH CAHPS reporting measure would 

require facilities to report (via a CMSapproved vendor) survey data to CMS 

once for PY 2016, and, for PY 2017 and 

beyond, to administer (via a CMSapproved vendor) a second ICH CAHPS 

survey and report the second set of 

survey data to CMS. Therefore, for PY 

2016, we estimated the burden 

associated with this requirement to be 

the time and effort necessary for 

facilities to submit (via a CMS-approved 

vendor) survey results to CMS. For PY 

2017 and future payment years, we 

estimated the burden associated with 

this requirement is the time and effort 

necessary for facilities to administer (via 

a CMS-approved vendor) a second ICH 

CAHPS survey and submit (via a CMSapproved vendor) the survey results to 

CMS. 

We estimated that approximately 

5,506 facilities will treat adult, in-center 

hemodialysis patients in PY 2016 and, 

therefore, will be eligible to receive a 

score on this measure. We further 

estimated that all 5,506 facilities will 

report (via a CMS-approved vendor) 

survey results to CMS, and that it will 

take each vendor approximately 5 

minutes to do so. Therefore, the 

estimated total annual burden 

associated with meeting the measure 

requirements in PY 2016 is 459 hours 

[(5/60) hours x 5,506 facilities). 

According to the Bureau of Labor 

Statistics, the mean hourly wage of a 

registered nurse is $32.66/hour. Since 

we anticipate nurses (or administrative 

staff who would be paid at a lower 

hourly wage) will submit this data to 

CMS, we estimated that the aggregate 

cost of this requirement for PY 2016 will 

be $14,991 (459 hours x $32.66/hour). 

We estimated that approximately 

5,693 facilities will treat adult, in-center 

hemodialysis patients in PY 2017 and, 

therefore, will be eligible to receive a 

score on this measure. We estimated 

that all 5,693 facilities will administer 

the ICH CAHPS survey through a thirdparty vendor and arrange for the vendor 

to submit the data to CMS. We 

estimated that it would take each 

patient 30 minutes to complete the 

survey (to account for variability in 

education levels) and that 

approximately 103 surveys per year 

would be taken per facility. Interviewers 

from each vendor would therefore 

spend a total of approximately 52 hours 

per year with patients completing these 

surveys (0.5 hours * 103 surveys) or 

$1,698 (52 hours × $32.66) for an 

estimated annual burden of $9,666,714 

($1,698 per facility × 5,693 facilities). 

We previously estimated that the 

aggregate cost of submitting survey data 

to CMS is $14,991. Therefore, we 

estimated that the total annual burden 

for ESRD facilities to comply with the 

collection of information requirements 

associated with the proposed expanded 

ICH CAHPS measure for PY 2017 and 

future payment years would be 

approximately $9,681,705 ($9,666,714 + 

$14,991) across all ESRD facilities. 

We requested comments on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

Comment: One commenter asked 

CMS to take a global look at the burden 

placed on dialysis facilities for all 

aspects of the ESRD QIP. 

Response: We appreciate the 

commenter’s suggestion and we clarify 

that we take an overarching view of 

provider burden each year during the 

rulemaking process when we conduct 

analyses associated with the Collection 

of Information Requirements. 

Comment: One commenter stated that 

the aggregate costs associated with the 

collection of information requirements 

are accurate, but that the costs are too 

high for facilities and amount to an 

unfunded mandate. 

Response: Although we recognize that 

the ESRD QIP imposes significant costs 

to providers, we disagree that those 

costs are too high or amount to an 

unfunded mandate. We continue to 

believe that the ESRD QIP drives 

improvements in the quality of care for 

patients with ESRD. We also believe 

that the benefits for patients far 

outweigh the costs for providers, and 

that the ESRD QIP does not amount to 

an unfunded mandate because it is tied 

to the reimbursements providers receive 

through the ESRD Prospective Payment 

System. 

Comment: A few commenters did not 

agree with the cost estimates in the 

collection of information requirements 

because it does not account for the 

burdens associated with entering data 

into CROWNWeb, as CROWNWeb is not 

fully functional. 

Response: We understand that 

members of the ESRD community have 

reported difficulties accessing and using 

the CROWNWeb system. As stated 

above, we are working to address known 

defects in CROWNWeb, and we look 

forward to continuing to work with 

facilities to minimize the burden of 

entering data into CROWNWeb. We note 

that entering data in CROWNWeb is a 

Condition for Coverage for dialysis 

facilities (§ 494.180(h)), and that 

CROWNWeb supports the 1995 

Paperwork Reduction Act. We will take 

the commenters’ suggestions under 

advisement in the future when 

estimating burdens associated with 

collection of information requirements 

Comment: Several commenters did 

not agree with the cost estimates for the 

collection of information requirements 

for the ICH CAHPS measure. These 

commenters stated that the cost 

estimates do not accurately capture the 

cost of using a third party vendor, and 

that these costs can vary significantly. 

Response: We agree that the cost 

estimates for the ICH CAHPS measure 

did not include the costs associated 

with contracting a third-party vendor to 

conduct the survey. As noted above (see 

Section III.C.2.a), the costs of these 

contracts vary significantly. Therefore, 

we assumed that third party vendors 

would employ registered nurses to 

administer the survey. We recognize the 

estimation method may not be entirely 

accurate, but we believe it is the most 

reliable way to generate a single cost 

estimate. 

b. Data Validation Requirements for the 

PY 2016 ESRD QIP 

Section III.C.13 of the proposed rule 

outlines our data validation proposals. 

We proposed to randomly sample 

records from 300 facilities; each 


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sampled facility would be required to 

produce up to 10 records; and the 

sampled facilities will be reimbursed by 

our validation contractor for the costs 

associated with copying and mailing the 

requested records. The burden 

associated with this validation 

requirement is the time and effort 

necessary to submit validation data to a 

CMS contractor. We estimate that it will 

take each facility approximately 2.5 

hours to comply with these 

requirements. If 300 facilities are tasked 

with providing the required 

documentation, the estimated annual 

burden for these facilities across all 

facilities would be 750 hours (300 

facilities × 2.5 hours) at a total of 

$24,495 (750 hours × $32.66/hour) or 

$81.65 ($24,495/300 facilities) per 

facility in the sample. 

We requested comments on this 

proposal. We did not receive any 

comments on this proposal. 

2. The clarification of the definition of 

routinely purchased DME does not 

contain any new information collection 

requirements. 

3. The clarification of the 3-year MLR 

for DME does not contain any new 

information collection requirements. 

4. The implementation of BudgetNeutral Fee Schedules for Splints, Casts 

and IOLs does not contain any new 

information collection requirements. 

X. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We examined the impacts of this final 

rule as required by Executive Order 

12866 (September 30, 1993, Regulatory 

Planning and Review) and Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011). Executive Orders 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. Even 

though this rule has been designated 

non-economically significant under 

section 3(f)(1) of Executive Order 12866, 

it has been reviewed by the Office of 

Management and Budget. We have 

prepared a Regulatory Impact Analysis 

that to the best of our ability presents 

the costs and benefits of the final rule. 

2. Statement of Need 

This rule finalizes a number of 

routine updates for renal dialysis 

services in CY 2014, implements the 

fourth year of the ESRD PPS transition, 

and makes several policy changes to the 

ESRD PPS. These include updates and 

changes to the ESRD PPS base rate, the 

wage index values, the wage index 

budget-neutrality adjustment factor, the 

home dialysis training add-on payment, 

and the outlier payment policy. This 

rule will also implement section 

1881(b)(14)(I), which requires the 

Secretary, by comparing per patient 

utilization from 2007 with such data 

from 2012, to reduce the single payment 

amount to reflect the Secretary’s 

estimate of the change in the utilization 

of ESRD-related drugs and biologicals. 

