[Federal Register Volume 87, Number 123 (Tuesday, June 28, 2022)]
[Proposed Rules]
[Pages 38464-38586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13449]



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Vol. 87

Tuesday,

No. 123

June 28, 2022

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 413 and 512





Medicare Program; End-Stage Renal Disease Prospective Payment System, 
Payment for Renal Dialysis Services Furnished to Individuals With Acute 
Kidney Injury, End-Stage Renal Disease Quality Incentive Program, and 
End-Stage Renal Disease Treatment Choices Model; Proposed Rule

Federal Register / Vol. 87 , No. 123 / Tuesday, June 28, 2022 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 512

[CMS-1768-P]
RIN 0938-AU79


Medicare Program; End-Stage Renal Disease Prospective Payment 
System, Payment for Renal Dialysis Services Furnished to Individuals 
With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive 
Program, and End-Stage Renal Disease Treatment Choices Model

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update and revise the End-Stage Renal 
Disease (ESRD) Prospective Payment System for calendar year 2023. This 
proposed rule also proposes to update the payment rate for renal 
dialysis services furnished by an ESRD facility to individuals with 
acute kidney injury. This rule also includes requests for information 
regarding potential payment adjustments for certain new renal dialysis 
drugs and biological products as well as health equity issues under the 
ESRD PPS with a focus on pediatric dialysis payment. In addition, this 
proposed rule proposes to update requirements for the ESRD Quality 
Incentive Program. Finally, this proposed rule would make updates to 
the ESRD Treatment Choices Model.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by August 22, 2022.

ADDRESSES: In commenting, please refer to file code CMS-1768-P.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1768-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1768-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    <a href="/cdn-cgi/l/email-protection#e6a3b5b4a2b6879f8b838892a6858b95c88e8e95c8818990"><span class="__cf_email__" data-cfemail="2a6f79786e7a4b53474f445e6a49475904424259044d455c">[email protected]</span></a>, for issues related to the ESRD PPS and 
coverage and payment for renal dialysis services furnished to 
individuals with AKI.
    <a href="/cdn-cgi/l/email-protection#46031514020736362a2f2527322f29283506252b35682e2e3568212930"><span class="__cf_email__" data-cfemail="5510060711142525393c3634213c3a3b26153638267b3d3d267b323a23">[email protected]</span></a>, for issues related to applications 
for the Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) or the Transitional Drug Add-on Payment 
Adjustment (TDAPA).
    Delia Houseal, (410) 786-2724, for issues related to the ESRD QIP.
    <a href="/cdn-cgi/l/email-protection#d1948592fc929c9c9891b2bca2ffb9b9a2ffb6bea7"><span class="__cf_email__" data-cfemail="1c59485f315f5151555c7f716f3274746f327b736a">[email protected]</span></a>, for issues related to the ESRD Treatment 
Choices (ETC) Model.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the individual will take actions to harm the individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Current Procedural Terminology (CPT) Copyright Notice: Throughout 
this proposed rule, we use CPT[supreg] codes and descriptions to refer 
to a variety of services. We note that CPT[supreg] codes and 
descriptions are copyright 2020 American Medical Association (AMA). All 
Rights Reserved. CPT[supreg] is a registered trademark of the AMA. 
Applicable Federal Acquisition Regulations (FAR) and Defense Federal 
Acquisition Regulations (DFAR) apply.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a Table of Contents.

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Cost and Benefits
II. Calendar Year (CY) 2023 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background
    B. Provisions for the CY 2023 ESRD PPS Update
    C. Proposed Transitional Add-On Payment Adjustment for New and 
Innovative Equipment and Supplies (TPNIES) for CY 2023 Payment
    D. Request for Information About Addressing Issues of Payment 
for New Drugs After Transitional Drug Add-On Payment Adjustment 
(TDAPA) Period Ends
    E. Requests for Information on Health Equity Issues Within ESRD 
PPS With a Focus on the Pediatric Payment
III. Calendar Year (CY) 2023 Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury (AKI)
    A. Background
    B. Proposed Annual Payment Rate Update for CY 2023
IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    A. Background
    B. Extraordinary Circumstances Exception (ECE) Previously 
Granted for the ESRD QIP Including Notification of ECE Due to ESRD 
Quality Reporting System Issues
    C. Updates for the PY 2025 ESRD QIP
V. End-Stage Renal Disease Treatment Choices (ETC) Model
    A. Background
    B. Proposed Updates to the ETC Model
VI. Collection of Information Requirements
    A. Legislative Requirement for Solicitation of Comments
    B. Requirements in Regulation Text
    C. Additional Information Collection Requirements
VII. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Impact Analysis
    D. Detailed Economic Analysis
    E. Accounting Statement
    F. Regulatory Flexibility Act Analysis (RFA)
    G. Unfunded Mandates Reform Act Analysis (UMRA)
    H. Federalism
VIII. Response to Comments
IX. Files Available to the Public via the Internet
Regulations Text

I. Executive Summary

A. Purpose

    This rule proposes changes related to the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS), payment for renal dialysis 
services furnished to individuals with acute

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kidney injury (AKI), the ESRD Quality Incentive Program (QIP), and the 
ESRD Treatment Choices (ETC) Model.
1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
    On January 1, 2011, we implemented the ESRD PPS, a case-mix 
adjusted, bundled PPS for renal dialysis services furnished by ESRD 
facilities as required by section 1881(b)(14) of the Social Security 
Act (the Act), as added by section 153(b) of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275). 
Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA, 
and amended by section 3401(h) of the Patient Protection and Affordable 
Care Act (the Affordable Care Act) (Pub. L. 111-148), established that 
beginning calendar year (CY) 2012, and each subsequent year, the 
Secretary of the Department of Health and Human Services (the 
Secretary) shall annually increase payment amounts by an ESRD market 
basket increase factor, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This proposed 
rule would update the ESRD PPS for CY 2023.
2. Coverage and Payment for Renal Dialysis Services Furnished to 
Individuals With Acute Kidney Injury (AKI)
    On June 29, 2015, the President signed the Trade Preferences 
Extension Act of 2015 (TPEA) (Pub. L. 114-27). Section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA amended section 1834 of the Act by adding a new subsection (r) 
that provides for payment for renal dialysis services furnished by 
renal dialysis facilities or providers of services paid under section 
1881(b)(14) of the Act to individuals with AKI at the ESRD PPS base 
rate beginning January 1, 2017. This proposed rule would update the AKI 
payment rate for CY 2023.
3. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is 
authorized by section 1881(h) of the Act. The Program fosters improved 
patient outcomes by establishing incentives for facilities to meet or 
exceed performance standards established by the Centers for Medicare & 
Medicaid Services (CMS). This proposed rule proposes several updates 
for Payment Year (PY) 2023, including the suppression of individual 
ESRD QIP measures for PY 2023 under the measure suppression policy 
previously finalized for the duration of the COVID-19 public health 
emergency (PHE), as well as updates for PY 2024 and PY 2025. At this 
time, no new requirements are being proposed beginning with the PY 2026 
ESRD QIP.
4. End-Stage Renal Disease Treatment Choices (ETC) Model
    The ETC Model is a mandatory Medicare payment model tested under 
section 1115A of the Act. The ETC Model is operated by the Center for 
Medicare and Medicaid Innovation (Innovation Center), and tests the use 
of payment adjustments to encourage greater utilization of home 
dialysis and kidney transplants, to preserve or enhance the quality of 
care furnished to Medicare beneficiaries while reducing Medicare 
expenditures. The ETC Model was finalized as part of a final rule 
published in the Federal Register on September 29, 2020, titled, 
``Medicare Program: Specialty Care Models to Improve Quality of Care 
and Reduce Expenditures'' (85 FR 61114), referred to herein as the 
``Specialty Care Models final rule.'' This proposed rule would make 
certain changes to the ETC Model, including adding a parameter to the 
Performance Payment Adjustment (PPA) achievement scoring methodology 
and adding an additional protection related to flexibilities for 
furnishing and billing kidney disease patient education services by ETC 
Participants. This proposed rule also discusses our intent to 
disseminate participant-level model performance information to the 
public.

B. Summary of the Major Provisions

1. ESRD PPS
    <bullet> Rebasing and revision of the End-Stage Renal Disease 
Bundled (ESRDB) market basket for CY 2023: We are proposing to rebase 
and revise the ESRDB market basket to a 2020 base year, reflecting the 
most recent and complete set of Medicare Cost Report data as well as 
other publicly available data. In addition, we are proposing to update 
the labor-related share of the ESRD PPS base rate to reflect the 
proposed 2020 labor-related cost share weights designated in the ESRDB 
market basket.
    <bullet> Update to the ESRD PPS base rate for CY 2023: The proposed 
CY 2023 ESRD PPS base rate is $264.09. This proposed amount reflects 
the application of the wage index budget-neutrality adjustment factor 
(0.999997) and a proposed productivity-adjusted market basket increase 
of 2.4 percent as required by section 1881(b)(14)(F)(i)(I) of the Act, 
equaling $264.09 (($257.90 x 0.999997) x 1.024 = $264.09).
    <bullet> Annual update to the wage index: We adjust wage indices on 
an annual basis using the most current hospital wage data and the 
latest core-based statistical area (CBSA) delineations to account for 
differing wage levels in areas in which ESRD facilities are located. 
For CY 2023, we are proposing to update the wage index values based on 
the latest available data.
    <bullet> Permanent cap on wage index decreases: For CY 2023 and 
subsequent years, we are proposing to apply a permanent 5-percent cap 
on any ESRD facility's wage index decrease from its wage index in the 
prior year, regardless of the circumstances causing the decline.
    <bullet> Wage index floor: We are proposing to raise the wage index 
floor, for areas with wage index values below the floor, from 0.5000 to 
0.6000.
    <bullet> Outlier policy refinement: The ESRD PPS has an outlier 
policy that targets 1.0 percent of total Medicare ESRD PPS expenditures 
in outlier payments for ESRD beneficiaries who require a high level of 
renal dialysis services. We are proposing to modify the methodology for 
calculating the fixed-dollar loss (FDL) amounts for adult patients.
    <bullet> Annual update to the outlier policy: We are proposing to 
update the outlier policy based on the most current data and our 
proposed refinement to the outlier policy. Accordingly, we propose to 
update the Medicare allowable payment (MAP) amounts for adult and 
pediatric patients for CY 2023 using the latest available CY 2021 
claims data. We propose to update the ESRD outlier services FDL amount 
for pediatric patients using the latest available CY 2021 claims data, 
and we propose to use the latest available claims data from CY 2019, CY 
2020, and CY 2021 to calculate the FDL amount for adults, in accordance 
with the proposed methodology discussed in section II.B.1.c.(4) of this 
proposed rule. For pediatric beneficiaries, the proposed FDL amount 
would decrease from $26.02 to $21.51, and the proposed MAP amount would 
decrease from $27.15 to $25.62, as compared to CY 2022 values. For 
adult beneficiaries, the proposed FDL amount would decrease from $75.39 
to $40.75, and the proposed MAP amount would decrease from $42.75 to 
$36.85. The 1.0 percent target for outlier payments was not achieved in 
CY 2021. Outlier payments represented approximately 0.4 percent

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of total payments rather than 1.0 percent.
    <bullet> Definition of oral-only drugs: We are proposing that, 
beginning January 1, 2025, we would include the word functional in the 
definition of oral-only drug at Sec.  413.234(a). Specifically, under 
the proposed definition, an oral-only drug would be a drug or 
biological product with no injectable functional equivalent or other 
form of administration other than an oral form.
    <bullet> Update to the offset amount for the transitional add-on 
payment adjustment for new and innovative equipment and supplies 
(TPNIES) for CY 2023: The proposed CY 2023 average per treatment offset 
amount for the TPNIES for capital-related assets that are home dialysis 
machines is $9.73. This proposed offset amount reflects the application 
of the productivity-adjusted market basket increase of 2.4 percent 
($9.50 x 1.024 = $9.73).
    <bullet> TPNIES applications received for CY 2023: This proposed 
rule presents a summary of the three CY 2023 TPNIES applications that 
we received by the February 1, 2022 deadline and our preliminary 
analysis of the applicants' claims related to substantial clinical 
improvement and other eligibility criteria for the TPNIES.
2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
    We are proposing to update the AKI payment rate for CY 2023. The 
proposed CY 2023 payment rate is $264.09, which is the same as the base 
rate proposed under the ESRD PPS for CY 2023.
3. ESRD QIP
    We are proposing to suppress the Standardized Hospitalization Ratio 
(SHR) clinical measure, the Standardized Readmission Ratio (SRR) 
clinical measure, the In-Center Hemodialysis Consumer Assessment of 
Healthcare Providers and Systems (ICH CAHPS) clinical measure, the 
Long-Term Catheter Rate clinical measure, the Percentage of Prevalent 
Patients Waitlisted (PPPW) clinical measure, and the Kt/V Dialysis 
Adequacy Comprehensive clinical measure for PY 2023 under our 
previously finalized measure suppression policy because we have 
determined that circumstances caused by the public health emergency 
(PHE) due to COVID-19 have significantly affected the measures and 
resulting performance scores. We are also proposing to use CY 2019 data 
to calculate performance standards for the PY 2023 ESRD QIP. We are 
also updating the technical specifications of the SHR clinical measure 
and SRR clinical measure so that the measure results are expressed as 
rates instead of ratios beginning with the PY 2024 ESRD QIP. Beginning 
with the PY 2025 ESRD QIP, we are proposing to add the COVID-19 
Vaccination Coverage among Healthcare Personnel (HCP) measure to the 
ESRD QIP measure set. We are also proposing to convert the Standardized 
Transfusion Ratio (STrR) reporting measure to a clinical measure 
beginning with PY 2025, and are further proposing to express the 
measure as a rate to align with the technical updates to express the 
SHR and SRR clinical measure results as rates. In addition, we are 
proposing to convert the Hypercalcemia clinical measure to a reporting 
measure, beginning with PY 2025. Furthermore, we are proposing to 
create a new Reporting Measure domain and to re-weight current measure 
domains beginning with PY 2025.
    This proposed rule also includes requests for information on 
several important topics, including potential quality measures for home 
dialysis, the expansion of our quality reporting programs to allow us 
to provide more actionable and comprehensive information on health care 
disparities across multiple variables and new care settings, and on the 
possible future inclusion of two potential social drivers of health 
screening measures.
4. ETC Model
    We are proposing to update the PPA achievement scoring methodology 
beginning in the fifth Measurement Year (MY5) of the ETC Model, which 
begins January 1, 2023. We are also proposing to clarify the 
requirements for qualified staff to furnish and bill kidney disease 
patient education services under the ETC Model's Medicare program 
waivers. In addition, we discuss our intent to disseminate participant-
level model performance information to the public.

C. Summary of Costs and Benefits

    In section VII.D.5 of this proposed rule, we set forth a detailed 
analysis of the impacts that the proposed changes would have on 
affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Proposed ESRD PPS
    The impact table in section VII.D.5.a of this proposed rule 
displays the estimated change in payments to ESRD facilities in CY 2023 
compared to estimated payments in CY 2022. The overall impact of the CY 
2023 changes is projected to be a 3.1 percent increase in payments. 
Hospital-based ESRD facilities have an estimated 3.7 percent increase 
in payments compared with freestanding facilities with an estimated 3.1 
percent increase. We estimate that the aggregate ESRD PPS expenditures 
would increase by approximately $320 million in CY 2023 compared to CY 
2022. This reflects a $250 million increase from the proposed payment 
rate update, a $70 million increase due to the proposed updates to the 
outlier threshold amounts, and approximately $2.5 million in estimated 
TPNIES amounts. Because of the projected 3.1 percent overall payment 
increase, we estimate there would be an increase in beneficiary 
coinsurance payments of 3.1 percent in CY 2023, which translates to 
approximately $60 million.
2. Impacts of the Proposed Payment for Renal Dialysis Services 
Furnished to Individuals With AKI
    The impact table in section VII.D.5.b of this proposed rule 
displays the estimated change in payments to ESRD facilities in CY 2023 
compared to estimated payments in CY 2022. The overall impact of the CY 
2023 changes is projected to be a 2.4 percent increase in payments for 
individuals with AKI. Hospital-based ESRD facilities have an estimated 
2.1 percent increase in payments compared with freestanding ESRD 
facilities with an estimated 2.4 percent increase. The overall impact 
reflects the effects of the proposed update to the labor-related share, 
proposed CY 2023 wage index, proposed permanent cap on wage index 
decreases, and the proposed payment rate update. We estimate that the 
aggregate payments made to ESRD facilities for renal dialysis services 
furnished to patients with AKI, at the proposed CY 2023 ESRD PPS base 
rate, would increase by $2 million in CY 2023 compared to CY 2022.
3. Impacts of the Proposed ESRD QIP
    Our proposals to suppress measures for the PY 2023 ESRD QIP 
necessitate a modification to our previously estimated overall economic 
impact of the PY 2023 ESRD QIP (85 FR 71400). In the CY 2021 ESRD PPS 
final rule, we estimated that the overall economic impact of the PY 
2023 ESRD QIP would be approximately $224 million as a result of the 
policies we had finalized at that time. The $224 million figure for PY 
2023 included costs associated with the collection of information 
requirements, which we estimated would be approximately $208 million, 
and $16 million in estimated payment reductions across all facilities. 
However, as a result of the proposals impacting the PY 2023 ESRD QIP 
that we are making in this proposed rule, we are modifying our previous 
estimate. We now estimate that the overall economic

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impact of the PY 2023 ESRD QIP would be approximately $218 million. The 
$218 million figure for PY 2023 includes costs associated with the 
collection of information requirements and recalculated estimated 
payment reductions based on the six measures we are proposing to 
suppress for PY 2023. Although we are updating the way we express the 
SHR clinical measure and the SRR clinical measure results beginning 
with PY 2024, these technical updates would not impact our previously 
estimated economic impact for the PY 2024 ESRD QIP. We estimate that 
the overall economic impact of the PY 2025 ESRD QIP would be 
approximately $252 million as a result of the policies we have 
previously finalized and the proposals in this proposed rule. The $252 
million figure for PY 2025 includes costs associated with the 
collection of information requirements, which we estimate would be 
approximately $215 million, and $37 million in estimated payment 
reductions across all facilities. We also estimate that the overall 
economic impact of the PY 2026 ESRD QIP would be approximately $252 
million as a result of the policies we have previously finalized. The 
$252 million figure for PY 2026 includes costs associated with the 
collection of information requirements, which we estimate would be 
approximately $215 million, and $37 million in estimated payment 
reductions across all facilities.
4. Impacts of the Proposed Changes to the ETC Model
    The impact estimate in section VII.D.5.d of this proposed rule 
describes the estimated change in anticipated Medicare program savings 
arising from the ETC Model over the duration of the ETC Model as a 
result of the proposed changes. We estimate that the ETC Model would 
result in $28 million in net savings over the 6.5 year duration of the 
ETC Model. We also estimate that the changes proposed in this proposed 
rule would produce no change in net savings for the ETC Model.

II. CY 2023 ESRD PPS

A. Background

1. Statutory Background
    On January 1, 2011, CMS implemented the ESRD PPS, a case-mix 
adjusted bundled PPS for renal dialysis services furnished by ESRD 
facilities, as required by 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). Section 1881(b)(14)(F) of the Act, as added by 
section 153(b) of MIPPA and amended by section 3401(h) of the Patient 
Protection and Affordable Care Act (the Affordable Care Act), 
established that beginning with CY 2012, and each subsequent year, the 
Secretary shall annually increase payment amounts by an ESRD market 
basket increase factor reduced by the productivity adjustment described 
in section 1886(b)(3)(B)(xi)(II) of the Act.
    Section 632 of the American Taxpayer Relief Act of 2012 (ATRA) 
(Pub. L. 112-240) included several provisions that apply to the ESRD 
PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act, 
which required the Secretary, by comparing per patient utilization data 
from 2007 with such data from 2012, to reduce the single payment for 
renal dialysis services furnished on or after January 1, 2014, to 
reflect the Secretary's estimate of the change in the utilization of 
ESRD-related drugs and biologicals (excluding oral-only ESRD-related 
drugs). Consistent with this requirement, in the CY 2014 ESRD PPS final 
rule, we finalized $29.93 as the total drug utilization reduction and 
finalized a policy to implement the amount over a 3- to 4-year 
transition period (78 FR 72161 through 72170).
    Section 632(b) of ATRA prohibited the Secretary from paying for 
oral-only ESRD-related drugs and biologicals under the ESRD PPS prior 
to January 1, 2016. Section 632(c) of ATRA required the Secretary, by 
no later than January 1, 2016, to analyze the case-mix payment 
adjustments under section 1881(b)(14)(D)(i) of the Act and make 
appropriate revisions to those adjustments.
    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) was enacted. Section 217 of PAMA included 
several provisions that apply to the ESRD PPS. Specifically, sections 
217(b)(1) and (2) of PAMA amended sections 1881(b)(14)(F) and (I) of 
the Act and replaced the drug utilization adjustment that was finalized 
in the CY 2014 ESRD PPS final rule (78 FR 72161 through 72170) with 
specific provisions that dictated the market basket update for CY 2015 
(0.0 percent) and how the market basket should be reduced in CY 2016 
through CY 2018.
    Section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA to 
provide that the Secretary may not pay for oral-only ESRD-related drugs 
under the ESRD PPS prior to January 1, 2024. Section 217(a)(2) of PAMA 
further amended section 632(b)(1) of ATRA by requiring that in 
establishing payment for oral-only drugs under the ESRD PPS, the 
Secretary must use data from the most recent year available. Section 
217(c) of PAMA provided that as part of the CY 2016 ESRD PPS 
rulemaking, the Secretary shall establish a process for-- (1) 
determining when a product is no longer an oral-only drug; and (2) 
including new injectable and intravenous products into the ESRD PPS 
bundled payment.
    Finally, on December 19, 2014, the President signed the Stephen 
Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE) (Pub. 
L. 113-295). Section 204 of ABLE amended section 632(b)(1) of ATRA, as 
amended by section 217(a)(1) of PAMA, to provide that payment for oral-
only renal dialysis services cannot be made under the ESRD PPS bundled 
payment prior to January 1, 2025.
2. System for Payment of Renal Dialysis Services
    Under the ESRD PPS, a single per-treatment payment is made to an 
ESRD facility for all the renal dialysis services defined in section 
1881(b)(14)(B) of the Act and furnished to individuals for the 
treatment of ESRD in the ESRD facility or in a patient's home. We have 
codified our definition of renal dialysis services at Sec.  413.171, 
which is in 42 CFR part 413, subpart H, along with other ESRD PPS 
payment policies. The ESRD PPS base rate is adjusted for 
characteristics of both adult and pediatric patients and accounts for 
patient case-mix variability. The adult case-mix adjusters include five 
categories of age, body surface area, low body mass index, onset of 
dialysis, and four comorbidity categories (that is, pericarditis, 
gastrointestinal tract bleeding, hereditary hemolytic or sickle cell 
anemia, myelodysplastic syndrome). A different set of case-mix 
adjusters are applied for the pediatric population. Pediatric patient-
level adjusters include two age categories (under age 22, or age 22 to 
26) and two dialysis modalities (that is, peritoneal or hemodialysis) 
(Sec.  413.235(a) and (b)).
    The ESRD PPS provides for three facility-level adjustments. The 
first payment adjustment accounts for ESRD facilities furnishing a low 
volume of dialysis treatments (Sec.  413.232). The second payment 
adjustment reflects differences in area wage levels developed from 
core-based statistical areas (CBSAs) (Sec.  413.231). The third payment 
adjustment accounts for ESRD facilities furnishing renal dialysis 
services in a rural area (Sec.  413.233).
    There are four additional payment adjustments under the ESRD PPS. 
The ESRD PPS provides adjustments, when applicable, for: (1) a training 
add-on for home and self-dialysis modalities (Sec.  413.235(c)); (2) an 
additional payment

[[Page 38468]]

for high cost outliers due to unusual variations in the type or amount 
of medically necessary care (Sec.  413.237); (3) a TDAPA for certain 
new renal dialysis drugs and biological products (Sec.  413.234(c)); 
and (4) a TPNIES for certain qualifying, new and innovative renal 
dialysis equipment and supplies (Sec.  413.236(d)).
3. Updates to the ESRD PPS
    Policy changes to the ESRD PPS are proposed and finalized annually 
in the Federal Register. The CY 2011 ESRD PPS final rule was published 
on August 12, 2010 in the Federal Register (75 FR 49030 through 49214). 
That rule implemented the ESRD PPS beginning on January 1, 2011 in 
accordance with section 1881(b)(14) of the Act, as added by section 
153(b) of MIPPA, over a 4-year transition period. Since the 
implementation of the ESRD PPS, we have published annual rules to make 
routine updates, policy changes, and clarifications.
    We published a final rule, which appeared in the November 8, 2021 
issue of the Federal Register, titled ``Medicare Program; End-Stage 
Renal Disease Prospective Payment System, Payment for Renal Dialysis 
Services Furnished to Individuals With Acute Kidney Injury, and End-
Stage Renal Disease Quality Incentive Program, and End-Stage Renal 
Disease Treatment Choices Model,'' referred to herein as the ``CY 2022 
ESRD PPS final rule.'' In that rule, we updated the ESRD PPS base rate, 
wage index, and outlier policy for CY 2022. We also updated the average 
per treatment offset amount for the TPNIES for CY 2022. In addition, we 
announced our approval of one application for the TPNIES for CY 2022 
payment. For further detailed information regarding these updates, see 
86 FR 61874.

B. Provisions of the Proposed Rule

1. Proposed CY 2023 ESRD PPS Update
a. Proposed CY 2023 ESRD Bundled (ESRDB) Market Basket Rebasing and 
Revision; Market Basket Increase Factor; Productivity Adjustment; and 
Labor-Related Share
(1) Proposed Rebasing and Revising of the ESRDB Market Basket
(a) 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 PPS payment amounts 
are required to be annually increased by an ESRD market basket increase 
factor and reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity 
adjustment may result in the increase factor being less than 0.0 for a 
year and may result in payment rates for a year being less than the 
payment rates for the preceding year. Section 1881(b)(14)(F)(i) of the 
Act 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 included in renal dialysis services.
    As required under section 1881(b)(14)(F)(i) of the Act, CMS 
developed an all-inclusive ESRD Bundled (ESRDB) input price index using 
CY 2008 as the base year (75 FR 49151 through 49162). We subsequently 
revised and rebased the ESRDB input price index to a base year of CY 
2012 in the CY 2015 ESRD PPS final rule (79 FR 66129 through 66136). In 
the CY 2019 ESRD PPS final rule (83 FR 56951 through 56964), we 
finalized a rebased ESRDB input price index to reflect a CY 2016 base 
year. Effective for CY 2023, we are proposing to rebase and revise the 
ESRDB market basket to a base year of CY 2020.
    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.
    The ESRDB market basket is a fixed-weight, Laspeyres-type price 
index. A Laspeyres-type price index measures the change in price, over 
time, of the same mix of goods and services purchased in the base 
period. Any changes in the quantity or mix of goods and services (that 
is, intensity) purchased over time are not measured.
    The index is constructed in three steps. First, a base period is 
selected where total base period expenditures are estimated for a set 
of mutually exclusive and exhaustive spending categories, with the 
proportion of total costs that each category represents being 
calculated. These proportions are called ``cost weights'' or 
``expenditure weights.'' Second, each expenditure category is matched 
to an appropriate price or wage variable, referred to as a ``price 
proxy.'' In almost every instance, these price proxies are derived from 
publicly available statistical series that are published on a 
consistent schedule (preferably at least on a quarterly basis). 
Finally, the expenditure weight for each cost category is multiplied by 
the level of its respective price proxy. The sum of these products 
(that is, the expenditure weights multiplied by their price index 
levels) for all cost categories yields the composite index level of the 
market basket in a given period. Repeating this step for other periods 
produces a series of market basket levels over time. Dividing an index 
level for a given period by an index level for an earlier period 
produces a rate of growth in the input price index over that timeframe.
    As noted previously, the market basket is described as a fixed-
weight index because it represents the change in price over time of a 
constant mix (quantity and intensity) of goods and services purchased 
to provide renal dialysis services. The effects on total expenditures 
resulting from changes in the mix of goods and services purchased 
subsequent to the base period are not measured. For example, an ESRD 
facility hiring more nurses to accommodate the needs of patients would 
increase the volume of goods and services purchased by the ESRD 
facility, but would not be factored into the price change measured by a 
fixed-weight ESRD market basket. Only when the index is rebased would 
changes in the quantity and intensity be captured, with those changes 
being reflected in the cost weights. Therefore, we rebase the market 
basket periodically so that the cost weights reflect changes between 
base periods in the mix of goods and services that ESRD facilities 
purchase to furnish ESRD treatment.
    We last rebased the ESRDB market basket cost weights effective for 
CY 2019 (83 FR 56951 through 56964), with 2016 data used as the base 
period for the construction of the market basket cost weights. We are 
proposing to use 2020 as the base year for the proposed rebased ESRDB 
market basket cost weights. The cost weights for this proposed ESRDB 
market basket are based on the cost report data for independent ESRD 
facilities. We refer to the proposed market basket as a CY market 
basket because the base period for all price proxies and weights are 
set to CY 2020 (that is, the average index level for CY 2020 is equal 
to 100). The major source data for the proposed ESRDB market basket is 
the 2020 Medicare cost reports (MCRs) (Form CMS-265-11, OMB NO. 0938-
0236), supplemented with 2012 data from the United States (U.S.) Census 
Bureau's Services Annual Survey (SAS) inflated to 2020 levels. The 2012 
SAS data is the most recent year of detailed expense data published by 
the Census Bureau for North American International Classification 
System (NAICS) Code 621492: Kidney Dialysis Centers. We also are 
proposing to use May 2020

[[Page 38469]]

Occupational Employment Statistics data from the U.S. Department of 
Labor's Bureau of Labor Statistics (BLS) to estimate the weights for 
the Wages and Salaries and Employee Benefits occupational blends. We 
provide more detail on our proposed methodology in section 
II.B.1.a.(1)(b) of this proposed rule.
    The terms ``rebasing'' and ``revising,'' while often used 
interchangeably, actually denote different activities. The term 
``rebasing'' means moving the base year for the structure of costs of 
an input price index (that is, in this exercise, we are proposing to 
move the base year cost structure from 2016 to 2020) without making any 
other major changes to the methodology. The term ``revising'' means 
changing data sources, cost categories, and/or price proxies used in 
the input price index. For CY 2023, we are proposing to rebase the 
ESRDB market basket to reflect the 2020 cost structure of ESRD 
facilities and to revise the index, that is, make changes to cost 
categories or price proxies used in the index.
    We are proposing CY 2020 as the new base year because 2020 is the 
most recent year for which relatively complete MCR data are available. 
We analyzed the cost weights for the years 2017 through 2020 and found 
that the expenses reported in the ESRD facility MCRs for 2020 were 
consistent with those in the prior years. Additionally, given the 
nature of renal dialysis services, any impacts on utilization due to 
the COVID-19 PHE were minimal as dialysis is not an optional treatment 
and must continue even during the PHE. In developing the proposed 
market basket, we reviewed ESRD expenditure data from ESRD MCRs (CMS 
Form 265-11, OMB NO. 0938-0236) for 2020 for each freestanding ESRD 
facility that reported expenses and payments. The 2020 MCRs are for 
those ESRD facilities whose cost reporting period began on or after 
October 1, 2019, and before October 1, 2020. Of the 2020 MCRs, 
approximately 91 percent of freestanding ESRD facilities had a begin 
date on January 1, 2020, approximately 5 percent had a begin date prior 
to January 1, 2020, and approximately 4 percent had a begin date after 
January 1, 2020. Using this methodology allowed our sample to include 
ESRD facilities with varying cost report years including, but not 
limited to, the federal fiscal year (FY) or CY.
    We are proposing to maintain our policy of using data from 
freestanding ESRD facilities (which account for over 90 percent of 
total ESRD facilities in CY 2020) because freestanding ESRD facility 
data reflect the actual cost structure faced by the ESRD facility 
itself. In contrast, expense data for hospital-based ESRD facilities 
reflect the allocation of overhead from the entire institution.
    We developed cost category weights for the proposed 2020-based 
ESRDB market basket in two stages. First, we derived base year cost 
weights for ten major categories (Wages and Salaries, Employee 
Benefits, Pharmaceuticals, Supplies, Laboratory Services, Housekeeping, 
Operations & Maintenance, Administrative & General, Capital-Related 
Building and Fixtures, and Capital-Related Moveable Equipment) from the 
ESRD MCRs. Second, we are proposing to divide the Administrative & 
General cost category into further detail using 2012 SAS data for the 
industry Kidney Dialysis Centers NAICS 621492 inflated to 2020 levels. 
We apply the estimated 2020 distributions from the SAS data to the 2020 
Administrative & General cost weight to yield the more detailed 2020 
cost weights in the proposed market basket. This is the same 
methodology we used in the CY 2019 ESRD PPS rulemaking to break the 
Administrative & General costs into more detail for the 2016-based 
ESRDB market basket (83 FR 56951 through 56964).
    We are proposing to include a total of 21 detailed cost categories 
for the proposed 2020-based ESRDB market basket, whereas the 2016-based 
ESRDB market basket had 20 detailed cost categories. A detailed 
discussion of the proposals is provided in section II.B.1.a.(1)(b) of 
this proposed rule.
(b) Cost Category Weights
    Using Worksheets A and B from the 2020 MCRs, we first computed cost 
shares for ten major expenditure categories: Wages and Salaries, 
Employee Benefits, Pharmaceuticals, Supplies, Laboratory Services, 
Housekeeping, Operations & Maintenance, Administrative and General, 
Capital-Related Building and Fixtures, and Capital-Related Moveable 
Equipment. Edits were applied to include only cost reports that had 
total costs greater than zero. Total costs as reported on the MCR 
include those costs reimbursable under the ESRD PPS. For example, we 
excluded expenses related to vaccine costs from total expenditures 
since these are not paid for under the ESRD PPS.
    In order to reduce potential distortions from outliers in the 
calculation of the individual cost weights for the major expenditure 
categories for each cost category, values less than the 5th percentile 
or greater than the 95th percentile were excluded from the major cost 
weight computations. The proposed data set, after removing cost reports 
with total costs equal to or less than zero and excluding outliers, 
included information from approximately 6,625 independent ESRD 
facilities' cost reports from an available pool of 7,413 cost reports.
    Table 1 presents the proposed 2020-based ESRDB and 2016-based ESRDB 
market basket major cost weights as derived directly from the MCR data.