Failure to publish this final rule would 

result in ESRD facilities not receiving 

appropriate payments in CY 2014. 

This rule finalizes to implement the 

ESRD QIP for PY 2016 and beyond by 

finalizing proposals to adopt measures, 

scoring, and payment reductions to 

incentivize improvements in dialysis 

care as directed by section 1881(h) of 

the Act. Failure to finalize requirements 

for the PY 2016 ESRD QIP would 

prevent continuation of the ESRD QIP 

beyond PY 2015. 

In addition, this final rule clarifies the 

grandfathering provision related to the 

3-year MLR for DME, provides 

clarification of the definition of 

routinely purchased DME and 

reclassifies certain items of DMEPOS, 

and implements budget-neutral fee 

schedules for splints and casts, and 

IOLs inserted in a physician’s office. 

Finally, this final rule makes a few 

technical amendments and corrections 

to existing regulations related to 

payment for DMEPOS items and 

services. 

3. Overall Impact 

We estimate that the revisions to the 

ESRD PPS will result in no increase in 

payments to ESRD facilities in CY 2014. 

This includes the amount associated 

with the increase in the ESRDB market 

basket reduced by the productivity 

adjustment, updates to outlier threshold 

amounts, the inclusion of the Pacific 

Rim ESRD facilities, updates to the wage 

index, the change from payments based 

on 25 percent composite rate system 

and 75 percent ESRD PPS to 100 percent 

ESRD PPS for those facilities that opted 

to be paid under the blend, and the drug 

utilization adjustment required by 

section 1881(b)(14)(I), as added by 

section 632(a) of ATRA. 

For PY 2016, we estimate that the 

requirements related to the ESRD QIP 

will cost approximately $39,486 

($14,991 for ICH CAHPS measure 

reporting + $24,495 data validation 

requirements) and the predicted 

payment reductions will equal about 

$15.1 million to result in a total impact 

from the ESRD QIP requirements of 

approximately $15.2 million. For PY 

2017 and future payment years, we 

expect the costs associated with the 

collection of information requirements 

for the expanded ICH CAHPS measure 

in the proposed ESRD QIP to be 

approximately $9.7 million. 

We estimate that the changes for 

implementing the fee schedule amounts 

from reasonable charge payments will 

be budget neutral and will have no 

impact to DMEPOS providers of splints, 

casts and IOLs inserted in a physician’s 

office. 

We estimate that our clarification of 

the definition of routinely purchased 

DME and re-classification of certain 

items as cap rental items would impact 

certain DMEPOS providers. The 

estimated overall impact on payments to 

suppliers is furnished in table 17 below. 

In addition, suppliers will incur 

additional expenses in submitting 

monthly claims for payment on a rental 

basis versus a single claim for payment 

on a purchase basis. Suppliers will be 

positively impacted by this change 

because they will not have to replace 

equipment in their inventory as often 

since they retain title to rented items 

that are not used on a continuous basis 

for 13 months by Medicare 

beneficiaries. We estimate that the 

clarification of the 3-year MLR for DME 

would have no impact on DMEPOS 

suppliers. 

B. Detailed Economic Analysis 

1. CY 2014 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

To understand the impact of the 

changes affecting payments to different 

categories of ESRD facilities, it is 

necessary to compare estimated 

payments in CY 2013 to estimated 

payments in CY 2014. To estimate the 

impact among various types of ESRD 

facilities, it is imperative that the 

estimates of payments in CY 2013 and 

CY 2014 contain similar inputs. 

Therefore, we simulated payments only 

for those ESRD facilities for which we 

are able to calculate both current 

payments and new payments. 

For this final rule, we used the June 

2013 update of CY 2012 National Claims 

History file as a basis for Medicare 

dialysis treatments and payments under 

the ESRD PPS. We updated the 2012 

claims to 2013 and 2014 using various 


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updates. The updates to the ESRD PPS 

base rate are described in section II.C of 

this final rule. For those providers that 

opted to be paid a blended payment 

amount during the transition, we used 

the price growth between the 

established 2013 and 2012 composite 

rate, drug add-on and part D add-on 

amounts. In addition we used the CY 

2010 amounts as the CY 2013 amounts 

for Supplies and Other Services, since 

this category primarily includes the 

$0.50 administration fee for separately 

billable Part B drugs and this fee is not 

increased. Since some ESRD facilities 

received blended payments during the 

transition and received payment for 

ESRD drugs and biologicals based on 

their average sales price plus 6 percent 

(ASP+6), we used price growth for the 

top twelve drugs and biologicals based 

on ASP+6 percent thru the fourth 

quarter of 2013. Since the top twelve 

drugs account for over 99 percent of 

total former separately billable Part B 

drug payments, we used a weighted 

average growth of the top twelve drugs, 

for the remainder. We updated 

payments for laboratory tests paid 

through the laboratory fee schedule to 

2013 using the statutory required 

update. Table 12 shows the impact of 

the estimated CY 2014 ESRD payments 

compared to estimated payments to 

ESRD facilities in CY 2013. 

TABLE 12—IMPACT OF CHANGES IN PAYMENTS TO ESRD FACILITIES FOR THE CY 2014 ESRD PPS FINAL RULE

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

Facility type Number of 

facilities 

Number of 

treatments 

(in millions) 

Effect of 

2014 

changes in 

outlier policy 4

(percent) 

Effect of 

2014 

changes in 

wage Indexes 

(percent) 

Effect of 

2014 

changes in 

blend of 

payments 

(percent) 

Effect of 

2014 

changes in 

market basket minus 

productivity 

update 

(percent) 

Effect of 

2014 

changes in 

base rate 

due to drug 

utilzation 5

(percent) 

Effect of 

total 2014 

changes 

(percent) 

A B C D E F G H 

All Facilities ....................................................... 5,873 42.7 0.4 0.0 0.2 2.8 ¥3.3 0.0 

Type: 

Freestanding .............................................. 5,362 39.6 0.4 0.0 0.1 2.8 ¥3.3 0.0 

Hospital based ........................................... 511 3.1 0.3 0.1 0.9 2.8 ¥3.2 0.8 

Ownership Type: 

Large dialysis organization ........................ 4,023 29.7 0.5 0.0 0.0 2.8 ¥3.3 ¥0.1 

Regional chain ........................................... 813 6.2 0.4 0.1 0.4 2.8 ¥3.3 0.2 

Independent ............................................... 601 4.2 0.2 0.1 0.7 2.8 ¥3.3 0.4 

Hospital based 1 ......................................... 424 2.6 0.3 0.1 0.9 2.8 ¥3.2 0.7 

Unknown .................................................... 12 0.1 0.4 ¥0.1 0.2 2.8 ¥3.3 ¥0.1 

Geographic Location: 

Rural ........................................................... 1,283 7.0 0.4 ¥0.1 0.2 2.8 ¥3.3 ¥0.1 

Urban ......................................................... 4,590 35.7 0.4 0.0 0.2 2.8 ¥3.3 0.0 

Census Region: 

East North Central ..................................... 962 6.4 0.5 ¥0.1 0.2 2.8 ¥3.3 ¥0.1 

East South Central ..................................... 487 3.2 0.5 ¥0.2 0.0 2.8 ¥3.3 ¥0.2 

Middle Atlantic ............................................ 651 5.1 0.4 0.4 0.3 2.8 ¥3.3 0.6 

Mountain .................................................... 346 2.0 0.3 ¥0.1 0.2 2.8 ¥3.3 ¥0.1 

New England .............................................. 172 1.4 0.4 0.1 0.1 2.8 ¥3.3 0.0 

Pacific 2 ...................................................... 692 5.9 0.2 0.6 0.1 2.8 ¥3.3 0.3 

Puerto Rico and Virgin Islands .................. 43 0.3 0.4 ¥2.3 0.4 2.8 ¥3.3 ¥2.1 

South Atlantic ............................................. 1,307 9.9 0.5 ¥0.3 0.2 2.8 ¥3.3 ¥0.2 

West North Central .................................... 426 2.2 0.4 ¥0.2 0.4 2.8 ¥3.3 0.0 

West South Central .................................... 787 6.2 0.5 ¥0.2 0.2 2.8 ¥3.3 ¥0.2 

Facility Size: 

Less than 4,000 treatments 3 ..................... 1,090 3.1 0.4 ¥0.1 0.3 2.8 ¥3.3 0.1 

4,000 to 9,999 treatments .......................... 2,167 11.1 0.4 ¥0.1 0.2 2.8 ¥3.3 ¥0.1 

10,000 or more treatments ........................ 2,431 27.5 0.4 0.0 0.2 2.8 ¥3.3 0.0 

Unknown .................................................... 185 1.0 0.6 ¥0.2 0.3 2.8 ¥3.3 0.0 

Percentage of Pediatric Patients: 

Less than 2% ............................................. 5,759 42.3 0.4 0.0 0.2 2.8 ¥3.3 0.0 

Between 2% and 19% ............................... 47 0.4 0.3 0.1 0.5 2.8 ¥3.3 0.4 

Between 20% and 49% ............................. 7 0.0 0.1 ¥0.2 0.3 2.8 ¥3.3 ¥0.4 

More than 50% .......................................... 60 0.1 0.1 0.0 0.0 2.8 ¥3.3 ¥0.5 

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

2. Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands. 

3. Of the 1,088 ESRD facilities with less than 4,000 treatments, only 362 qualify for the low-volume payment adjustment. The low-volume payment adjustment is 

mandated by Congress, and is not applied to pediatric dialysis treatments. The impact to these low-volume ESRD facilities is a 0.4% increase in payments. 

4. Includes the effect of including the Pacific Rim ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands into the ESRD PPS. 

5. Includes the effect of adjusting the training add-on payment to $50.16, and the effect of an $8.16 decrease in the base rate due to the drop in drug utilization. 

Note: Totals do not necessarily equal the sum of rounded parts, as percentages are multiplicative, not additive. 

Column A of the impact table 

indicates the number of ESRD facilities 

for each impact category and column B 

indicates the number of dialysis 

treatments (in millions). The overall 

effect of the changes to the outlier 

payment policy described in section 

II.B.6. of this final rule is shown in 

column C. For CY 2014, the impact on 

all facilities as a result of the changes to 

the outlier payment policy would be a 

0.4 percent increase in estimated 

payments. The estimated impact of the 

changes to outlier payment policy 

ranges from a 0.1 percent to a 0.6 

percent increase. All ESRD facility types 

are anticipated to experience a positive 

effect in their estimated CY 2014 

payments as a result of the outlier 

policy changes. 

Column D shows the effect of the 

wage index on ESRD facilities and 

reflects the CY 2014 wage index values 

for the ESRD PPS payments. ESRD 

facilities located in the census region of 

Puerto Rico and the Virgin Islands 

would receive a 2.3 percent decrease in 

estimated payments in CY 2014. Since 

most of the facilities in this category are 

located in Puerto Rico, the decrease is 


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primarily due to the reduction in the 

wage index floor, (which only affects 

facilities in Puerto Rico in CY 2014). 

The other categories of types of facilities 

in the impact table show changes in 

estimated payments ranging from a 0.3 

percent decrease to a 0.6 percent 

increase due to the update of the wage 

index. 

Column E shows the effect of the 

change in the blended payment 

percentage from 25 percent of payments 

based on the composite rate system and 

75 percent based on the ESRD PPS in 

CY 2013, to 100 percent based on the 

ESRD PPS in CY 2014, for those 

facilities that choose to be paid under 

the transition. The impact on all 

facilities would be a 0.2 percent 

increase in estimated payments. The 

estimated impacts of the change in the 

blend ranges from a 0.0 percent to 0.9 

percent increase. 

Column F shows the effect of the 

ESRDB market basket increase minus 

productivity adjustment. The impact on 

all facilities would be a 2.8 percent 

increase. 

Column G shows the effect of the drug 

utilization adjustment required by 

section 1881(b)(14)(I) of the Act. For CY 

2014, the impact on all facilities as a 

result of the $8.16 decrease to the base 

rate, as described in section II.B.2.a, 

would be a 3.3 percent decrease in 

estimated payments. The estimated 

impact ranges from 3.2 percent to 3.3 

percent decrease. 

Column H reflects the overall impact 

(that is, the effects of the outlier policy 

changes, the wage index, the effect of 

the blended payment percentage 

change, the effect of the ESRDB market 

basket increase minus productivity 

adjustment, and the effect of the drug 

utilization adjustment required by 

section 1881(b)(14)(I)). We expect that 

overall ESRD facilities will experience a 

0.0 percent increase in estimated 

payments in 2014. ESRD facilities in 

Puerto Rico and the Virgin Islands are 

expected to receive a 2.1 percent 

decrease in their estimated payments in 

CY 2014. This larger decrease is 

primarily due to the negative impact of 

the wage index. The other categories of 

types of facilities in the impact table 

show impacts ranging from a decrease of 

0.5 percent to an increase 0.8 percent in 

their 2014 estimated payments. 

b. Effects on Other Providers 

Under the ESRD PPS, ESRD facilities 

are paid directly for the renal dialysis 

bundle and other provider types such as 

laboratories, DME suppliers, and 

pharmacies, may no longer bill 

Medicare directly for renal dialysis 

services. Rather, effective January 1, 

2011, such other providers can only 

furnish renal dialysis services under 

arrangements with ESRD facilities and 

must seek payment from ESRD facilities 

rather than Medicare. Under the ESRD 

PPS, Medicare pays ESRD facilities one 

payment for renal dialysis services, 

which may have been separately paid to 

suppliers by Medicare prior to the 

implementation of the ESRD PPS. 

Therefore, in CY 2014, the fourth year 

of the ESRD PPS, we estimate that the 

ESRD PPS will have zero impact on 

these other providers. 

c. Effects on the Medicare Program 

We estimate that Medicare spending 

(total Medicare program payments) for 

ESRD facilities in CY 2014 will be 

approximately $8.8 billion. This 

estimate takes into account a projected 

increase in fee-for-service Medicare 

dialysis beneficiary enrollment of 3.1 

percent in CY 2014. 

d. Effects on Medicare Beneficiaries 

Under the ESRD PPS, beneficiaries are 

responsible for paying 20 percent of the 

ESRD PPS payment amount. As a result 

of the projected 0.0 percent overall 

increase in the final ESRD PPS payment 

amounts in CY 2014, we estimate that 

there will be an increase in beneficiary 

co-insurance payments of 0.0 percent in 

CY 2014, which translates to 

approximately $0 million. 

e. Alternatives Considered 

For this final rule, we considered 

implementing the full drug utilization 

adjustment amount in CY 2014. In 

particular, we could have implemented 

a one-time reduction of $29.93 to the CY 

2014 ESRD PPS base rate. We also 

considered several transition options. 