[[Page 38470]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.002

    We are proposing to disaggregate the Administrative & General major 
cost category developed from the MCR into more detail to more 
accurately reflect ESRD facility costs. Those categories include: 
Benefits, Professional Fees, Telephone, Utilities, and All Other Goods 
and Services. We describe below how the initially computed categories 
and weights from the cost reports were modified to yield the proposed 
2020 ESRDB market basket expenditure categories and weights presented 
in this proposed rule.
Wages and Salaries
    The proposed Wages and Salaries cost weight is comprised of direct 
patient care wages and salaries and non-direct patient care wages and 
salaries. Direct patient care wages and salaries for 2020 was derived 
from Worksheet B, column 5, lines 8 through 17 of the MCR. Non-direct 
patient care wages and salaries includes all other wages and salaries 
costs for non-health workers and physicians, which we are proposing to 
derive using the following steps:
    Step 1: To capture the salary costs associated with non-direct 
patient care cost centers, we calculated salary percentages for non-
direct patient care from Worksheet A of the MCR. The estimated ratios 
were calculated as the ratio of salary costs (Worksheet A, columns 1 
and 2) to total costs (Worksheet A, column 4). The salary percentages 
were calculated for seven distinct cost centers: `Operations and 
Maintenance of Plant' combined with `Capital Related Costs-Renal 
Dialysis Equipment' (line 3 and 6), Housekeeping (line 4), Employee 
Health and Wellness (EH&W) Benefits for Direct Patient Care (line 8), 
Supplies (line 9), Laboratory (line 10), Administrative & General (line 
11), and Pharmaceuticals (line 12).
    Step 2: We then multiplied the salary percentages computed in step 
1 by the total costs for each corresponding reimbursable cost center 
totals as reported on Worksheet B. The Worksheet B totals were based on 
the sum of reimbursable costs reported on lines 8 through 17. For 
example, the salary percentage for Supplies (as measured by line 9 on 
Worksheet A) was applied to the total expenses for the Supplies cost 
center (the sum of costs reported on Worksheet B, column 7, lines 8 
through 17). This provided us with an estimate of Non-Direct Patient 
Care Wages and Salaries.
    Step 3: The estimated Wages and Salaries for each of the cost 
centers on Worksheet B derived in step 2 were subsequently summed and 
added to the direct patient care wages and salaries costs.
    Step 4: The estimated non-direct patient care wages and salaries 
(see step 2) were then subtracted from their respective cost categories 
to avoid double-counting their values in the total costs.
    Using this methodology, we derive a proposed Wages and Salaries 
cost weight of 34.5 percent, reflecting an estimated direct patient 
care wages and salaries cost weight of 25.7 percent and non-direct 
patient care wages and salaries cost weight of 8.9 percent, as seen in 
Table 2.
    The final adjustment made to this category is to include Contract 
Labor costs. These costs appear on the MCR; however, they are embedded 
in the Other Costs from the trial balance reported on Worksheet A, 
Column 3 and cannot be disentangled using the MCRs. To avoid double 
counting of these expenses we are proposing to move the estimated cost 
weight for the contract labor costs from the Administrative and General 
category (where we believe the majority of the contract labor costs 
would be reported) to the Wages and Salaries category. We are proposing 
to use data from the SAS (2012 data inflated to 2020), which reported 
2.4 percent of total expenses were spent on contract labor costs. We 
allocated 80 percent of that contract labor cost weight to the Wages 
and Salaries category. At the same time, we subtracted that same amount 
from the Administrative and General category, where the majority of 
contract labor expenses would likely be reported on the MCR. The 80 
percent figure that was used was determined by taking salaries as a 
percentage of total compensation (excluding contract labor) from the 
2020 MCR data. This is the same method that was used to allocate 
contract labor costs to the Wages and Salaries cost category

[[Page 38471]]

for the 2016-based ESRDB market basket.
    The resulting proposed cost weight for Wages and Salaries increases 
to 36.5 percent when contract labor wages are added. The calculation of 
the proposed Wages and Salaries cost weight for the 2020-based ESRDB 
market basket is shown in Table 2 along with the similar calculation 
for the 2016-based ESRDB market basket.
[GRAPHIC] [TIFF OMITTED] TP28JN22.003

Employee Benefits
    The proposed Employee Benefits cost weight was derived from the MCR 
data for direct patient care and supplemented with data from the SAS 
(2012 data inflated to 2020) to account for non-direct patient care 
Employee Benefits. The MCR data only reflects Employee Benefit costs 
associated with health and wellness; that is, it does not reflect 
retirement benefits.
    In order to reflect the benefits related to non-direct patient care 
for employee health and wellness, we estimated the impact on the 
benefit weight using SAS. Unlike the MCR, the SAS collects detailed 
expenses for employee benefits including expenses related to the 
retirement and pension benefits. Incorporating the SAS data produced an 
Employee Benefits (both direct patient care and non-direct patient 
care) weight that was 1.3 percentage points higher (9.0 vs. 7.7) than 
the Employee Benefits weight for direct patient care calculated 
directly from the MCR. To avoid double-counting and to ensure all of 
the market basket weights still totaled 100 percent, we removed this 
additional 1.3 percentage points for Non-Direct Patient Care Employee 
Benefits from the Administrative and General cost category.
    The final adjustment made to this category is to include contract 
labor benefit costs. Once again, these costs appear on the MCR; 
however, they are embedded in the Other Costs from the trial balance 
reported on Worksheet A, Column 3 and cannot be disentangled using the 
MCR data. Identical to our methodology previously for allocating 
Contract Labor Costs to Wages and Benefits, we applied 20 percent of 
total Contract Labor Costs, as estimated using the SAS, to the Benefits 
cost weight calculated from the cost reports. The 20 percent figure was 
determined by taking benefits as a percentage of total compensation 
(excluding contract labor) from the 2020 MCR data. The resulting cost 
weight for Employee Benefits increases to 9.5 percent when contract 
labor benefits are added. This is the same method that was used to 
allocate contract labor costs to the Benefits cost category for the 
2016-based ESRDB market basket.
    Table 3 compares the 2016-based Benefits cost share derivation as 
detailed in the CY 2019 ESRD PPS final rule (83 FR 56954) to the 
proposed 2020-based Benefits cost share derivation.
[GRAPHIC] [TIFF OMITTED] TP28JN22.004


[[Page 38472]]


Pharmaceuticals
    The proposed 2020-based ESRDB market basket includes expenditures 
for all drugs, including formerly separately billable drugs and all 
other ESRD-related drugs that were covered under Medicare Part D before 
the ESRD PPS was implemented. We calculated a Pharmaceuticals cost 
weight from the following cost centers on Worksheet B, the sum of lines 
8 through 17, for the following columns: column 11, ``Drugs Included in 
Composite Rate,'' column 12, ``Erythropoiesis stimulating agents 
(ESAs)''; and column 13, ``ESRD-Related and AKI -Related Drugs.'' We 
did not include the drug expenses for Non-ESRD Related Drugs, Supplies, 
and Labs as reported on line 5, column 10 or the AKI Non-Renal Related 
Drugs, Supplies, & Lab as reported on line 5.01 column 10 as these 
expenses are not included in the ESRD PPS bundled payment amount. 
Section 1842(o)(1)(A)(iv) of the Act requires that influenza, 
pneumococcal, COVID-19, and hepatitis B vaccines described in paragraph 
(A) or (B) of section 1861(s)(10) of the Act be paid based on 95 
percent of average wholesale price (AWP) of the drug. Since these 
vaccines are not paid for under the ESRD PPS, we did not include 
expenses reported on worksheet B, column 9 line 7 in the proposed 2020-
based ESRDB market basket.
    Finally, to avoid double-counting, the weight for the 
Pharmaceuticals category was reduced to exclude the estimated share of 
Non-Direct Patient Care Wages and Salaries associated with the 
applicable pharmaceutical cost centers referenced previously. This 
resulted in a proposed ESRDB market basket weight for Pharmaceuticals 
of 10.1 percent. ESA expenditures accounted for 6.0 percentage points 
of the proposed Pharmaceuticals cost weight, and All Other Drugs 
accounted for the remaining 4.1 percentage points.
    The Pharmaceuticals cost weight decreased 2.3 percentage points 
from the 2016-based ESRDB market basket to the proposed 2020-based 
ESRDB market basket (12.4 percent to 10.1 percent). Most ESRD 
facilities experienced a decrease in their Pharmaceuticals cost weight 
since 2016.
Supplies
    We calculated the proposed Supplies cost weight using the costs 
reported in the Supplies cost center (Worksheet B, line 5 and the sum 
of lines 8 through 17, column 7) of the MCR. To avoid double-counting, 
the Supplies costs were reduced to exclude the estimated share of Non-
Direct patient care Wages and Salaries associated with this cost 
center. The resulting proposed 2020-based ESRDB market basket weight 
for Supplies is 11.0 percent, approximately 0.6 percentage point higher 
than the weight for the 2016-based ESRDB market basket.
Laboratory Services
    We calculated the proposed Laboratory Services cost weight using 
the costs reported in the Laboratory cost center (Worksheet B, line 5 
and the sum of line 8 through 17, column 8) of the MCR. To avoid 
double-counting, the Laboratory Services costs were reduced to exclude 
the estimated share of Non-Direct Patient Care Wages and Salaries 
associated with this cost center. The proposed 2020-based ESRDB market 
basket weight for Laboratory Services is estimated at 1.3 percent, 
which is a 0.9 percentage point decrease from the 2016-based ESRDB 
market basket.
Housekeeping
    We calculated the proposed Housekeeping cost weight using the costs 
reported on Worksheet A, line 4, column 8, of the MCR. To avoid double-
counting, the weight for the Housekeeping category was reduced to 
exclude the estimated share of Non-Direct Patient Care Wages and 
Salaries associated with this cost center. These costs were divided by 
total costs to derive a proposed 2020-based ESRDB market basket weight 
for Housekeeping of 0.5 percent. For the 2016-based ESRDB market basket 
the cost category weight for both Housekeeping and Operations costs 
were combined into a single cost weight. The Housekeeping cost weight 
in the 2016-based ESRDB market basket would have been 0.5 percent if it 
had been broken out separately.
Operations & Maintenance
    We are proposing a new Operations & Maintenance cost category that 
includes the direct expenses incurred in the operation and maintenance 
of the plant and equipment such as heat, light, water (excluding water 
treatment for dialysis purposes), air conditioning, and air treatment; 
the maintenance and repair of building, parking facilities, and 
equipment; painting; elevator maintenance; performance of minor 
renovation of buildings and equipment; and protecting employees, 
visitors, and facility property. As previously discussed, these costs 
had formerly been combined with the Housekeeping expenses in a single 
cost category for Housekeeping and Operations. The proposed 2020-based 
ESRDB market basket Operations & Maintenance cost category reflects the 
expenses for Operations & Maintenance, which also includes the costs 
for Water and Sewerage that was a stand alone cost category in the 
2016-based ESRDB market basket. We calculated the Operations & 
Maintenance cost weight using the costs reported on Worksheet A, line 
3, column 8, of the MCR. To avoid double-counting, the weight for the 
Operations & Maintenance category was reduced to exclude the estimated 
share of Non-Direct Patient Care Wages and Salaries associated with 
this cost center. The resulting proposed 2020-based ESRDB market basket 
weight for Operations & Maintenance is 3.7 percent.
Capital
    We developed a proposed market basket weight for the Capital 
category using data from Worksheet B of the MCRs. Capital-related costs 
include depreciation and lease expenses for buildings, fixtures and 
movable equipment, property taxes, insurance costs, the costs of 
capital improvements, and maintenance expense for buildings, fixtures, 
and machinery. The MCR captures Capital-related Costs including: (1) 
Capital-Related- Building and Fixtures (2) Capital-Related Costs--
Moveable Equipment and (3) Housekeeping, and Operations & Maintenance 
costs in Worksheet B, column 2. Since we developed separate expenditure 
categories for Housekeeping, and Operations & Maintenance, as detailed 
previously, we excluded these costs from the Capital cost weights. To 
calculate the Capital-related Buildings and Fixtures cost weight we sum 
expenses reported in Worksheet B lines 8 through 17, column 2 less 
Housekeeping, Operations & Maintenance (as derived from expenses 
reported on Worksheet A, as described previously), and less Capital-
related Moveable equipment costs (calculated as Worksheet A, column 8, 
line 2 divided by the sum of Worksheet A, column 8, lines 1 and 2). The 
Capital-related moveable equipment cost weight is equal to Capital-
related Renal Dialysis Equipment costs (Worksheet B, the sum of lines 8 
through 17, column 4 plus Capital-Related Moveable Equipment (as 
described in the prior sentence)). We reasoned this delineation was 
particularly important given the critical role played by dialysis 
machines. Likewise, because price changes associated with Buildings and 
Fixtures could move differently than those associated with Machinery, 
we continue to believe that two capital-related cost categories are 
appropriate. The resulting proposed 2020-based ESRDB market basket 
weights for Capital-related

[[Page 38473]]

Buildings and Fixtures and Capital-related Moveable Equipment are 9.4 
and 4.4 percent, respectively.
Administrative & General
    We computed the proportion of total Administrative & General 
expenditures using the Administrative and General cost center data from 
Worksheet B, the sum of lines 8 through 17, (column 9) of the MCRs. 
Additionally, we removed contract labor from this cost category and 
apportioned these costs to the Wages and Salaries and Employee Benefits 
cost weights. Similar to other expenditure category adjustments, we 
then reduced the computed weight to exclude Wages and Salaries and 
Benefits associated with the Administrative and General cost center for 
Non-direct Patient Care as estimated from the SAS data. The resulting 
Administrative and General cost weight is 13.7 percent.
    We are proposing to further disaggregate the Administrative and 
General cost weight to derive detailed cost weights for Electricity, 
Natural Gas, Telephone, Professional Fees, and All Other Goods and 
Services. These detailed cost weights were derived by inflating the 
detailed 2012 SAS data forward to 2020 by applying the annual price 
changes from the respective price proxies to the appropriate market 
basket cost categories that are obtained from the 2012 SAS data. We 
repeated this practice for each year to 2020. We then calculated the 
cost shares that each cost category represents of the 2012 data 
inflated to 2020. These resulting 2020 cost shares were applied to the 
Administrative and General cost weight derived from the MCR (net of 
contract labor and additional benefits) to obtain the detailed cost 
weights for the proposed 2020-based ESRDB market basket. This method is 
similar to the method used for the 2016-based ESRDB market basket.
    Table 4 lists all of the cost categories and cost weights in the 
proposed 2020-based ESRDB market basket compared to the 2016-based 
ESRDB market basket.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP28JN22.005


[[Page 38474]]


BILLING CODE 4120-01-C
(c) Proposed Price Proxies for the 2020-Based ESRDB Market Basket
    After developing the cost weights for the proposed 2020-based ESRDB 
market basket, we are proposing to select the most appropriate wage and 
price proxies currently available to represent the rate of price change 
for each expenditure category. We based the proposed price proxies on 
BLS data and group them into one of the following BLS categories:
    <bullet> Employment Cost Indexes. Employment Cost Indexes (ECIs) 
measure the rate of change in employment wage rates and employer costs 
for employee benefits per hour worked. These indexes are fixed-weight 
indexes and strictly measure the change in wage rates and employee 
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE) 
as price proxies for input price indexes because they are not affected 
by shifts in occupation or industry mix, and because they measure pure 
price change and are available by both occupational group and by 
industry. The industry ECIs are based on the NAICS and the occupational 
ECIs are based on the Standard Occupational Classification System 
(SOC).
    <bullet> Producer Price Indexes. Producer Price Indexes (PPIs) 
measure price changes for goods sold in other than retail markets. PPIs 
are used when the purchases of goods or services are made at the 
wholesale level.
    <bullet> Consumer Price Indexes. Consumer Price Indexes (CPIs) 
measure change in the prices of final goods and services bought by 
consumers. CPIs are only used when the purchases are similar to those 
of retail consumers rather than purchases at the wholesale level, or if 
no appropriate PPIs are available.
    We evaluated the price proxies using the criteria of reliability, 
timeliness, availability, and relevance:
    Reliability. Reliability indicates that the index is based on valid 
statistical methods and has low sampling variability. Widely accepted 
statistical methods ensure that the data were collected and aggregated 
in a way that can be replicated. Low sampling variability is desirable 
because it indicates that the sample reflects the typical members of 
the population. (Sampling variability is variation that occurs by 
chance because only a sample was surveyed rather than the entire 
population.)
    Timeliness. Timeliness implies that the proxy is published 
regularly, preferably at least once a quarter. The market baskets are 
updated quarterly, and therefore, it is important for the underlying 
price proxies to be up-to-date, reflecting the most recent data 
available. We believe that using proxies that are published regularly 
(at least quarterly, whenever possible) helps to ensure that we are 
using the most recent data available to update the market basket. We 
strive to use publications that are disseminated frequently, because we 
believe that this is an optimal way to stay abreast of the most current 
data available.
    Availability. Availability means that the proxy is publicly 
available. We prefer that our proxies are publicly available because 
this helps to ensure that our market basket increase factors are as 
transparent to the public as possible. In addition, this enables the 
public to be able to obtain the price proxy data on a regular basis.
    Relevance. Relevance means that the proxy is applicable and 
representative of the cost category weight to which it is applied. The 
CPIs, PPIs, and ECIs that we have selected to propose in this proposed 
rule meet these criteria. Therefore, we believe that they continue to 
be the best measure of price changes for the cost categories to which 
they would be applied.
    Table 7 lists all proposed price proxies for the proposed 2020-
based ESRDB market basket. We note that we are proposing to use the 
same proxies as those used in the 2016-based ESRDB market basket, 
except for the price proxy for the Other Drugs (except ESAs) cost 
category. Below is a detailed explanation of the proposed price proxies 
used for each cost category.
Wages and Salaries
    We are proposing to continue using a blend of ECIs to proxy the 
Wages and Salaries cost weight in the proposed 2020-based ESRDB market 
basket, and to continue using four occupational categories and 
associated ECIs based on full-time equivalents (FTE) data from ESRD 
MCRs and ECIs from BLS. We calculated occupation weights for the 
blended Wages and Salaries price proxy using 2020 FTE data from the MCR 
data multiplied by the associated 2020 Average Mean Wage data from the 
Bureau of Labor Statistics' Occupational Employment Statistics. This is 
similar to the methodology used in the 2016-based ESRDB market basket 
to derive these occupational wages and salaries categories.
Health Related Wages and Salaries
    We are proposing to continue using the ECI for Wages and Salaries 
for All Civilian Workers in Hospitals (BLS series code 
#CIU1026220000000I) as the price proxy for health-related occupations. 
Of the two health-related ECIs that we considered (``Hospitals'' and 
``Health Care and Social Assistance''), the wage distribution within 
the Hospital NAICS sector (622) is more closely related to the wage 
distribution of ESRD facilities than it is to the wage distribution of 
the Health Care and Social Assistance NAICS sector (62).
    The Wages and Salaries--Health Related subcategory weight within 
the Wages and Salaries cost category accounts for 79.4 percent of total 
Wages and Salaries in 2020. The ESRD MCR FTE categories used to define 
the Wages and Salaries--Health Related subcategory include 
``Physicians,'' ``Registered Nurses,'' ``Licensed Practical Nurses,'' 
``Nurses' Aides,'' ``Technicians,'' and ``Dieticians''.
Management Wages and Salaries
    We are proposing to continue using the ECI for Wages and Salaries 
for Private Industry Workers in Management, Business, and Financial 
(BLS series code #CIU2020000110000I). We believe this ECI is the most 
appropriate price proxy to measure the wages and salaries price growth 
of management personnel at ESRD facilities.
    The Wages and Salaries--Management subcategory weight within the 
Wages and Salaries cost category is 9.0 percent in 2020. The ESRD MCR 
FTE category used to define the Wages and Salaries--Management 
subcategory is ``Management.''
Administrative Wages and Salaries
    We are proposing to continue using the ECI for Wages and Salaries 
for Private Industry Workers in Office and Administrative Support (BLS 
series code #CIU2020000220000I). We believe this ECI is the most 
appropriate price proxy to measure the wages and salaries price growth 
of administrative support personnel at ESRD facilities.
    The Wages and Salaries--Administrative subcategory weight within 
the Wages and Salaries cost category is 5.3 percent in 2020. The ESRD 
MCR FTE category used to define the Wages and Salaries--Administrative 
subcategory is ``Administrative.''
Services Wages and Salaries
    We are proposing to continue using the ECI for Wages and Salaries 
for Private Industry Workers in Service Occupations (BLS series code 
#CIU2020000300000I). We believe this ECI is the most appropriate price 
proxy to measure the wages and salaries price growth of all other non-
health related, non-management, and non-

[[Page 38475]]

administrative service support personnel at ESRD facilities.
    The Services subcategory weight within the Wages and Salaries cost 
category is 6.3 percent in 2020. The ESRD MCR FTE categories used to 
define the Wages and Salaries--Services subcategory are ``Social 
Workers'' and ``Other.''
    Table 5 lists the four ECI series and the corresponding weights 
used to construct the proposed ECI blend for Wages and Salaries 
compared to the 2016-based weights for the subcategories. We believe 
this proposed ECI blend is the most appropriate price proxy to measure 
the growth of wages and salaries faced by ESRD facilities.
[GRAPHIC] [TIFF OMITTED] TP28JN22.006

Employee Benefits
    We are proposing to continue using an ECI blend for Employee 
Benefits in the proposed 2020-based ESRDB market basket where the 
components match those of the proposed Wage and Salaries ECI blend. The 
proposed occupation weights for the blended Benefits price proxy (Table 
6) are the same as those proposed for the wages and salaries price 
proxy blend as shown in Table 5. BLS does not publish ECI for Benefits 
price proxies for each Wage and Salary ECI; however, where these series 
are not published, they can be derived by using the ECI for Total 
Compensation and the relative importance of wages and salaries with 
total compensation as published by BLS for each detailed ECI 
occupational index.
Health Related Benefits
    We are proposing to continue using the ECI for Benefits for All 
Civilian Workers in Hospitals to measure price growth of this 
subcategory. This is calculated using the ECI for Total Compensation 
for All Civilian Workers in Hospitals (BLS series code 
#CIU1016220000000I) and the relative importance of Wages and Salaries 
within Total Compensation as published by BLS. We believe this 
constructed ECI series is technically appropriate for the reason stated 
in the Wages and Salaries price proxy section.
Management Benefits
    We are proposing to continue using the ECI for Benefits for Private 
Industry Workers in Management, Business, and Financial to measure 
price growth of this subcategory. This ECI is calculated using the ECI 
for Total Compensation for Private Industry Workers in Management, 
Business, and Financial (BLS series code #CIU2010000110000I) and the 
relative importance of wages and salaries within total compensation. We 
believe this constructed ECI series is technically appropriate for the 
reason stated in the Wages and Salaries price proxy section.
Administrative Benefits
    We are proposing to continue using the ECI for Benefits for Private 
Industry Workers in Office and Administrative Support to measure price 
growth of this subcategory. This ECI is calculated using the ECI for 
Total Compensation for Private Industry Workers in Office and 
Administrative Support (BLS series code #CIU2010000220000I) and the 
relative importance of Wages and Salaries within Total Compensation. We 
believe this constructed ECI series is technically appropriate for the 
reason stated in the wages and salaries price proxy section.
Services Benefits
    We are proposing to continue using the ECI for Total Benefits for 
Private Industry Workers in Service Occupations (BLS series code 
#CIU2030000300000I) to measure price growth of this subcategory. We 
believe this ECI series is technically appropriate for the reason 
stated in the Wages and Salaries price proxy section. We believe the 
proposed benefits ECI blend continues to be the most appropriate price 
proxy to measure the growth of benefits prices faced by ESRD 
facilities. Table 6 lists the four ECI series and the corresponding 
weights used to construct the proposed benefits ECI blend.

[[Page 38476]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.007

Electricity
    We are proposing to continue using the PPI Commodity for Commercial 
Electric Power (BLS series code #WPU0542) to measure the price growth 
of this cost category.
Natural Gas
    We are proposing to continue using the PPI Commodity for Commercial 
Natural Gas (BLS series code #WPU0552) to measure the price growth of 
this cost category.
Pharmaceuticals
    ESAs: We are proposing to continue using the PPI Commodity for 
Biological Products, Excluding Diagnostic, for Human Use (which we will 
abbreviate as PPI-BPHU) (BLS series code #WPU063719) as the price proxy 
for the ESA drugs in the market basket. The PPI-BPHU measures the price 
change of prescription biologics, and ESAs would be captured within 
this index, if they are included in the PPI sample. Since the PPI 
relies on confidentiality with respect to the companies and drugs/
biologicals included in the sample, we do not know if these drugs are 
indeed reflected in this price index. However, we believe the PPI-BPHU 
is an appropriate proxy to use because although ESAs may be a small 
part of the fuller category of biological products, we can examine 
whether the price increases for the ESA drugs are similar to the drugs 
included in the PPI-BPHU. We did this by comparing the historical price 
changes in the PPI-BPHU and the average sales price (ASP) for ESAs and 
found the cumulative growth to be consistent over the past 4 years. We 
would continue to monitor the trends in the prices for ESA drugs as 
measured by other price data sources to ensure that the PPI-BPHU is 
still an appropriate price proxy.
    Other Drugs (except ESA): For all other drugs included in the ESRD 
PPS bundled payment other than ESAs, we are proposing to use a blend of 
50 percent of the PPI Commodity for Vitamin, Nutrient, and Hematinic 
Preparations (which we will abbreviate as PPI-VNHP) (BLS series code 
#WPU063807), and 50 percent of the PPI Commodity for Pharmaceuticals 
for human use, prescription (which we will abbreviate as PPI-
Pharmaceuticals) (BLS series code #WPUSI07003). We continue to believe 
that the PPI-VNHP is an appropriate price proxy for the iron 
supplements commonly used in the treatment of ESRD, and an analysis of 
claims data indicate that iron supplement costs account for about half 
of the All Other ESRD-related Drugs costs. For the remaining drugs 
represented in the non-ESA drug category (such as calcimimetics and 
Vitamin D analogs) we believe a different price proxy would be more 
appropriate and we are proposing to use the PPI Commodity for 
Pharmaceuticals for human use, prescription, which captures the 
inflationary price pressures for all types of prescription drugs rather 
than a single therapeutic category of drugs. Though this PPI measure 
includes a wide variety of prescription drugs, we believe it is 
technically appropriate to use a broad indicator of prescription drug 
price trends for three key reasons: (1) the more detailed PPI measure 
where we believe these types of non-ESA drugs would be captured would 
more likely reflect price trends not faced by ESRD facilities, such as 
cancer drugs, (2) there have been notable changes to the types and mix 
of drugs paid for under the ESRD PPS bundled payment since 2016, such 
as the inclusion of formerly oral-only calcimimetics and the addition 
of AKI-related drugs, and (3) the potential for future changes to the 
types and mix of drugs that may be paid for under the ESRD PPS bundled 
payment, such as when other drugs that are currently oral-only drugs 
are included in the ESRD PPS beginning for CY 2025. For these reasons, 
we believe that a broader drug index representing a larger mix of 
prescription drugs is a technical improvement to the proposed price 
proxy for this cost category. We will continue to monitor the relative 
share of expenses for iron supplements and other types of drugs for 
this cost category to determine if the proposed 50/50 PPI blend 
warrants an adjustment, and if so, we would propose such an adjustment 
in future rulemaking.
Supplies
    We are proposing to continue using the PPI Commodity for Surgical 
and Medical Instruments (BLS series code #WPU1562) to measure the price 
growth of this cost category.
Laboratory Services
    We are proposing to continue using the PPI Industry for Medical 
Laboratories (BLS series code #PCU621511621511) to measure the price 
growth of this cost category.
Telephone Service
    We are proposing to continue using the CPI U.S. city average for 
Telephone Services (BLS series code #CUUR0000SEED) to measure the price 
growth of this cost category.
Housekeeping
    We are proposing to continue using the PPI Commodity for Cleaning 
and Building Maintenance Services (BLS series code #WPU49) to measure 
the price growth of this cost category.
Operations & Maintenance
    For the Operations & Maintenance cost category, we are proposing to 
use the ECI for Total compensation for All Civilian workers in 
Installation, maintenance, and repair (BLS series code 
#CIU1010000430000I) to measure the price growth of this cost category.

[[Page 38477]]

This price proxy accounts for the compensation expenses related to 
maintenance and repair workers. We believe the majority of expenses for 
maintenance and repair to be labor-related costs and therefore, believe 
that this ECI is the most technically appropriate price proxy for this 
cost category.
Professional Fees
    We are proposing to continue using the ECI for Total Compensation 
for Private Industry Workers in Professional and Related (BLS series 
code #CIU2010000120000I) to measure the price growth of this cost 
category.
All Other Goods and Services
    We are proposing to continue using the PPI Commodity for Final 
demand--Finished Goods Less Foods and Energy (BLS series code 
#WPUFD4131) to measure the price growth of this cost category.
Capital-Related Building and Fixtures
    We are proposing to continue using the PPI Industry for Lessors of 
Nonresidential Buildings (BLS series code #PCU531120531120) to measure 
the price growth of this cost category.
Capital-Related Moveable Equipment
    We are proposing to continue using the PPI Commodity for Electrical 
Machinery and Equipment (BLS series code #WPU117) to measure the price 
growth of this cost category.
    Table 7 shows all the proposed price proxies and cost weights for 
the proposed 2020-based ESRDB Market Basket.
BILLING CODE 4120-01-P

[[Page 38478]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.008


[[Page 38479]]


(d) Proposed Rebasing Results
    A comparison of the yearly differences of increase factors from CY 
2019 to CY 2023 for the 2016-based ESRDB market basket and the proposed 
2020-based ESRDB market basket is shown in Table 8. The CY 2023 ESRDB 
market basket increase factor would be 0.2 percentage point lower if we 
continued to use the 2016-based ESRDB market basket. For the years 
prior to CY 2023 the annual market basket increase factors were the 
same, except for CY 2021 where the proposed 2020-based market basket 
was 0.1 percentage point lower.
[GRAPHIC] [TIFF OMITTED] TP28JN22.009

(2) Proposed Labor-Related Share for ESRD PPS
    We define the labor-related share (LRS) as those expenses that are 
labor-intensive and vary with, or are influenced by, the local labor 
market. The labor-related share of a market basket is determined by 
identifying the national average proportion of operating costs that are 
related to, influenced by, or vary with the local labor market.
    We are proposing to use the proposed 2020-based ESRDB market basket 
cost weights to determine the proposed labor-related share for ESRD 
facilities. Therefore, effective for CY 2023, we are proposing a labor-
related share of 55.2 percent, compared to the current 52.3 percent 
that was based on the 2016-based ESRDB market basket, as shown in Table 
9. These figures represent the sum of Wages and Salaries, Benefits, 
Housekeeping, Operations & Maintenance, 87 percent of the weight for 
Professional Fees (details discussed later in this subsection), and 46 
percent of the weight for Capital-related Building and Fixtures 
expenses (details discussed later in this subsection). We used the same 
methodology for the 2016-based ESRDB market basket.
[GRAPHIC] [TIFF OMITTED] TP28JN22.010

BILLING CODE 4120-01-C
    The proposed labor-related share for Professional Fees reflects the 
proportion of ESRD facilities' professional fees expenses that we 
believe vary with local labor market (87 percent). We conducted a 
survey of ESRD facilities in 2008 to better understand the proportion 
of contracted professional

[[Page 38480]]

services that ESRD facilities typically purchase outside of their local 
labor market. These purchased professional services include functions 
such as accounting and auditing, management consulting, engineering, 
and legal services. Based on the survey results, we determined that, on 
average, 87 percent of professional services are purchased from local 
firms and 13 percent are purchased from businesses located outside of 
the ESRD's local labor market. Thus, we are proposing to include 87 
percent of the cost weight for Professional Fees in the labor-related 
share (87 percent is the same percentage as used in prior years).
    The proposed labor-related share for capital-related expenses 
reflects the proportion of ESRD facilities' capital-related expenses 
that we believe varies with local labor market wages (46 percent of 
ESRD facilities' Capital-related Building and Fixtures expenses). 
Capital-related expenses are affected in some proportion by variations 
in local labor market costs (such as construction worker wages) that 
are reflected in the price of the capital asset. However, many other 
inputs that determine capital costs are not related to local labor 
market costs, such as interest rates. The 46-percent figure is based on 
regressions run for the inpatient hospital capital PPS in 1991 (56 FR 
43375). We use a similar methodology to calculate capital-related 
expenses for the labor-related shares for rehabilitation facilities (70 
FR 30233), psychiatric facilities, long-term care facilities, and 
skilled nursing facilities (66 FR 39585).
(3) Proposed CY 2023 ESRD Market Basket Increase Factor, Adjusted for 
Productivity
    Under section 1881(b)(14)(F)(i) of the Act, beginning in CY 2012, 
the ESRD PPS payment amounts are required to be annually increased by 
an ESRD market basket percentage increase factor and reduced by the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act. We are proposing to use the 2020-based ESRDB market basket as 
described in section II.B.1 of this proposed rule to compute the CY 
2023 ESRDB market basket increase factor and labor-related share based 
on the best available data. Consistent with historical practice, we 
propose to estimate the ESRDB market basket increase factor based on 
IHS Global Inc.'s (IGI) forecast using the most recently available 
data. IGI is a nationally recognized economic and financial forecasting 
firm with which CMS contracts to forecast the components of the market 
baskets.
(a) Proposed CY 2023 Market Basket Increase Factor
    Using this methodology and the IGI forecast available in the first 
quarter of 2022 of the proposed 2020-based ESRDB market basket (with 
historical data through the fourth quarter of 2021), and consistent 
with our historical practice of estimating market basket increases 
based on the best available data, the proposed CY 2023 ESRDB market 
basket increase factor is 2.8 percent.
(b) Proposed Productivity Adjustment
    Under section 1881(b)(14)(F)(i) of the Act, as amended by section 
3401(h) of the Affordable Care Act, for CY 2012 and each subsequent 
year, the ESRD market basket percentage increase factor shall be 
reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide, private nonfarm business multifactor productivity 
(MFP) (as projected by the Secretary for the 10-year period ending with 
the applicable FY, year, cost reporting period, or other annual period) 
(the ``productivity adjustment''). MFP is derived by subtracting the 
contribution of labor and capital input growth from output growth. The 
detailed methodology for deriving the MFP projection was finalized in 
the CY 2012 ESRD PPS final rule (76 FR 70232 through 70235).
    BLS publishes the official measures of productivity for the U.S. 
economy. We note that previously the productivity measure referenced in 
section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as 
private nonfarm business MFP. Beginning with the November 18, 2021 
release of productivity data, BLS replaced the term ``multifactor 
productivity'' with ``total factor productivity'' (TFP). BLS noted that 
this is a change in terminology only and will not affect the data or 
methodology.\1\ As a result of the BLS name change, the productivity 
measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now 
published by BLS as private nonfarm business TFP; however, as mentioned 
previously, the data and methods are unchanged. We refer readers to 
https://www.bls.gov/productivity/ for the BLS historical published TFP 
data. A complete description of IGI's TFP projection methodology is 
available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in the CY 
2022 ESRD PPS final rule (86 FR 61879), we noted that effective for CY 
2022 and future years, CMS would be changing the name of this 
adjustment to refer to it as the productivity adjustment rather than 
the MFP adjustment. We stated this was not a change in policy, as we 
will continue to use the same methodology for deriving the adjustment 
and rely on the same underlying data.
---------------------------------------------------------------------------

    \1\ Total Factor Productivity in Major Industries--2020. 
Available at: https://www.bls.gov/news.release/prod5.nr0.htm.
---------------------------------------------------------------------------

    Using this methodology and IGI's first quarter 2022 forecast, the 
proposed productivity adjustment for CY 2023 (the 10-year moving 
average of TFP for the period ending CY 2023) is projected to be 0.4 
percentage point.
(c) Proposed CY 2023 Market Basket Increase Factor Adjusted for 
Productivity
    As a result of these provisions, the proposed CY 2023 ESRD market 
basket increase factor reduced by the productivity adjustment is 2.4 
percent. This proposed market basket increase factor is calculated by 
starting with the proposed 2020-based ESRDB market basket percentage 
increase factor of 2.8 percent for CY 2023, and reducing it by the 
proposed productivity adjustment (the 10-year moving average of TFP for 
the period ending CY 2023) of 0.4 percentage point. As is our general 
practice, we are also proposing that if more recent data are 
subsequently available (for example, a more recent estimate of the 
market basket increase factor or productivity adjustment), we would use 
such data to determine the market basket increase factor and 
productivity adjustment in the CY 2023 ESRD PPS final rule.
b. Proposed CY 2023 ESRD PPS Wage Indices
(1) Background
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index payment adjustment, such as the 
index referred to in section 1881(b)(12)(D) of the Act, as the 
Secretary determines to be appropriate. In the CY 2011 ESRD PPS final 
rule (75 FR 49200), we finalized an adjustment for wages at Sec.  
413.231. Specifically, CMS adjusts the labor-related portion of the 
base rate to account for geographic differences in the area wage levels 
using an appropriate wage index, which reflects the relative level of 
hospital wages and wage-related costs in the geographic area in which 
the ESRD facility is located. We use OMB's CBSA-based