For example, we considered equal 

reductions over a 3 or 4 year period. We 

chose to implement the drug utilization 

adjustment by offsetting the payment 

update, that is the ESRDB market basket 

minus productivity increase factor, and 

other impacts (such as, changes to the 

outlier thresholds) by a portion of the 

drug utilization adjustment amount 

necessary to create an overall impact of 

zero percent for ESRD facilities from the 

previous year’s payments for CY 2014 

and CY 2015. We believe that this 

approach will minimize disruption in 

the delivery of critical ESRD services. 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2016 ESRD QIP 

The ESRD QIP provisions are 

intended to prevent possible reductions 

in the quality of ESRD dialysis facility 

services provided to beneficiaries as a 

result of payment changes under the 

ESRD PPS by implementing a ESRD QIP 

that reduces ESRD PPS payments by up 

to 2 percent for dialysis facilities that 

fail to meet or exceed a TPS with 

respect to performance standards 

established by the Secretary with 

respect to certain specified measures. 

The methodology that we proposed to 

determine a facility’s TPS is described 

in section III.D.9 of this final rule. Any 

reductions in ESRD PPS payments as a 

result of a facility’s performance under 

the PY 2016 ESRD QIP would begin 

with services furnished on January 1, 

2016. 

As a result, based on the ESRD QIP 

outlined in this final rule, we estimate 

that, of the total number of dialysis 

facilities (including those not receiving 

an ESRD QIP TPS), approximately 24 

percent or 1,390 of the facilities would 

likely receive a payment reduction in 

PY 2016. Facilities that do not receive 

a TPS are not eligible for a payment 

reduction. 

The ESRD QIP impact assessment 

assumes an initial count of 5,771 

dialysis facilities paid through the PPS. 

Table 13 shows the overall estimated 

distribution of payment reductions 

resulting from the PY 2016 ESRD QIP. 

TABLE 13—ESTIMATED DISTRIBUTION

OF PY 2016 ESRD QIP PAYMENT

REDUCTIONS

Payment reduction Number of 

facilities 

Percent of 

facilities 

(percent) 

0.0% .................. 4,483 76.3 

0.5% .................. 957 16.3 

1.0% .................. 305 5.2 

1.5% .................. 70 1.2 

2.0% .................. 58 1.0 

Note: This table excludes 285 facilities that 

did not receive a score because they did not 

have enough data to receive a Total Performance Score. 

To estimate whether or not a facility 

would receive a payment reduction 

under the proposed approach, we 

scored each facility on achievement and 

improvement on several measures we 

have previously finalized and for which 

there were available data from 

CROWNWeb and Medicare claims. 

Measures used for the simulation are 

shown in Table 14. 


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TABLE 14—DATA USED TO ESTIMATE PY 2016 ESRD QIP PAYMENT REDUCTIONS

Measure 

Period of time used to calculate achievement thresholds, 

performance standards, benchmarks, and improvement 

thresholds 

Performance period 

Hemoglobin Greater Than 12 

g/dL.

Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

Vascular Access Type: 

% Fistula ........................... Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

% Catheter ........................ Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

Kt/V: 

Adult HD ............................ Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

Adult PD ............................ Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

Pediatric HD ...................... Jan 2012–Dec 2012 ........................................................... Jan 2013–Aug 2013. 

Hypercalcemia ...................... July 2012–Dec 2011 ........................................................... Jan 2013–June 2013. 

Clinical measures with less than 11 

cases for a facility were not included in 

that facility’s TPS. Each facility’s TPS 

was compared to the estimated 

minimum TPS and the payment 

reduction table found in section III.C.11 

of this proposed rule. Facilities were 

required to have a score on at least one 

clinical measure to receive a TPS. For 

these simulations, the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients and the reporting measures 

were not included due to lack of data 

availability. Therefore, the simulated 

facility TPSs were calculated using only 

some of the clinical measure scores. 

Additionally, since data for the 

reporting measures were not available, 

facilities were scored at the median, or 

5, for each of the three reporting 

measures. 

To estimate the total payment 

reductions in PY 2016 for each facility 

resulting from this final rule, we 

multiplied the total Medicare payments 

to the facility during the one year period 

between January 2012 and December 

2012 by the facility’s estimated payment 

reduction percentage expected under 

the ESRD QIP, yielding a total payment 

reduction amount for each facility: 

(Total ESRD payment in January 2012 

through December 2012 times the 

estimated payment reduction 

percentage). For PY 2016 the total 

payment reduction for all of the 1,390 

facilities expected to receive a reduction 

is approximately $15.1 million 

($15,137,161). Further, we estimate that 

the total costs associated with the 

collection of information requirements 

for PY 2016 described in section IX.C.1 

of this final rule would be 

approximately $39.5 thousand for all 

ESRD facilities. As a result, we estimate 

that ESRD facilities will experience an 

aggregate impact of $15.2 million 

($39,486 + $15,137,161 = $15,176,647) 

in PY 2016, as a result of the PY 2016 

ESRD QIP. 

Table 15 below shows the estimated 

impact of the finalized ESRD QIP 

payment reductions to all ESRD 

facilities for PY 2016. The table details 

the distribution of ESRD facilities by 

facility size (both among facilities 

considered to be small entities and by 

number of treatments per facility), 

geography (both urban/rural and by 

region), and by facility type (hospital 

based/freestanding facilities). Given that 

the time periods used for these 

calculations will differ from those we 

propose to use for the PY 2016 ESRD 

QIP, the actual impact of the PY 2016 

ESRD QIP may vary significantly from 

the values provided here. 

TABLE 15—IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2016 

Number of facilities 

Number of 

treatments 

2012 

(in millions) 

Number of facilities with 

QIP score 

Number of facilities expected to receive a payment reduction 

Payment reduction 

(percent 

change in total 

ESRD payments) 

All Facilities .......................................................................... 5,873 42.7 5,645 1,390 ¥0.17 

Facility Type: 

Freestanding ..................................................................... 5,362 39.6 5,248 1,259 ¥0.16 

Hospital-based .................................................................. 511 3.1 397 131 ¥0.32 

Ownership Type: 

Large Dialysis ................................................................... 4,023 29.7 3,963 966 ¥0.16 

Regional Chain ................................................................. 813 6.2 789 149 ¥0.13 

Independent ...................................................................... 601 4.2 563 161 ¥0.23 

Hospital-based (non-chain) .............................................. 424 2.6 323 112 ¥0.34 

Unknown ........................................................................... 12 0.1 7 2 ¥0.28 

Facility Size: 

Large Entities ................................................................... 4,836 35.9 4,752 1,115 ¥0.15 

Small Entities 1 ................................................................. 1,025 6.7 886 273 ¥0.27 

Unknown ........................................................................... 12 0.1 7 2 ¥0.28 

Rural Status: 

(1) Yes .......................................................................... 1,283 7.0 1,233 288 ¥0.16 

(2) No ............................................................................ 4,590 35.7 4,412 1,102 ¥0.18 

Census Region: 

Northeast ...................................................................... 806 6.5 772 201 ¥0.20 

Midwest ......................................................................... 1,359 8.6 1,286 391 ¥0.21 