[[Page 38481]]

geographic area designations to define urban and rural areas and their 
corresponding wage index values (75 FR 49117). OMB publishes bulletins 
regarding CBSA changes, including changes to CBSA numbers and titles. 
The bulletins are available online at https://www.whitehouse.gov/omb/information-for-agencies/bulletins/.
    For CY 2023, we are proposing to update the wage indices to account 
for updated wage levels in areas in which ESRD facilities are located 
using our existing methodology. We use the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the inpatient 
PPS. The ESRD PPS wage index values are calculated without regard to 
geographic reclassifications authorized under sections 1886(d)(8) and 
(d)(10) of the Act and utilize prefloor hospital data that are 
unadjusted for occupational mix. For CY 2023, the updated wage data are 
for hospital cost reporting periods beginning on or after October 1, 
2018, and before October 1, 2019 (FY 2019 cost report data).
    We have also adopted methodologies for calculating wage index 
values for ESRD facilities that are located in urban and rural areas 
where there is no hospital data. For a full discussion, see the CY 2011 
and CY 2012 ESRD PPS final rules at 75 FR 49116 through 49117 and 76 FR 
70239 through 70241, respectively. For urban areas with no hospital 
data, we compute the average wage index value of all urban areas within 
the state to serve as a reasonable proxy for the wage index of that 
urban CBSA, that is, we 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. We apply the statewide urban 
average based on the average of all urban areas within the state to 
Hinesville-Fort Stewart, Georgia (78 FR 72173), and we apply the wage 
index for Guam to American Samoa and the Northern Mariana Islands (78 
FR 72172).
    A wage index floor value (0.5000) is applied under the ESRD PPS as 
a substitute wage index for areas with very low wage index values. 
Currently, all areas with wage index values that fall below the floor 
are located in Puerto Rico. However, the wage index floor value is 
applicable for any area that may fall below the floor. A description of 
the history of the wage index floor under the ESRD PPS can be found in 
the CY 2019 ESRD PPS final rule (83 FR 56964 through 56967).
    An ESRD facility's wage index is applied to the labor-related share 
of the ESRD PPS base rate. In the CY 2019 ESRD PPS final rule (83 FR 
56963), we finalized a labor-related share of 52.3 percent, which was 
based on the 2016-based ESRDB market basket. In the CY 2021 ESRD PPS 
final rule (85 FR 71436), we updated the OMB delineations as described 
in the September 14, 2018 OMB Bulletin No. 18-04, beginning with the CY 
2021 ESRD PPS wage index. In addition, we finalized the application of 
a 5 percent cap on any decrease in an ESRD facility's wage index from 
the ESRD facility's wage index from the prior CY. We finalized that the 
transition would be phased in over 2 years, such that the reduction in 
an ESRD facility's wage index would be capped at 5 percent in CY 2021, 
and no cap would be applied to the reduction in the wage index for the 
second year, CY 2022. For CY 2023, as discussed in section II.B.1.a (2) 
of this proposed rule, the proposed labor-related share to which the 
wage index would be applied is 55.2 percent, based on the proposed 
2020-based ESRDB market basket.
    For CY 2023, we are proposing to update the ESRD PPS wage index to 
use the most recent hospital wage data. The proposed CY 2023 ESRD PPS 
wage index is set forth in Addendum A and is available on the CMS 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. Addendum A provides a crosswalk between the CY 2022 wage 
index and the proposed CY 2023 wage index. Addendum B provides an ESRD 
facility level impact analysis. Addendum B is available on the CMS 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.
(2) Proposed Permanent Cap on Wage Index Decreases
    As discussed in section II.B.1.b(1) of this proposed rule and in 
previous ESRD PPS rules, under the authority of section 
1881(b)(14)(D)(iv)(II) of the Act, we have proposed and finalized 
temporary, budget-neutral transition policies in the past to help 
mitigate negative impacts on ESRD facilities following the adoption of 
certain ESRD PPS wage index changes. In the CY 2015 ESRD PPS final rule 
(79 FR 66142), we implemented revised OMB area delineations using a 2-
year transition, with a 50/50 blended wage index for all ESRD 
facilities in CY 2015 \2\ and 100 percent of the wage index based on 
the new OMB delineations in CY 2016. In the CY 2021 ESRD PPS proposed 
rule (85 FR 42160 through 42161), we proposed a transition policy to 
help mitigate any negative impacts that ESRD facilities may experience 
due to our proposal to adopt the 2018 OMB delineations under the ESRD 
PPS. We noted that because the overall amount of ESRD PPS payments 
would increase slightly due to the 2018 OMB delineations, the effect of 
the wage index budget neutrality factor would be to reduce the ESRD PPS 
per treatment base rate for all ESRD facilities paid under the ESRD 
PPS, despite the fact that the majority of ESRD facilities would be 
unaffected by the 2018 OMB delineations. Thus, we explained that we 
believed it would be appropriate to provide for a transition period to 
mitigate the resulting short-term instability of a lower ESRD PPS base 
rate as well as consequential negative impacts to ESRD facilities that 
experience reduced payments. We proposed to apply a 5-percent cap on 
any decrease in an ESRD facility's wage index from its final wage index 
from the prior calendar year, that is, CY 2020. We explained that we 
believed the 5-percent cap would provide greater transparency and would 
be administratively less complex than the prior methodology of applying 
a 50/50 blended wage index (85 FR 71478). We proposed that no cap would 
be applied to the reduction in the wage index for the second year, that 
is, CY 2022 (85 FR 42161).
---------------------------------------------------------------------------

    \2\ ESRD facilities received 50 percent of their CY 2015 wage 
index value based on the OMB delineations for CY 2014 and 50 percent 
of their CY 2015 wage index value based on the newer OMB 
delineations. 79 FR 66142.
---------------------------------------------------------------------------

    Several commenters to the CY 2021 ESRD PPS proposed rule supported 
the wage index transition policy that we proposed for CY 2021; however, 
as discussed in the CY 2021 ESRD PPS final rule (86 FR 71434 through 
71436), some commenters expressed concerns about the large negative 
effects of the new labor market area delineations on certain areas. A 
patient organization suggested that the 5 percent cap may not provide 
an adequate transition for labor market areas that would experience a 
decrease in their wage index of greater than 10 percent. Similarly, a 
national non-profit dialysis organization recommended that CMS provide 
an extended transition period, beyond the proposed 5 percent limit for 
2021, for at least 3 years. Some commenters, including MedPAC, 
suggested

[[Page 38482]]

alternatives to the methodology. MedPAC suggested that the 5 percent 
cap limit should apply to both increases and decreases in the wage 
index.
    We stated in the CY 2021 ESRD PPS final rule that we believed a 5 
percent cap on the overall decrease in an ESRD facility's wage index 
value would be an appropriate transition, as it would effectively 
mitigate any significant decreases in an ESRD facility's wage index for 
CY 2021. With respect to extending the transition period for at least 3 
years, we stated that we believed this would undermine the goal of the 
wage index policy, which is to improve the accuracy of payments under 
the ESRD PPS, and would serve to further delay improving the accuracy 
of the ESRD PPS by continuing to pay certain ESRD facilities more than 
their wage data suggest is appropriate. We also stated that the 
transition policies are not intended to curtail the positive impacts of 
certain wage index changes, so it would not be appropriate to also 
apply the 5 percent cap on wage index increases. We acknowledged that a 
transition policy was necessary to help mitigate initial significant 
negative impacts from revised OMB delineations, but expressed that this 
mitigation must be balanced against the importance of ensuring accurate 
payments. We finalized the transition policy for CY 2021 as proposed. 
We did not propose to extend the transition policy for CY 2022 or 
future years, however, as we discussed in the CY 2022 ESRD PPS final 
rule (86 FR 61881), we received comments acknowledging and supporting 
the final phase-in of the updated OMB delineations for CY 2022.
    Based on our past wage index transition policies and public 
comments, we recognize that certain changes to our wage index policy 
may significantly affect Medicare payments to ESRD facilities. 
Commenters have raised concerns about scenarios in which changes to 
wage index policy may have significant negative impacts on ESRD 
facilities. Therefore, we considered for this CY 2023 ESRD PPS proposed 
rule how best to address those scenarios.
    In the past, we have established transition policies of limited 
duration to phase in significant changes to labor market areas, such as 
revised OMB delineations. In taking this approach in the past, we 
sought to mitigate short-term instability and fluctuations that can 
negatively impact ESRD facilities due to wage index changes. In 
accordance with the ESRD PPS wage index regulations at Sec.  
413.231(a), we adjust the labor-related portion of the base rate to 
account for geographic differences in the area wage levels using an 
appropriate wage index that is established by CMS, and which reflects 
the relative level of hospital wages and wage-related costs in the 
geographic area in which the ESRD facility is located. Our policy is 
generally to use the most current hospital wage data and analysis 
available in order to ensure the accuracy of the ESRD PPS wage index, 
in accordance with Sec.  413.196(d)(2). As discussed earlier in this 
section of the proposed rule, we believe that past wage index 
transition policies have helped mitigate initial significant negative 
impacts from changes such as revised OMB delineations. However, we 
recognize that changes to the wage index have the potential to create 
instability and significant negative impacts on certain ESRD facilities 
even when labor market areas do not change as a result of revised OMB 
delineations. In addition, year-to-year fluctuations in an area's wage 
index can occur due to external factors beyond an ESRD facility's 
control, such as the COVID-19 PHE, and for an individual ESRD facility, 
these fluctuations can be difficult to predict. While we have 
maintained that temporary transition policies provide sufficient time 
for facilities to make operational changes for future CYs and have 
noted separate agency actions to address certain external factors, such 
as the issuance of waivers and flexibilities during the COVID-19 PHE 
(85 FR 71435), we also recognize that predictability in Medicare 
payments is important to enable ESRD facilities to budget and plan 
their operations.
    In light of these considerations, we are proposing a permanent 
mitigation policy to smooth the impact of year-to-year changes in ESRD 
PPS payments related to decreases in the ESRD PPS wage index. We are 
proposing a policy that we believe would increase the predictability of 
ESRD PPS payments for ESRD facilities; mitigate instability and 
significant negative impacts to ESRD facilities resulting from changes 
to the wage index; and use the most current data to maintain the 
accuracy of the ESRD PPS wage index.
    As previously discussed, we believe our transition policy that 
applied a 5-percent cap on wage index decreases for CY 2021 provided 
greater transparency and was administratively less complex than prior 
transition methodologies. In addition, we believe this methodology 
mitigated short-term instability and fluctuations that can negatively 
impact ESRD facilities due to wage index changes. Lastly, we believe 
the 5-percent cap we applied to all wage index decreases for CY 2021 
provided an adequate safeguard against significant and unpredictable 
payment reductions in that year, related to the adoption of the revised 
OMB delineations. However, as discussed earlier in this section of the 
proposed rule, we recognize there are circumstances that a 2-year 
transition policy, like the one adopted for CY 2021, would not 
effectively address for future years in which ESRD facilities continue 
to be negatively affected by significant wage index decreases. We 
believe our proposed permanent policy would eliminate the need for 
temporary and potentially uncertain transition adjustments to the wage 
index in the future due to specific policy changes or circumstances 
outside ESRD facilities' control (for example, public health or other 
emergencies, or the adoption of future OMB revisions to the CBSA 
delineations through rulemaking).
    Typical year-to-year variation in the ESRD PPS wage index has 
historically been within 5 percent, and we expect this will continue to 
be the case in future years. Because ESRD facilities are usually 
experienced with this level of wage index fluctuation, we believe 
applying a 5-percent cap on all wage index decreases each year, 
regardless of the reason for the decrease, would effectively mitigate 
instability in ESRD PPS payments due to any significant wage index 
decreases that may affect ESRD facilities in a year. Therefore, we 
believe this approach would address concerns about instability that 
commenters raised in response to the CY 2021 ESRD PPS proposed rule. In 
addition, we believe that applying a 5-percent cap on all wage index 
decreases would support increased predictability about ESRD PPS 
payments for ESRD facilities, enabling them to more effectively budget 
and plan their operations. Lastly, because applying a 5-percent cap on 
all wage index decreases would represent a small overall impact on the 
labor market area wage index system, we believe it would still ensure 
the wage index is a relative measure of the value of labor in 
prescribed labor market areas. With a permanent cap, we would be able 
to continue to update the wage index with the most current hospital 
wage data as required under Sec.  413.196(d)(2) in order to more 
accurately align the use of labor resources with ESRD PPS payment while 
mitigating the instability in payments to individual ESRD facilities 
that such updates may otherwise cause. As discussed in section 
II.B.1.d(2) of this proposed rule, we compute a wage index budget-
neutrality adjustment factor that is applied to the ESRD PPS

[[Page 38483]]

base rate. As discussed in further detail in that section, we estimate 
that applying a 5-percent cap on all wage index decreases would have a 
very small effect on the wage index budget neutrality factor for CY 
2023, and therefore would have a small effect on the ESRD PPS base 
rate. This small effect on budget neutrality also demonstrates that 
this policy would have a minimal impact on the ESRD PPS wage index 
overall. The wage index \3\ is a measure of the value of labor (wage 
and wage-related costs) in a prescribed labor market area relative to 
the national average. Therefore, we anticipate that in the absence of 
any proposed wage index policy changes such as changes to OMB 
delineations, most ESRD facilities would not experience year-to-year 
wage index declines greater than 5 percent in any given year. 
Therefore, we anticipate that the impact to the wage index budget 
neutrality factor in future years would continue to be minimal. We also 
believe that when the 5-percent cap would be applied under this 
proposed policy, it likely would be applied similarly to all ESRD 
facilities in the same labor market area, as the hospital average 
hourly wage data in the CBSA (and any relative decreases compared to 
the national average hourly wage) would be similar. While this proposed 
policy may result in ESRD facilities in a CBSA receiving a higher wage 
index than others in the same area (such as in situations when OMB 
delineations change), we believe the impact would be temporary, as the 
average hourly wage of facilities in a labor market would tend to 
converge to the mean average hourly wage of the CBSA.
---------------------------------------------------------------------------

    \3\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/AcuteInpatientPPS/
wageindex#:~:text=A%20labor%20market%20area's%20wage,portion%20of%20t
he%20standardized%20amounts.
---------------------------------------------------------------------------

    As noted previously in this section of the proposed rule, section 
1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD PPS may 
include a geographic wage index payment adjustment, such as the index 
referred to in section 1881(b)(12)(D) of the Act, as the Secretary 
determines to be appropriate. Under our regulations at Sec.  
413.231(a), we must use an appropriate wage index to adjust the labor-
related portion of the base rate to account for geographic differences 
in the area wage levels. For the reasons discussed in this section of 
the proposed rule, we believe a 5-percent cap on wage index decreases 
would be appropriate for the ESRD PPS. Therefore, for CY 2023 and 
subsequent years, we are proposing to apply a 5-percent cap on any 
decrease to an ESRD facility's wage index from its wage index in the 
prior year, regardless of the circumstances causing the decline. That 
is, we are proposing that an ESRD facility's wage index for CY 2023 
would not be less than 95 percent of its final wage index for CY 2022, 
regardless of whether the ESRD facility is part of an updated CBSA, and 
that for subsequent years, an ESRD facility's wage index would not be 
less than 95 percent of its wage index calculated in the prior CY. This 
also would mean that if an ESRD facility's prior CY wage index is 
calculated with the application of the 5-percent cap, the following 
year's wage index would not be less than 95 percent of the ESRD 
facility's capped wage index in the prior CY. For example, if an ESRD 
facility's wage index for CY 2023 is calculated with the application of 
the 5-percent cap, then its wage index for CY 2024 would not be less 
than 95 percent of its capped wage index in CY 2023. Lastly, we are 
proposing that a newly opened or newly certified ESRD facility would be 
paid the wage index for the area in which it is geographically located 
for its first full or partial CY with no cap applied, because a new 
ESRD facility would not have a wage index in the prior CY. We would 
reflect the proposed permanent cap on wage index decreases in our 
regulations at Sec.  413.231(c).
    As previously discussed in this proposed rule, we believe this 
proposed mitigation policy would maintain the ESRD PPS wage index as a 
relative measure of the value of labor in prescribed labor market 
areas, increase predictability of ESRD PPS payments for ESRD 
facilities, and mitigate instability and significant negative impacts 
to ESRD facilities resulting from significant changes to the wage 
index. In section VII.D.5 of this proposed rule, we estimate the impact 
to payments for ESRD facilities in CY 2023 based on this proposed 
policy. We also note that we would examine the effects of this proposed 
policy, if finalized, on an ongoing basis in the future in order to 
assess its continued appropriateness.
(3) Proposed Update to ESRD PPS Wage Index Floor
(a) Background
    A wage index floor value is applied under the ESRD PPS as a 
substitute wage index for areas with very low wage index values. 
Currently, all areas with wage index values that fall below the floor 
are located in Puerto Rico; however, the wage index floor value is 
applicable for any area that may fall below the floor.
    In the CY 2011 ESRD PPS final rule (75 FR 49116 through 49117), we 
finalized a policy to reduce the wage index floor by 0.05 for each of 
the remaining years of the ESRD PPS transition, that is, until CY 2014. 
We applied a 0.05 reduction to the wage index floor for CYs 2012 and 
2013, resulting in a wage index floor of 0.5500 and 0.5000, 
respectively (CY 2012 ESRD PPS final rule, 76 FR 70241). We continued 
to apply and reduce the wage index floor by 0.05 in CY 2013 (77 FR 
67459 through 67461). Although we only intended to provide a wage index 
floor during the 4-year transition in the CY 2014 ESRD PPS final rule 
(78 FR 72173), we decided to continue to apply the wage index floor and 
reduce it by 0.05 per year for CY 2014 and for CY 2015, resulting in a 
wage index floor of 0.4500 and 0.4000, respectively.
    In the CY 2016 ESRD PPS final rule (80 FR 69006 through 69008), 
however, we decided to maintain a wage index floor of 0.4000, rather 
than further reduce the floor by 0.05. We stated that we needed more 
time to study the wage indices that are reported for Puerto Rico to 
assess the appropriateness of discontinuing the wage index floor (80 FR 
69006).
    In the CY 2017 ESRD PPS proposed rule (81 FR 42817), we presented 
the findings from analyses of ESRD facility cost report and claims data 
submitted by facilities located in Puerto Rico and mainland facilities. 
We solicited public comments on the wage index for CBSAs in Puerto Rico 
as part of our continuing effort to determine an appropriate policy. We 
did not propose to change the wage index floor for CBSAs in Puerto 
Rico, but we requested public comments in which interested parties 
could provide useful input for consideration in future decision making. 
Specifically, we solicited comment on the suggestions that were 
submitted in the CY 2016 ESRD PPS final rule (80 FR 69007). After 
considering the public comments we received regarding the wage index 
floor, in the CY 2017 ESRD PPS final rule, we finalized a wage index 
floor of 0.4000 (81 FR 77858).
    In the CY 2018 ESRD PPS final rule (82 FR 50747), we finalized a 
policy to permanently maintain the wage index floor of 0.4000, because 
we believed it was set at an appropriate level to provide additional 
payment support to the lowest wage areas. This policy also obviated the 
need for an additional budget-neutrality adjustment that would reduce 
the ESRD PPS base rate, beyond the adjustment needed to reflect updated 
hospital wage data, in order to

[[Page 38484]]

maintain budget neutrality for wage index updates.
    In the CY 2019 ESRD PPS proposed rule (83 FR 34328 through 34330), 
we proposed to increase the wage index floor from 0.4000 to 0.5000. We 
conducted various analyses to support our proposal to increase the wage 
index floor from 0.4000 to 0.5000. We calculated alternative wage 
indexes for Puerto Rico that combined labor quantities, that is FTEs, 
from cost reports with BLS wage information to create two regular 
Laspeyres price indexes \4\ (ranging between 0.510 and 0.550). We 
discuss this analysis in detail in the following paragraphs, however, 
the complete discussion can be found in the CY 2019 ESRD PPS proposed 
rule at 83 FR 34328 through 34330.
---------------------------------------------------------------------------

    \4\ A Laspeyres index is an index formula used in price 
statistics for measuring price development of the basket of goods 
and services consumed in the base period (https://ec.europa.eu/
eurostat/statistics-explained/
index.php?title=Glossary:Laspeyres_price_index#:~:text=The%20Laspeyre
s%20price%20index%20is,cost%20in%20the%20current%20period.)
---------------------------------------------------------------------------

    In response to the CY 2019 wage index floor proposal, we received 
several comments. One commenter opposed the proposal and expressed 
concern over the data sources used to develop the wage indexes in 
general. This commenter requested additional documentation of our 
analysis to determine the two alternative wage indices for Puerto Rico. 
Several commenters expressed support for the proposal to increase the 
wage index from 0.40 in 2018 to 0.50 for CY 2019 and subsequent years, 
because they believed it would assist ESRD facilities in providing 
access to high-quality care particularly in rural areas where access 
challenges may be present. Some commenters expressed support for CMS's 
position that the then-current wage index floor was too low; however, 
they recommended CMS set the wage index floor higher than 0.5000 
(specifically, at 0.5936, which was identified as the lower boundary of 
CMS's statistical outlier analysis as discussed further in this section 
of the proposed rule).
    In response to these comments, in the CY 2019 ESRD PPS final rule 
(83 FR 56967), we stated that we continued to believe that a wage index 
floor of 0.5000 struck an appropriate balance between providing 
additional payments to areas that fell below the wage floor while 
minimizing the impact on the ESRD PPS base rate. We noted that the 
purpose of the wage index adjustment is to recognize differences in 
ESRD facility resource use for wages specific to the geographic area in 
which facilities are located. While a wage index floor of 0.5000 
continued to be the lowest wage index nationwide, we noted that the 
areas subject to the floor continued to have the lowest wages compared 
to mainland facilities. We noted that the increase to the wage index 
floor to 0.5000 was a 25 percent increase over the then-current floor 
and would provide a higher wage index for all facilities in Puerto Rico 
where wage indexes, based on hospital reported data, range from .3300 
to .4400. For these reasons, we stated that we believed a wage index 
floor of 0.5000 was appropriate and would support labor costs in low 
wage areas.
    Therefore, in the CY 2019 ESRD PPS final rule (83 FR 56964 through 
56967), we finalized an increase to the wage index floor from 0.4000 to 
0.5000 for CY 2019 and subsequent years. We explained that we revisited 
our evaluation of payments to ESRD facilities located in the lowest 
wage areas to be responsive to comments from interested parties and to 
ensure payments under the ESRD PPS are appropriate. We provided 
statistical analyses that supported a higher wage index floor and 
finalized an increase from 0.4000 to 0.5000 to safeguard access to care 
in affected areas.
    As noted previously in this proposed rule, currently, all areas 
with wage index values that fall below the floor are located in Puerto 
Rico; however, the wage index floor value is applicable for any area 
that may fall below the floor. The wage index floor of 0.5000 has been 
in effect since January 1, 2019.
    We did not include any wage index floor proposals in the CY 2022 
ESRD PPS proposed rule, however, we received several public comments 
regarding the wage index floor. As discussed in the CY 2022 ESRD PPS 
final rule (86 FR 61881), three commenters, including a large dialysis 
organization, a non-profit health insurance organization in Puerto 
Rico, and a healthcare group in Puerto Rico, commented on the wage 
index for ESRD facilities located in Puerto Rico. These commenters 
recommended that CMS increase the wage index floor from 0.5000 to 
0.5500, noting that in the CY 2019 ESRD PPS proposed rule, CMS reported 
that its own analysis indicated that Puerto Rico's wage index likely 
lies between 0.5100 and 0.5500. They noted that CMS further stated that 
any wage index values less than 0.5936 are considered outlier values. 
They also pointed out that CMS still finalized a floor at 0.5000 and 
that we characterized it as a balance between providing additional 
payments to affected areas while minimizing the impact on the ESRD PPS 
base rate. Another commenter recommended that CMS evaluate policy 
inequities between the ESRD PPS wage index for ESRD facilities located 
in Puerto Rico compared to other states and territories, taking into 
consideration the unique circumstances that affect Puerto Rico, 
including its shortage of healthcare specialists and labor work force, 
remote geography, transportation and freighting costs, drug pricing, 
and lack of transitional care services.
    In response to these comments, we stated in the CY 2022 ESRD PPS 
final rule that we would not finalize any changes to those policies 
since we did not propose any changes to the wage index floor or wage 
index methodology for CY 2022, but would take these suggestions into 
account when considering future rulemaking.
(b) Wage Index Floor Proposal
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index adjustment, such as the index 
referred to in section 1881(b)(12)(D) of the Act, as the Secretary 
determines to be appropriate. Based on this authority, we believe a 
proposal to increase the wage index floor would be in accordance with 
the Secretary's efforts to account for geographic differences in an 
area's wage levels using an appropriate wage index which reflects the 
relative level of hospital wages and wage-related costs in the 
geographic area in which the ESRD facility is located.
    For CY 2023 and subsequent years, we are proposing to increase the 
wage index floor to 0.6000. We believe that this wage floor increase 
would be responsive to comments from interested parties, safeguard 
access to care in areas at the lowest end of the current wage index 
distribution, and be supported by data and analyses that support a 
higher wage index floor, as discussed in the following subsections.
(i) Analysis of Puerto Rico Cost Reports for the CY 2019 ESRD PPS 
Rulemaking
    For the CY 2019 ESRD PPS proposed rule (83 FR 34329 through 34330), 
we performed an analysis using ESRD facility cost reports and wage 
information specific to Puerto Rico from the BLS (https://www.bls.gov/oes/2015/may/oes_pr.htm). The analysis utilized data from cost reports 
for freestanding facilities and for hospital-based facilities in Puerto 
Rico for CYs 2013 through 2015.
    Using these data, we calculated alternative wage indexes for Puerto 
Rico that combined labor quantities, that is FTEs, from cost reports 
with BLS wage

[[Page 38485]]

information to create two regular Laspeyres price indexes. In the 
context of this analysis, a Laspeyres price index can be viewed as a 
relative, weighted average wage of labor in each geographical area. 
This average combines the wages of various labor categories according 
to certain weights. The two indexes we considered used the same BLS-
derived wages but different weights. The first index used quantity 
weights derived from the overall U.S. use of labor inputs. The second 
index used quantity weights derived from the Puerto Rico use of labor 
inputs. The alternative wage indexes derived from the analysis 
indicated that Puerto Rico's wage index likely lies between 0.5100 and 
0.5500. As noted earlier in this section of this proposed rule and 
discussed in the CY 2019 ESRD PPS final rule (83 FR 56967), commenters 
have noted that both of these values are above the current wage index 
floor and suggest that the current 0.5000 wage index floor may be too 
low. Commenters pointed out CMS's analysis shows that Puerto Rico's 
wage index likely lies between 0.51 and 0.55, while additional analyses 
note that any wage index values less than 0.5936 are considered outlier 
values, with 0.5936 therefore as the lower wage index boundary. They 
expressed concern that in the CY 2019 ESRD PPS proposed rule CMS 
proposed a new floor of only 0.5000 even though the present methodology 
applied to Puerto Rico has created the only outlier in the U.S. As we 
stated in the CY 2019 ESRD PPS final rule (83 FR 56967), at that time, 
we believed that a wage index floor of 0.5000 struck an appropriate 
balance between providing additional payments to areas that fall below 
the wage floor while minimizing the impact on the ESRD PPS base rate. 
At the time, we conducted analyses to gauge the appropriateness of the 
then-current wage index floor of 0.4000 and determine whether it was 
too low. We did not propose to use these analyses to determine the 
exact value for a new wage index floor.
    Specifically, as we explained in the CY 2019 ESRD PPS final rule, 
CMS performed a statistical outlier analysis to identify the upper and 
lower boundaries of the distribution of the current wage index values 
and remove outlier values at the edges of the distribution. In the 
general sense, an outlier is an observation that lies outside a defined 
range from other values in a population. In this case, the population 
of values is the various wage indexes within the CY 2019 wage index. 
The lower and upper quartiles (the 25th and 75th percentiles) are also 
used. The lower quartile is Q1 and the upper quartile is Q3. The 
difference (Q3-Q1) is called the interquartile range (IQR). The IQR is 
used in calculating the inner and outer fences of a data set. The inner 
fences are needed for identifying mild outlier values in the edges of 
the distribution of a data set. Any values in the data set that are 
outside of the inner fences are identified as an outlier. The standard 
multiplying value for identifying the inner fences is 1.5. First, we 
identified the Q1 and Q3 quartiles of the CY 2018 wage index, which are 
as follows: Q1 = 0.8303 and Q3 = 0.9881. Next, we identified the IQR: 
IQR = 0.9881-0.8303 = 0.1578. Finally, we identified the inner fence 
values as shown below. Lower inner fence: Q1-1.5*IQR = 0.8303-(1.5 x 
0.1578) = 0.5936. This statistical outlier analysis demonstrated that 
any wage index values less than 0.5936 are considered outlier values, 
and 0.5936 as the lower boundary also suggested that the current wage 
index floor could be appropriately reset at a higher level.
    Based on these analyses, we finalized a wage index floor of 0.5000 
in the CY 2019 ESRD PPS final rule. We continued to apply the wage 
index floor of 0.5000 per year through CY 2022. Although we did not 
propose specific policies relating to the wage index floor in the CY 
2022 ESRD PPS proposed rule, commenters on that rule noted that past 
hurricanes and the COVID-19 PHE have created infrastructure challenges 
that lead to high costs of dialysis care. These commenters requested 
CMS increase the wage index floor. In response to comments and our 
continued concern regarding access, in this proposed rule, we are 
revisiting the CY 2019 analysis, and believe that the statistical 
analysis of the CY 2019 data indicated that a wage index floor as high 
as 0.5936 would be appropriate.
(ii) Analysis of the CY 2023 ESRD PPS Proposed Rule Analytic File
    We performed an analysis to compare the impact of three options to 
adjust the wage index floor upward using the CY 2023 ESRD PPS proposed 
rule analytic file. The analytic file includes qualifying data for 
beneficiaries for whom a 72x claim for renal dialysis services was 
submitted in the outpatient file setting during CY 2021. We analyzed 
the impact of three options for adjustment for the wage index floor: 
(1) wage index floor of 0.5000 (that is, no change), (2) wage index 
floor of 0.5500, and (3) wage index floor of 0.6000. Specifically, we 
examined how these three options would potentially impact the base 
rate, outlier thresholds, and average payment rates for all ESRD 
facilities.
    Among the three options, we considered the wage index floor of 
0.5000 as the baseline or starting point used for comparisons. We then 
compared the impact on various aspects of the ESRD PPS under the 
alternative options using the 0.5500 and 0.6000 wage index floor.
    First, we examined the potential impact on the base rate. Under the 
baseline (wage index value of 0.5000), the proposed base rate for CY 
2023 would be $264.14. The remaining two options (0.5500 floor and 
0.6000 floor) would result in a base rate of $264.11 and $264.09, 
respectively. These options would decrease the proposed ESRD PPS base 
rate due to the application of the budget neutrality factor for each 
option, however as discussed in the following paragraph, the overall 
impact to ESRD PPS payments would be negligible.
    Next, we examined the potential impact to the outlier thresholds. 
Relative to the baseline (wage index floor value of 0.5000), all 
options would have little or no impact on either the outlier MAP or the 
FDL. Lastly, we examined the potential impact to overall ESRD facility 
payments. After accounting for all payment adjustments under the ESRD 
PPS and applying the required budget neutrality factor for each option, 
all options would be associated with a 3.00 percent increase in 
projected payments for CY 2023 due to the proposed market basket update 
and proposed outlier FDL and MAP amounts. We estimate that the change 
in overall payments attributable to increasing the wage index floor 
would be less than 0.01 percentage point. However, we estimate that 
there would be a significant increase in payments to ESRD facilities 
located in Puerto Rico. Under the 0.5500 wage index floor option, we 
estimate that payments to ESRD facilities in Puerto Rico would increase 
by approximately 3.8 percent relative to the 0.5000 wage index floor 
option. Under the 0.6000 wage index floor option, we estimate that 
payments to Puerto Rico facilities would increase by approximately 7.6 
percent relative to the 0.5000 floor. In other words, increasing the 
wage index floor to 0.6000 would maximize the positive impacts for ESRD 
facilities located in Puerto Rico while continuing to minimize the 
impact to overall ESRD PPS payments.
    As noted previously in this section of the proposed rule, the 
statistical analysis presented in the CY 2019 ESRD PPS rulemaking 
resulted in values for the lower and upper fences for

[[Page 38486]]

appropriate wage index values (lower = 0.5936, upper = 0.7514). Any 
values in the data set that are outside of the fences are identified as 
an outlier. Therefore, the analysis indicated that a wage index floor 
of 0.5936 would be appropriate, because any wage index values less than 
0.5936 or greater than 0.7514 would be considered outlier values, and a 
wage index value within the fences could be appropriate. For greater 
simplicity and public understanding, we propose to round the lower 
fence of 0.5936 to the nearest 0.05, to align with the increment of 
change that we previously adopted in the CY 2011 ESRD PPS final rule 
(75 FR 49116 through 49117) for historical reductions to the ESRD PPS 
wage index floor. As a result, after rounding to the nearest 0.05, a 
wage index floor of 0.6000 would be in line with the data.
    We strive for a wage index floor value that maintains the accuracy 
of payments under the ESRD PPS, that is, has minimal impact on the base 
rate, outlier thresholds, and average payment rates for all ESRD 
facilities. Based on our analysis of several options using the most 
recent analytic file for this proposed rule, a value near the lower 
fence of 0.5936 as described in the prior paragraph would maximize the 
positive impacts for ESRD facilities with wage indexes below the floor 
while continuing to minimize the impact to overall ESRD PPS payments.
(iii) Wage Index Floor Proposed Action
    Based on our re-evaluation the CY 2019 analysis and subsequent 
analysis of several options using the most recent analytic file for 
this proposed rule, we are proposing to increase the wage index floor 
to 0.6000. We believe our analyses support that wage index floor value 
and would strike the right balance between providing increased payment 
to areas to areas for which labor costs are higher than the current 
wage index for the relevant CBSAs indicate, while maintaining the 
accuracy of payments under the ESRD PPS and minimizing the overall 
impact to all ESRD facilities. In addition, we are proposing to amend 
Sec.  413.231 by adding new paragraph (d) to reflect this change and to 
codify the wage index floor policy. We believe this proposed increase 
from the current 0.5000 wage index floor value would minimize the 
impact to the base rate while providing increased payment to areas that 
need it.
    Currently, only rural Puerto Rico and 8 urban CBSAs in Puerto Rico 
receive the wage index floor of 0.5000. The next lowest wage index is 
the Virgin Islands CBSA with a value of 0.6004. Under this proposal, 
all CBSAs in Puerto Rico would be subject to the wage index floor of 
0.6000. Though the proposed wage index floor value currently would only 
affect areas in Puerto Rico, we note that, consistent with our 
established policy, the proposed wage index floor value of 6.000 that 
would be applicable for any area that may fall below the floor.
    We solicit comment on the proposal to increase the wage index floor 
from 0.5000 to 0.6000.
c. Proposed CY 2023 Update to the Outlier Policy
(1) Background
    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 ESAs necessary for anemia management. Some 
examples of the patient conditions that may be reflective of higher 
facility costs when furnishing dialysis care would be frailty and 
obesity. A patient's specific medical condition, such as secondary 
hyperparathyroidism, may result in higher per treatment costs. The ESRD 
PPS recognizes high cost patients, and we have codified the outlier 
policy and our methodology for calculating outlier payments at Sec.  
413.237.
    Section 413.237(a)(1) enumerates the following items and services 
that are eligible for outlier payments as ESRD outlier services. (i) 
Renal dialysis drugs and biological products that were or would have 
been, prior to January 1, 2011, separately billable under Medicare Part 
B; (ii) Renal dialysis laboratory tests that were or would have been, 
prior to January 1, 2011, separately billable under Medicare Part B; 
(iii) Renal dialysis medical/surgical supplies, including syringes, 
used to administer renal dialysis drugs and biological products that 
were or would have been, prior to January 1, 2011, separately billable 
under Medicare Part B; (iv) Renal dialysis drugs and biological 
products that were or would have been, prior to January 1, 2011, 
covered under Medicare Part D, including renal dialysis oral-only drugs 
effective January 1, 2025; and (v) renal dialysis equipment and 
supplies, except for capital-related assets that are home dialysis 
machines (as defined in Sec.  413.236(a)(2)), that receive the 
transitional add-on payment adjustment as specified in Sec.  413.236 
after the payment period has ended.\5\
---------------------------------------------------------------------------