South ............................................................................. 2,544 19.2 2,490 570 ¥0.15 

West .............................................................................. 1,020 7.9 992 186 ¥0.14 


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TABLE 15—IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2016—Continued 

Number of facilities 

Number of 

treatments 

2012 

(in millions) 

Number of facilities with 

QIP score 

Number of facilities expected to receive a payment reduction 

Payment reduction 

(percent 

change in total 

ESRD payments) 

U.S. Territories 2 ........................................................... 144 0.5 105 42 ¥0.33 

Census Division: 

East North Central ............................................................ 962 6.4 904 310 ¥0.24 

East South Central ........................................................... 487 3.2 476 102 ¥0.13 

Middle Atlantic .................................................................. 651 5.1 615 165 ¥0.20 

Mountain ........................................................................... 346 2.0 331 65 ¥0.16 

New England .................................................................... 172 1.4 164 39 ¥0.20 

Pacific ............................................................................... 692 5.9 674 126 ¥0.13 

South Atlantic ................................................................... 1,307 9.9 1,269 321 ¥0.17 

West North Central ........................................................... 426 2.2 402 85 ¥0.15 

West South Central .......................................................... 787 6.2 769 152 ¥0.13 

U.S. Territories 2 ................................................................... 43 0.3 41 25 ¥0.50 

Facility Size (# of total treatments) 

Less than 4,000 treatments .......................................... 1,090 3.1 938 277 ¥0.26 

4,000–9,999 treatments ................................................ 2,167 11.1 2,147 440 ¥0.13 

Over 10,000 treatments ................................................ 2,431 27.5 2,422 629 ¥0.17 

Unknown ....................................................................... 185 1.0 138 44 ¥0.24 

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

2 Includes Puerto Rico and Virgin Islands. 

3Based on claims data through December 2012. 

b. Alternatives Considered for the PY 

2016 ESRD QIP 

In the proposed PY 2016 ESRD QIP, 

we selected measures that we believe 

are important indicators of patient 

outcomes and quality of care as 

discussed in section III.C of this final 

rule. Poor management of anemia, for 

example, can lead to avoidable 

hospitalizations, decreased quality of 

life, and death. In order to provide 

strong incentives to improve patient 

outcomes in this clinically important 

area, we considered proposing a clinical 

measure for Pediatric Iron Therapy. 

However, upon further review we 

recognized that we lacked the necessary 

baseline data to establish achievement 

thresholds, performance standards, and 

benchmarks. We, therefore, proposed a 

reporting measure in order to gather the 

data we will need to introduce a clinical 

measure in the future. In the case of the 

NHSN Bloodstream Event in 

Hemodialysis Outpatient measure, we 

considered proposing a reporting 

measure instead of a clinical measure, 

because we lacked the necessary 

baseline data to establish achievement 

thresholds, performance standards, and 

benchmarks. However, we decided not 

to do so. Due to the great impact 

hospital acquired infections have upon 

patients and the industry, we believe it 

is important to begin assessing facilities 

on the number of these events rather 

than on merely whether they report 

these events as soon as possible. 

Similarly, in the case of the Patient 

Informed Consent for Anemia Treatment 

measure, we considered proposing a 

reporting measure instead of a clinical 

measure, because we lacked the 

necessary baseline data to establish 

achievement thresholds, performance 

standards, and benchmarks. We decided 

not to do because we believe that 

providing counseling on the risks and 

benefits of anemia treatment, and 

seeking informed consent for such 

treatment, is already a standard of 

clinical care in the ESRD provider 

community. We also considered 

proposing the Standardized 

Hospitalization Ratio Admissions (SHR) 

measure and the Standardized Mortality 

Ratio (SMR) measure as reporting 

measures for the PY 2016 ESRD QIP. We 

decided not to do so due to outstanding 

concerns about the measures’ validity 

and reliability. As an alternative, we 

proposed the Comorbidity reporting 

measure to provide a reliable source of 

data that we can use to properly riskadjust SHR and SMR clinical measures 

(should we propose to adopt such 

measures in the future), and to improve 

our understanding of the risk factors 

that contribute to morbidity and 

mortality in the ESRD patient 

population. 

In developing the proposed scoring 

methodology for the PY 2016 ESRD QIP, 

we considered several alternatives. For 

example, we considered weighting the 

clinical measures at 80 percent and the 

reporting measures at 20 percent of the 

TPS. We ultimately decided to propose 

the weighting methodology used in the 

PY 2015 ESRD QIP because the ratio of 

clinical to reporting measures did not 

change significantly, and also because 

we wanted to retain a strong incentive 

for facilities to meet the requirements 

for the reporting measures. We also 

considered a number of ways to 

establish achievement thresholds and 

benchmarks for the NHSN clinical 

measure. For example, we considered 

using baseline data from CYs 2012 

through 2013 to set achievement 

thresholds and benchmarks. However, 

we ultimately decided to propose to use 

data from CY 2014 when establishing 

baseline data for scoring purposes, 

because facilities were not required to 

submit twelve full months of NHSN 

data during CY 2012–2013, and rates of 

healthcare-acquired infections are 

susceptible to seasonal variability. In 

light of the importance of monitoring 

and preventing infections in the ESRD 

population, we decided that it would be 

preferable to propose a clinical measure 

with equivalent baseline and 

performance periods, rather than a 

reporting measure that would have less 

of a direct impact on clinical practice. 

We also considered a number of ways to 

score the Patient Informed Consent for 

Anemia Treatment clinical measure. In 

this case, we lacked baseline data that 

could be used to establish achievement 

thresholds and benchmarks, so we 

considered proposing a reporting 

measure in place of the clinical 

measure. In light of the importance of 

the measure, however, we ultimately 

decided to propose a clinical measure in 

order to provide a stronger incentive for 


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facilities to obtain informed consent 

from patients receiving anemia 

treatment. In considering possible 

scoring methodologies for the measure, 

we specifically considered setting the 

achievement threshold at 100 percent 

because we believe that facilities should 

always obtain informed consent from 

patients receiving ESA. However, we 

recognized that unexpected events in 

the clinical setting might preclude the 

possibility of obtaining informed 

consent in every instance, so we 

ultimately decided to propose to set the 

achievement threshold for the measure 

at 92 percent. We selected 92 percent 

because this would allow facilities with 

26 patients to meet the achievement 

threshold if they failed to obtain 

informed consent from 2 patients (see 

section III.C.8 for more details). 