    \5\ Under Sec.  413.237(a)(1)(vi), as of January 1, 2012, the 
laboratory tests that comprise the Automated Multi-Channel Chemistry 
panel are excluded from the definition of outlier services.
---------------------------------------------------------------------------

    In the CY 2011 ESRD PPS final rule (75 FR 49142), CMS 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 (that is, date of service) on the monthly claim. Renal 
dialysis drugs, laboratory tests, and medical/surgical supplies that 
are recognized as ESRD outlier services were specified in Transmittal 
2134, dated January 14, 2011.\6\ We use administrative issuances and 
guidance to continually update the renal dialysis service items 
available for outlier payment via our quarterly update CMS Change 
Requests, when applicable. For example, we use these issuances to 
identify renal dialysis oral drugs that were or would have been covered 
under Part D prior to 2011 in order to provide unit prices for 
determining the imputed MAP amounts. In addition, we use these 
issuances to update the list of ESRD outlier services by adding or 
removing items and services that we determined, based our monitoring 
efforts, are either incorrectly included or missing from the list.
---------------------------------------------------------------------------

    \6\ Transmittal 2033 issued August 20, 2010, was rescinded and 
replaced by Transmittal 2094, dated November 17, 2010. Transmittal 
2094 identified additional drugs and laboratory tests that may also 
be eligible for ESRD outlier payment. Transmittal 2094 was rescinded 
and replaced by Transmittal 2134, dated January 14, 2011, which 
included one technical correction. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2134CP.pdf.
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    Under Sec.  413.237, an ESRD facility is eligible for an outlier 
payment if its imputed (that is, calculated) MAP amount per treatment 
for ESRD outlier services exceeds a threshold. The MAP amount 
represents the average estimated expenditure 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 MAP amount per treatment plus the FDL amount. As described in 
the following paragraphs, the facility's predicted MAP amount is the 
national adjusted average ESRD outlier services MAP amount per 
treatment, further adjusted for case-mix and facility characteristics 
applicable to the claim. We use the term ``national adjusted average'' 
in this section of this proposed rule in order to more clearly 
distinguish the calculation of the average ESRD outlier services MAP 
amount per treatment from the calculation of the predicted MAP amount 
for a claim. The average ESRD outlier services MAP amount per treatment 
is based on

[[Page 38487]]

utilization from all ESRD facilities, whereas the calculation of the 
predicted MAP amount for a claim is based on the individual ESRD 
facility and patient characteristics of the monthly claim. In 
accordance with Sec.  413.237(c), ESRD 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 and codified in Sec.  
413.220(b)(4), using 2007 data, we established the outlier percentage, 
which is used to reduce the per treatment base rate to account for the 
proportion of the estimated total payments under the ESRD PPS that are 
outlier payments, at 1.0 percent of total payments (75 FR 49142 through 
49143). We also established the FDL amounts that are added to the 
predicted outlier services MAP amounts. The outlier services MAP 
amounts and FDL amounts are different for adult and pediatric patients 
due to differences in the utilization of separately billable services 
among adult and pediatric patients (75 FR 49140). As we explained in 
the CY 2011 ESRD PPS final rule (75 FR 49138 through 49139), the 
predicted outlier services MAP amounts for a patient are determined by 
multiplying the adjusted average outlier services MAP amount by the 
product of the patient-specific case-mix adjusters applicable using the 
outlier services payment multipliers developed from the regression 
analysis used to compute the payment adjustments. We discuss the 
details of our current methodology for calculating the MAP and FDL 
amounts in the following section.
(2) Overview of Current Outlier Methodology
    We update the national adjusted average MAP amounts and FDL amounts 
each year using the latest available data in the annual regulatory 
updates to the ESRD PPS, in accordance with our longstanding policy (75 
FR 49174). As noted earlier in this section of the proposed rule, based 
on our longstanding policy finalized in the CY 2011 ESRD PPS final rule 
(75 FR 49139 through 49140), the national adjusted average MAP amounts 
represent the national average estimated expenditure per treatment for 
ESRD outlier services, adjusted by a standardization factor. As 
detailed in the following paragraph, when evaluating outlier 
eligibility for a particular patient treated in a particular facility 
for a particular month, this national adjusted average is further 
adjusted to reflect the patient-specific case-mix severity and facility 
characteristics. We refer to this further adjusted MAP amount as the 
predicted MAP amount. Unlike the national average outlier MAP amount 
per treatment, the predicted MAP amount varies across patients (and 
even across patient-months). The national adjusted average MAP amounts 
and FDL 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).
    Under the methodology finalized in the CY 2011 ESRD PPS final rule 
(75 FR 49174), each year, using the latest available ESRD PPS data, we 
compute the national average MAP amount, and establish the FDL amount 
at a level that results in projected outlier payments that equal 1.0 
percent of total payments under the ESRD PPS. When setting the outlier 
thresholds for the ESRD PPS rule, we first identify all ESRD outlier 
services for all beneficiaries using the most recently complete 72x 
claims data, which is claims from two years prior. For example, for the 
CY 2022 ESRD PPS rulemaking (86 FR 61882), we used 2020 claims. For 
items billed using HCPCS codes, we include injectable drugs as eligible 
ESRD outlier services if they belong to one of the ESRD PPS functional 
categories but are not in one of the composite rate drug categories 
(both are described in Chapter 11, Section 20.3 of the Medicare Benefit 
Policy Manual).\7\ We do not include composite rate items because they 
are not eligible for outlier payments, in accordance with our 
longstanding ESRD PPS policy of including only formerly separately 
billable items and services as eligible ESRD outlier services (75 FR 
49138). For items billed using National Drug Codes (NDCs), we include 
all oral drugs included on the ESRD outlier services list, which 
includes oral calcimimetics (starting January 1, 2021), and oral 
vitamin D analogs. We also include laboratory services that are on the 
list of eligible ESRD outlier services published by CMS.\8\ Two supply 
HCPCS codes are eligible for outlier payments (A4657 syringe and A4913 
miscellaneous supplies).
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    \7\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
    \8\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Outlier_Services.
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(a) Methodology for Calculating Imputed MAP Amounts and Predicted MAP 
Amounts
    As we explained in the CY 2011 ESRD PPS final rule (75 FR 49142), 
the ESRD facility must identify all ESRD outlier services furnished to 
the patient by line item on the monthly claim that it submits to 
Medicare in order to receive the outlier payment adjustment. We 
estimate the imputed MAP amount for these services by applying the 
established pricing methodologies described in the following paragraph 
of this proposed rule. The imputed MAP amounts for each of these 
services are summed and divided by the corresponding number of 
treatments identified on the claim to yield the imputed ESRD outlier 
services MAP amount per treatment.
    We multiply the utilization (that is, units of ESRD outlier 
services reported on the 72X claim) with prices to obtain the outlier-
eligible amount. We obtain the utilization only from claim lines that 
are fully covered by Medicare (that is, claim lines that do not include 
any non-covered charge amount) containing ESRD outlier services. 
Separately billable services that are performed in the ESRD facility 
during dialysis that are not related to the treatment of ESRD are not 
included in the outlier-eligible amount. In the CY 2011 ESRD PPS final 
rule (75 FR 49142), we finalized the basis for estimating imputed MAP 
amounts as follows. For pricing of ESRD outlier services that are Part 
B renal dialysis drugs reported with HCPCS codes, we use the latest 
Average Sales Price (ASP) data, which is updated quarterly. ESRD 
outlier services that are renal dialysis drugs formerly covered under 
Part D and reported with NDCs are priced based on the national average 
pricing data retrieved from the Medicare Prescription Drug Plan Finder, 
which reflect pharmacy dispensing and administration fees. For ESRD 
outlier services that are laboratory tests billed using HCPCS codes, we 
use the latest payment rates from the Clinical Laboratory Fee Schedule. 
For renal dialysis supplies used to administer ESRD outlier services 
Part B drugs (for example, syringes), we estimate MAP amounts based on 
the predetermined fees that apply to these items, that is, we pay $0.50 
for each syringe identified on an ESRD facility's claims form. For 
other medical/surgical supplies such as intravenous sets and gloves, 
the Medicare Claims Processing Manual currently allows Medicare 
contractors to elect among various options to price these supplies, 
such as the Drug Topics Red Book, Med-Span, or First Data Bank

[[Page 38488]]

(CMS Pub. 100-04, Chapter 8, Sec.  60.2.1). We sum up the outlier-
eligible amounts for drugs, laboratory tests, and supplies separately.
    Next, we inflate the outlier-eligible amounts calculated for drugs, 
laboratory tests, and supplies from the latest available prices to 
forecasted prices for the rule year.\9\ For example, in the CY 2022 
ESRD PPS rulemaking (86 FR 61882), we used 2021 prices inflated to the 
forecasted prices for CY 2022. Then, we add the inflated drug, 
laboratory test, and supply amounts and multiply the total amount by 
0.98, in accordance with the budget neutrality requirement under 
section 153(b) of MIPPA. Lastly, we divide the amount by the number of 
treatments reported on the claim in order to obtain imputed MAP amount 
per treatment.
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    \9\ We use a blended 4-quarter moving average of the ESRDB 
market basket price proxies for pharmaceuticals to inflate drug 
prices to the rule year. We inflate laboratory test prices to the 
rule year based on the estimated change in payment rates under the 
Clinical Laboratory Fee Schedule, using a CPI forecast to estimate 
changes for years in which a new survey will be implemented. For 
supplies, we apply a 0 percent inflation factor, because these 
prices are based on predetermined fees or prices established by the 
Medicare contractor.
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    After calculating the imputed MAP amount per treatment, we then 
compute the predicted MAP amount for the claim. As we explained in the 
CY 2011 ESRD PPS final rule (75 FR 49138 through 49139), the patient-
specific predicted MAP amount is equal to the national adjusted average 
MAP amount multiplied by the patient-specific case-mix adjusters. The 
national average MAP amount is adjusted by applying a standardization 
factor that reflects the national average of patients' outlier services 
case-mix severity. We apply this standardization factor in order to 
avoid systematically biasing the national average MAP amount 
calculation, which would result in setting the FDL amounts at a level 
that is too low. By applying the standardization factor to the national 
average MAP amount when calculating the patient-specific predicted MAP 
amount, we ensure that total imputed MAP dollars equal total predicted 
MAP dollars. The methodology for calculating this standardization 
factor is discussed in detail in the following section.
(b) Methodology for Calculating Case-Mix Standardization Factor and 
National Adjusted Average MAP Amount
    We publish the national adjusted average MAP amount each year in 
the ESRD PPS proposed and final rule along with the adjustment factor. 
We currently use the ESRD outlier services multipliers that are the 
separately billable (SB) multipliers developed from the regression 
analysis used in the CY 2016 ESRD PPS refinement (80 FR 68993 and 80 FR 
69002). As discussed in the CY 2016 ESRD PPS final rule (80 FR 68970), 
in accordance with section 632(c) of ATRA, we analyzed the case-mix 
payment adjustments under the ESRD PPS using more recent data. We 
revised the adjustments by changing the adjustment payment amounts 
based on our updated regression analysis using CYs 2012 and 2013 ESRD 
claims and cost report data. There was no change in the ESRD PPS 
outlier methodology for CY 2016, however, we updated the ESRD outlier 
services multipliers (80 FR 69008). The current ESRD outlier services 
multipliers are presented in Tables 10 and 11 in this section. A more 
detailed description of the steps is provided in the following 
paragraphs.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP28JN22.011


[[Page 38489]]


[GRAPHIC] [TIFF OMITTED] TP28JN22.012

BILLING CODE 4120-01-C
    As discussed in the CY 2011 ESRD PPS final rule (75 FR 49138 
through 49140), in order to calculate the predicted MAP amount per 
treatment, we first compute the weighted mean of the imputed MAP 
amounts per treatment, separately for adult and pediatric patients, at 
the national level. Then, for each claim, we identify the patient's 
case-mix adjustments that are applicable for the month based on 
conditions recorded on the 72x claims, and multiply all applicable ESRD 
outlier services multipliers together to obtain the combined ESRD 
outlier services multiplier. For pediatric patients, the ESRD outlier 
services multipliers are the age and modality adjusters; for adults, 
the ESRD outlier services multipliers include all case-mix and 
facility-level adjusters. We then calculate the national per-treatment 
weighted mean of the combined outlier services multipliers for adult 
and pediatric patients separately. We calculate one standardization 
factor for adult patients and one for pediatric patients. Each 
standardization factor is calculated as follows:

1/(weighted mean of the combined outlier services multipliers).

    We calculate the adjusted national average outlier MAP amount per 
treatment by multiplying the per-treatment weighted mean of the imputed 
outlier MAP amount per treatment by the standardization factor, 
separately for adults and pediatric patients.
    In order to calculate the predicted outlier MAP amount per 
treatment for each claim, we multiply the national adjusted average MAP 
amount per treatment, separate for adults and pediatrics, by all 
applicable outlier services multipliers for that claim.
(c) Methodology for Calculating FDL Amounts
    In accordance with our longstanding methodology, FDL amounts are 
calculated separately for adult and pediatric patients so that 
projected outlier payments equal 1.0 percent of total ESRD PPS payments 
(75 FR 49142 through 49144). For the FDL amounts, we begin by computing 
total payments for the particular rule year separately for adults and 
pediatric patients. We include all anticipated updates such as the wage 
index, market basket update, and productivity adjustment. For each 
claim, we compute:

Outlier payment per Treatment =
Outlier loss share amount * (Imputed MAP amount per Treatment-
(Threshold per Treatment)) =
0.8 * (Imputed MAP amount per Treatment-(Predicted MAP amount per 
Treatment + FDL))

    A claim is eligible for an outlier payment if the imputed MAP 
amount per treatment-(Threshold per Treatment) >0.
    We simulate total outlier payments, separately for adult and 
pediatric patients, starting with the prior rule year's FDL amounts. If 
the sum of projected outlier payments for the particular rule year is 
higher than 1.0 percent of total payments, we increase the FDL amounts 
in order to decrease the amount of outlier payments. In contrast, if 
projected outlier payments are lower than 1.0 percent of total 
payments, we decrease the FDL amounts in order to increase the amount 
of outlier payments. We determine the separate adult and pediatric FDL 
amounts that bring projected adult and pediatric outlier payments to 
1.0 percent of total payments for each patient population. We announce 
the proposed and final MAP amounts and FDL amounts in the annual ESRD 
PPS proposed and final rules, respectively.
(d) Example of Outlier Calculation
    The following is an example of the calculation of the outlier 
payment. John, a 68-year-old male Medicare beneficiary, is 187.96 cm. 
in height and weighs 95 kg. John receives hemodialysis 3 times weekly. 
In January 2022, he was hospitalized for 4 days for a compound ankle 
fracture. During the hospitalization John did not undergo any dialysis 
treatments. After discharge John resumed his dialysis treatments, but 
required additional laboratory testing and above-average doses of 
several injectable drugs, particularly EPO, to return his hemoglobin 
levels to the normal range. During January 2022, John received 9 
hemodialysis treatments at his usual ESRD facility. The facility 
submitted a claim for eligible ESRD outlier services including drugs 
and biological products, laboratory tests, and supplies totaling 
$3,000.00.
    We begin by computing the predicted MAP amount per treatment based 
on the ESRD outlier services case-mix adjustment factors applicable to 
John. These factors are age and BSA. John's BSA is 2.2161. Applying the 
ESRD outlier services multiplier set forth in Table 10 of this proposed 
rule for BSA, John's ESRD outlier services payment multiplier (PM) for 
BSA is computed as follows:

1.000<SUP>(2.2161-1.9)/0.1</SUP> = 1.000<SUP>3.16135</SUP> = 1.000

    Using this calculated PM for BSA and the PM for age from Table 10, 
John's outlier services PM is calculated as:

1.005 * 1.000 = 1.005

    For CY 2022, the national average MAP amount per treatment for 
adult patients is $42.75. Therefore, the predicted MAP amount per 
treatment for John is: $42.75 * 1.005 = $42.96.
    Next, we determine the imputed MAP amount per treatment which 
reflects the estimated expenditure for ESRD outlier services incurred 
by the ESRD facility. John's imputed MAP amount per treatment is equal 
to the total amount of

[[Page 38490]]

drugs and biological products, laboratory tests, and supplies submitted 
on the claim, divided by the number of treatments. We calculate this 
as:

$3000.00/9 = $333.33.

    Next, we must determine if John's ESRD facility is entitled to 
outlier payments for John's January claim by comparing the predicted 
MAP amount to the threshold per treatment. We calculate the threshold 
per treatment by adding the CY 2022 FDL amount to the predicted MAP 
amount for John.
    The threshold amount for John is calculated to reflect the case-mix 
adjustments for age and BSA.

Threshold = Predicted MAP amount ($42.96) + FDL ($75.39) = $118.35

    Because John's imputed MAP amount per treatment was $333.33, which 
exceeds the sum of the predicted MAP amount and FDL amount ($118.35), 
John's ESRD facility is eligible for outlier payments.
    The outlier payments for John's 9 treatments are calculated as the 
amount by which the imputed MAP amount exceeds the threshold, then 
multiplied by the 80 percent loss-sharing ratio.

Imputed MAP amount minus Threshold: $333.33-$118.35 = $214.98
Outlier payments per treatment: $214.98 * .80 = $171.98
Total outlier payments: $171.98 * 9 = $1,547.82
(3) Current Issue and Concerns From Interested Parties
    For several years, outlier payments have consistently landed below 
the target of 1.0 percent of total ESRD PPS payments. Commenters have 
raised concerns that the methodology we currently use to calculate the 
outlier payment adjustment results in underpayment to ESRD facilities, 
as money was removed from the base rate to balance the outlier payment 
(85 FR 71409, 71438 through 71439; 84 FR 60705 through 60706; 83 FR 
56969). Therefore, they have urged us to adopt an alternative modeling 
approach that accounts for declining trends in spending for eligible 
ESRD outlier services over time.
    MedPAC echoed these concerns in a comment in response to the CY 
2021 ESRD PPS proposed rule (85 71438 through 71440), and also 
suggested that the introduction of calcimimetics as an eligible ESRD 
outlier service could perpetuate this issue. MedPAC predicted that if 
calcimimetic use decreases between 2019 (when the products were paid 
under the ESRD PPS using the TDAPA) and 2021 (when the products would 
be paid as part of the ESRD PPS base rate), the outlier threshold would 
be set too high, and outlier payments would be lower than the target of 
1.0 percent of total CY 2021 payments.
    In response to the concerns raised by MedPAC and others, CMS has 
been conducting research in conjunction with its contractor, including 
holding three technical expert panels (TEPs), to investigate possible 
improvements to the ESRD PPS payment methodologies. As discussed in the 
CY 2022 ESRD PPS proposed rule (86 FR 36401 through 36402), during the 
second and third TEP meetings convened by the CMS contractor in 2019 
and 2020, panelists discussed their specific concerns regarding the 
current outlier policy and alternative methodologies to achieve the 1.0 
percent outlier target. Some TEP panelists and interested parties have 
strongly advocated that we establish a new outlier methodology using 
alternative modeling approaches that account for trends in formerly 
separately billable spending over time. Other interested parties 
advocated for changing the outlier percentage. Overall, panelists 
expressed support for any change to outlier calculations that result in 
total outlier payments being closer to the target.
    In the CY 2022 ESRD PPS proposed rule (86 FR 36402), we stated that 
we were considering potential revisions to the calculation of the 
outlier threshold to address concerns from interested parties. In that 
rule, we presented the information that was previously provided to the 
TEP in order to solicit comments from interested parties in the 
dialysis community and the public (86 FR 36402). We published an RFI to 
solicit comments on the approaches noted in the previous paragraph and 
any information that would better inform future modifications to the 
methodology (86 FR 36402). In addition to generally seeking input 
regarding calculating the outlier payment adjustment, we specifically 
requested responses to the following questions:
    <bullet> An alternative approach could be to estimate the 
retrospective FDL trend by using historical utilization data. How many 
years of data should be included in calculation of this trend to best 
capture changes in treatment patterns?
    <bullet> The simulation of the FDL can be improved by better 
anticipating changes in utilization of ESRD outlier services. What are 
the factors that affect the use of ESRD outlier services over time, and 
to what extent should CMS try to forecast the effect of these factors?
    <bullet> As ESRD beneficiaries can now choose to enroll in Medicare 
Advantage (MA), please describe any anticipated effects of this 
enrollment change on the use of ESRD outlier services in the ESRD PPS.
    <bullet> Adoption of the suggested methodology may account for 
systematic changes in the use of high cost outlier items. However, 
inherently unpredictable changes may still push the outlier payment off 
the 1.0 percent target. Please comment on the acceptability of the 
following payment adjustment methods: Payment reconciliation in the 
form of an add-on payment adjustment or a payment reduction might be 
necessary to bring payments in line with the 1 percent target. An add-
on payment adjustment would be distributed after sufficient data reveal 
the magnitude of the deviation (1 year after the end of the payment 
year). The distribution of these monies could be done via a lump sum or 
via a per-treatment payment add-on effective for 1 year. This add-on 
payment adjustment would be paid irrespective of the outlier claim 
status in that year. A payment reduction could take the form of a 
reduction in the base rate, also to be applied 1 year after the end of 
the payment year.
    As discussed in the CY 2022 ESRD PPS final rule (86 FR 61996), we 
received numerous public comments in response to our RFI on payment 
reform under the ESRD PPS. As discussed in a more detailed comment 
summary on the CMS website,\10\ we received comments from major 
national patient and provider organizations and MedPAC on the RFI 
regarding the outlier policy. Commenters reiterated their concerns that 
outlier payments under the ESRD PPS have not achieved the 1.0 percent 
target since the system was implemented. Commenters focused on three 
main suggestions for the outlier policy: (1) reducing the target 
outlier percentage to 0.5 or 0.6 percent, which commenters argued would 
more closely align with the historical percentage that has been paid 
under the ESRD PPS; (2) changing the methodology used to calculate the 
FDL and MAP amounts in order to better account for not only historical 
trends in utilization but also changes in prices and utilization of new 
and innovative products; and (3) re-allocating money from the ESRD PPS 
that is not paid out for outliers--either by allowing unspent funds to 
apply to a subsequent year's withhold amount or establishing a payment 
mechanism to support ESRD facilities' activities aimed at reducing 
health disparities.
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    \10\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.

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[[Page 38491]]

(4) Proposed Changes to the Outlier Methodology for CY 2023
    In response to significant public comments received over many 
years, we are proposing changes to the outlier policy for CY 2023 and 
subsequent years. In developing these proposed changes, we considered 
the three main suggestions that commenters raised in response to the CY 
2022 RFI.
    First, we considered the recommendation from commenters that CMS 
reduce the outlier percentage from 1.0 percent to 0.5 percent or 0.6 
percent. Although this approach would allow us to potentially increase 
payment under the ESRD PPS base rate for treatment of those patients 
who do not qualify for outlier payments, we are chiefly concerned that 
this approach would not directly address the root cause of outlier 
payments totaling less than 1 percent of overall ESRD PPS payments in 
prior years. Although reducing the target outlier percentage would 
reduce the size of outlier payments relative to total ESRD PPS 
payments, we are concerned that if we do not change the methodology 
that we use to prospectively determine the outlier threshold, we may 
continue to not meet even the lower target outlier percentage.
    Additionally, as discussed in the CY 2011 ESRD PPS final rule (75 
FR 49134), we established the 1.0 percent outlier percentage because it 
struck an appropriate balance between our objective of paying an 
adequate amount for the most costly, resource-intensive patients while 
providing an appropriate level of payment for those patients who do not 
qualify for outlier payments. We are concerned that a reduced outlier 
percentage may not provide the appropriate level of payment for outlier 
cases, and may not protect access for beneficiaries whose care is 
unusually costly. This is because if we were to decrease the target 
outlier percentage, we would need to significantly increase the FDL 
amounts, which would make it more difficult for ESRD facilities to 
receive outlier payment based on their claims. Therefore, after careful 
consideration, we are not proposing to reduce the outlier percentage.
    Next, we considered the recommendation to re-allocate money from 
the ESRD PPS that is not paid out for outliers. As explained earlier in 
this section of the proposed rule, we solicited comments in the CY 2022 
ESRD PPS proposed rule (86 FR 36402) about a potential payment 
reconciliation in the form of an add-on payment adjustment or a payment 
reduction, which might be necessary to bring outlier payments in line 
with the 1.0 percent target. As we described in the detailed RFI 
comment summary document on the CMS website,\11\ several commenters 
supported this idea, and recommended that CMS allow unspent outlier 
funds from the prior year to reduce the amount set aside for outliers 
in the next year. Other commenters suggested that unspent outlier funds 
could be used to fund initiatives that support health equity. One 
national dialysis organization pointed out that lags in the claims 
process and refiling of claims, often over different calendar years, 
would present challenges to such an approach. This organization noted 
that these challenges could make it difficult to accurately calculate 
the amount of the add-on payment adjustment or ``clawback'' payment 
amount for each year. We agree with the concerns this organization 
raised, and believe that these challenges would make it difficult to 
accurately operationalize commenters' recommendations that we allow 
unspent funds to apply to a subsequent year's withhold amount or 
establish a payment mechanism to support ESRD facilities' activities 
aimed at reducing health disparities. Therefore, after careful 
consideration, we are not proposing to establish a payment 
reconciliation methodology for the ESRD PPS outlier policy.
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    \11\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.
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    Lastly, we considered the feedback from interested parties and 
commenters in the past ESRD PPS TEPs and in comments to the RFI in the 
CY 2022 ESRD PPS proposed rule regarding the methodology used to 
calculate the FDL amounts. As commenters have previously noted, the 
current methodology that we use to prospectively calculate the FDL 
amounts has not been able to effectively account for declining use of 
eligible ESRD outlier services (that is, separately billable items and 
services prior to 2011) each year since the implementation of the ESRD 
PPS. For example, the CY 2021 FDL amounts ($48.33 for adult and $41.04 
pediatric patients) were added to the predicted MAP amounts to 
determine the outlier thresholds using 2019 data. The outlier MAP 
amount continued to fall from 2019 to 2021. Consequently, in 2021 
claims, outlier payments comprised approximately 0.4 percent of total 
ESRD PPS payments, demonstrating that the use of 2019 data resulted in 
thresholds too high to achieve the targeted 1.0 percent outlier 
payment.
    Several organizations that commented in response to the RFI \12\ in 
the CY 2022 ESRD PPS proposed rule expressed that using a retrospective 
FDL trend based on historical utilization data would provide a better 
calculation of the appropriate prospective FDL amounts. These 
organizations also cautioned that such a methodology would remain 
sensitive to changes in utilization or price increases for new and 
innovative products. Commenters suggested that such a methodology would 
likely not succeed in estimating the appropriate FDL amounts in years 
when there are significant changes to the ESRD PPS, such as in years 
that immediately follow the end of a period during which CMS has paid 
for a product using the TDAPA or TPNIES payment adjustments under the 
ESRD PPS. MedPAC suggested that CMS consider modeling alternative 
approaches to establishing the outlier threshold and use an approach 
that reflects the trend over time in spending for items in the ESRD PPS 
bundled payment that were separately billable prior to 2011.
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    \12\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.
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    In the CY 2022 ESRD PPS proposed rule (86 FR 36402), we also 
solicited comments on any anticipated effects enrollment changes in MA 
plans might have on the use of ESRD outlier services. National provider 
organizations pointed out that to the extent that MA plans are not 
permitted to systematically include healthier ESRD beneficiaries and 
exclude costly beneficiaries, there would seem to be little impact on 
the outlier pool. They expressed concern about the decision \13\ to 
eliminate network adequacy standards that apply to ESRD facilities.

[[Page 38492]]

They predicted these decisions would discourage many ESRD patients from 
enrolling in MA plans, especially those needing specialized treatment 
or requiring additional medications. To the extent this scenario were 
to occur, commenters argued that it could result in ``outlier'' 
patients, specifically, those sicker, costlier patients, remaining in 
traditional Medicare and the healthier, less costly patients enrolling 
in MA plans.
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    \13\ We believe the commenters were referring to a CMS decision 
to remove outpatient dialysis from the list of facility types 
subject to network adequacy standards and require that MA 
organizations submit an attestation that it has as an adequate 
network that provides the required access and availability to 
dialysis services, including outpatient facilities. CMS indicated in 
the Medicare Program; Contract Year 2021 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription 
Drug Benefit Program, and Medicare Cost Plan Program (CMS-4190-F) 
final rule that we believe there is more than one way to access 
medically necessary dialysis care and that we wanted plans to 
exercise all of their options to best meet a beneficiary's health 
care needs. (85 FR 33796, 33852 through 33866). Further, regardless 
of whether a facility or provider specialty type is subject to 
network adequacy standards, MA organizations are required in Sec.  
422.112(a)(3) to arrange for health care services outside of the 
plan provider network when network providers are unavailable or 
inadequate to meet an enrollee's medical needs. Section 
422.112(a)(10) requires MA plans to ensure access and availability 
to covered services consistent with the prevailing community pattern 
of health care delivery in the areas served by the network. (85 FR 
33858 through 33860).
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    Based on these comments, we are proposing an approach that would 
account for the historical trend in spending for formerly separately 
billable items and services and would also effectively account for the 
introduction of new and innovative products under the ESRD PPS. We 
believe that our proposed methodology would also adapt to changes in 
the ESRD PPS patient population, such as the potential scenario that 
commenters raised in which costlier ``outlier'' patients might remain 
in traditional Medicare while healthier, less costly patients enroll in 
MA plans.
    As we discussed earlier in this section of the proposed rule, our 
current methodology prospectively calculates the adult and pediatric 
FDL and MAP amounts based on simulated outlier payments. The 
utilization of outlier services for these simulated outlier payments 
comes from a single year of ESRD PPS claims, and the prices come from 
the pricing methodology described earlier in this section of the 
proposed rule using latest available prices inflated to forecasted 
prices for the rule year. Under the current methodology, we 
prospectively set the adult and pediatric FDL amounts so that simulated 
outlier payments for the rule year are estimated to equal 1.0 percent.
    For CY 2023 and subsequent years, we are proposing to continue to 
calculate the adult and pediatric MAP amounts for the rule year (CY 
2023) following our established methodology, but we are proposing to 
prospectively calculate the adult FDL amounts based on the historical 
trend in FDL amounts that would have achieved the 1.0 percent outlier 
target in the 3 most recent available data years. We are also proposing 
to adjust the calculation of the historical FDL trend for years that 
immediately follow the end of a period during which CMS has paid for a 
product using the TDAPA or TPNIES payment adjustments under the ESRD 
PPS. We note that we are not proposing to apply this method to 
pediatric FDL amount calculations, as the pediatric population is too 
small to reliably use this method.
    We are proposing the following steps for prospectively calculating 
the adult FDL amounts:
    <bullet> Step 1: Use ESRD PPS claims from the 3 most recent 
available data years, relative to the rule year. For CY 2023, this 
would include data from CY 2019, CY 2020, and CY 2021. Using these 
claims, the projected base rate for the rule year, and the latest 
available prices of ESRD outlier services, we would use our established 
methodology to calculate the FDL amounts that would have achieved the 
1.0 percent outlier target for each year. In the following steps, we 
refer to these calculated FDL amounts as the ``retrospective'' FDL 
amounts.
    <bullet> Step 2: If any items or services that were previously paid 
for using the TDAPA or TPNIES in any of the 3 most recent available 
data years would be ESRD outlier services for the rule year, then we 
would also calculate an alternative series of retrospective FDL 
amounts. This alternative series would account for any new ESRD outlier 
services, that is, any ESRD outlier services for the rule year that 
were previously paid for using the TDAPA or TPNIES in any of the 3 most 
recent available data years. In the following steps, we refer to this 
alternative series of retrospective FDL amounts as the ``adjusted'' 
retrospective FDLs. Specifically, we would calculate the adjusted 
retrospective FDL amounts as follows:
    ++ If a new ESRD outlier service was paid for using the TDAPA or 
TPNIES in the most recent available data year, as in the case of 
calcimimetics in the CY 2020 data used for the CY 2022 ESRD PPS 
rulemaking, then we would calculate the first retrospective FDL amount 
for that year using the latest available prices and historical 
utilization of ESRD outlier services that includes TDAPA or TPNIES 
utilization for the new ESRD outlier service. We would also calculate a 
second retrospective FDL amount for that year that excludes the new 
ESRD outlier service. In order to calculate the adjusted retrospective 
FDLs for the preceding 2 data years, we would take the difference 
between the corresponding FDL amount with and without the new ESRD 
outlier service for the most recent data year, and add this amount to 
each retrospective FDL amount calculated in Step 1. For CY 2023, we 
would add the difference calculated for CY 2021 to the retrospective 
FDL amounts for CY 2020 and CY 2019.
    ++ If a new ESRD outlier service first became eligible in the most 
recent available data year, as in the case of calcimimetics in the CY 
2021 data used for this CY 2023 ESRD PPS proposed rule, then we would 
calculate the first retrospective FDL amount for the most recent data 
year using the latest available prices and historical utilization of 
ESRD outlier services. We would also calculate a second retrospective 
FDL amount for that year that excludes the new ESRD outlier service. In 
order to calculate the adjusted retrospective FDL amounts for the 
preceding 2 data years, we would take the difference between the 
corresponding FDL amount with and without the new ESRD outlier service 
for the most recent data year, and add this amount to each 
retrospective FDL amount calculated in Step 1. For CY 2023, we would 
add the difference calculated for CY 2021 to the retrospective FDL 
amounts for CY 2020 and CY 2019.
    ++ If a new ESRD outlier service first became eligible in the 
second most recent available data year, as in the case of calcimimetics 
in the CY 2022 data that we would expect to use for the CY 2024 
rulemaking, then we would calculate retrospective FDL amounts for the 
most recent two data years using the latest available prices and 
historical utilization of outlier services. For the earliest historical 
year, in which the new ESRD outlier service was still being paid for 
using the TDAPA or the TPNIES, we would also calculate a second 
retrospective FDL amount for that year that excludes the new ESRD 
outlier service. In order to calculate the adjusted retrospective FDL 
amount for the earliest historical year, we would take the difference 
between the corresponding FDL amount with and without the new ESRD 
outlier service in the second most recent available data year, and add 
this amount to the retrospective FDL amount calculated in Step 1. For 
CY 2023, we would add the difference calculated for CY 2020 to the 
retrospective FDL amount for CY 2019.
    ++ If a new ESRD outlier service first became outlier eligible 
earlier than any of the 3 most recent available data years, we would 
not calculate any adjusted retrospective FDL amounts for that item or 
service. For example, for CY 2025, we would not calculate any adjusted 
retrospective FDL amounts to account for calcimimetics in the CY 2021, 
CY 2022, and CY 2023 claims. We would calculate only the series of 
retrospective FDL amounts for these years in accordance with Step 1.
    <bullet> Step 3: Using either the series of retrospective FDL 
amounts or adjusted retrospective FDL amounts, as appropriate, for the 
3 most recent available data years, we would use a

[[Page 38493]]

linear regression to calculate the historical trend in FDL amounts. We 
would project this trend forward to determine the appropriate FDL 
amount for the rule year.
    For illustration purposes, Figure 1 presents an example of the 
adult retrospective FDL amounts and adjusted retrospective FDL amounts 
calculated for CY 2019, CY 2020, and CY 2021, as well as the projected 
FDL trend through CY 2023, under our proposed methodology. The adjusted 
retrospective FDL amounts shown in Figure 1 would account for the 
difference in retrospective FDL amounts calculated with and without 
calcimimetics, which became ESRD outlier services beginning January 1, 
2021. Figure 1 illustrates how the proposed methodology would 
incorporate data for new ESRD outlier services while continuing to 
account for the downward historical trend in spending for formerly 
separately billable items and services.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP28JN22.041

(5) Proposed CY 2023 Update to the Outlier Services MAP Amounts and FDL 
Amounts
    We recognize that the utilization of ESAs and other outlier 
services have continued to decline under the ESRD PPS, and that we have 
lowered the MAP amounts and FDL amounts every year under the ESRD PPS. 
As discussed in the CY 2022 ESRD PPS final rule (86 FR 61883), CY 2020 
claims data showed outlier payments represented approximately 0.6 
percent of total payments. CY 2021 claims data show outlier payments 
represent approximately 0.4 percent of total payments. Accordingly, as 
discussed in section II.B.1.c.(4) of this proposed rule, we are 
proposing to change our ESRD PPS outlier methodology to better target 
1.0 percent of total payments. We are proposing that the outlier 
services MAP amounts and pediatric FDL amounts for CY 2023 would be 
derived from claims data from CY 2021, consistent with our policy to 
base any adjustments made to the MAP amounts under the ESRD PPS upon 
the most recent data year available. We are proposing that the adult 
FDL amounts for CY 2023 would be derived from the projected FDL trend 
calculated according to the proposed methodology described in section 
II.B.1.c.(4) of this proposed rule.
    The impact of this proposed update is shown in Table 12, which 
compares the outlier services MAP amounts and FDL amounts used for the 
outlier policy in CY 2022 with the updated proposed estimates for this 
rule. The estimates for the proposed CY 2023 MAP amounts, which are 
included in Column II of Table 12, were inflation adjusted to reflect 
projected 2023 prices for ESRD outlier services.

[[Page 38494]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.013

BILLING CODE 4120-01-C
    As demonstrated in Table 12, the estimated FDL per treatment that 
determines the CY 2023 outlier threshold amount for adults (Column II; 
$40.75) is lower than that used for the CY 2022 outlier policy (Column 
I; $75.39). The lower threshold is accompanied by a decrease in the 
adjusted average MAP for outlier services from $42.75 to $36.85. For 
pediatric patients, there is a decrease in the FDL from $26.02 to 
$21.51. There is a corresponding decrease in the adjusted average MAP 
for outlier services among pediatric patients, from $27.15 to $25.62.
    We estimate that the percentage of patient months qualifying for 
outlier payments in CY 2023 will be 11.54 percent for adult patients 
and 13.58 percent for pediatric patients, based on the 2021 claims data 
and proposed methodology described in section II.B.1.c.(4) of this 
proposed rule. The outlier MAP and FDL 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).
(6) Outlier Percentage
    In the CY 2011 ESRD PPS final rule (75 FR 49081) and under Sec.  
413.220(b)(4), we reduced the per treatment base rate by 1 percent to 
account for the proportion of the estimated total payments under the 
ESRD PPS that are outlier payments as described in Sec.  413.237. Based 
on the 2021 claims, outlier payments represented approximately 0.4 
percent of total payments, which is below the 1 percent target due to 
declines in the use of outlier services. Recalibration of the 
thresholds using 2021 data and the proposed methodology described in 
section II.B.1.c.(4) of this proposed rule are expected to result in 
aggregate outlier payments closer to the 1 percent target in CY 2022. 
We believe the update to the outlier MAP and FDL amounts for CY 2023 
would increase payments for ESRD beneficiaries requiring higher 
resource utilization. This would move us closer to meeting our 1 
percent outlier policy goal, because we are using more current data for 
computing the MAP and FDL amounts, which is more in line with current 
outlier services utilization rates. We also note that recalibration of 
the FDL amounts would result in no change in payments to ESRD 
facilities for beneficiaries with renal dialysis items and services 
that are not eligible for outlier payments.
d. Proposed Impacts to the CY 2023 ESRD PPS Base Rate
(1) ESRD PPS Base Rate
    In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), CMS 
established the methodology for calculating the ESRD PPS per-treatment 
base rate, that is, the ESRD PPS base rate, and calculating the per 
treatment payment amount, which are codified at Sec.  413.220 and Sec.  
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 MAP for composite rate and 
separately billable services. In accordance with section 1881(b)(14)(D) 
of the Act and our regulation at Sec.  413.230, the per-treatment 
payment amount is the sum of the ESRD PPS base rate, adjusted for the 
patient specific case-mix adjustments,

[[Page 38495]]

applicable facility adjustments, geographic differences in area wage 
levels using an area wage index, and any applicable outlier payment, 
training adjustment add-on, TDAPA, and TPNIES.
(2) Annual Payment Rate Update for CY 2023
    We are proposing an ESRD PPS base rate for CY 2023 of $264.09. This 
proposed update reflects several factors, described in more detail as 
follows:
    Wage Index Budget-Neutrality Adjustment Factor: We compute a wage 
index budget-neutrality adjustment factor that is applied to the ESRD 
PPS base rate. For CY 2023, we are not proposing any changes to the 
methodology used to calculate this factor, which is described in detail 
in the CY 2014 ESRD PPS final rule (78 FR 72174). We computed the 
proposed CY 2023 wage index budget-neutrality adjustment factor using 
treatment counts from the 2021 claims and facility-specific CY 2022 
payment rates to estimate the total dollar amount that each ESRD 
facility would have received in CY 2022. The total of these payments 
became the target amount of expenditures for all ESRD facilities for CY 
2023. Next, we computed the estimated dollar amount that would have 
been paid for the same ESRD facilities using the proposed CY 2023 ESRD 
PPS wage index and proposed labor-related share for CY 2023. As 
discussed in section II.B.1.b of this proposed rule, the proposed ESRD 
PPS wage index for CY 2023 includes an update to the most recent 
hospital wage data and continued use of the 2018 OMB delineations. 
Additionally, as discussed in section II.B.1.b(3)(b)(iii) of this 
proposed rule, we are proposing to increase the ESRD PPS wage index 
floor from 0.5000 to 0.6000 and to apply a permanent 5-percent cap on 
any decrease to an ESRD facility's wage index from its wage index in 
the prior year, regardless of the circumstances causing the decline. 
The total of these payments becomes the new CY 2023 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 2023 amount. When we multiplied the wage index budget neutrality 
factor by the applicable CY 2023 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. The CY 2023 proposed wage index budget-
neutrality adjustment factor is 0.999997. This application would yield 
a CY 2023 ESRD PPS proposed base rate of $257.90 prior to the 
application of the market basket increase factor ($257.90 x 0.999997= 
$257.90). This CY 2023 proposed wage index budget-neutrality adjustment 
factor reflects the impact of all proposed wage index changes, 
including the proposed CY 2023 ESRD PPS wage index and labor-related 
share, proposed increase to the wage index floor, and proposed 
permanent 5-percent cap on wage index decreases.
    For purposes of illustration and analysis, we also calculated a 
separate budget neutrality factor in order to estimate the impact that 
the proposed permanent 5-percent cap on wage index decreases would have 
on CY 2023 ESRD PPS payments. Following the steps described earlier in 
this section of the proposed rule, we divided estimated payments 
without the proposed 5-percent cap by estimated payments with the cap. 
We calculated the resulting budget neutrality factor as 0.999910. 
Applying this budget neutrality factor to the ESRD PPS base rate, we 
estimate that the proposed permanent 5-percent cap would result in a 
$0.02 decrease to the ESRD PPS base rate ($257.90 x 0.999910 = 
$257.88). The overall CY 2023 proposed wage index budget-neutrality 
adjustment factor is higher, because the effect on budget neutrality of 
the proposed 5-percent cap is offset by the effect of the proposed 
increase to the labor-related share.
    Market Basket Increase: Section 1881(b)(14)(F)(i)(I) of the Act 
provides that, beginning in 2012, the ESRD PPS payment amounts are 
required to be annually increased by the ESRD market basket percentage 
increase factor. The latest CY 2023 projection of the proposed ESRDB 
market basket percentage increase factor is 2.8 percent. In CY 2023, 
this amount must be reduced by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act, as required by section 
1881(b)(14)(F)(i)(II) of the Act. As discussed previously in section 
II.B.1.a of this proposed rule, the proposed productivity adjustment 
for CY 2023 is 0.4 percent, thus yielding a proposed update to the base 
rate of 2.4 percent for CY 2023. Therefore, the proposed CY 2023 ESRD 
PPS base rate is $264.09 ($257.90 x 1.024 = $264.09).
e. Update to the Average per Treatment Offset Amount for Home Dialysis 
Machines
    In the CY 2021 ESRD PPS final rule (85 FR 71427), we expanded 
eligibility for the TPNIES under Sec.  413.236 to include certain 
capital-related assets that are home dialysis machines when used in the 
home for a single patient. To establish the TPNIES basis of payment for 
these items, we finalized the additional steps that the Medicare 
Administrative Contractors (MACs) must follow to calculate a pre-
adjusted per treatment amount, using the prices they establish under 
Sec.  413.236(e) for a capital-related asset that is a home dialysis 
machine, as well as the methodology that CMS uses to calculate the 
average per treatment offset amount for home dialysis machines that is 
used in the MACs' calculation, to account for the cost of the home 
dialysis machine that is already in the ESRD PPS base rate. For 
purposes of this proposed rule, we will refer to this as the ``TPNIES 
offset amount.''
    The methodology for calculating the TPNIES offset amount is set 
forth in Sec.  413.236(f)(3). Section 413.236(f)(3)(v) states that 
effective January 1, 2022, CMS annually updates the amount determined 
in Sec.  413.236(f)(3)(iv) by the ESRD bundled market basket percentage 
increase factor minus the productivity adjustment factor. The TPNIES 
for capital-related assets that are home dialysis machines is based on 
65 percent of the MAC-determined pre-adjusted per treatment amount, 
reduced by the TPNIES offset amount, and is paid for 2 calendar years.
    The proposed CY 2023 TPNIES offset amount for capital-related 
assets that are home dialysis machines is $9.73. As discussed 
previously in section II.B.1.a(3)(c) of this proposed rule, the 
proposed CY 2023 ESRD bundled market basket increase factor minus the 
productivity adjustment is 2.4 percent (2.8 percent minus 0.4 
percentage point). Applying the proposed update factor of 1.024 to the 
CY 2022 offset amount results in the proposed CY 2023 offset amount of 
$9.73 ($9.50 x 1.024 = $9.73). We propose to update this calculation to 
use the most recent data available in the CY 2023 ESRD PPS final rule.
f. Proposed Revision to the Oral-Only Drug Definition and Clarification 
Regarding the ESRD PPS Functional Category Descriptions
(1) Background
    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 
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,

[[Page 38496]]

and subclause (iii) of such section states that these services include 
other drugs and biologicals \14\ that are furnished to individuals for 
the treatment of ESRD and for which payment was made separately under 
this title, and any oral equivalent form of such drug or biological.
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    \14\ As discussed in the CY 2019 ESRD PPS final rule (83 FR 
56922), we began using the term ``biological products'' instead of 
``biologicals'' under the ESRD PPS to be consistent with FDA 
nomenclature. We use the term ``biological products'' in this CY 
2023 ESRD PPS proposed rule except where referencing specific 
language in the Act or regulations.
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    When we implemented the ESRD PPS in 2011 (75 FR 49030), we 
interpreted this provision as including not only injectable drugs and 
biological products used for the treatment of ESRD (other than ESAs and 
any oral form of ESAs, which are included under clause (ii) of section 
1881(b)(14)(B) of the Act), but also all oral drugs and biological 
products used for the treatment of ESRD and furnished under title XVIII 
of the Act. We also concluded that, to the extent oral-only drugs or 
biological products used for the treatment of ESRD do not fall within 
clause (iii) of section 1881(b)(14)(B) of the Act, such drugs or 
biological products would fall under clause (iv) of such section, and 
constitute other items and services used for the treatment of ESRD that 
are not described in clause (i) of section 1881(b)(14)(B) of the Act.
    We finalized and promulgated the payment policies for oral-only 
renal dialysis service drugs or biological products in the CY 2011 ESRD 
PPS final rule (75 FR 49038 through 49053). In that rule we defined 
renal dialysis services at Sec.  413.171 as including other drugs and 
biologicals that are furnished to individuals for the treatment of ESRD 
and for which payment was made separately prior to January 1, 2011 
under Title XVIII of the Act, including drugs and biologicals with only 
an oral form. Although we included oral-only renal dialysis service 
drugs and biologicals in the definition of renal dialysis services in 
the CY 2011 ESRD PPS final rule (75 FR 49044), we also finalized a 
policy to delay payment for these drugs under the ESRD PPS until 
January 1, 2014. In the CY 2011 ESRD PPS proposed rule (74 FR 49929), 
we noted that the only oral-only drugs that we identified were 
phosphate binders and calcimimetics, specifically, cinacalcet 
hydrochloride, lanthanum carbonate, calcium acetate, sevelamer 
hydrochloride, and sevelamer carbonate. All of these drugs fall into 
the ESRD PPS functional category for bone and mineral metabolism. In 
the CY 2011 ESRD PPS final rule (75 FR 49043), we explained that there 
were certain advantages to delaying the implementation of payment for 
oral-only drugs and biological products under the ESRD PPS, including 
allowing ESRD facilities additional time to make operational changes 
and logistical arrangements in order to furnish oral-only renal 
dialysis service drugs and biological products to their patients. 
Accordingly, we codified the delay in payment for oral-only renal 
dialysis service drugs and biological products at Sec.  413.174(f)(6), 
and provided that payment to an ESRD facility for renal dialysis 
service drugs and biological products with only an oral form would be 
incorporated into the PPS payment rates effective January 1, 2014. 
Since oral-only drugs are generally not a covered service under 
Medicare Part B, this delay of payment under the ESRD PPS also allowed 
coverage to continue under Medicare Part D.
    On January 3, 2013, ATRA was enacted. Section 632(b) of ATRA 
precluded the Secretary from implementing the policy under Sec.  
413.174(f)(6) relating to oral-only ESRD-related drugs in the ESRD PPS 
prior to January 1, 2016. Accordingly, in the CY 2014 ESRD PPS final 
rule (78 FR 72185 through 72186), we delayed payment for oral-only 
renal dialysis service drugs and biological products under the ESRD PPS 
until January 1, 2016. We implemented this delay by revising the 
effective date at Sec.  413.174(f)(6) for providing payment for oral-
only renal dialysis service drugs under the ESRD PPS from January 1, 
2014 to January 1, 2016. In addition, we changed the date when oral-
only renal dialysis service drugs and biological products would be 
eligible for outlier services under the outlier policy described in 
Sec.  413.237(a)(1)(iv) from January 1, 2014 to January 1, 2016.
    On April 1, 2014, PAMA was enacted. Section 217(a)(1) of PAMA 
amended section 632(b)(1) of ATRA to preclude the Secretary from 
implementing the policy under Sec.  413.174(f)(6) relating to oral-only 
renal dialysis service drugs and biological products prior to January 
1, 2024. We implemented this delay in the CY 2015 ESRD PPS final rule 
(79 FR 66262) by modifying the effective date for providing payment for 
oral-only renal dialysis service drugs and biological products under 
the ESRD PPS at Sec.  413.174(f)(6) from January 1, 2016 to January 1, 
2024. We also changed the date in Sec.  413.237(a)(1)(iv) regarding 
outlier payments for oral-only renal dialysis service drugs made under 
the ESRD PPS from January 1, 2016 to January 1, 2024. Section 217(a)(2) 
of PAMA further amended section 632(b)(1) of ATRA by requiring that in 
establishing payment for oral-only drugs under the ESRD PPS, the 
Secretary must use data from the most recent year available.
    On December 19, 2014, ABLE was enacted. Section 204 of ABLE amended 
section 632(b)(1) of ATRA, as amended by section 217(a)(1) of PAMA, to 
provide that payment for oral-only renal dialysis services cannot be 
made under the ESRD PPS bundled payment prior to January 1, 2025. 
Similar to the CY 2014 and CY 2015 ESRD PPS final rule changes, we 
implemented this delay in the CY 2016 ESRD PPS final rule (80 FR 
469028) by modifying the effective date for providing payment for oral-
only renal dialysis service drugs and biological products under the 
ESRD PPS at Sec.  413.174(f)(6) from January 1, 2024, to January 1, 
2025. We also changed the date in Sec.  413.237(a)(1)(iv) regarding 
outlier payments for oral-only renal dialysis service drugs made under 
the ESRD PPS from January 1, 2024 to January 1, 2025. We stated that we 
continue to believe that oral-only renal dialysis service drugs and 
biological products are an essential part of the ESRD PPS bundled 
payment and should be paid for under the ESRD PPS.
    Section 217(c)(1) of PAMA required us to adopt a process for 
determining when oral-only drugs are no longer oral-only. In the CY 
2016 ESRD PPS proposed rule (80 FR 37839), when considering a 
definition for the term ``oral-only drug,'' we noted that in the CY 
2011 ESRD PPS final rule (75 FR 49038 through 49039), we described 
oral-only drugs as those that have no injectable equivalent or other 
form of administration. In the CY 2016 ESRD PPS final rule (80 FR 
69027), we finalized the definition of oral-only drug at Sec.  
413.234(a) to provide that an oral-only drug is a drug or biological 
with no injectable equivalent or other form of administration other 
than an oral form. We also finalized our process at Sec.  413.234(d) 
for determining that an oral only drug is no longer considered oral-
only when a non-oral version of the oral-only drug is approved by FDA. 
We stated that we will undertake rulemaking to include the oral and any 
non-oral version of the drug in the ESRD PPS bundled payment when it is 
no longer considered an oral-only drug under this regulation. In 
addition, we noted that we will pay for the existing oral-only drugs 
(which were, at that time, only phosphate binders and calcimimetics) 
using the TDAPA, as applicable. We stated that this will allow us to 
collect data reflecting

[[Page 38497]]

current utilization of both the oral and injectable or intravenous 
forms of the drugs, as well as payment patterns and beneficiary co-
pays, before we add these drugs to the ESRD PPS bundled payment. We 
also stated that for future oral-only drugs for which a non-oral form 
of administration comes on the market, we will apply our drug 
designation process as we would for all other new drugs.
    In the CY 2016 ESRD PPS final rule (80 FR 69017), we also codified 
the term ESRD PPS functional category at Sec.  413.234(a) as a distinct 
grouping of drugs and biologicals, as determined by CMS, whose end 
action effect is the treatment or management of a condition or 
conditions associated with ESRD. We explained that we codified this 
definition in regulation text to formalize the approach we adopted in 
CY 2011 because the drug designation process is dependent on the ESRD 
PPS functional categories (80 FR 69015). We provided a detailed 
discussion of how we accounted for renal dialysis drugs and biological 
products in the ESRD PPS base rate since the implementation of the ESRD 
PPS (80 FR 69013 through 69015). We discussed how we grouped renal 
dialysis drugs and biological products into functional categories based 
on their action (80 FR 37831). We explained that this was done for the 
purpose of adding new drugs and biological products with the same 
function into the functional categories and the ESRD PPS bundled 
payment as expeditiously as possible after the drug becomes 
commercially available to provide access for the ESRD Medicare 
population (80 FR 69014). Our approach of considering drugs and 
biological products as included in the ESRD PPS base rate if they fit 
within one of our ESRD PPS functional categories is reflected in the 
drug designation process set forth in our regulations at Sec.  413.234.
    In 2017, FDA approved an injectable calcimimetic. In accordance 
with the policy finalized in the CY 2016 ESRD PPS final rule (80 FR 
69013 through 69027) described in the previous paragraphs, we issued a 
change request to implement payment under the ESRD PPS for both the 
oral and injectable forms of calcimimetics using the TDAPA.\15\ We paid 
for calcimimetics using the TDAPA under the ESRD PPS for 3 years, CY 
2018 through CY 2020, during which time CMS collected utilization data. 
In the CY 2021 ESRD PPS final rule (85 FR 71406 through 71410), we 
finalized a modification to the ESRD PPS base rate to account for the 
costs of calcimimetics following the methodology codified at Sec.  
413.234(f). Accordingly, effective January 1, 2021,\16\ calcimimetics 
are no longer paid for using the TDAPA and instead are included in the 
ESRD PPS base rate. We also noted that effective January 1, 2021, 
calcimimetics are eligible for outlier payments as ESRD outlier 
services under Sec.  413.237.\17\
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    \15\ Change Request 10065, Transmittal 1889, issued August 4, 
2017, replaced by Transmittal 1999, issued January 10, 2018, 
implemented the TDAPA for calcimimetics effective January 1, 2018.
    \16\ Change Request 12011, Transmittal 10568, issued January 14, 
2021,
    \17\ In the CY 2020 ESRD PPS final rule (84 FR 60803), CMS made 
a technical change to Sec.  413.234(a) to revise the definitions of 
``ESRD PPS functional category'' and ``Oral-only drug'' to use the 
term ``biological product'' instead of ``biological'' for greater 
consistency with FDA nomenclature.
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    At the present time, phosphate binders are still considered oral-
only drugs, and therefore under current law will be paid under Medicare 
Part D until January 1, 2025, as long as they remain oral-only drugs. 
Beginning January 1, 2025, in accordance with Sec.  413.174(f)(6), 
payment to an ESRD facility for renal dialysis service drugs and 
biologicals with only an oral form furnished to ESRD patients will be 
incorporated into the ESRD PPS and separate payment will no longer be 
provided.
    Under our current policy (80 FR 69027), if an injectable equivalent 
or other form of administration of phosphate binders were to be 
approved by FDA prior to January 1, 2025, the phosphate binders would 
no longer be considered oral-only drugs and would no longer be paid 
outside the ESRD PPS. We would pay for the oral and any non-oral 
version of the drug using the TDAPA under the ESRD PPS for at least 2 
years, during which time we would collect and analyze utilization data. 
If no other injectable equivalent (or other form of administration) of 
phosphate binders is approved by the FDA prior to January 1, 2025 then 
we would pay for these drugs using the TDAPA under the ESRD PPS for at 
least 2 years beginning January 1, 2025. CMS will then undertake 
rulemaking to modify the ESRD PPS base rate to account for the cost of 
the drug in the ESRD PPS bundled payment. As required by section 
632(b)(1) of ATRA, as amended by section 217(a)(2) of PAMA, in 
establishing payment for oral-only drugs under the ESRD PPS, we will 
use data from the most recent year available.
(2) CMS Observations Regarding Decrease in Drug Utilization and 
Medicare Expenditures When Drugs Are Included in the ESRD PPS
    As we prepare for the incorporation of oral-only drugs into the 
ESRD PPS bundled payment beginning January 1, 2025, we have been 
studying trends in drug utilization and Medicare expenditures for renal 
dialysis drugs and biological products. Our observations, presented 
below, provide further support for our longstanding view that oral-only 
renal dialysis service drugs and biological products are an essential 
part of the ESRD PPS bundled payment and should be paid for under the 
ESRD PPS.
    With the transition of payment for calcimimetics from Medicare Part 
D to Medicare Part B, we observed two distinct patterns. First, when 
the calcimimetics were paid for using the TDAPA under the ESRD PPS 
beginning 2018, we observed a significant increase in the utilization 
of calcimimetics across patients of all races and ethnicities, with a 
more significant uptake by the African-American/Black minority 
population. As utilization increased, cost decreased. To demonstrate, 
before 2018, only brand-name oral calcimimetics were available, but in 
2018, generic oral calcimimetics began to enter the market. We observed 
a greater than ten-fold decrease in the per milligram cost of 
Cinacalcet, the oral calcimimetic, from Q1 2018, which was the 
beginning of the TDAPA period for calcimimetics, and Q4 2020. We 
believe that the transition of payment for calcimimetics from Part D to 
Part B increased access for the population that lacked Part D coverage 
or had less generous coverage than the Part D standard benefit. Second, 
after we incorporated the calcimimetics into the ESRD PPS bundled 
payment beginning January 1, 2021, we noted a decrease in the 
calcimimetic utilization overall, with a pronounced decrease in the 
more expensive injectable calcimimetic. In order to mitigate the risk 
of potential access issues for minority populations, which include 
African-American/Black, Asian, Hispanic, and Other non-white 
populations, we believe it is important that any future oral-only drugs 
that fit into a current ESRD PPS functional category be included in the 
ESRD bundled payment through the processes previously finalized in our 
regulations at Sec.  413.234 and described in this CY 2023 ESRD PPS 
proposed rule.
    We have noted a similar pattern in the change in utilization with 
other renal dialysis service drugs, such as vitamin D agents, which 
were separately paid

[[Page 38498]]

prior to the establishment of the ESRD PPS and subsequently included in 
the ESRD PPS bundled payment. Prior to the implementation of ESRD PPS, 
certain renal dialysis drugs and biological products were separately 
paid according to the number of units of the drug administered; in 
other words, the more units of a drug or biological product 
administered, the higher the Medicare payment.\18\ Between 2011 and 
2013, the first 3 years of the new ESRD PPS, the utilization of 
formerly separately billable renal dialysis drugs and biological 
products included in the ESRD PPS bundled payment declined. With the 
inclusion of the formerly separately billable renal dialysis drugs and 
biological products in the ESRD PPS bundled payment, the ESRD PPS 
increased the incentive for ESRD facilities to be more efficient in 
providing these products.
---------------------------------------------------------------------------

    \18\ Report to the Congress: Medicare Payment Policy, March 
2017. p. 169. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/mar17_medpac_ch6.pdf.
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    CMS has observed that incorporation of formerly separately billable 
renal dialysis drugs and biological products into the ESRD PPS bundled 
payment is followed by a decrease in utilization of the drug. For 
example, by drug class, on a per treatment basis, between 2007 and 
2013, the use of vitamin D agents (part of the bone and mineral 
metabolism ESRD PPS functional category) declined by 20 percent, with 
most of the decline occurring between 2010 and 2013. Under the ESRD 
PPS, drug utilization and average sales price (ASP) data suggest 
increased competition between the two principal vitamin D agents in the 
ESRD PPS bundled payment. Between 2010 and 2014, per treatment use of 
paricalcitol, the costlier vitamin D drug (according to Medicare ASP 
data) declined, while per treatment use of doxercalciferol, the less 
costly vitamin D drug, increased. Between 2010 and 2015, the ASP price 
per unit for both these products declined by 60 percent. We have 
observed a similar pattern in price decline as a result of competition 
with the oral calcimimetics between 2018 and 2021. The brand name oral 
cinacalcet (a calcimimetic) was paid under Medicare Part D drug before 
2018, but the price of the oral drug dropped significantly once the 
injectable calcimimetic became available and the oral (both brand name 
and generics) and the injectable calcimimetic became eligible for 
payment using the TDAPA under the ESRD PPS.
    We have been monitoring health outcomes since 2011 and have not 
observed any sustained increase in adverse outcomes related to 
incorporation of renal dialysis drugs or biological products into the 
ESRD PPS bundled payment, including adverse outcomes related to changes 
in utilization of different forms of calcimimetics, as noted in the 
previous paragraph. To date, we have monitored for hospitalizations, 
fractures, strokes, acute myocardial infarctions, heart failures, 
parathyroidectomies, and calciphylaxis. Utilization of calcimimetics 
remains higher among minority populations, which include African-
American/Black, Asian, Hispanic, and Other non-white populations, and 
we have not observed any sustained adverse health outcomes due to this 
change in utilization. We continue to monitor these health outcomes on 
an ongoing basis.
(3) CMS Observations on Part D Spending for Dialysis Drugs
    While the use of formerly separately billable renal dialysis drugs 
included in the ESRD PPS bundled payment declined between 2011 and 
2013, the use of dialysis drugs paid under Medicare Part D (as measured 
by Medicare spending) increased. Medicare Part D spending for oral-only 
drugs in 2016, which at that time only included calcimimetics and 
phosphate binders, grew to $2.3 billion, an increase of 22 percent per 
year compared with 2011. When calculated on a per treatment basis, 
Medicare Part D spending for dialysis drugs increased by 20 percent per 
year. In addition, between 2011 and 2016, total Medicare Part D 
spending for dialysis drugs grew more rapidly than total Medicare Part 
D spending for ESRD beneficiaries on dialysis (22 percent vs. 11 
percent, respectively). In 2016, Medicare Part D spending for dialysis 
drugs constituted 60 percent of gross Medicare Part D spending for ESRD 
beneficiaries.
    As noted previously in this section of the proposed rule, beginning 
on January 1, 2018, calcimimetics were paid for using the TDAPA under 
the ESRD PPS and beginning on January 1, 2021, were incorporated into 
the ESRD PPS bundled payment. Currently, phosphate binders are the only 
drugs that are paid for under Medicare Part D as oral-only drugs.
    A number of studies, including studies by CMS, have examined trends 
in Medicare spending for phosphate binders. Between 2013 and 2014, 
Medicare Part D spending for phosphate binders increased by 24 percent 
to approximately $980 million. Medicare costs for phosphate binders for 
patients on dialysis and patients with chronic kidney disease enrolled 
in Medicare Part D exceeded $1.5 billion in 2015. Additionally, annual 
Medicare expenditures for phosphate binders increased by 118 percent 
(approximately $486 million) between 2008 and 2013, reflecting 
increasing numbers of patients on dialysis being prescribed phosphate 
binders and large increases in per-user phosphate binder costs. During 
these 6 years, total costs per user-year for phosphate binders 
increased 67 percent, in contrast to a 21 percent increase for all 
other Medicare Part D medications for patients receiving dialysis 
services.\19\
---------------------------------------------------------------------------

    \19\ Am J Kidney Dis 2018 Feb;71(2):246-253. doi: 10.1053/
j.ajkd.2017.09.007. Epub 2017 Nov 28. CMS's data also confirms this 
figure.
---------------------------------------------------------------------------

    MedPAC has also studied Medicare spending under Part D for 
phosphate binders. According to MedPAC's report titled March 2021 
Report to the Congress: Medicare Payment Policy \20\ between 2017 and 
2018, spending for phosphate binders furnished to FFS beneficiaries on 
dialysis declined by 17 percent to $1.1 billion. This decline is linked 
to FDA's approval in 2017 for a generic version of Renvela (sevelamer 
carbonate), a phosphate binder. By contrast, spending grew 12 percent 
per year for the five-year period 2012 through 2017. In 2018, Medicare 
Part D spending for phosphate binders accounted for 40 percent of all 
Medicare Part D spending for dialysis beneficiaries. The most recent 
CMS data through December 2020 indicates that total spending on 
phosphate binders is approximately $1 billion. The average spending per 
treatment of phosphate binders in 2020 is approximately $19.85 among 
all adult ESRD beneficiaries, and $24.24 among all Part D eligible 
adult ESRD beneficiaries. This illustrates that Medicare Part D 
spending for the same category of drugs is more expensive for ESRD 
beneficiaries with Medicare Part D.
---------------------------------------------------------------------------

    \20\ https://www.medpac.gov/document/march-2021-report-to-the-congress-medicare-payment-policy/.
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    MedPAC has also noted the benefits of the future incorporation of 
phosphate binders into the ESRD PPS bundled payment as of January 1, 
2025. As noted in MedPAC's report titled March 2022 Report to the 
Congress: Medicare Payment Policy,\21\ this is expected to result in 
better drug therapy management for the ESRD beneficiary, and to improve 
their access to these medications. MedPAC stated that this is 
especially important since some beneficiaries lack Part D coverage, or

[[Page 38499]]

have coverage less generous than the standard Part D benefit. MedPAC 
also noted that in addition to supporting equitable access for the ESRD 
beneficiaries, including phosphate binders in the ESRD PPS bundled 
payment might improve provider efficiency. MedPAC stated, and we have 
confirmed, that between 2018 and 2019, Medicare total spending 
increased for the phosphate binders that did not have generic 
competitors.
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    \21\ https://www.medpac.gov/document/march-2022-report-to-the-congress-medicare-payment-policy/.
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(4) The Oral-Only Drug Definition and ``Functional'' Equivalence Under 
the ESRD PPS
    As noted previously in this section of the proposed rule, under 
Sec.  413.234(a), we define an oral-only drug as ``A drug or biological 
product with no injectable equivalent or other form of administration 
other than an oral form.'' In addition, Sec.  413.234(d) provides that 
an oral-only drug is no longer considered oral-only if an injectable or 
other form of administration of the oral-only drug is approved by the 
Food and Drug Administration. We note that there are various types of 
drug equivalences that are defined in regulation by FDA, including 
pharmaceutical equivalents, bioequivalents, and therapeutic 
equivalents.\22\ However, we have not relied on these types of drug 
equivalences defined by FDA for purposes of the oral-only drug policy 
under the ESRD PPS.
---------------------------------------------------------------------------

    \22\ FDA has defined the terms ``pharmaceutical equivalents'', 
``bioequivalence'', and ``therapeutic equivalents'' at 21 CFR 
314.3(b). Therapeutic equivalence, as used in FDA's Orange Book: 
Approved Drug Products with Therapeutic Equivalence Evaluations (see 
Section 1.21.15), applies only to drug products containing the same 
active ingredient(s) and does not encompass a comparison of 
different therapeutic agents used for the same condition. https://www.accessdata.fda.gov/scripts/cder/ob/index.cfm.
---------------------------------------------------------------------------

    Moreover, our regulations do not currently specify the meaning of 
the term ``equivalent'' in the definition of ``oral-only drug''.\23\ We 
believe that the history of the ESRD PPS and our longstanding drug 
designation process indicate that CMS must consider ``functional'' 
equivalence, which is not described in FDA's regulations, in order to 
evaluate whether there is another form of administration other than an 
oral form and determine if a drug or biological product is an oral-only 
drug. For the purpose of ESRD PPS, we consider a drug or biological 
product to be functionally equivalent if it has the same end action 
effect as another renal dialysis drug or biological product. For 
example, when we first developed the Medicare ESRD PPS, we examined all 
renal dialysis drugs and biological products included in the prior 
composite rate payment system. Functional substitutes for those drugs 
or biological products were part of that evaluation. In the CY 2011 
ESRD PPS final rule (75 FR 49044 through 49053) we explained our 
process for identifying drugs and biological products used for the 
treatment of ESRD that would be included in the ESRD PPS base rate. We 
performed an extensive analysis of Medicare payments for Part B drugs 
and biological products billed on ESRD claims and evaluated each drug 
and biological product to identify its category by indication or mode 
of action. We stated that categorizing drugs and biological products on 
the basis of drug action allows us to determine which categories (and 
therefore, the drugs and biological products within the categories) 
would be considered used for the treatment of ESRD (75 FR 49047).
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    \23\ Neither ATRA, PAMA, nor ABLE includes a definition of 
``equivalent'' for purposes of the oral-only drug determination. 
Additionally, CMS did not provide a definition for or elaborate on 
the meaning of ``equivalent'' for purposes of the oral-only drug 
determination in our prior rules.
---------------------------------------------------------------------------