3. DMEPOS Provisions 

a. Effects of the Implementation of Fee 

Schedules for Splints, Casts and IOLs 

The implementation of fee schedules 

for use in paying claims for splints, 

casts, and IOLs inserted in a physician’s 

office would result in administrative 

savings associated with determining and 

implementing the Medicare allowed 

payment amounts for these items. As a 

result, the agency would save 

approximately $94,000 in annual 

administrative expenses for calculating 

reasonable charge payment amounts and 

maintaining multiple pricing files 

necessary for making payment on a 

reasonable charge basis. 

b. Clarification of the 3-Year MLR for 

DME 

We expect no significant impact 

regarding application of the 3-year MLR 

for DME. As we noted in the final rule 

implementing the 3-year MLR, we 

believe that a vast majority of the 

categories of items that were classified 

as DME before January 1, 2012, did 

function for 3 or more years (76 FR 

70289). The 3-year MLR is designed to 

represent a minimum threshold for 

determination of durability for 

equipment that is consistent with the 

statutory DME payment provisions and 

applies on a prospective basis, effective 

January 1, 2012. CMS recognizes that 

the healthcare industry and 

beneficiaries have come to rely on items 

that have qualified as DME prior to 

January 1, 2012, regardless of whether 

those items met the 3-year MLR set forth 

at § 414.202. We note that given that 

reliance and consistent with the 

regulation at § 414.202, CMS would not 

reopen those prior decisions and 

reclassify the equipment in light of the 

new 3-year standard. We believe that 

continuing the Medicare coverage for all 

the items that qualified as DME on or 

prior to January 1, 2012, would avoid 

disrupting the continuity of care for the 

beneficiaries that received these items 

for medical treatment prior to January 1, 

2012. As noted in the final rule for the 

3-year MLR (76 FR 70301, 70311) it is 

difficult to predict how many different 

types of new devices will be introduced 

in the market in the future that may or 

may not meet the 3-year MLR. However, 

even absent the 3-year MLR, it is likely 

that new products which do not meet 

the 3-year MLR will not qualify as DME 

based upon our current interpretation of 

the criteria for DME. It is possible that 

with the clarification of the 3-year MLR, 

we would limit what can be covered as 

DME compared to what we would have 

covered as DME absent this regulatory 

clarification. In general, we expect that 

the 3-year MLR we finalized effective 

January 1, 2012 (76 FR 70311) and 

clarification we are now providing of 

the 3-year MLR would have a minimal, 

if any, savings impact on the 

expenditures under program. 

c. Definition of Routinely Purchased 

DME 

As discussed in section IV of this final 

rule, this final rule clarifies the 

definition of routinely purchased 

equipment set forth at section 

§ 414.220(a) and re-classifies an 

expensive item of DME or accessory 

(over $150) as a capped rental item for 

which Medicare claims data from July 

1986 through June 1987 does not exist 

or for which Medicare claims data 

indicates that the item was not acquired 

by purchase on a national basis at least 

75 percent of the time during the period 

July 1986 through June 1987. Because 

concerns were brought to our attention 

on the application of the definition of 

routinely purchased DME, we 

performed a review of the 

approximately 250 HCPCS codes 

assigned to the routinely purchased 

category of DME in excess of $150. 

Based on our review, and given the 

definition of routinely purchased 

equipment set forth at section § 414.220, 

we would classify such items in the 

capped rental category if the items were 

not acquired by purchase on a national 

basis at least 75 percent of the time 

during the period July 1986 through 

June 1987. 

This final rule identified the HCPCS 

codes requiring reclassification from 

routinely purchased DME to capped 

rental DME in section IV. The majority 

of codes relate to manual wheelchairs 

and wheelchair accessories. Also, 

accessories of complex rehabilitative 

power wheelchairs that will be 

classified as capped rental items and for 

which suppliers must also offer to the 

beneficiary on a lump sum purchase 

basis in accordance with § 414.229(h)(3) 

of the regulations are noted. Below are 

shown approximately 14 codes which 

will be reclassified in two stages 

effective July 1, 2016, for all items 

included in competitive bidding 

programs other than those furnished in 

the Round 1 Recompete programs and 

areas; and on January 1, 2017, for those 

items furnished as part of the Round I 

Recompete competitive bidding 

programs. 

TABLE 16—ITEMS RECLASSIFIED TO

CAPPED RENTAL DME CATEGORY

EFFECTIVE JULY 1, 2016 * 

HCPCS category HCPCS 

Support Surfaces ...... E0197. 

Walkers ..................... E0140 E0149. 

Wheelchairs .............. E0985 E1020 E1028 

E2228 E2368 

E2369. 

Options/Accessories E2370 E2375 K0015 

K0070. 

Wheelchair Seating ... E0955. 

* Items furnished in accordance with Round 

1 Recompete contracts would be reclassified 

effective January 1, 2017 

In Table 17 below, we show estimated 

savings associated with making 

payment on a capped rental basis rather 

than a lump sum purchase basis for 

items that will be reclassified. 

TABLE 17—IMPACT OF ITEMS RECLASSIFIED TO CAPPED RENTAL DME 

CATEGORY

FY 

Impact to the 

federal government) 

(in $ millions) 

2014 ...................................... ¥10 

2015 ...................................... ¥20 

2016 ...................................... ¥20 

2017 ...................................... ¥30 

2018 ...................................... ¥40 

The decrease in expenditures is 

expected because the changes would 

eliminate the lump sum purchase 

method for the certain items, and 

instead payment would be made under 

the monthly rental method resulting in 

lower aggregate payments because many 

beneficiaries do not rent items for as 

long as 13 months. In order to prepare 

our impact on the Medicare program, 

we reviewed claims data and utilization 

for all items currently classified as 

capped rental items from 2009 through 

2011 and determined that the weighted 

average number of allowed monthly 

rental services for beneficiaries 


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receiving capped rental items during 

that period was 8 months. We therefore 

used 8 months as the estimated number 

of months beneficiaries would rent 

items in Table 11 of section IV of the 

preamble of this final rule that would 

not have a purchase option. All 

anticipated savings include the price 

growth for the covered item fee 

schedule update factors for DME 

mandated by section 1834(a)(14) of the 

Act. In addition, our estimate takes into 

account projected changes in DME 

beneficiary enrollment. Furthermore, we 

reflected the savings for these items that 

are currently included under any 

existing competitive bidding program 

and which will be reclassified from 

routinely purchased to capped rental 

effective July 1, 2016. 

Approximately $100 million in 

allowed charges in 2011 are for items 

that would no longer be eligible for 

purchase. Under the capped rental 

payment rules, these items would be 

rented for up to 13-continuous months, 

following which title to the equipment 

would transfer from the supplier to the 

beneficiary. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars_

a004_a-4), in Table 18 below, we have 

prepared an accounting statement 

showing the classification of the 

transfers and costs associated with the 

various provisions of this final rule. 

TABLE 18—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS

Category Transfers 

ESRD PPS for CY 2014 

Annualized Monetized Transfers .............................................................. $0 million. 

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

Category Transfers 

Increased Beneficiary Co-insurance Payments ....................................... $0 million. 

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

ESRD QIP for PY 2016 

Category Transfers 

Annualized Monetized Transfers .............................................................. ¥$15.1 million.* 

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

Category Costs 

Annualized Monetized ESRD Provider Costs .......................................... $39.5 thousand.** 

DME Definition of Routinely Purchased DME 

Category Transfers 

Annualized Monetized Transfer Payments ............................................... ¥$23.1 million ................. 2013 7% 2014–2018 

¥$23.6 million ................. 2013 3% 2014–2018 

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

* It is the reduced payment to the ESRD facilities, which fall below the quality standards as stated in section III.C.11 of this final rule. 

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

XI. Regulatory Flexibility Act Analysis 

** 

The Regulatory Flexibility Act 

(September 19, 1980, Pub. L. 96–354) 

(RFA) requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. 

Approximately 17 percent of ESRD 

dialysis facilities are considered small 

entities according to the Small Business 

Administration’s (SBA) size standards, 

which classifies small businesses as 

those dialysis facilities having total 

revenues of less than $35.5 million in 

any 1 year. Individuals and States are 

not included in the definitions of a 

small entity. For more information on 

SBA’s size standards, see the Small 

Business Administration’s Web site at 

http://www.sba.gov/content/smallbusiness-size-standards (Kidney 

Dialysis Centers are listed as 621492 

with a size standard of $35.5 million). 