    In the CY 2016 ESRD PPS final rule, we codified our longstanding 
drug designation process at Sec.  413.234 and reiterated that 
injectable and intravenous drugs and biological products were grouped 
into ESRD PPS functional categories based on their action (80 FR 
69014). This was done for the purpose of adding new drugs or biological 
products with the same functions to the ESRD PPS bundled payment as 
expeditiously as possible after the drugs become commercially available 
so that beneficiaries have access to them. We further clarified that 
the ESRD PPS functional categories are not based on their mode of 
action, but rather end action effect (80 FR 69015 through 69017). 
Accordingly, and as noted previously in this section of this proposed 
rule, we finalized the definition of an ESRD PPS functional category in 
Sec.  413.234(a) as a distinct grouping of drugs or biological 
products, as determined by CMS, whose end action effect is the 
treatment or management of a condition or conditions associated with 
ESRD (80 FR 69017 and 84 FR 60803).
    Our guidance has also indicated that we consider functional 
equivalence when assessing whether particular drugs are renal dialysis 
services paid for under the ESRD PPS. The Medicare Benefit Policy 
Manual, Chapter 11, Section 20.3F states, ``Drugs that were used as a 
substitute for any of these drugs [that is, drugs that were considered 
composite rate drugs and not billed separately prior to the 
implementation of the ESRD PPS] or are used to accomplish the same 
effect are also covered under the composite rate.'' Given that we rely 
on functional equivalence in determining whether drugs are reflected in 
an ESRD PPS functional category and thus are renal dialysis services 
paid for under the ESRD PPS, we believe the same standard should apply 
when determining if a drug is an oral-only drug.
(5) Proposed Revision to the Definition of Oral-Only Drug
    Based on our observations regarding renal dialysis drug utilization 
and spending and the upcoming changes related to payment for oral-only 
drugs under the ESRD PPS, we are proposing a change to the definition 
of oral-only drug at Sec.  413.234(a). The current definition states 
that an oral-only drug is a drug or biological product with no 
injectable equivalent or other form of administration other than an 
oral form. We are proposing to modify the definition to specify that 
equivalence refers to functional equivalence, in line with our current 
drug designation process, which relies on the ESRD PPS functional 
categories. The proposed definition would state that an oral-only drug 
is a drug or biological product with no functional equivalent or other 
form of administration other than an oral form. We are proposing that 
this change would take effect beginning January 1, 2025, to coincide 
with the incorporation of oral-only drugs into the ESRD PPS bundled 
payment under Sec.  413.174(f)(6).
    We are proposing this change for several reasons. First, we note 
that it would be consistent with the policies previously established 
for phosphate binders and calcimimetics. As discussed previously in 
this section of the proposed rule, in the CY 2016 ESRD PPS final rule, 
we finalized that when a non-oral form of administration of a phosphate 
binder or calcimimetic is approved by FDA, we would go through 
rulemaking to include the oral and any non-oral form of administration 
of the drug in the ESRD PPS bundled payment. We explained that we would 
not take this approach for any subsequent drugs that are approved by 
FDA and fall within the bone and mineral metabolism functional category 
(or any other ESRD PPS functional categories). This is because the 
phosphate binders and calcimimetics were the only renal dialysis drugs 
for which we delayed payment under the ESRD PPS because we did not have 
utilization data (80 FR 69025). We believe that a revision to the oral-
only drug definition to clarify that a drug is not an oral-only drug if 
it has a

[[Page 38500]]

functional equivalent is consistent with that policy; that is, only 
oral-only drugs that are calcimimetics and phosphate binders would be 
eligible for a potential base rate addition and we would not take this 
approach for any subsequent drugs that fall within any of the ESRD PPS 
functional categories (80 FR 69025). While Congress has delayed the 
incorporation of oral-only drugs into the ESRD PPS until January 1, 
2025, and this delay still applies to the phosphate binders as oral-
only drugs, we believe we can still take action now to ensure that our 
drug designation process clearly reflects the longstanding ESRD PPS 
functional category framework.
    In addition, this proposed modification would help ensure that we 
do not perpetuate any further delays in payment for renal dialysis 
services under the ESRD PPS. As noted previously, throughout the years, 
a series of legislative actions delayed the inclusion of oral-only 
drugs into the ESRD PPS bundled payment, from 2014 to 2016, to 2024, to 
January 1, 2025. When we first implemented the payment system in 2011, 
we noted that there were certain advantages to delaying payment for 
oral-only drugs under the ESRD PPS and continuing to pay for them under 
Part D, such as giving ESRD facilities additional time to make 
operational changes. CMS believes that sufficient time has passed since 
2011 and we have abundant data about historical patterns to incorporate 
all drugs and biological products that are renal dialysis services into 
the ESRD PPS bundled payment as soon as possible under current law.
    Our proposed modification would help ensure that new drugs and 
biological products that become available in the future and that are 
reflected in the ESRD PPS functional categories, are properly paid as 
part of the ESRD PPS. In other words, by specifying that an oral-only 
drug is one with no injectable ``functional'' equivalent, we would 
limit the scope of any new drugs or biological products that could be 
considered oral-only drugs in the future, and would therefore 
facilitate incorporation of these renal dialysis services into ESRD 
PPS. Any new oral renal dialysis drugs or biological products that are 
reflected in existing ESRD PPS functional categories and have 
functional equivalents in those categories would not meet the 
definition of an oral-only drug and thus could be included in the ESRD 
PPS bundled payment without delay, even if the functional equivalents 
are not ``chemical equivalents'' (that is, products containing 
identical amounts of the identical active drug ingredient). This would 
support beneficiary access to renal dialysis service drugs and would 
meet the intent of the ESRD PPS functional category framework, which is 
to be broad and to facilitate adding new drugs to the therapeutic 
armamentarium of the treating physician (83 FR 56941).
    We note that over the past decade, CMS has been monitoring and 
analyzing data regarding beneficiary access to Medicare Part D drugs, 
Medicare expenditure increases for renal dialysis drugs paid under 
Medicare Part D, health equity implications of varying access to 
Medicare Part D drugs among patients with ESRD, and ESRD facility 
behavior regarding drug utilization. We have seen that incorporating 
Medicare Part D drugs into the ESRD PPS has had a significant positive 
effect of expanding access to such drugs for beneficiaries who do not 
have Medicare Part D coverage. As discussed earlier in this section of 
this proposed rule, this has significant health equity implications. 
For example, we have identified among these beneficiaries a significant 
uptake by the African-American/Black minority population for 
calcimimetics once we began paying for those drugs using the TDAPA 
under the ESRD PPS.
    We believe the proposed modification of the oral-only drug 
definition would facilitate the inclusion of oral renal dialysis drugs 
into the ESRD PPS bundled payment, as opposed to payment under Medicare 
Part D, and therefore would support health equity for beneficiaries 
with oral-only drugs in their plan of care who lack Medicare Part D 
coverage, or have less generous than Medicare Part D standard benefit. 
From 2017 and 2021, between 10 to 20 percent of FFS beneficiaries on 
dialysis either had no Medicare Part D coverage or had coverage less 
generous than the Medicare Part D standard benefit. Timely inclusion of 
renal dialysis drugs and biological products into the ESRD PPS bundled 
payment would promote health equity for those beneficiaries who are not 
enrolled in Part D or who do not have access to these drugs through 
alternate insurance programs.
    When compared with all FFS beneficiaries, FFS beneficiaries 
receiving dialysis are disproportionately young, male, disabled, and 
African-American, have low income as measured by dual status, and 
reside in an urban setting. We believe a clarification to help ensure 
that renal dialysis drugs and biological products are properly included 
in the ESRD PPS bundled payment would increase the likelihood of 
pharmaceutical compliance for this population of patients, promote 
health equity for patients that lack Medicare Part D coverage or have 
coverage less generous than the Part D standard benefit, and contribute 
to better clinical outcomes by leveling the playing field for all 
patients with ESRD. In addition, this proposal would support Executive 
Order 13985, Advancing Racial Equity and Support for Underserved 
Communities through the Federal Government (86 FR 7009), which 
addresses conducting an equity assessment in federal agencies, and 
determining whether new policies, regulations, or guidance documents 
may be necessary to advance equity in agency action and programs.
    In summary, we believe that a proposed modification to the 
definition of oral-only drug to specify ``functional'' equivalence 
would be consistent with the current policy for oral-only drugs and the 
ESRD PPS functional category framework, would help ensure that new 
renal dialysis drugs and biological products are paid for under the 
ESRD PPS without delay, and would continue to support health care 
practitioners' decision-making to meet the clinical needs of their 
patients. Additionally, the proposed modification would promote health 
equity and support proper financial incentives for ESRD facilities, in 
keeping with our fiduciary responsibility to the Medicare Trust Funds. 
For all of these reasons, we are proposing to include the word 
``functional'' in the definition of oral-only drug at Sec.  413.234(a), 
so that the definition would be ``a drug or biological product with no 
injectable functional equivalent or other form of administration other 
than an oral form.'' We propose that this change would be effective 
January 1, 2025. We seek comments on this proposal.
(6) Proposed Revisions To Clarify the ESRD PPS Functional Category 
Descriptions
    In the CY 2011 ESRD PPS final rule (75 FR 49044 through 49053), we 
discussed the extensive analysis of Medicare payments that we performed 
in order to identify drugs and biological products that are used for 
the treatment of ESRD and therefore meet the definition of renal 
dialysis services (defined at section 1881(b)(14)(B) of the Act and 42 
CFR 413.171) that would be included in the ESRD PPS base rate. We 
analyzed Medicare Part B drugs and biological products billed on ESRD 
claims and evaluated each drug and biological product to identify its 
category by indication or mode of action. We also explained that 
categorizing drugs and biological products on the basis of drug action 
would allow us to determine which categories (and therefore, the drugs 
and

[[Page 38501]]

biological products within the categories) would be considered used for 
the treatment of ESRD (75 FR 49047).
    Using this approach, we established categories of drugs and 
biological products that are not considered for the treatment of ESRD, 
categories of drugs and biological products that are always considered 
for the treatment of ESRD, and categories of drugs and biological 
products that may be used for the treatment of ESRD but are also 
commonly used to treat other conditions (75 FR 49049 through 49051). 
Those drugs and biological products that were identified as not used 
for the treatment of ESRD were not considered renal dialysis services 
and were not included in computing the ESRD PPS base rate. The 
categories of drugs and biologicals that were always considered used 
for the treatment of ESRD were identified as access management, anemia 
management, anti-infectives (specifically vancomycin and daptomycin 
used to treat access site infections), bone and mineral metabolism, and 
cellular management (75 FR 49050). In the CY 2015 ESRD PPS final rule, 
we removed anti-infectives from the list of categories of drugs and 
biological products that are included in the ESRD PPS base rate and not 
separately payable (79 FR 66149 through 66150). The categories of drugs 
that were considered always used for the treatment of ESRD have 
otherwise remained unchanged since we finalized them in the CY 2011 
ESRD PPS final rule. The current categories of drugs that are included 
in the ESRD PPS base rate and that may be used for the treatment of 
ESRD but are also commonly used to treat other conditions are 
antiemetics, anti-infectives, antipruritics, anxiolytics, drugs used 
for excess fluid management, drugs used for fluid and electrolyte 
management including volume expanders, and pain management (analgesics) 
(79 FR 66150).
    Although commenters requested that we list the specific ESRD-only 
drugs in the CY 2011 ESRD PPS final rule rather than specifying drugs 
and biological products used for the treatment of ESRD, we chose to 
identify drugs and biological products by functional category. We did 
not finalize a drug-specific list because we did not want to 
inadvertently exclude drugs that may be substitutes for drugs 
identified. We stated that using categories of drugs allows CMS to 
update the bundled ESRD PPS base rate accordingly as new drugs and 
biological products become available (75 FR 49050). Because there are 
many drugs and biological products that have multiple uses, and because 
new drugs and biological products are being developed, we stated that 
we did not believe that a drug-specific list would be beneficial (75 FR 
49050).
    However, we provided a list of the specific Part B drugs and 
biological products (75 FR 49205 through 49209) and the former Part D 
drugs that were included in the bundled ESRD PPS base rate (75 FR 
49210). We emphasized that drugs or biological products furnished for 
the purpose of access management, anemia management, vascular access or 
peritonitis, cellular management and bone and mineral metabolism will 
be considered a renal dialysis service under the ESRD PPS and will not 
be eligible for separate payment. In addition, we noted that any drug 
or biological product used as a substitute for a drug or biological 
product that was included in the bundled ESRD PPS base rate would also 
be a renal dialysis service and would not be eligible for separate 
payment (75 FR 49050).
    In the CY 2016 ESRD PPS final rule (80 FR 69024), we finalized the 
drug designation process in our regulations at Sec.  413.234 as being 
dependent upon the ESRD PPS functional categories, consistent with our 
policy since the implementation of the ESRD PPS in 2011. We discussed 
the history of the ESRD PPS functional category approach and noted that 
we grouped the injectable and intravenous drugs and biological products 
into ESRD PPS functional categories for the purpose of adding new drugs 
or biological products with the same functions to the bundled ESRD PPS 
base rate as expeditiously as possible. We also stated that in previous 
regulations we referred to these categories as drug categories, 
however, we believe the term functional categories is more precise and 
better reflects how we have used the categories. We explained that CMS 
has designated several new drugs and biological products as renal 
dialysis services because they fit within the ESRD PPS functional 
categories, consistent with the process noted in CY 2011 ESRD PPS final 
rule.
    As described more fully in the CY 2016 ESRD PPS final rule (80 FR 
69023 through 69024), CMS established a TDAPA policy in our regulation 
at Sec.  413.234 that is based on a determination as to whether or not 
a drug fits into an existing ESRD PPS functional category. We defined 
an ESRD PPS functional category in our regulation at Sec.  413.234(a) 
as a distinct grouping of drugs or biological products, as determined 
by CMS, whose end action effect is the treatment or management of a 
condition or conditions associated with ESRD.
    In addition, in the CY 2016 ESRD PPS final rule (80 FR 69017), we 
explained that commenters suggested changes to our descriptions of some 
of the ESRD PPS functional categories in the preamble of the CY 2016 
ESRD PPS proposed rule to more precisely define the drugs that would 
fit into the categories. In particular, the commenters suggested 
changes to the anti-infective, pain management, and anxiolytic ESRD PPS 
functional categories to better describe how each of the categories 
relate to the treatment of ESRD in accordance with the statute. The 
commenters suggested that we remove language from the description of 
the antiemetic functional category to eliminate drugs used to treat 
nausea caused by the use of oral-only drugs because these drugs are 
paid outside the ESRD PPS bundled payment and are covered under a 
separate benefit category.
    In response to these suggestions, in the CY 2016 ESRD PPS final 
rule, we moved the anti-infective functional group from the list of 
drugs always used for the treatment of ESRD to the list of drugs that 
may be used for the treatment of ESRD (80 FR 69017). We also adopted 
the commenters' recommendations regarding narrowing the functional 
categories to describe how the category relates to the treatment of 
ESRD. We explained that many of the commenters' recommendations were 
consistent with how we believe the categories should be defined and 
help to ensure that the drugs that fall into them are those that are 
essential for the delivery of maintenance dialysis. We presented the 
final ESRD PPS functional categories, as revised with suggestions from 
commenters, in Table 8B in the CY 2016 ESRD PPS final rule (80 FR 
69018). In that CY 2016 ESRD PPS final rule table, we listed each ESRD 
PPS functional category and rationale for association, meaning the 
reason we included drugs in each category, with examples of drugs in 
certain categories. Table 8B also separated the functional categories 
into those that describe drugs always considered used for the treatment 
of ESRD and those that described drugs that may be used for treatment 
of ESRD.
    In the CY 2019 ESRD PPS final rule (83 FR 56928) we discussed the 
current ESRD PPS functional categories as part of our final policy to 
expand the TDAPA to all new renal dialysis drugs and biological 
products without modifying the base rate for drugs in existing 
functional categories. We emphasized that the functional categories are 
deliberately broad in nature because, when a new drug becomes 
available, it is added to the therapeutic

[[Page 38502]]

armamentarium of the treating physician (83 FR 56941).
    In 2021, a new antipruritic drug was granted marketing 
authorization by FDA. The new antipruritic drug was approved for a 
single indication, chronic kidney disease associated pruritus. The new 
antipruritic drug was approved for the ESRD PPS TDAPA in December 2021 
and will receive the TDAPA from April 1, 2022 until March 31, 2024. The 
Change Request (CR) 12583 that established the TDAPA for 
Korsuva[supreg] (difelikefalin) was issued on March 15, 2022.\24\ As 
stated in that CR, the drug qualifies for the TDAPA as a drug or 
biological product used to treat or manage a condition for which there 
is an existing ESRD PPS functional category, specifically, the 
antipruritic category. Because the new drug already fits within the 
antipruritic ESRD PPS functional category, the drug will receive the 
TDAPA for 2 years (Sec.  413.234(b)). After the TDAPA period, the drug 
will be considered included in the ESRD PPS bundled payment and there 
will be no modification to the base rate (Sec.  413.234(c)(1)(i)).
---------------------------------------------------------------------------

    \24\ https://www.cms.gov/files/document/r11295CP.pdf.
---------------------------------------------------------------------------

    In this proposed rule, we are taking the opportunity to review the 
descriptions for the existing ESRD PPS functional categories and 
propose certain clarifications to ensure our descriptions are as clear 
as possible for potential TDAPA applicants and the public. These 
proposed revisions to the descriptions would be consistent with our 
current policies for the ESRD PPS functional categories and would not 
be changes to the categories themselves. As required by the definition 
in Sec.  413.234(a), the drugs and biological products in the ESRD PPS 
functional categories are grouped by end action effect, and as we have 
stated in the past, the functional categories are deliberately broad by 
design to provide practitioners an array of drugs to use that meet the 
specific needs of the ESRD patient (83 FR 56941). In offering category 
descriptions, which we have also identified as rationales for 
association (80 FR 69015, 69016, and 69018), it has not been our 
intention to strictly define or limit drugs in any functional category 
but rather to broadly describe the renal dialysis drugs and biological 
products that are currently available and fall into the categories. We 
are proposing to make the following clarifications:
    <bullet> Indicate that certain ESRD PPS functional categories may 
include, but are not limited to, drugs that have multiple clinical 
indications. For example, drugs and biological products in the 
anxiolytic functional category could have multiple clinical 
indications, and we are proposing to amend the description to reflect 
this understanding.
    <bullet> Add the term ``biological products'' to the descriptions 
of several ESRD PPS functional categories, which currently refer only 
to ``drugs''.
    <bullet> Update the examples provided in some category descriptions 
to describe the end-action effect of drugs or biological products 
included in that functional category.
    These proposed clarifications to the descriptions of the ESRD PPS 
functional categories are shown in italics in Table 13 of this proposed 
rule.
BILLING CODE 4120-01-P

[[Page 38503]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.014

BILLING CODE 4120-01-C

C. Proposed Transitional Add-On Payment Adjustment for New and 
Innovative Equipment and Supplies (TPNIES) for CY 2023 Payment

1. Background
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), CMS 
established the transitional add-on payment adjustment for new and 
innovative equipment and supplies (TPNIES) under the ESRD PPS, under 
the authority of section 1881(b)(14)(D)(iv) of the Act, in order to 
support ESRD facility use and beneficiary access to these new 
technologies. We established this add-on payment adjustment to help 
address the unique circumstances experienced by ESRD facilities when 
incorporating new and innovative equipment and supplies into their 
businesses and to support ESRD facilities transitioning or testing 
these products during the period when they are new to market. We added 
Sec.  413.236 to establish the eligibility criteria and payment 
policies for the TPNIES.
    In the CY 2020 ESRD PPS final rule (84 FR 60650), we established in 
Sec.  413.236(b) that for dates of service occurring on or after 
January 1, 2020, we will provide the TPNIES to an ESRD facility for 
furnishing a covered equipment or supply only if the item: (1) has been 
designated by CMS as a renal dialysis service under Sec.  413.171; (2) 
is new, meaning granted marketing authorization by the Food and Drug 
Administration (FDA) on or after January 1, 2020; (3) is commercially 
available by January 1 of the particular CY, meaning the year in which 
the payment adjustment would take effect; (4) has a Healthcare Common 
Procedure Coding System (HCPCS) application submitted in accordance 
with the official Level II HCPCS coding procedures by September 1 of 
the particular CY; (5) is innovative, meaning it meets the substantial 
clinical improvement criteria specified in the Inpatient Prospective 
Payment System

[[Page 38504]]

(IPPS) regulations at Sec.  412.87(b)(1) and related guidance; and (6) 
is not a capital related asset that an ESRD facility has an economic 
interest in through ownership (regardless of the manner in which it was 
acquired).
    Regarding the innovation requirement in Sec.  413.236(b)(5), in the 
CY 2020 ESRD PPS final rule (84 FR 60690), we stated that we will use 
the following criteria to evaluate substantial clinical improvement for 
purposes of the TPNIES under the ESRD PPS based on the IPPS substantial 
clinical improvement criteria in Sec.  412.87(b)(1) and related 
guidance:
    A new technology represents an advance that substantially improves, 
relative to renal dialysis services previously available, the diagnosis 
or treatment of Medicare beneficiaries. First, CMS considers the 
totality of the circumstances when making a determination that a new 
renal dialysis equipment or supply represents an advance that 
substantially improves, relative to renal dialysis services previously 
available, the diagnosis or treatment of Medicare beneficiaries. 
Second, a determination that a new renal dialysis equipment or supply 
represents an advance that substantially improves, relative to renal 
dialysis services previously available, the diagnosis or treatment of 
Medicare beneficiaries means one of the following:
    <bullet> The new renal dialysis equipment or supply offers a 
treatment option for a patient population unresponsive to, or 
ineligible for, currently available treatments; or
    <bullet> The new renal dialysis equipment or supply offers the 
ability to diagnose a medical condition in a patient population where 
that medical condition is currently undetectable, or offers the ability 
to diagnose a medical condition earlier in a patient population than 
allowed by currently available methods, and there must also be evidence 
that use of the new renal dialysis service to make a diagnosis affects 
the management of the patient; or
    <bullet> The use of the new renal dialysis equipment or supply 
significantly improves clinical outcomes relative to renal dialysis 
services previously available as demonstrated by one or more of the 
following: (1) a reduction in at least one clinically significant 
adverse event, including a reduction in mortality or a clinically 
significant complication; (2) a decreased rate of at least one 
subsequent diagnostic or therapeutic intervention; (3) a decreased 
number of future hospitalizations or physician visits; (4) a more rapid 
beneficial resolution of the disease process treatment including, but 
not limited to, a reduced length of stay or recovery time; (5) an 
improvement in one or more activities of daily living; an improved 
quality of life; or (6) a demonstrated greater medication adherence or 
compliance; or,
    <bullet> The totality of the circumstances otherwise demonstrates 
that the new renal dialysis equipment or supply substantially improves, 
relative to renal dialysis services previously available, the diagnosis 
or treatment of Medicare beneficiaries.
    Third, evidence from the following published or unpublished 
information sources from within the United States or elsewhere may be 
sufficient to establish that a new renal dialysis equipment or supply 
represents an advance that substantially improves, relative to renal 
dialysis services previously available, the diagnosis or treatment of 
Medicare beneficiaries: Clinical trials, peer reviewed journal 
articles; study results; meta-analyses; consensus statements; white 
papers; patient surveys; case studies; reports; systematic literature 
reviews; letters from major healthcare associations; editorials and 
letters to the editor; and public comments. Other appropriate 
information sources may be considered.
    Fourth, the medical condition diagnosed or treated by the new renal 
dialysis equipment or supply may have a low prevalence among Medicare 
beneficiaries.
    Fifth, the new renal dialysis equipment or supply may represent an 
advance that substantially improves, relative to services or 
technologies previously available, the diagnosis or treatment of a 
subpopulation of patients with the medical condition diagnosed or 
treated by the new renal dialysis equipment or supply.
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), we 
also established a process modeled after IPPS's process of determining 
if a new medical service or technology meets the substantial clinical 
improvement criteria specified in Sec.  412.87(b)(1). As we discussed 
in the CY 2020 ESRD PPS final rule (84 FR 60682), we believe it is 
appropriate to facilitate access to new and innovative equipment and 
supplies through add-on payment adjustments similar to the IPPS New 
Technology Add-On Payment and to provide stakeholders with standard 
criteria for both inpatient and ESRD facility settings. In Sec.  
413.236(c), we established a process for our announcement of TPNIES 
determinations and a deadline for consideration of new renal dialysis 
equipment or supply applications under the ESRD PPS. We will consider 
whether a new renal dialysis equipment or supply meets the eligibility 
criteria specified in Sec.  413.236(b) and summarize the applications 
received in the annual ESRD PPS proposed rules. Then, after 
consideration of public comments, we will announce the results in the 
Federal Register as part of our annual updates and changes to the ESRD 
PPS in the ESRD PPS final rule. In the CY 2020 ESRD PPS final rule, we 
also specified certain deadlines for the application requirements. We 
noted that we would only consider a complete application received by 
February 1 prior to the particular CY. In addition, we required that 
FDA marketing authorization for the equipment or supply must occur by 
September 1 prior to the particular CY. We also stated in the CY 2020 
ESRD PPS final rule (84 FR 60690 through 60691) that we would establish 
a workgroup of CMS medical and other staff to review the materials 
submitted as part of the TPNIES application, public comments, FDA 
marketing authorization, and HCPCS application information and assess 
the extent to which the product provides substantial clinical 
improvement over current technologies.
    In the CY 2020 ESRD PPS final rule, we established Sec.  413.236(d) 
to provide a payment adjustment for a new and innovative renal dialysis 
equipment or supply. We stated that the TPNIES is paid for two calendar 
years. Following payment of the TPNIES, the ESRD PPS base rate will not 
be modified and the new and innovative renal dialysis equipment or 
supply will become an eligible outlier service as provided in Sec.  
413.237.
    Regarding the basis of payment for the TPNIES, in the CY 2020 ESRD 
PPS final rule, we finalized at Sec.  413.236(e) that the TPNIES is 
based on 65 percent of the price established by the MACs, using the 
information from the invoice and other specified sources of 
information.
    In the CY 2021 ESRD PPS final rule (85 FR 71410 through 71464), we 
made several changes to the TPNIES eligibility criteria at Sec.  
413.236. First, we revised the definition of new at Sec.  413.236(b)(2) 
as within 3 years beginning on the date of the FDA marketing 
authorization. Second, we changed the deadline for TPNIES applicants' 
HCPCS Level II code application submission from September 1 of the 
particular CY to the HCPCS Level II code application deadline for 
biannual Coding Cycle 2 for durable medical equipment, orthotics, 
prosthetics, and supplies (DMEPOS) items and services as specified in 
the HCPCS Level II coding guidance on the CMS website prior to the CY. 
In

[[Page 38505]]

addition, a copy of the applicable FDA marketing authorization must be 
submitted to CMS by the HCPCS Level II code application deadline for 
biannual Coding Cycle 2 for DMEPOS items and services as specified in 
the HCPCS Level II coding guidance on the CMS website in order for the 
equipment or supply to be eligible for the TPNIES the following year. 
Third, we revised Sec.  413.236(b)(5) to remove a reference to related 
guidance on the substantial clinical improvement criteria, as the 
guidance had already been codified.
    Finally, in the CY 2021 ESRD PPS final rule, we expanded the TPNIES 
policy to include certain capital-related assets that are home dialysis 
machines when used in the home for a single patient. We explained that 
capital-related assets are defined in the Provider Reimbursement Manual 
(chapter 1, section 104.1) as assets that a provider has an economic 
interest in through ownership (regardless of the manner in which they 
were acquired). We noted that examples of capital-related assets for 
ESRD facilities are dialysis machines and water purification systems. 
We explained that, although we stated in the CY 2020 ESRD PPS proposed 
rule (84 FR 38354) that we did not believe capital-related assets 
should be eligible for additional payment through the TPNIES because 
the cost of these items is captured in cost reports, they depreciate 
over time, and are generally used for multiple patients, there were a 
number of other factors we considered that led us to consider expanding 
eligibility for these technologies in the CY 2021 ESRD PPS rulemaking. 
We explained that, following publication of the CY 2020 ESRD PPS final 
rule, we continued to study the issue of payment for capital-related 
assets under the ESRD PPS, taking into account information from a wide 
variety of stakeholders and recent developments and initiatives 
regarding kidney care. For example, we considered various HHS home 
dialysis initiatives, Executive Orders to transform kidney care, and 
how the risk of COVID-19 for particularly vulnerable ESRD beneficiaries 
could be mitigated by encouraging home dialysis.
    After closely considering these issues, we proposed a revision to 
Sec.  413.236(b)(6) in the CY 2021 ESRD PPS proposed rule to provide an 
exception to the general exclusion for capital-related assets from 
eligibility for the TPNIES for capital-related assets that are home 
dialysis machines when used in the home for a single patient and that 
meet the other eligibility criteria in Sec.  413.235(b), and finalized 
the exception as proposed in the CY 2021 ESRD PPS final rule. We 
finalized the same determination process for TPNIES applications for 
capital-related assets that are home dialysis machines as for all other 
TPNIES applications; that we will consider whether the new home 
dialysis machine meets the eligibility criteria specified in Sec.  
413.236(b) and announce the results in the Federal Register as part of 
our annual updates and changes to the ESRD PPS. In accordance with 
Sec.  413.236(c), we will only consider, for additional payment using 
the TPNIES for a particular CY, an application for a capital-related 
asset that is a home dialysis machine received by February 1 prior to 
the particular CY. If the application is not received by February 1, 
the application will be denied and the applicant is able to reapply 
within 3 years beginning on the date of FDA marketing authorization in 
order to be considered for the TPNIES, in accordance with Sec.  
413.236(b)(2).
    In the CY 2021 ESRD PPS final rule, at Sec.  413.236(f), we 
finalized a pricing methodology for capital-related assets that are 
home dialysis machines when used in the home for a single patient, 
which requires the MACs to calculate the annual allowance and the 
preadjusted per treatment amount. The pre-adjusted per treatment amount 
is reduced by an estimated average per treatment offset amount to 
account for the costs already paid through the ESRD PPS base rate.\25\ 
We finalized that this amount will be updated on an annual basis so 
that it is consistent with how the ESRD PPS base rate is updated.
---------------------------------------------------------------------------

    \25\ The CY 2021 TPNIES offset amount was $9.32. The CY 2022 
TPNIES offset amount is $9.50. CMS is proposing a CY 2023 TPNIES 
offset amount of $9.73, as discussed in section II.B.1.(e) of this 
proposed rule.
---------------------------------------------------------------------------

    We revised Sec.  413.236(d) to reflect that we would pay 65 percent 
of the pre-adjusted per treatment amount minus the offset for capital-
related assets that are home dialysis machines when used in the home 
for a single patient.
    We revised Sec.  413.236(d)(2) to reflect that following payment of 
the TPNIES, the ESRD PPS base rate will not be modified and the new and 
innovative renal dialysis equipment or supply will be an eligible 
outlier service as provided in Sec.  413.237, except a capital-related 
asset that is a home dialysis machine will not be an eligible outlier 
service as provided in Sec.  413.237.
    In summary, under the current eligibility requirements in Sec.  
413.236(b), CMS provides for a TPNIES to an ESRD facility for 
furnishing a covered equipment or supply only if the item: (1) has been 
designated by CMS as a renal dialysis service under Sec.  413.171; (2) 
is new, meaning within 3 years beginning on the date of the FDA 
marketing authorization; (3) is commercially available by January 1 of 
the particular CY, meaning the year in which the payment adjustment 
would take effect; (4) has a complete HCPCS Level II code application 
submitted in accordance with the HCPCS Level II coding procedures on 
the CMS website, by the HCPCS Level II code application deadline for 
biannual Coding Cycle 2 for DMEPOS items and services as specified in 
the HCPCS Level II coding guidance on the CMS website prior to the CY; 
(5) is innovative, meaning it meets the criteria specified in Sec.  
412.87(b)(1); and (6) is not a capital-related asset, except for 
capital-related assets that are home dialysis machines.
    We received three applications for the TPNIES for CY 2023. A 
discussion of these applications is presented below.
a. CloudCath Peritoneal Dialysis Drain Set Monitoring System (CloudCath 
System)
    CloudCath submitted an application for the TPNIES for the CloudCath 
Peritoneal Dialysis Drain Set Monitoring System (CloudCath System) for 
CY 2023. According to the applicant, the CloudCath System is a tabletop 
passive drainage system that detects and monitors solid particles in 
dialysate effluent during peritoneal dialysis (PD) \26\ treatments. 
Solid particles in dialysate effluent, manifesting itself as cloudy 
dialysate, may indicate that the patient has peritonitis, an 
inflammation of the peritoneum in the abdominal wall, usually due to a 
bacterial or fungal infection.\27\ PD therapy is a common cause of 
peritonitis.\28\ If left untreated, the condition can be life 
threatening.\29\ We note that CloudCath previously submitted an 
application for the TPNIES for the CloudCath System for CY 2022, as 
summarized in the CY 2022 ESRD PPS proposed rule (86 FR 36343 through 
36347), but withdrew that application prior to the issuance of the CY 
2022 ESRD PPS final rule (86 FR 61889). As indicated in the CY 2022 
ESRD PPS final rule (86 FR 61889), the applicant withdrew its 
application from consideration after the issuance of the CY 2022 ESRD 
PPS proposed rule

[[Page 38506]]

because it did not receive FDA marketing authorization by July 6, 2021, 
which was the HCPCS Level II code application deadline for biannual 
Coding Cycle 2 for DMEPOS items and services. Under Sec.  413.236(c), 
an applicant for the TPNIES must receive FDA marketing authorization 
for its new equipment or supply by that deadline prior to the 
particular calendar year. Therefore, as we stated in the CY 2022 ESRD 
PPS final rule, the CloudCath System was not eligible for consideration 
for the TPNIES for CY 2022.
---------------------------------------------------------------------------

    \26\ Peritoneal Dialysis: Waste products pass from the patient's 
body through the peritoneal membrane into the peritoneal (abdominal) 
cavity where the bath solution (dialysate) is introduced and removed 
periodically. Medicare Benefit Policy Manual Chapter 11--End Stage 
Renal Disease (ESRD) (Rev. 257, 03-01-19).
    \27\ Mayo Clinic Staff, ``Peritonitis,'' June 18, 2020, 
available at: https://www.mayoclinic.org/diseases-conditions/peritonitis/symptoms-causes/syc-20376247.
    \28\ Ibid.
    \29\ Ibid.
---------------------------------------------------------------------------

    PD-related peritonitis is a major complication and challenge to the 
long-term success and adherence of patients on PD therapy.\30\ The 
applicant stated that only about 12 percent of eligible patients are on 
PD therapy.\31\ The applicant claimed that the risk of PD-related 
peritonitis, and the challenges to detect it, are the main reasons for 
these figures. The guidelines for diagnosis of PD-related peritonitis, 
as outlined by the International Society for Peritoneal Dialysis 
(ISPD), recommend that peritonitis be diagnosed when at least two of 
the following criteria are present: (1) the patient experiences 
clinical features consistent with peritonitis (abdominal pain and/or 
cloudy dialysate effluent); (2) the patient's dialysate effluent has a 
whole blood count (WBC) >100 cells/[mu]L or >0.1 x 10/L with 
polymorphonuclear (PMN) cells >50 percent; and (3) positive dialysis 
effluent culture is identified.\32\ Additionally, the guidelines 
recommend that PD patients presenting with cloudy effluent be presumed 
to have peritonitis and treated as such until the diagnosis can be 
confirmed or excluded.\33\ Per the guidelines, this means that for 
patients undergoing PD treatments at home, it is recommended that they 
self-monitor for symptoms of peritonitis, cloudy dialysate and/or 
abdominal pain, and seek medical attention for additional testing and 
treatment upon experiencing any or both of these symptoms.
---------------------------------------------------------------------------