We do not believe ESRD facilities are 

operated by small government entities 

such as counties or towns with 

populations of 50,000 or less, and 

therefore, they are not enumerated or 

included in this estimated RFA analysis. 

Individuals and States are not included 

in the definition of a small entity. 

For purposes of the RFA, we estimate 

that approximately 17 percent of ESRD 

facilities are small entities as that term 

is used in the RFA (which includes 

small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). This amount is based on 

the number of ESRD facilities shown in 

the ownership category in Table 12. 

Using the definitions in this ownership 

category, we consider the 601 facilities 

that are independent and the 424 

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

facilities that are owned and operated 

by LDOs and regional chains would 

have total revenues of more than $35.5 

million in any year when the total 

revenues for all locations are combined 

for each business (individual LDO or 

regional chain), and are not, therefore, 

included as small entities. 

For the ESRD PPS updates in this 

rule, a hospital-based ESRD facility (as 


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defined by ownership type) is estimated 

to receive a 0.4 percent increase in 

payments for CY 2014. An independent 

facility (as defined by ownership type) 

is estimated to receive a 0.7 percent 

increase in payments for CY 2014. 

We solicited comment on the RFA 

analysis provided. The comments 

received and our responses are as 

follows. 

Comment: A few commenters 

requested that CMS improve the impact 

analysis for small entities. One 

association requested that we improve 

transparency for ESRD facilities and that 

we update our description of small 

entities. The association provided a 

study that identified all the ESRD 

facilities that have $35.5 million in 

revenues, consistent with the RFA 

definition of a small entity. The Small 

Business Administration, Office of 

Advocacy commented that the rule’s 

transparency would be improved if 

CMS: 1) improved its description of 

small entities likely to be impacted by 

the rule; 2) provided further details on 

the rule’s impacts on affected small 

ESRD facilities; and 3) entertained 

reasonable alternatives to the provisions 

of the proposed rule pursuant to RFA 

section 603(c). Such alternatives might 

include adoption of a transition or 

phase-in period on which CMS solicited 

comments in the proposed rule. The 

commenter suggested that CMS provide 

an impact table tailored to the size 

standards utilized in the RFA to enable 

small entities to better anticipate and 

comment on the impacts of this rule and 

that we include a margin analysis in the 

RFA. 

Response: We thank the commenters 

for their suggestions to enhance the RFA 

analysis. We will take these suggestions 

into consideration for future 

rulemaking. We note that CMS 

publishes a provider level impact table 

each year. The CY 2014 Final ESRD PPS 

Facility Level Impact File may be 

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

Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/End-StageRenal-Disease-ESRD-PaymentRegulations-and-Notices.html. We 

believe that this file for allows adequate 

transparency and identification for all 

ESRD facilities. For example, Medicare 

certified ESRD facilities are identified 

by provider number, Medicare 

payments, number of furnished 

treatments, as well as, rural or urban 

status. 

In section II.C.2.a.v. of this final rule 

we discuss the implementation of the 

drug utilization adjustment. 

Specifically, for CYs 2014 and 2015, we 

are implementing a transition of the 

drug utilization adjustment by offsetting 

the payment update, that is the ESRDB 

market basket minus productivity 

increase factor and other impacts (such 

as, changes to the outlier thresholds), by 

a portion of the reduction amount 

necessary to create an overall impact of 

zero percent for ESRD facilities from the 

previous year’s payments. For CY 2016, 

we will evaluate how to apply the 

balance of the reduction when we 

conduct an analysis of the case-mix 

adjustments as required by section 

632(c) of ATRA and implement the 

inclusion of oral-only ESRD-related 

drugs and biologicals as permitted by 

section 632(b) of ATRA. Following this 

evaluation, we will determine whether 

we should apply the balance of the 

reduction in CY 2016 or provide one 

additional transition year so that the full 

amount of the drug utilization 

adjustment will have been applied to 

the base rate over a 4-year transition 

period ending in CY 2017. 

Based on the finalized QIP payment 

reduction impacts to ESRD facilities for 

PY 2016, we estimate that of the 1,390 

ESRD facilities expected to receive a 

payment reduction, 273 ESRD small 

entity facilities would experience a 

payment reduction (ranging from 0.5 

percent up to 2.0 of total payments), as 

presented in Table 13 (‘‘Estimated 

Distribution of PY 2016 ESRD QIP 

Payment Reductions’’) and Table 15 

(‘‘Impact of Proposed QIP Payment 

Reductions to ESRD Facilities for PY 

2016’’) above. We anticipate the 

payment reductions to average 

approximately $10,890 per facility 

among the 1,390 facilities receiving a 

payment reduction, with an average of 

$12,011 per small entity facilities 

receiving a payment reduction. Using 

our projections of facility performance, 

we then estimated the impact of 

anticipated payment reductions on 

ESRD small entities, by comparing the 

total payment reductions for the 273 

small entities expected to receive a 

payment reduction, with the aggregate 

ESRD payments to all small entities. We 

estimate that there are a total of 1,025 

small entity facilities. For this entire 

group of 1,025 ESRD small entity 

facilities, a decrease of 0.27 percent in 

aggregate ESRD payments is observed. 

Splints and casts, and IOLs affected 

by this rule are generally furnished by 

physicians. Approximately 95 percent 

of physicians are considered to be small 

entities for the purposes of the RFA. 

Individuals and states are not included 

in the definition of a small entity. The 

reasonable charge payment amounts for 

splints and casts are based on national 

reasonable charge amounts increased 

each year by the 12-month percentage 

change in the CPI–U ending June of the 

previous year. These national inflationindexed charges can easily be converted 

to fee schedule amounts with no impact 

on the national Medicare payment 

amounts for these items. Therefore, the 

fee schedule amounts that will take 

effect on April 1, 2014, for splints and 

casts would be the same as the 

reasonable charge amounts that will 

take effect on April 1, 2014, for these 

items. This final rule will have no 

impact on small businesses that furnish 

these items. Given that Medicare pays 

for very few IOLs inserted in a 

physician’s office, these entities do not 

rely on Medicare payment for these 

items to support their businesses. 

Because the fee schedule amounts that 

would take effect on April 1, 2014, for 

IOLs inserted in a physician’s office 

would be based on the national average 

allowed charge for the item, the 

payment amounts these entities would 

receive under the fee schedule will be, 

on average, the same amounts they are 

currently paid for these items when 

considering the small national volume 

of claims as a whole. For example, in 

2011, the average allowed charge for an 

IOL inserted in a physician’s office was 

$174 for just 287 cases nationwide. If a 

particular physician office is a small 

business that charges less than $174 per 

IOL, a national fee schedule amount of 

$174 could increase payment for this 

small business for this item. 

Alternatively, if a particular physician 

office is a small business that charges 

more than $174 per IOL, a national fee 

schedule amount of $174 could decrease 

payment for this small business for this 

item. However, with only 287 cases 

nationwide, implementing a national fee 

of $174 would not have a significant 

impact on any physician office that is a 

small business because the volume of 

claims indicates that the small 

businesses are not relying on payment 

for these items to fund their businesses 

(physician practices) as a whole. 

Therefore, we expect that the overall 

impact of this rule on small businesses 

that are physician offices that insert 

IOLs covered by Medicare would be 

minimal. Approximately 85 percent of 

suppliers of DMEPOS in general are 

considered to be small entities for the 

purposes of the RFA. 