    \30\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: http://dx.doi.org/10.3747/pdi.2016.00078.
    \31\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
    \32\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: http://dx.doi.org/10.3747/pdi.2016.00078.
    \33\ Ibid.
---------------------------------------------------------------------------

    According to the applicant, despite the fact that peritonitis is 
highly prevalent, symptom monitoring is insensitive and non-specific, 
which can contribute to late presentation for medical attention and 
treatment. The applicant asserted that under the current standard of 
care, PD patients face the following challenges in detecting 
peritonitis. First, the applicant stated that patients' fluid 
observation has low compliance rates as it relies on patients' close 
examination of their own dialysate effluent during PD treatments, which 
often occur while patients are asleep. Second, the applicant noted that 
it can be difficult for patients to visually detect peritonitis in 
dialysate effluent using a ``newspaper test'' for cloudiness, and can 
be even more difficult to see when the fluid is drained into a toilet, 
where it is diluted by water. The applicant stated that, as a result of 
these challenges, patients with ESRD suffer unsatisfactorily high 
mortality and morbidity from peritonitis, as well as high rates of PD 
modality loss, meaning they must discontinue PD and begin a different 
type of dialysis treatment. Per the applicant, the CloudCath System 
addresses these challenges by detecting changes in dialysate effluent 
at much lower levels of particle concentrations than the amount needed 
to accumulate for visual detection by patients.
    Per the applicant, the CloudCath System consists of three 
components: (1) drain set, (2) sensor, and (3) patient monitoring 
software. As explained in the application, the CloudCath System's drain 
set connects to a compatible PD cycler's drain line to enable draining 
and monitoring of dialysate effluent before routing the fluid to the 
drainage receptacle. Per the CloudCath System User Guide, included in 
the application, the CloudCath System is compatible with the following 
PD cyclers: Baxter Healthcare Home Choice PRO<SUP>TM</SUP>, Baxter 
Healthcare AMIA<SUP>TM</SUP> Automated PD System, and Fresenius 
Liberty[supreg] Select Cycler. Per the applicant, once the CloudCath 
System is attached to a compatible cycler, the dialysate effluent runs 
through the drain set, through the CloudCath System's optical sensor. 
The applicant explained that the CloudCath System's optical sensor 
detects and monitors changing concentrations of solid particles in the 
dialysate effluent during each dialysis cycle and reports the 
concentrations in a turbidity score. Per the applicant, the CloudCath 
System will indicate whether dialysate effluent has normal turbidity 
and will notify the patient and/or health care professional if the 
dialysate effluent turbidity has exceeded the notification threshold 
set by the patient's dialysis provider. The applicant stated that the 
optical sensor's hardware and software components allow for data 
trending over time and remote monitoring by a health care professional.
(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    Regarding the first TPNIES eligibility criterion in Sec.  
413.236(b)(1), that the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, monitoring for peritonitis is a 
service furnished to individuals for the treatment of ESRD that is 
essential for the delivery of maintenance dialysis, and therefore the 
CloudCath System would be considered a renal dialysis service under 
Sec.  413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion in Sec.  
413.236(b)(2), that the item is new, meaning within 3 years beginning 
on the date of the FDA marketing authorization, the applicant stated 
that the CloudCath System received FDA marketing authorization on 
February 9, 2022. Therefore, the CloudCath System is considered new.
(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    Regarding the third TPNIES eligibility criterion in Sec.  
413.236(b)(3), that the item is commercially available by January 1 of 
the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that the CloudCath 
System is not currently commercially available but noted that it 
expects the CloudCath System will be commercially available immediately 
after receiving FDA marketing authorization. We do not have information 
as to whether the product became currently commercially available 
following the FDA marketing authorization on February 9, 2022. We seek 
comment on the CloudCath System's commercial availability.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    Regarding the fourth TPNIES eligibility criterion in Sec.  
413.236(b)(4) requiring that the applicant submit a complete HCPCS 
Level II code application by the HCPCS Level II application deadline of 
July 5, 2022, the applicant stated that it has not submitted an 
application yet, but intends to apply by the deadline.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With regard to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is

[[Page 38507]]

innovative, meaning it meets the substantial clinical improvement 
criteria specified in Sec.  412.87(b)(1), the applicant made two 
claims. First, the applicant asserted that the CloudCath System offers 
substantial clinical improvement over technologies currently available 
for the Medicare patient population by offering the ability to monitor 
changes in turbidity of peritoneal dialysate effluent through 
continuous remote monitoring in patients with ESRD receiving PD therapy 
earlier than the current standard of care. Per the applicant, by 
allowing the clinical standard of care to be initiated earlier, the use 
of the CloudCath System changes the management of peritonitis patients 
by enabling clinicians to both diagnose peritonitis and initiate 
antibiotic treatment earlier. Second, the applicant asserted that the 
CloudCath System offers substantial clinical improvement over existing 
technologies because the device's remote monitoring capabilities 
provides patients with oversight and increased confidence that should 
peritonitis occur, it will be detected more reliably than visual 
detection and earlier than the current standard of care, allowing for 
earlier diagnosis and treatment management. The applicant claimed that 
by alleviating the fear associated with peritonitis and providing this 
additional support and confidence to patients, the CloudCath System can 
enable patients to either switch to or remain on home-PD, ultimately 
improving quality of life.
    The applicant submitted two studies on the technology in support of 
its substantial clinical improvement claims. First, the applicant 
included a preliminary, unpublished report by Briggs, et al. of a proof 
of principle observational study that tested the ability of the 
CloudCath System and its dialysate effluent monitoring algorithm to 
detect indicators of peritonitis.\34\ The study consisted of 70 PD 
patients outside of the U.S. who had been on PD for a long interval of 
time (>10 days), and thus were at an increased risk of developing 
peritonitis. Out of the 64 PD patients whose data were included in the 
study, over 40 PD patients were receiving intermittent PD,\35\ which is 
not commonly used in the U.S. The remainder of the study participants 
were receiving Continuous Ambulatory Peritoneal Dialysis (CAPD).\36\ 
The report states that in the U.S., PD is generally performed in a 
modality called Continuous Cycling Peritoneal Dialysis (CCPD),\37\ in 
which a cycler automatically administers multiple dialysis exchange 
cycles, typically while patients sleep. Samples were collected from 
patients' PD effluent drainage bags and measured in the CloudCath 
System against a proprietary Turbidity Score threshold value and also 
tested for reference laboratory measurements according to ISPD 
guidelines for WBC count and differential (>100 cells/[mu]L, >50 
percent PMN).\38\ Regarding the Turbidity Score threshold value, the 
study set a score to determine if the effluent sample in the CloudCath 
System was infected or not; samples greater than or equal to the 
Turbidity Score threshold value would be classified as infected, and 
samples less than the Turbidity Score threshold value would be 
classified as non-infected. The crude sensitivity and specificity of 
the CloudCath System was 96.2 percent and 91.2 percent, respectively. A 
majority of false positives (44 of 77 samples) occurred among patients 
already receiving antibiotic treatment for peritonitis, and another 20 
false positive reports occurred because the patient had elevated 
turbidity due to a cause other than peritonitis. The investigators 
subsequently removed samples from patients already receiving treatment 
for peritonitis, setting the sensitivity for detecting peritonitis 
using the CloudCath System at 99 percent and the specificity at 97.6 
percent.
---------------------------------------------------------------------------

    \34\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
    \35\ Intermittent Peritoneal Dialysis (IPD)--Waste products pass 
from the patient's body through the peritoneal membrane into the 
peritoneal cavity where the dialysate is introduced and removed 
periodically by machine. Peritoneal dialysis generally is required 
for approximately 30 hours a week, either as three 10-hour sessions 
or less frequent, but longer, sessions. Medicare Benefit Policy 
Manual Chapter 11--End Stage Renal Disease (ESRD) (Rev. 257, 03-01-
19).
    \36\ Continuous Ambulatory Peritoneal Dialysis (CAPD)--In CAPD, 
the patient's peritoneal membrane is used as a dialyzer. The patient 
connects a 2-liter plastic bag of dialysate to a surgically 
implanted indwelling catheter that allows the dialysate to pour into 
the beneficiary's peritoneal cavity. Every 4 to 6 hours the patient 
drains the fluid out into the same bag and replaces the empty bag 
with a new bag of fresh dialysate. This is done several times a day. 
Medicare Benefit Policy Manual Chapter 11--End Stage Renal Disease 
(ESRD) (Rev. 257, 03-01-19).
    \37\ Continuous Cycling Peritoneal Dialysis (CCPD)--CCPD is a 
treatment modality that combines the advantages of the long dwell, 
continuous steady-state dialysis of CAPD, with the advantages of 
automation inherent in intermittent peritoneal dialysis. The 
solution exchanges, are performed at nighttime and are performed 
automatically with a peritoneal dialysis cycler. Generally, there 
are three nocturnal exchanges occurring at intervals of 2\1/2\ to 3 
hours. Upon awakening, the patient disconnects from the cycler and 
leaves the last 2-liter fill inside the peritoneum to continue the 
daytime long dwell dialysis. Medicare Benefit Policy Manual Chapter 
11--End Stage Renal Disease (ESRD) (Rev. 257, 03-01-19).
    \38\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: http://dx.doi.org/10.3747/pdi.2016.00078.
---------------------------------------------------------------------------

    The second study the applicant submitted is the Prospective 
Clinical Study to Evaluate the Ability of the CloudCath System to 
Detect Peritonitis Compared to Standard of Care during In-Home 
Peritoneal Dialysis (CATCH).\39\ The applicant stated that it initiated 
this ongoing single-arm, open-label, multi-center study to demonstrate 
that the CloudCath System is able to detect changes in turbidity 
associated with peritonitis in PD patients prior to laboratory 
diagnosis of peritonitis with a high degree of specificity and 
sensitivity. The target enrollment is 186 participants over 18 years of 
age using CCPD as their PD modality, with at least 2 exchanges per 
night.\40\ Patients with active infection and/or cancer are excluded 
from the trial.\41\ The primary endpoint is time of peritonitis 
detection by the CloudCath System (defined as two consecutive Turbidity 
Scores >7.0) as compared to laboratory evidence of peritonitis (defined 
as WBC count >100 cells/[mu]L or >0.1 x 109/L with percentage of PMN 
>50 percent).\42\ While the study is ongoing, the applicant included 
the study protocol and the first preliminary results with its 
application.\43\ According to the applicant, the first preliminary 
results demonstrate that as of December 29, 2020, 132 participants were 
enrolled in the CATCH Study at 13 sites.\44\
---------------------------------------------------------------------------

    \39\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \40\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' Study 
Protocol (CC-P-001), June 24, 2020.
    \41\ Ibid.
    \42\ Ibid.
    \43\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \44\ Ibid.
---------------------------------------------------------------------------

    Enrolled participants underwent an average of 4.5 dialysate 
exchanges per night.\45\ The preliminary results indicated that, as of 
December 29, 2020, there have been 7 peritonitis events that met the 
ISPD peritoneal fluid cell counts and differentials standard.\46\ 
According to the applicant, 5 of the 7 peritonitis events described in 
the CATCH study occurred after initial use

[[Page 38508]]

of the CloudCath System, and all 5 of the peritonitis events were also 
detected by the CloudCath System.\47\ In the 5 events, the CloudCath 
System detected peritonitis 44 to 368 hours prior to the time of 
detection from a clinical laboratory.\48\ The CloudCath System also 
detected peritonitis 27 to 344 hours prior to participants presenting 
to the hospital or clinic with signs or symptoms of peritonitis.\49\ 
The applicant stated that these results support the claim that the 
CloudCath System would enable diagnosis of peritonitis earlier than the 
current standard of care through turbidity monitoring. According to the 
applicant, in the remaining 2 peritonitis events, participants 
experienced peritonitis prior to initial use of the CloudCath System, 
however, the CloudCath System detected peritonitis upon initial use.
---------------------------------------------------------------------------

    \45\ Ibid.
    \46\ Ibid.
    \47\ Ibid.
    \48\ Ibid.
    \49\ Ibid.
---------------------------------------------------------------------------

    In addition to the studies on the technology, the applicant 
submitted an article by Muthucumarana, et. al. on the impact of time-
to-treatment on clinical outcomes of PD-related peritonitis.\50\ The 
article included data from the Presentation and the Time of Initial 
Administration of Antibiotics With Outcomes of Peritonitis (PROMPT) 
Study, a prospective multicenter study from 2012 to 2014 that observed 
symptom-to-contact time, contact-to-treatment time, defined as the time 
from health care presentation to initial antibiotic, and symptom-to-
treatment time in Australian PD patients. One hundred sixteen patients 
participated in the survey.\51\ Out of the sample size of 116 survey 
participants, there were 159 episodes of PD-related peritonitis. Of 
these, 38 patient episodes met the primary outcome of PD failure 
(defined as catheter removal or death) at 30 days.\52\ The median 
symptom-to-treatment time was 9.0 hours in all patients, 13.6 hours in 
the PD-fail group, and 8.0 hours in the PD-cure group.\53\ The study 
found that the risk of PD-failure increased by 5.5 percent for each 
hour of delay of administration of antibiotics once patients presented 
to a health care provider.\54\ However, neither symptom-to-contact nor 
symptom-to-treatment was associated with PD-failure in non-adjusted 
analyses, and the time from presentation to a health care provider to 
treatment was only associated with PD-failure outcomes in 
multivariable-adjusted analyses in a subset of patients who presented 
to hospital-based facilities. In addition to the Muthucumarana et. al. 
article, the applicant cited to other studies that have found that 
antibiotic treatment should begin as soon as possible in order to 
effectively treat infections other than peritonitis. 
<SUP>55 56 57</SUP> Per the applicant, these articles on time-to-
treatment demonstrate that the CloudCath System's ability to detect 
effluent changes substantially earlier improves the standard of care, 
enabling PD-related peritonitis diagnosis and antibiotic treatment 
earlier while decreasing the likelihood of PD-failure due to PD-related 
peritonitis.
---------------------------------------------------------------------------

    \50\ Muthucumarana, et al., ``The Relationship Between 
Presentation and the Time of Initial Administration of Antibiotics 
With Outcomes of Peritonitis in Peritoneal Dialysis Patients: The 
PROMPT Study.,'' Kidney Int Rep. 2016 Jun 11;1(2):65-72. doi: 
10.1016/j.ekir.2016.05.003. PMID: 29142915; PMCID: PMC5678844.
    \51\ Ibid.
    \52\ Ibid.
    \53\ Ibid.
    \54\ Ibid.
    \55\ Gacouin, A. et al., ``Severe pneumonia due to Legionella 
pneumophila: prognostic factors, impact of delayed appropriate 
antimicrobial therapy,'' Intensive Care Medicine 28, 686-691 (2002), 
https://doi.org/10.1007/s00134-002-1304-8.
    \56\ Houck, PM. et al., ``Timing of antibiotic administration 
and outcomes for Medicare patients hospitalized with community-
acquired pneumonia,'' Arch Intern Med. 2004 Mar 22;164(6):637-44. 
doi: 10.1001/archinte.164.6.637. PMID: 15037492.
    \57\ Lodise TP, et al., ``Outcomes analysis of delayed 
antibiotic treatment for hospital-acquired Staphylococcus aureus 
bacteremia,'' Clin Infect Dis. 2003 Jun 1;36(11):1418-23. doi: 
10.1086/375057. Epub 2003 May 20. PMID: 12766837.
---------------------------------------------------------------------------

    The applicant also submitted letters of support from a nephrologist 
at an academic institution and the following ESRD patient advocacy 
groups: the American Kidney Fund, the American Association of Kidney 
Patients, and the International Society of Nephrology. The 
nephrologist's letter of support endorsed the CloudCath System's 
ability to detect peritonitis and enable clinicians to begin to treat 
the infection earlier, preventing hospitalizations and complications 
such as the abandonment of home dialysis. The nephrologist's letter 
also asserted that the CloudCath System helps address the challenge of 
peritonitis as the main reason for abandonment of PD for HD, and will 
encourage a greater number of patients to select PD as their dialysis 
modality of choice. The letters from the American Association of Kidney 
Patients and the International Society of Nephrology encouraged CMS to 
consider the CloudCath System's TPNIES application, explaining that the 
technology would have several benefits to patients, for example, by 
reducing peritonitis-related hospitalizations, increasing adherence to 
PD, and encouraging higher utilization of PD as a viable alternative to 
in-center HD. The American Kidney Fund's letter emphasized that 
peritonitis is a significant concern for PD patients \58\ and requested 
CMS support of all efforts that ensure patients with ESRD undergoing PD 
treatments can quickly detect and treat infections.
---------------------------------------------------------------------------

    \58\ Mehrotra, Rajnish et al., ``The Current State of Peritoneal 
Dialysis,'' Journal of the American Society of Nephrology 27: 3238-
3252, 2016. doi: 10.1681/ASN.2016010112, available at: https://jasn.asnjournals.org/content/jnephrol/27/11/3238.full.pdf?with-ds=yes.
---------------------------------------------------------------------------

    As noted previously in this section of the proposed rule, the 
applicant previously submitted a TPNIES application for CY 2022, but 
withdrew its application. Compared to the CY 2022 application, the 
applicant updated the number of patients and sites that were enrolled 
in the CATCH study. In its CY 2022 application, the applicant reported 
that as of December 29, 2020, 132 patients were enrolled in the CATCH 
study at 15 sites. In its CY 2023 application, the applicant provided 
updated enrollment figures and stated that as of May 5, 2021, 185 
patients were enrolled in the CATCH study at 15 sites.
    In response to CMS' preliminary assessment of CloudCath's 
substantial clinical improvement claims in the CY 2022 ESRD PPS 
proposed rule, the applicant provided additional information to clarify 
how the CloudCath System fits into the current standard of care and how 
use of the CloudCath System affects the management of the patient. The 
applicant stated that the monitoring of changes in turbidity enabled by 
the CloudCath System does not require clinicians to deviate from their 
current diagnosis or treatment sequence, since sign and symptom 
monitoring is an already accepted trigger for subsequent clinical steps 
and patient management. However, per the applicant, the detection of 
turbidity does allow clinicians to evaluate patients earlier in this 
clinical pathway for diagnosis of peritonitis and antibiotic/
antimicrobial treatment in accordance with the ISPD guidelines. The 
applicant further stated that earlier detection of turbidity would not 
impact appropriate diagnosis and treatment with respect to false 
positives and that, while a small number of patients in the Briggs et 
al. study showed a change in turbidity that ultimately resulted in a 
false positive for infection, these patients would not have received 
inappropriate use of antimicrobial therapy compared to the standard of 
care per ISPD guidelines. The applicant further stated that even though 
the CloudCath System may in some instances detect change in turbidity 
in patients without infection,

[[Page 38509]]

these patients would still be clinically evaluated for peritonitis 
diagnosis and eligibility for antimicrobial treatment by a clinician as 
per the existing standard of care with the change in turbidity. 
Therefore, the applicant asserted, the CloudCath System does not result 
in increased provision of unnecessary antimicrobial therapy, nor 
deviate from the ISPD guidelines in terms of antimicrobial treatment 
pattern.
(b) CMS Preliminary Assessment of Substantial Clinical Improvement 
Claims and Sources
    After a review of the information provided by the applicant 
regarding the CloudCath System, we note the following concerns with 
regard to the substantial clinical improvement criteria under Sec.  
413.236(b)(5) and Sec.  412.87(b)(1). We note that, consistent with 
Sec.  413.236(c), CMS will announce its final determination regarding 
whether the CloudCath System meets the substantial clinical improvement 
criteria and other eligibility criteria for the TPNIES in the CY 2023 
ESRD PPS final rule.
    Because the applicant claims to offer the ability to diagnose a 
medical condition, PD-related peritonitis, earlier in a patient 
population than allowed by currently available methods, the applicant 
must also include evidence that use of the new technology to make a 
diagnosis affects the management of the patient, as required under the 
substantial clinical improvement criteria at Sec.  412.87(b)(1)(ii)(B). 
Specifically, Sec.  412.87(b)(1)(ii)(B) states that a determination 
that a technology represents substantial clinical improvement over 
existing technology means: the new medical service or technology offers 
the ability to diagnose a medical condition in a patient population 
where that medical condition is currently undetectable, or offers the 
ability to diagnose a medical condition earlier in a patient population 
than allowed by currently available methods and there must also be 
evidence that use of the new medical service or technology to make a 
diagnosis affects the management of the patient.
    As we noted previously in the CY 2022 ESRD PPS proposed rule (86 FR 
36346 through 36347), it is not clear to us whether the studies 
submitted demonstrate or examine the impacts of using the technology on 
patients with ESRD such that we can determine whether it represents an 
advance that substantially improves the treatment of Medicare 
beneficiaries compared to renal dialysis services previously available. 
We note that the studies submitted serve as ``proof of concept,'' as 
they are testing whether the CloudCath System detects turbidity in 
dialysate effluent that may indicate PD-related peritonitis, and 
whether they do so earlier than patient observation and a cell count 
test. However, the studies are limited in that they do not observe how 
the CloudCath System, in measuring the turbidity in dialysate effluent 
and doing so earlier than traditional self-monitoring, affects the 
management of the patient as required under the substantial clinical 
improvement criteria at Sec.  412.87(b)(1)(ii)(B). For example, as part 
of the CATCH Study, investigators deactivated the notification 
capability of the CloudCath System for the duration of the study, so 
that neither the participants nor the investigators would be aware of 
the device measurements.\59\ Therefore, as currently designed, the 
CATCH study may not examine patient and clinician behavior, including 
the medical management of the patient, after the CloudCath System 
detected the solid particles in the dialysate effluent. The Briggs et 
al. study also did not examine how use of the CloudCath System impacted 
management of the patient. The investigators in that study stated that 
none of the data from the device was used for clinical decision making, 
which indicates to us that the study did not test how or if the 
CloudCath System offered the ability to diagnose a medical condition 
and how use of the CloudCath System to make a diagnosis affected the 
management of the patient.\60\ Because the studies submitted did not 
observe how patients and clinicians use the CloudCath System's 
monitoring to make decisions regarding patient management, it is 
unclear how they support a finding that early detection of PD-related 
peritonitis by the CloudCath System meets the substantial clinical 
improvement criteria at Sec.  412.87(b)(1)(ii)(B).
---------------------------------------------------------------------------

    \59\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report, NCT04515498, Jan 27, 2020.
    \60\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
---------------------------------------------------------------------------

    Similarly, while the applicant submitted evidence to show that 
time-to-treatment plays a role in preventing PD failure in patients 
with ESRD with PD-related peritonitis,\61\ CMS has not received 
information regarding how the CloudCath System would affect management 
of the patient by reducing time-to-treatment for patients with ESRD 
receiving PD therapy. CMS also notes that the applicant referenced 
studies that support beginning antibacterial therapy for infections 
other than PD-related peritonitis, like pneumonia, and therefore, do 
not directly demonstrate the importance of time-to-treatment for PD-
related peritonitis.
---------------------------------------------------------------------------

    \61\ Muthucumarana, et. al., ``The Relationship Between 
Presentation and the Time of Initial Administration of Antibiotics 
With Outcomes of Peritonitis in Peritoneal Dialysis Patients: The 
PROMPT Study.,'' Kidney Int Rep. 2016 Jun 11;1(2):65-72. doi: 
10.1016/j.ekir.2016.05.003. PMID: 29142915; PMCID: PMC5678844.
---------------------------------------------------------------------------

    As we noted in the CY 2022 ESRD PPS proposed rule, it is also not 
clear to us whether the CloudCath System would affect medical 
management of the patient because use of the technology may potentially 
detect turbidity changes in dialysate effluent so early, that, in some 
cases, health care providers may still decide to wait for confirmation 
via patient symptoms, cell count, or positive culture as stated in the 
ISPD guidelines on diagnosis.\62\ It is unclear whether clinicians 
would begin treatment for peritonitis without observing patient 
symptoms, cloudy dialysate, or confirming cell count via fluid test or 
how turbidity information would be incorporated into clinical practice 
among physicians who may empirically treat asymptomatic patients with 
antibiotics while awaiting cell count and culture results to confirm a 
peritonitis diagnosis.
---------------------------------------------------------------------------

    \62\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: http://dx.doi.org/10.3747/pdi.2016.00078.
---------------------------------------------------------------------------

    We note that the applicant stated that the first preliminary 
results of the CATCH study demonstrated that the CloudCath System 
detected PD-related peritonitis 33 to 367 hours prior to the time of 
detection from a clinical laboratory, and it also detected PD-related 
peritonitis 27 to 344 hours prior to participants presenting to a 
healthcare facility with symptoms of PD-related 
peritonitis.<SUP> 63 64</SUP> However, we note that no evidence was 
submitted to show that clinicians would begin to treat suspected 
peritonitis if the CloudCath System alerted the patient and clinician 
of possible PD-related peritonitis that was too early to detect via any 
of the ISPD guidelines.\65\ In

[[Page 38510]]

other words, we have not received evidence to demonstrate that the 
CloudCath System would affect medical management of the patient by 
replacing one of the ISPD guidelines for diagnosis.\66\ As two criteria 
are necessary for diagnosis of peritonitis (per ISPD guidelines noted 
by the applicant), it is unclear why the CloudCath System detection 
alone in the control arm (absent clinical manifestations such as 
symptomatic patients or cloudy effluent) is comparable as a diagnosis 
of peritonitis to patients with clinical manifestations plus laboratory 
evidence of peritonitis. In other words, we question whether a more 
appropriate comparison to demonstrate a time difference would be time 
to laboratory-confirmed peritonitis in both study arms, or time to 
antibiotic initiation following the CloudCath System notification 
versus antibiotic initiation following standard of care patient 
monitoring.
---------------------------------------------------------------------------

    \63\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \64\ Ibid.
    \65\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: http://dx.doi.org/10.3747/pdi.2016.00078.
    \66\ Ibid.
---------------------------------------------------------------------------

    Further, we are concerned by the applicant's statements in response 
to the concerns we noted in the CY 2022 ESRD PPS proposed rule that the 
monitoring of changes in turbidity enabled by the CloudCath System does 
not require clinicians to deviate from their current diagnosis or 
treatment sequence. As stated previously, our regulations under Sec.  
412.87(b)(1)(ii)(B) require evidence that use of the new medical 
service or technology to make a diagnosis affects the management of the 
patient. Therefore, we request information that demonstrates that the 
CloudCath System affects the management of the patient, including by 
impacting clinicians' diagnosis or treatment sequence.
    While the applicant updated the CY 2023 application to include more 
patient and site enrollment, CMS has concerns that the CATCH trial is 
not designed to indicate potential changes in clinical practice in a 
way that would be helpful for substantial clinical improvement 
assessment. We welcome additional information regarding whether use of 
CloudCath has demonstrated lower hospitalization rates, an increase in 
PD use, or decrease in peritoneal dialysis modality loss, or improved 
mortality for our analysis. We also believe that any data on clinician 
and patient behavior while using the CloudCath System, for example by 
enabling CloudCath notifications or alarms in the CATCH Study, would be 
informative in our assessment.
    Finally, regarding the applicant's claim that the CloudCath 
System's remote monitoring capabilities help to assure patients that 
peritonitis could be detected and treated earlier, and that by 
alleviating the fear of peritonitis, the CloudCath System enables 
patients to either switch to or remain on home-PD, ultimately improving 
quality of life, we are concerned there may be insufficient evidence to 
demonstrate that the CloudCath System improves patients' quality of 
life. The applicant referenced literature regarding health-related 
quality of life in home dialysis patients as well as information 
regarding the challenges of managing PD patients remotely. 
<SUP>67 68 69</SUP> However, we did not receive any data demonstrating 
improved quality of life or PD retention with the use of the CloudCath 
System, and we would be interested in additional evidence to support 
this claim.
---------------------------------------------------------------------------

    \67\ Bonenkamp AA, van Eck van der Sluijs et al. Kidney 
Medicine, Health-Related Quality of Life in Home Dialysis Patients 
Compared to In-Center Hemodialysis Patients: A Systematic Review and 
Meta-analysis. Vol.2(2) P139-154.
    \68\ 25 Ronco C, Crepaldi C, Rosner MH (eds): Remote Patient 
Management in Peritoneal Dialysis. Contrib Nephrol. Basel, Karger, 
2019, vol 197, pp I-VI.
    \69\ Hansson JH, Finkelstein FO. Kidney Med. 2020 Sep 
1;2(5):529-531.
---------------------------------------------------------------------------

    We are inviting public comments on whether the CloudCath System 
meets the substantial clinical improvement criteria for the TPNIES.
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    Regarding the sixth TPNIES eligibility criterion in Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
stated that the CloudCath System is not a capital-related asset. We 
note that the CloudCath System does not meet the definition of a 
capital-related asset under Sec.  413.236(a)(2), because it is not an 
asset that the ESRD facility has an economic interest in through 
ownership and is subject to depreciation.\70\
---------------------------------------------------------------------------

    \70\ See also CMS Provider Reimbursement Manual, Chapter 1, 
Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

b. SunWrap<SUP>TM</SUP> System
    Sun Scientific, Inc. submitted an application for the TPNIES for 
the SunWrap<SUP>TM</SUP> System for CY 2023. According to the 
applicant, the technology is comprised of a compression sleeve with a 
transparent air bladder and hand pump designed to provide static 
pneumatic compression to the forearm and/or upper arm following 
dialysis needle removal from the arteriovenous (AV) fistula access. The 
applicant explained that following hemodialysis (HD), gauze is placed 
over the puncture sites as the needles are removed, and then the 
SunWrap<SUP>TM</SUP> System is placed around the arm with the 
transparent bladder positioned over the gauze-covered access site. Per 
the applicant, the SunWrap<SUP>TM</SUP> System is then inflated, 
compressing the site to stop bleeding. Per the applicant, the 
SunWrap<SUP>TM</SUP> System provides a sufficient source of pressure to 
compress the AV intervention puncture site and has adjustable 
compression at 20-30mmHg and 30-40 mmHg. The applicant also stated that 
the inflation portion of the wrap is composed of completely transparent 
film, allowing for visualization of the puncture site(s) and ensuring 
that the hemostasis can be monitored. The applicant stated that the 
SunWrap<SUP>TM</SUP> System is easy to apply, safe, non-invasive, 
requires minimal training of only one tutorial, and has been proven to 
meet patient satisfaction and safety requirements after multiple 
trials.
    The applicant also submitted a SunWrap<SUP>TM</SUP> System brochure 
noting that the product is indicated for post-HD treatment needle 
puncture management for hemostasis of needle site and that it is 
contraindicated for use directly on an open wound. The applicant 
submitted the following listing of the SunWrap<SUP>TM</SUP> System's 
line of products: Upper Arm--Right Small, Upper Arm--Right Large, 
Forearm Right, Upper Arm--Left Small, Upper Arm- Left Large, Forearm 
Left, and MINI--Single Site.
    The applicant stated that the SunWrap<SUP>TM</SUP> System is meant 
to replace the current method of compression for bleeding control, 
which relies on the patient or skilled caregiver manually applying 
pressure to the puncture site for up to 15 minutes following HD. Per 
the applicant, inadequate or incorrect application of compression can 
result in discomfort, excessive bleeding, hematoma, fistula damage, and 
potentially even death. The applicant stated that use of the 
SunWrap<SUP>TM</SUP> System allows for more consistent application of 
compression, frees up the hands of the patient or skilled caregiver, 
and allows for simultaneous visual management of the needle site.
(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    Regarding the first TPNIES eligibility criterion in Sec.  
413.236(b)(1), that the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, compression to the HD access site 
following dialysis needle removal is a

[[Page 38511]]

service that is furnished to individuals for the treatment of ESRD and 
essential for the delivery of maintenance dialysis, and therefore would 
be considered a renal dialysis service under Sec.  413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion in Sec.  
413.236(b)(2), that the item is new, meaning within 3 years beginning 
on the date of the FDA marketing authorization, the applicant did not 
submit an FDA marketing authorization date but instead, indicated that 
the SunWrap<SUP>TM</SUP> System is considered FDA Class I Exempt. We 
note that under FDA regulatory scheme, Class I exempt status is 
determined by FDA, which maintains on its website the listing of 
devices exempt from the premarket notification (510(k)) requirements. 
As described on the FDA website, Class I devices present minimal 
potential for harm to the user and are often simpler in design than 
Class II or Class III devices. Examples include enema kits and elastic 
bandages.\71\
---------------------------------------------------------------------------

    \71\ Food & Drug Administration. Learn if a Medical Device Has 
Been Cleared by FDA for Marketing. Available at: https://www.fda.gov/medical-devices/consumers-medical-devices/learn-if-medical-device-has-been-cleared-fda-marketing. Accessed on March 23, 
2022.
---------------------------------------------------------------------------

    The applicant submitted the following information pertaining to Sun 
Scientific, Inc.'s registration and product classification: (1) a 
document labeled Class I Exempt Documentation and (2) listing, 
registration, and Firm Establishment Identifier (FEI) numbers for 
SunWrap. While the Class I Exempt Documentation lacked identifying 
product information such as the SunWrap<SUP>TM</SUP> System's product 
name(s) and date of the Class I Exempt status determination, we located 
supplemental information online. Sun-Scientific, Inc. is identified on 
the FDA website with Registration Number: 3008773774, FEI Number: 
3008773774, and Owner/Operator Number: 10034866.\72\ Twelve devices 
were identified with this Owner/Operator Number, but only the following 
two devices include the regulation number (880.5075) included in the 
application: Dressing, Compression--Aerowrap; SunWrap and Dressing, 
Compression--SunWrap.\73\
---------------------------------------------------------------------------

    \72\ U.S. Food & Drug Administration. Establishment Registration 
& Device Listing. Sun-Scientific Inc. Available at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/rl.cfm?rid=124922. 
Accessed on March 29, 2022.
    \73\ U.S. Food & Drug Administration. Establishment Registration 
& Device Listing. Sun-Scientific Inc. Available at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/rl.cfm?start_search=1&showList=1&establishmentName=®Num=&StateName=&CountryName=&OwnerOperatorNumber=10034866&OwnerOperatorName=&ProductCode=&DeviceName=&ProprietaryName=&establishmentType=&PAGENUM=10&SortColumn=EstablishmentName20%25ASC&RegistrationNumber=3008773774. 
Accessed on March 29, 2022.
---------------------------------------------------------------------------

    After a review of the information provided by the applicant, we 
note the following concerns with regard to the newness criterion under 
Sec.  413.236(b)(2). Consistent with Sec.  413.236(c), CMS will 
announce its final determination regarding whether the SunWrap\TM\ 
System meets the newness criterion and other eligibility criteria for 
the TPNIES in the CY 2023 ESRD PPS final rule.
    First, the applicant included a product brochure and product 
selection listing of 7 SunWrap<SUP>TM</SUP> System products and did not 
clearly indicate which of the 7 products are the subject of the CY 2023 
TPNIES application. In addition, it is not clear whether the listing 
and registration numbers provided apply to all 7 products. We request 
that the applicant clarify these points.
    Second, while the applicant stated that the Sun Wrap<SUP>TM</SUP> 
System is considered FDA Class I Exempt, as indicated in Sec.  
413.236(b)(2), to be eligible for the TPNIES, the applicant must apply 
within three years of the FDA marketing authorization date. While our 
primary concern is the lack of FDA marketing authorization, we also 
note that the applicant did not clearly indicate the date of Class I 
Exempt status. Therefore, it is unclear whether the 
SunWrap<SUP>TM</SUP> System's Class I Exempt status is within the 
three-year window.
    We note that manufacturers of devices that fall into a category of 
exempted Class I devices are not required to submit to FDA a premarket 
notification and obtain FDA clearance before marketing the device in 
the U.S. However, the manufacturer is required to register its 
establishment and list its device with FDA.\74\ Devices that receive 
FDA marketing authorization have met regulatory standards that provide 
a reasonable assurance of safety and efficacy for the devices. For 
exempt devices, FDA has determined that a premarket notification is not 
required to provide a reasonable assurance of safety and effectiveness 
for the devices. However, exempt devices still must comply with certain 
regulatory controls (known as ''general controls'') to provide a 
reasonable assurance of safety and effectiveness for such devices. Our 
intent in requiring applicants to receive FDA marketing authorization 
was to exclude devices that lack FDA marketing authorization. However, 
we welcome public comment on these issues.
---------------------------------------------------------------------------