We expect that the impact of moving 

certain expensive DME items from the 

routinely purchased payment class to 

the capped rental payment class on 

small business will be minimal since 

the suppliers would still receive 105 

percent of the purchase fee for items 

that are rented for the full 13-month 

capped rental period. In addition, the 

supplier would retain ownership of 


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equipment that is not used for 13 

months and can furnish the equipment 

to another beneficiary, beginning a new, 

separate 13-month capped rental period 

for the same item. 

Therefore, the Secretary has 

determined that this final rule will not 

have a significant economic impact on 

a substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. Any such regulatory impact 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

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

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this final rule 

will have a significant impact on 

operations of a substantial number of 

small rural hospitals because most 

dialysis facilities are freestanding. 

While there are 162 rural hospital-based 

dialysis facilities, we do not know how 

many of them are based at hospitals 

with fewer than 100 beds. However, 

overall, the 162 rural hospital-based 

dialysis facilities will experience an 

estimated 0.2 percent increase in 

payments. As a result, this final rule is 

not estimated to have a significant 

impact on small rural hospitals. 

Therefore, the Secretary has determined 

that this final rule will not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

XII. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

$100 million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold is approximately $141 

million. This final rule does not include 

any mandates that would impose 

spending costs on State, local, or Tribal 

governments in the aggregate, or by the 

private sector, of $141 million. 

XIII. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

final rule under the threshold criteria of 

Executive Order 13132, Federalism, and 

have determined that it will not have 

substantial direct effects on the rights, 

roles, and responsibilities of States, 

local or Tribal governments. 

XIV. Congressional Review Act 

This final rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and has been 

transmitted to the Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

XV. Files Available to the Public Via 

the Internet 

This section lists the Addenda 

referred to in the preamble of this final 

rule. Beginning in CY 2012, the 

Addenda for the annual ESRD PPS 

proposed and final rulemakings will no 

longer appear in the Federal Register. 

Instead, the Addenda will be available 

only through the Internet. We will 

continue to post the Addenda through 

the Internet. 

Readers who experience any problems 

accessing the Addenda that are posted 

on the CMS Web site at http://

www.cms.gov/ESRDPayment/PAY/

list.asp, should contact Michelle Cruse 

at (410) 786–7540. 

List of Subjects 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as follows: 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END–STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 1. The authority citation for part 413 

is revised to read as follows: 

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

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

1881, 1883 and 1886 of the Social Security 

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

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

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

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

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

156), and sec. 632 of Pub. L. 112–240 (126 

Stat. 2354) 

§ 413.174 [Amended] 

■ 2. Section 413.174 (f)(6) (as added on 

August 12, 2010 at 75 FR 49198, and 

effective on January 1, 2014) is amended 

by removing ‘‘January 1, 2014’’ and by 

adding in its place ‘‘January 1, 2016’’. 

§ 413.237 [Amended] 

■ 3. Section 413.237 (a)(1)(iv) is 

amended by removing ‘‘excluding’’ and 

by adding in its place ‘‘including’’; and 

by removing ‘‘January 1, 2014’’ and 

adding in its place ‘‘January 1, 2016’’. 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 4. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1881(b)(1) 

of the Social Security Act (42 U.S.C.1302, 

1395hh, and 1395rr(b)(1)). 

■ 5. The heading for subpart C is revised 

to read as follows: 

Subpart C—Fee Schedules for 

Parenteral and Enteral Nutrition (PEN) 

Nutrients, Equipment and Supplies, 

Splints, Casts, and Certain Intraocular 

Lenses (IOLs) 

* * * * * 

■ 6. Section 414.100 is revised to read 

as follows: 

§ 414.100 Purpose. 

This subpart implements fee 

schedules for PEN items and services, 

splints and casts, and IOLs inserted in 

a physician’s office as authorized by 

section 1842(s) of the Act. 

■ 7. Section 414.102 is amended by 

revising paragraphs (a) introductory 

text, (a)(2), (b)(1), and (c) to read as 

follows: 

§ 414.102 General payment rules. 

(a) General rule. For PEN items and 

services furnished on or after January 1, 

2002, and for splints and casts and IOLs 

inserted in a physician’s office on or 

after April 1, 2014, Medicare pays for 

the items and services as described in 

paragraph (b) of this section on the basis 

of 80 percent of the lesser of—- 

* * * * * 

(2) The fee schedule amount for the 

item or service, as determined in 

accordance with §§ 414.104 thru 

414.108. 


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Federal Register / Vol. 78, No. 231 / Monday, December 2, 2013 / Rules and Regulations 72253 

(b) * * * 

(1) CMS or the carrier determines fee 

schedules for parenteral and enteral 

nutrition (PEN) nutrients, equipment, 

and supplies, splints and casts, and 

IOLs inserted in a physician’s office, as 

specified in §§ 414.104 thru 414.108. 

* * * * * 

(c) Updating the fee schedule 

amounts. For the years 2003 through 

2010 for PEN items and services, the fee 

schedule amounts of the preceding year 

are updated by the percentage increase 

in the CPI–U for the 12-month period 

ending with June of the preceding year. 

For each year subsequent to 2010 for 

PEN items and services and for each 

year subsequent to 2014 for splints and 

casts, and IOLs inserted in a physician’s 

office, the fee schedule amounts of the 

preceding year are updated by the 

percentage increase in the CPI–U for the 

12-month period ending with June of 

the preceding year, reduced by the 

productivity adjustment described in 

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

■ 8. Section 414.106 is added to read as 

follows: 

§ 414.106 Splints and casts. 

(a) Payment rules. Payment is made in 

a lump sum for splints and casts. 

(b) Fee schedule amount. The fee 

schedule amount for payment for an 

item or service furnished in 2014 is the 

reasonable charge amount for 2013, 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of 2013. 

■ 9. Section 414.108 is added to read as 

follows: 

§ 414.108 IOLs inserted in a physician’s 

office. 

(a) Payment rules. Payment is made in 

a lump sum for IOLs inserted in a 

physician’s office. 

(b) Fee schedule amount. The fee 

schedule amount for payment for an IOL 

furnished in 2014 is the national 

average allowed charge for the IOL 

furnished from in calendar year 2012, 

updated by the percentage increase in 

the CPI–U for the 24-month period 

ending with June of 2013. 

■ 10. Revise the heading to Subpart D to 

read as follows: 

Subpart D—Payment for Durable 

Medical Equipment, Prosthetic and 

Orthotic Devices, and Surgical 

Dressings 

* * * * * 

■ 11. Section § 414.200 is revised to 

read as follows: 

§ 414.200 Purpose 

This subpart implements sections 

1834(a), (h) and (i) of the Act by 

specifying how payments are made for 

the purchase or rental of new and used 

durable medical equipment, prosthetic 

and orthotic devices, and surgical 

dressings for Medicare beneficiaries. 

■ 12. Section 414.226 is amended by 

revising paragraph (c)(6) to read as 

follows: 

§ 414.226 Oxygen and oxygen equipment 

* * * * * 

(c) * * * 

(6) Beginning in 2008, CMS makes an 

annual adjustment to the national 

limited monthly payment rate for items 

described in paragraph (c)(1)(i) of this 

section to ensure that such payment 

rates do not result in expenditures for 

any year that are more or less than the 

expenditures that would have been 

made if such classes had not been 

established. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program). 

Dated: November 20, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: November 21, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–28451 Filed 11–22–13; 4:15 pm] 

BILLING CODE 4120–01–P 


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