    \74\ Food & Drug Administration. Learn if a Medical Device Has 
Been Cleared by FDA for Marketing. Available at: https://www.fda.gov/medical-devices/consumers-medical-devices/learn-if-medical-device-has-been-cleared-fda-marketing. Accessed on March 23, 
2022.
    .
---------------------------------------------------------------------------

(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    Regarding the third TPNIES eligibility criterion in Sec.  
413.236(b)(3), that the item is commercially available by January 1 of 
the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that the Sun 
Wrap<SUP>TM</SUP> System is currently commercially available.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    Regarding the fourth TPNIES eligibility criterion in Sec.  
413.236(b)(4) requiring that the applicant submit a complete HCPCS 
Level II code application by the HCPCS Level II application deadline of 
July 5, 2022, the applicant stated that it submitted that application 
on January 31, 2022.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With regard to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), the applicant asserted that the use of the 
SunWrap<SUP>TM</SUP> System significantly improves clinical outcomes 
relative to the current standard of care, which it identified as 
reliance on the patient or a skilled caregiver manually applying 
pressure to the puncture site for up to 15 minutes following HD.
    The applicant presented the following six substantial clinical 
improvement claims: (1) a reduction in at least one clinically 
significant adverse event; (2) a decreased rate of at least one 
subsequent diagnostic or therapeutic intervention; (3) a decreased 
number of future hospitalizations or physician visits; (4) a more rapid 
beneficial resolution of the disease process treatment; (5) an 
improvement in one or more activities of daily living; and (6) an 
improved quality of life.
    Regarding the first claim, a reduction in at least one clinically 
significant adverse event, the applicant stated that the 
SunWrap<SUP>TM</SUP> System potentially reduces the incidence of 
hematoma, fistula stenosis/thrombosis, and Fatal Vascular Access 
Hemorrhage (FVAH).
    Regarding the second claim, a decreased rate of at least one 
subsequent diagnostic or therapeutic intervention,

[[Page 38512]]

the applicant stated that the SunWrap<SUP>TM</SUP> System potentially 
reduces the incidence of ER visits, estimated at $10,000 per visit, 
ultrasound assessment, or interventions for stenosis or thrombosis. The 
applicant also stated that the SunWrap<SUP>TM</SUP> System potentially 
reduces the incidence of hospital admissions that are estimated at 
$15,000 or more per admission. The applicant further stated that 
incident cases of ESRD are reaching nearly 21,000 annually, and that 
vascular access complications account for 16 to 25 percent of hospital 
admissions.\75\
---------------------------------------------------------------------------

    \75\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
http://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
---------------------------------------------------------------------------

    Regarding the third claim, a decreased number of future 
hospitalizations or physician visits, the applicant stated that the 
SunWrap<SUP>TM</SUP> System reduces ER visits due to bleeding and the 
potential for subsequent admission, saving approximately $10,000 per 
visit.\76\ The applicant also stated that the SunWrap<SUP>TM</SUP> 
System reduces the need for revascularization due to stenosis/
thrombosis.\77\
---------------------------------------------------------------------------

    \76\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
http://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
    \77\ Ibid.
---------------------------------------------------------------------------

    Regarding the fourth claim, a more rapid beneficial resolution of 
the disease process treatment, the applicant stated that the 
SunWrap<SUP>TM</SUP> System reduces the need for nurses to be tied up 
with manual compression therapy, maximizing their efforts around 
dialysis treatment. The applicant also stated that the 
SunWrap<SUP>TM</SUP> System adds a layer of assurance as patients 
transfer to home therapy, as compression is not reliant on patient or 
caregiver ability to provide compression consistent with care that 
occurs in the clinics. Per the applicant, the SunWrap<SUP>TM</SUP> 
System provides consistent compression to needle sites post-dialysis 
with the ability to visualize sites through a transparent window 
potentially reducing the incidence of unrecognized bleeding.
    Regarding the fifth claim, an improvement in one or more activities 
of daily living, the applicant stated that the SunWrap<SUP>TM</SUP> 
System could increase comfort levels of patients in the home setting 
and could help reduce fatigue-related compression interruption, and 
allow some normal activity while ensuring post-dialysis compression is 
provided, resulting in potential for improved patient satisfaction.
    Regarding the sixth claim, improved quality of life, the applicant 
stated that the SunWrap<SUP>TM</SUP> System allows the patient to 
become more autonomous and that the ability to have their hands free 
while stopping bleeding post-HD is beneficial. The applicant also 
stated that the potential reduction in fistula complications could 
improve quality of life on a broader scale.
    The applicant did not provide direct links to the supporting 
materials for each of the six claims, but rather referred more broadly 
to several sources of information as evidence of demonstrating 
substantial clinical improvement, including a U.S. Centers for Disease 
Control and Prevention fact sheet on Chronic Kidney Disease (CKD),\78\ 
case studies on fatal hemorrhage from HD vascular access sites,\79\ and 
a case study of managing fistula complications in the Emergency 
Department.\80\ The applicant stated that there are 786,000 annual ESRD 
patients, 71 percent are on dialysis and 29 percent have kidney 
transplants.\81\ Referring to Gage, et. al., the applicant stated that 
75 percent of AV fistulae and AV grafts required one or more 
interventions; stenosis and thrombosis were the most common 
complications diagnosed and treated (41 percent and 16 percent 
respectively); and that potential needle-related complications 
accounted for 6 percent of this data set.\82\ The applicant also 
asserted that a review of standard and early cannulation graft 
literature reveals that HD complications are similar across the graft 
types. The applicant further noted that in retrospective review 
articles, infection, hematoma, pseudoaneurysm, and bleeding occur at 
rates of up to 26 percent, 24 percent, 15 percent, and 14 percent, 
respectively.
---------------------------------------------------------------------------

    \78\ Centers for Disease Control and Prevention. Chronic Kidney 
Disease in the United States, 2021. Atlanta, GA: US Department of 
Health and Human Services, Centers for Disease Control and 
Prevention; 2021. Available at: https://www.cdc.gov/kidneydisease/pdf/Chronic-Kidney-Disease-in-the-US-2021-h.pdf. Accessed on March 
17, 2022.
    \79\ Jose, M., Marshall, M., Read, G., Lioufas, N., Ling, J., 
Snelling, P., Polkinghorne, K. (2017). Fatal dialysis vascular 
access hemorrhage. Am J Kidney Dis., 70(4), 570-575. Available at: 
https://www.sciencedirect.com/science/article/pii/S0272638617307497. 
Accessed on March 17, 2022.
    \80\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
http://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
    \81\ Centers for Disease Control and Prevention. Chronic Kidney 
Disease in the United States, 2021. Atlanta, GA: US Department of 
Health and Human Services, Centers for Disease Control and 
Prevention; 2021. Available at: https://www.cdc.gov/kidneydisease/pdf/Chronic-Kidney-Disease-in-the-US-2021-h.pdf. Accessed on March 
17, 2022.
    \82\ Gage SM, Reichert H. Determining the incidence of needle-
related complications in hemodialysis access: We need a better 
system. J Vasc Access. 2021 Jul;22(4):521-532. doi: 10.1177/
1129729820946917. Epub 2020 Aug 18. PMID: 32811335. Available at: 
https://pubmed.ncbi.nlm.nih.gov/32811335/Accessed on March 17, 2022.
---------------------------------------------------------------------------

    The applicant also included a summary of what it described as 
evidence from an unpublished pilot study involving 54 patients in two 
vascular access laboratory sites, 23 and 31 patients from each site, 
respectively who required intervention on their AV fistula or graft 
access site.\83\ The applicant provided background information stating 
that patients require AV fistula or graft interventions for various 
reasons such as maintenance angioplasty, fistulogram, or thrombectomy. 
Per the applicant, the physician normally uses sutures to close the 
puncture site and after the procedure, the patients are monitored in 
the recovery room for a few hours before the sutures are removed or 
patients revisit the clinic for suture removal. The applicant stated 
that this suturing technique is frequently used because it is quick, 
straightforward, and has been the common practice. The applicant 
further indicated that suture removal poses a risk of infection. The 
applicant stated that during the study, the SunWrap<SUP>TM</SUP> System 
was applied for wound closure in place of suturing with an inflation 
pressure at 20--40 mmHg and hold-time at 20 to 30 minutes for most of 
the patients because most patients were punctured with a large note 
sheath size of 6--8 F. The applicant also stated that in ESRD 
facilities, the needle size is relatively smaller and less inflation 
pressure and shorter hold-times are needed to achieve hemostasis. As 
such, the applicant asserted that the SunWrap<SUP>TM</SUP> System could 
be safely applied in the ESRD facility setting without extensive 
training.
---------------------------------------------------------------------------

    \83\ Summary points included in the application identified as: 
Sun-Wrap A Novel device for arteriovenous (AV) access hemostasis, 
Presented by Steven H.S. Tan, M.D. & Sundaram Ravikumar, M.D., FACS.
---------------------------------------------------------------------------

    The applicant noted two reported cases of immediate post-operative 
bleeding; one reported case (fistula) of thrombosis at 48 to 72 hours 
post-operatively; and three reported cases (two fistula and one graft) 
of thrombosis 30 days post-operatively. The applicant stated that there 
were no reported cases of post-operative bleeding, infection, and 
pseudoaneurysm at 48 to 72 hours.
    Per the applicant, the two cases of immediate post-operative 
bleeding were directly due to the SunWrap<SUP>TM</SUP> System.

[[Page 38513]]

Per the applicant, the first case occurred during training in the 
initial phase of the study and there was no repetitive event after 
modification of the technique and timing of the application of the 
SunWrap<SUP>TM</SUP> System. We note that the applicant did not specify 
the way in which the technique or timing of applying the 
SunWrap<SUP>TM</SUP> System were modified. The applicant stated that 
the second case was due to two distant puncture sites that exceeded the 
coverage for the SunWrap<SUP>TM</SUP> System. Per the applicant, in 
patients with two puncture sites that measure more than 7.5 cm apart or 
if there is immediate bleeding, suturing is the treatment of choice.
    The applicant stated that the thrombosis cases identified (one case 
at 48 to 72 hours post-operatively and three cases 30-days post-
operatively) were not directly due to the SunWrap<SUP>TM</SUP> System. 
Per the applicant, the patients did not have any complications while on 
the SunWrap<SUP>TM</SUP> System and left the clinic safely after 
thorough monitoring in the recovery room. The applicant further stated 
that the patients underwent dialysis after the removal of the 
SunWrap<SUP>TM</SUP> System and asserted that the dialysis may have 
been the major contributing factor for the thrombosis.
(b) CMS Preliminary Assessment of Substantial Clinical Improvement 
Claims and Sources
    After a review of the information provided by the applicant, we 
note the following concerns with regard to the substantial clinical 
improvement criteria under Sec.  413.236(b)(5) and Sec.  412.87(b)(1). 
Consistent with Sec.  413.236(c), CMS will announce its final 
determination regarding whether the SunWrap\TM\ System meets the 
substantial clinical improvement criteria and other eligibility 
criteria for the TPNIES in the CY 2023 ESRD PPS final rule.
    The applicant stated that the SunWrap<SUP>TM</SUP> System has the 
potential to represent substantial clinical improvement. However, it is 
not clear whether or how the evidence submitted by the applicant 
supports the applicant's 6 substantial clinical improvement claims. It 
would be helpful for our evaluation if the applicant would directly 
link each claim to the relevant supporting information. The applicant 
provided summary points of a non-published, single pilot study of 54 
patients treated with the SunWrap<SUP>TM</SUP> System at two vascular 
access laboratory sites. While the applicant provided a bullet-point 
summary of the study setting, complications, and a brief discussion of 
study data, the applicant did not provide details pertaining to study 
type, timeframe, patient demographics and endpoints. We note that this 
study appears to involve patients treated with the SunWrap<SUP>TM</SUP> 
System for the purpose of controlling bleeding following interventional 
procedures involving an AV fistula or graft and does not involve use of 
the SunWrap<SUP>TM</SUP> System following HD treatment in the ESRD 
facility setting. We question the extent to which this data would be 
generalizable to the ESRD facility setting and would be interested in 
any data pertaining to the use the SunWrap<SUP>TM</SUP> System for the 
purpose of controlling bleeding in the ESRD facility setting; 
specifically, at the needle puncture sites following HD.
    We also note that the applicant stated that the 
SunWrap<SUP>TM</SUP> System provides static pneumatic compression to 
the forearm and/or upper arm with a gauze bandage, following dialysis 
needle removal from the AV fistula access. We request clarification as 
to whether the SunWrap<SUP>TM</SUP> System's indication for use is 
limited to patients with AV fistula access sites or if it is also 
indicated for use among patients with AV graft access sites.
    The applicant identified 6 cases of post-operative complications 
within the pilot study, stating that two were directly due to the 
SunWrap<SUP>TM</SUP> System and that the 4 remaining cases were 
unrelated to the SunWrap<SUP>TM</SUP> System, but did not offer data to 
substantiate this statement. In addition, the applicant stated that the 
SunWrap<SUP>TM</SUP> System has met patient satisfaction and safety 
requirements after multiple trials, but did not provide specific 
information in support of this statement within the application. We 
would appreciate additional information regarding these trials, as well 
as any additional data demonstrating that the SunWrap<SUP>TM</SUP> 
System represents an advance that substantially improves, relative to 
technologies previously available, the diagnosis or treatment of 
Medicare beneficiaries. For example, it would be useful to consider 
data comparing the SunWrap<SUP>TM</SUP> System's outcomes to outcomes 
of patients treated by manual compression at the puncture site 
following HD.
    The applicant referred to the SunWrap<SUP>TM</SUP> Mini, stating 
that it targets single puncture sites and may be useful for achieving 
hemostasis for puncture sites which are more than 7.5 cm apart, may be 
easier to use in ESRD facilities, and is currently in its initial phase 
of study. As noted previously in this section of the proposed rule, the 
applicant provided a listing of 7 SunWrap<SUP>TM</SUP> System products. 
We request clarification as to which of the 7 SunWrap<SUP>TM</SUP> 
System products were included in the primary pilot study of 54 
patients. We welcome public comment on these issues.
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    Regarding the sixth TPNIES eligibility criterion in Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
did not address this criterion within its application. However, because 
the SunWrap<SUP>TM</SUP> System is not an asset that the ESRD facility 
has an economic interest in through ownership and is subject to 
depreciation, it is not a capital related asset.\84\
---------------------------------------------------------------------------

    \84\ 42 CFR 413.236(a)(2); CMS Provider Reimbursement Manual, 
Chapter 1, Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

c. THERANOVA 400 Dialyzer/THERANOVA 500 Dialyzer (THERANOVA)
    Baxter Healthcare Corporation (Baxter) submitted an application for 
the TPNIES for the THERANOVA 400 Dialyzer/THERANOVA 500 Dialyzer, 
collectively referred to as ``THERANOVA,'' for CY 2023. According to 
the applicant, THERANOVA is a new class of single-use dialyzer, 
featuring an innovative three-layer membrane structure that enables 
more comprehensive removal of certain harmful proteins known as large 
middle molecules (LMMs), while selectively maintaining essential 
proteins in the blood during hemodialysis (HD), compared to 
conventional low-flux and high-flux dialyzers. The applicant noted that 
the `400' and `500' denote differences in surface area. The applicant 
stated that THERANOVA is used with standard HD machines, like most 
other high-flux dialyzers, but has unique membrane properties that 
allow for enhanced removal of LMM uremic toxins contributing to disease 
burden (cardiovascular disease, development of inflammation, and other 
comorbidities) while retaining appropriate levels of beneficial 
molecules such as albumin, coagulation factors, and immunoglobulins. We 
note that Baxter previously submitted an application for the TPNIES for 
THERANOVA for CY 2021, as discussed in the CY 2021 ESRD PPS proposed 
rule (85 FR 42167 through 42177) and the CY 2021 ESRD

[[Page 38514]]

PPS final rule (85 FR 71444 through 71457).\85\
---------------------------------------------------------------------------

    \85\ As noted in the CY 2021 ESRD PPS final rule, we did not 
find the submitted evidence and public comments sufficient in 
meeting the substantial clinical improvement ``totality of the 
circumstances'' criterion at Sec.  412.87(b)(1)(i). Therefore, we 
determined that THERANOVA did not qualify for the TPNIES at that 
time (85 FR 71457).
---------------------------------------------------------------------------

    The applicant stated that THERANOVA is intended to treat kidney 
failure by expanded hemodialysis (HDx). The applicant noted that 
previous dialyzers were only able to remove toxins up to 25 kilodaltons 
(kDa), while HDx, enabled by the THERANOVA dialyzer, can remove 
molecules from 25 kDa to approximately 45 kDa. The applicant explained 
that patients with CKD have increasing difficulty removing these 
solutes as their kidneys fail. The applicant further explained that 
these non-protein bound uremic solutes can be divided into three main 
categories: (1) small molecules (SMs), <0.5 kDa, with effective removal 
by diffusion, (2) small and medium middle molecules (SMMMs), 0.5-<25 
kDa, with limited removal by diffusion, and (3) large middle molecules 
(LMMs), 25-60 kDa, which requires higher permeability membranes for 
effective and efficient removal.\86\ The applicant noted that evidence 
to date demonstrates a strong link between LMMs and the development of 
different outcome-related morbidities, and that uremia related to the 
retention of SMMMs/LMMs is associated with inflammation and 
cardiovascular events.<SUP>87 88 89</SUP> The applicant stated that 
THERANOVA's innovative hollow fiber, medium cut-off (MCO) membrane 
shows a permeability profile close to that of the natural kidney and 
expands the range of uremic toxin removal beyond what is achieved with 
current membranes during regular HD.
---------------------------------------------------------------------------

    \86\ Baxter. Theranova 400/500 Instructions For Use. N50 648 rev 
003, 2017-05-29.
    \87\ Yilmaz MI, Carrero JJ, Axelsson J, Lindholm B, Stenvinkel 
P: Low-grade inflammation in chronic kidney disease patients before 
the start of renal replacement therapy: sources and consequences. 
Clin Nephrol 68:1- 9, 2007.
    \88\ Stenvinkel P. Can treating persistent inflammation limit 
protein energy wasting? Semin Dial. 2013;26(1):16-19. doi:10.1111/
sdi.12020.
    \89\ Akchurin OM, Kaskel Fl. Update on inflammation in chronic 
kidney disease. Blood Purif 2015; 39:84-92.
---------------------------------------------------------------------------

    The applicant asserted that the design of THERANOVA allows for use 
on any HD machine, both in-center and home, made by Baxter or another 
manufacturer, by merely changing the dialyzer. The applicant stated 
that the membrane is compatible with standard fluid quality and does 
not require any additional fluid quality control measure.\90\
---------------------------------------------------------------------------

    \90\ Alvarez L, et al. Intradialytic Symptoms and Recovery Time 
in Patients on Thrice-Weekly In-Center Hemodialysis: A Cross-
sectional Online Survey, Kidney Med. 2020;2(2)125-130.
---------------------------------------------------------------------------

(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    With respect to the first TPNIES eligibility criterion under Sec.  
413.236(b)(1), whether the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, maintenance dialysis treatments 
and all associated services, including historically defined dialysis-
related drugs, laboratory tests, equipment, supplies, and staff time, 
were included in the composite rate for renal dialysis services as of 
December 31, 2010 (75 FR 49036). A dialyzer would be considered a 
supply essential for the delivery of maintenance dialysis and, 
therefore, we would consider this a renal dialysis service under Sec.  
413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion under Sec.  
413.236(b)(2), whether the item is new, meaning within 3 years 
beginning on the date of the FDA marketing authorization, the applicant 
stated that the THERANOVA received FDA marketing authorization for home 
use on August 28, 2020. Therefore, the THERANOVA is considered new.
(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    With respect to the third TPNIES eligibility criterion under Sec.  
413.236(b)(3), whether the item is commercially available by January 1 
of the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that THERANOVA is 
commercially available in the U.S.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    With respect to the fourth TPNIES eligibility criterion under Sec.  
413.236(b)(4), whether the applicant submitted a HCPCS Level II code 
application by the July 5, 2022 deadline, the applicant stated a HCPCS 
application was submitted on June 27, 2020, and it intends to resubmit 
a HCPCS Level II code application by the July 5, 2022 deadline.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With respect to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), the applicant asserted that THERANOVA significantly 
improves clinical outcomes relative to the current standard of care for 
dialysis membranes. The applicant presented the following substantial 
clinical improvement claims: (1) decrease in the number of future 
hospitalization by up to 45 percent; (2) improved recovery time by up 
to 2 hours; (3) improved quality of life (QoL) as indicated by reduced 
pruritus, improvement in two Kidney Disease Quality of Life (KDQoL) 
survey domains, and improved London Evaluation of Illness (LEVIL) 
scores; (4) reduced restless leg syndrome by 10 percent or more; and 
(5) reduced rate of subsequent therapeutic interventions such as 
reduced need for and use of erythropoietin stimulating agents (ESAs), 
iron, and insulin. The applicant supported these claims with seven 
published papers, one paper accepted for publication, and one poster. 
Several of the studies were secondary analyses of the same trial data.
    With respect to the claim that THERANOVA decreases the number of 
future hospitalizations, the applicant noted that emergent need for 
hospitalization can be a serious and life-threatening event, especially 
for medically-fragile populations, and that hospitalization is a 
frequent and costly occurrence for the ESRD population. The applicant 
stated that an estimated 792,643 HD patient hospitalizations occur 
every year,\91\ with roughly 40 percent of new dialysis patients 
averaging nearly two hospitalizations per year.\92\ The applicant also 
asserted that ESRD patients often have health impairments associated 
with their condition and other comorbidities that put them at greater 
risk for

[[Page 38515]]

hospitalization, and at greater risk for adverse outcomes once 
hospitalized. The applicant stated that, for example, a recent study 
found that hospitalized ESRD patients on maintenance dialysis had 
higher odds of mortality after cardiopulmonary resuscitation (odds 
ratio, 1.24; 95 percent CI, 1.11 to 1.3; p < 0.001), compared to the 
general patient population.\93\ The applicant explained that the 
frequency and severity of hospitalizations in the ESRD patient 
population adds urgency to adopting innovative technologies that can 
help prevent hospitalization and associated morbidity and mortality.
---------------------------------------------------------------------------

    \91\ The applicant's information on the number of 
hospitalizations is based on a Moran Company analysis of the 
following sourced figure: `Average hospitalization rate' of 
hemodialysis patients captured from the United States Renal Data 
System (USRDS), 2020 Annual Data Report (ADR), End Stage Renal 
Disease, Chapter 4: Hospitalization, Figure 4.1a Adjusted 
hospitalization rates in prevalent Medicare beneficiaries with ESRD 
by treatment modality, 2009-2018.
    \92\ Nissenson AR, Improving Outcomes for ESRD Patients: 
Shifting the Quality Paradigm. CJASN Feb 2014, 9 (2) 430-434; DOI: 
10.2215/CJN.05980613 https://doi.org/10.2215/CJN.05980613.
    \93\ Saeed F, Adil MM, Malik AA, Schold JD, Holley JL, Outcomes 
of In-Hospital Cardiopulmonary Resuscitation in Maintenance Dialysis 
Patients. JASN Dec 2015, 26 (12) 3093-3101; DOI: 10.1681/
ASN.2014080766 https://doi.org/10.1681/ASN.2014080766.
---------------------------------------------------------------------------

    To support its claim that the use of THERANOVA decreases the number 
of future hospitalizations, the applicant referred to a poster by Tran 
et al. (2021), which was an abstract of a secondary analysis of a 
prospective, open-label, randomized controlled trial \94\ of 172 
patients (86 THERANOVA; 85 high-flux HD (HF-HD), with 1 patient not 
treated). As a post hoc analysis of a randomized controlled trial, the 
applicant stated that the objective of the study was to evaluate the 
association of HDx with the THERANOVA dialyzer with hospitalization 
rates, as compared to conventional HD. The applicant stated that 
patients were randomized and treated with either Theranova 400 or a 
conventional high-flux dialyzer in 21 U.S. study centers. The applicant 
noted that hospitalization was defined by the occurrence of any serious 
adverse event containing a hospitalization admission date, 
hospitalization rate was defined by treatment as total number of 
hospitalizations divided by total person-years of follow-up, and 
hospital length of stay was defined as number of days between admission 
and discharge. The applicant stated that this study found that the rate 
of hospitalizations for patients using THERANOVA was statistically 
significantly lower--45 percent--than those using HF-HD (IRR = 0.55; p 
= 0.0495).\95\
---------------------------------------------------------------------------

    \94\ Weiner D, et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
    \95\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
---------------------------------------------------------------------------

    The applicant also referred to a multi-center, observational 
retrospective, cohort study by Molano-Trivi[ntilde]o et al. (2022) that 
used propensity score matching assignment methods for 1,098 patients 
(534 HF-HD; 564 HDx with THERANOVA). The applicant stated that the 
objective of the study was to evaluate clinical effectiveness of 
THERANOVA versus HF-HD dialyzers, in terms of hospitalization rate and 
duration, cardiovascular event rate and survival in a HD cohort in 
Colombia. The applicant stated that adult HD patients (>90 days in HD) 
at Baxter Renal Care Services Colombia were included between September 
1, 2017 to November 30, 2017, with follow-up until 2 years. The 
applicant noted that inverse probability of treatment weighting on the 
propensity score was used to balance comparison groups on indicators of 
baseline socio-demographic and clinical characteristics, and that the 
investigators compared rates and duration of hospitalization and 
cardiovascular events using a negative binomial regression to estimate 
weighted incidence rate ratios (IRRs). The applicant stated that this 
study found a statistically significant lower hospitalization rate in 
the THERANOVA group, compared to the HF-HD group (IRR HDx with 
THERANOVA/HF-HD: 0.82, 95 percent CI 0.69 to 0.98; p=0.03), without 
differences in hospitalization duration or survival.\96\
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    \96\ Molano AP, Hutchison CA, Sanchez R, Rivera AS, Buitrago G, 
Dazzarola MP, Munevar M, Guerrero M, Vesga JI, Sanabria M, Medium 
Cut-Off Versus High-Flux Hemodialysis Membranes and Clinical 
Outcomes: A Cohort Study Using Inverse Probability Treatment 
Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
---------------------------------------------------------------------------

    The applicant also referred to two other papers to further support 
reductions in hospitalization and medication utilization. According to 
the applicant, Sanabria et al. (2021) was a multi-center, observational 
prospective cohort study of 81 patients (Year 1, HF-HD; Year 2, HDx 
with THERANOVA). In this study across 3 clinics, the applicant noted 
that 175 patients with ESRD on chronic HD were originally recruited, 
and 23 did not meet the eligibility criteria. The applicant stated that 
patients received HF-HD for at least 1 year and then switched to HDx 
and were followed up for 1 year. The applicant stated that patients 
were excluded if they discontinued therapy, changed provider, underwent 
kidney transplant, recovered kidney function, or changed to PD, another 
dialyzer, or another renal clinic. The applicant noted that only 81 
patients were eligible for analysis because 71 patients were lost to 
follow-up. The applicant asserted that the study results demonstrated 
that the rate of hospitalizations per patient-year was lower twelve 
months after switching to HDx, from 0.77 (95 percent CI: 0.60-0.98, 61 
events) to 0.71 (95 percent CI: 0.55-0.92, 57 events), p=0.6987. The 
applicant also reported that the study results demonstrated 
significantly reduced hospital day rate per patient-year, from 5.94 
days in the year prior to switching compared with 4.41 days after 
switching (p=0.0001).\97\
---------------------------------------------------------------------------

    \97\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
---------------------------------------------------------------------------

    The applicant also cited Ariza et al. (2021), which the applicant 
noted analyzed the same study sample of 81 patients as Sanabria et al. 
(2021),\98\ discussed previously in this section, with the stated 
objective of examining new evidence linking HDx using THERANOVA with 
hospitalizations, hospital days, medication use, costs, and patient 
utility. The applicant stated that this retrospective study utilized 
data from the Renal Care Services medical records database in Colombia 
from 2017 to 2019. The applicant noted that the study data included 
years on dialysis, hospitalizations, medication use, and QoL measured 
by the KDQoL survey at the start of HDx, and 1 year after HDx. The 
applicant stated that generalized linear models were run comparing 
patients before and after switching to HDx. The applicant asserted that 
the study results demonstrated that HDx was also significantly 
associated with lower hospital days per year (5.94 on HD vs. 4.41 on 
HDx), although not with the number of hospitalizations. The applicant 
stated that the results showed that HDx was statistically significantly 
associated with reduced hospitalization days.\99\
---------------------------------------------------------------------------

    \98\ Ibid.
    \99\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA is associated with 
improved recovery time by up to 2 hours, the applicant stated that the 
treatment intensity and recovery time for patients on HD is a 
significant burden. The applicant explained that patients might receive 
in-center HD 3 days a week for 3 to 5 hour sessions, or home HD. The 
applicant noted that following treatment, there is often a prolonged 
period before a patient recovers to pre-treatment function and energy 
levels, with many patients reporting that they feel tired and in need

[[Page 38516]]

of rest or sleep. The applicant cited an estimate that 40 to 80 percent 
of patients receiving chronic HD face post-dialysis fatigue.\100\ The 
applicant also noted that patients who were highly fatigued had a 
significantly higher risk of adverse cardiovascular events (hazard 
ratio: 2.17; p <0.01).\101\ The applicant referred to the Dialysis 
Outcomes and Practice Patterns Study (DOPPS), which analyzed over 6,000 
HD patients from 12 countries in Europe, Japan, Canada, and the U.S. 
The applicant noted that 25 percent of patients required more than 6 
hours of recovery time, and that patient-reported recovery time was 
positively associated with rates of first hospitalization (adjusted 
hazard ratio [AHR] per additional hour of recovery time [RT], 1.03; 95 
percent CI, 1.02-1.04) and all-cause mortality (AHR, 1.05; 95 percent 
CI, 1.03-1.07).\102\ The applicant stated that improving recovery time 
is not only critical to averting hospitalization and increased risk of 
mortality, but also ensures that ESRD patients have meaningful QoL 
improvements.
---------------------------------------------------------------------------

    \100\ Bossola M, et al. Fatigue is associated with increased 
risk of mortality in patients on chronic hemodialysis. Nephron 2015; 
130:113-118.
    \101\ Koyama H, Fukuda S, Shoji T, Inaba M, Tsujimoto Y, Tabata 
T, Okuno S, Yamakawa T, Okada S, Okamura M, Kuratsune H, Fujii H, 
Hirayama Y, Watanabe Y, Nishizawa Y, Fatigue Is a Predictor for 
Cardiovascular Outcomes in Patients Undergoing Hemodialysis CJASN 
Apr 2010, 5 (4) 659-666; DOI: 10.2215/CJN.08151109.
    \102\ Rayner HC, et al. Recovery time, quality of life, and 
mortality in hemodialysis patients: The Dialysis Outcomes and 
Practice Patterns Study (DOPPS). Am J Kidney Dis 2014; 64:86-94.
---------------------------------------------------------------------------

    To support its claim of improved recovery time, the applicant 
referred to a single-center, single-arm, observational, retrospective, 
cohort study by Bolton et al. (2021) of 58 patients with HF-HD at 
baseline who switched to THERANOVA. The applicant stated that a 
dialysis unit performed regular assessments of patient-reported symptom 
burden, using the POS-S Renal Symptom questionnaire and the ``Recovery 
time from last dialysis session'' question as part of routine patient 
focused care. The applicant noted that of the 90 people who initially 
agreed to provide patient reported outcome measures (PROMs) data, the 
number of participants providing data at 3, 6, 9, and 12 months were 
80, 72, 68, and 59 respectively. The applicant concluded that a 
sustained clinically relevant reduction in post-dialysis recovery time 
was observed following the therapy switch. The applicant stated that 
the study results demonstrated that the percentage of patients 
reporting a recovery time greater than 360 minutes decreased from 36 
percent at baseline to 26 percent, 14 percent, 14 percent, and 9 
percent at 3, 6, 9, and 12 months, respectively. The applicant noted 
that additionally, there was a statistically significant improvement in 
median recovery time from a baseline of 210 minutes (IQR 7.5-600) to 60 
minutes after 6 months (0-210; p = 0.002), 60 minutes after 9 months 
(0-225; p < 0.001), and 105 minutes after 12 months (0-180; p = 
0.001).\103\
---------------------------------------------------------------------------

    \103\ Bolton S, Gair R, Nilsson LG, Matthews M, Stewart L, 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas. 2021;12:315-321 https://doi.org/10.2147/PROM.S325016.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA is associated with 
improved QoL, as indicated by reduced pruritus, improvement in two 
KDQoL survey domains, and improved London Evaluation of Illness (LEVIL) 
scores, the applicant described the background and significance of each 
indicator. The applicant noted that that pruritus can be uncomfortable 
and significantly interfere with ESRD patients' daily living 
activities. The applicant asserted that pruritus that is severe or 
chronic can prevent ESRD patients from sleeping normally,\104\ and that 
in addition to causing sleep loss, pruritus can also cause anxiety and 
depression.\105\ The applicant also noted that prolonged scratching of 
itchy skin also leads to skin injury, scarring, and infection.\106\
---------------------------------------------------------------------------

    \104\ Mayo Clinic, Itchy skin (pruritus), available at https://www.mayoclinic.org/diseases-conditions/itchy-skin/symptoms-causes/syc-20355006.
    \105\ Ibid.
    \106\ Ibid.
---------------------------------------------------------------------------

    The applicant also explained that one of the most commonly used 
tools to assess kidney disease QoL in the U.S. is the KDQoL \107\ 
patient survey, which assesses patients' physical and mental well-
being, the burden of kidney disease, treatment-associated symptoms and 
problems, and the effects of kidney disease on daily life. The 
applicant noted that the survey assesses a patient's ability to 
accomplish desired tasks, levels of depression and anxiety, the ability 
to participate in social activities, and some daily life activities.
---------------------------------------------------------------------------

    \107\ RAND Corporation, Kidney Disease Quality of Life 
Instrument (KDQOL), available at https://www.rand.org/health-care/surveys_tools/kdqol.html.
---------------------------------------------------------------------------

    The applicant also referenced the LEVIL survey, which measures 
patient-reported outcomes and evaluates well-being, energy level, sleep 
quality, bodily pain, appetite, and shortness of breath. Per the 
applicant, the survey is validated, and scores are correlated with 
acute hospital admissions, abnormal fluid status, and vascular access 
events.\108\
---------------------------------------------------------------------------

    \108\ Pittman Z, et al. Collection of daily patient reported 
outcomes is feasible and demonstrates differential patient 
experience in chronic kidney disease. Hemodialysis International, 
2017; 21:265-273.
---------------------------------------------------------------------------

    To support its claim of improved pruritus and improvement in two 
KDQoL survey domains, the applicant referred to a prospective, open-
label, randomized control trial by Lim, Park, et al. (2020). This study 
randomized patients to either Theranova 400 or a high-flux dialyzer. 
Forty-nine HD patients (24 using THERANOVA; 25 using a high-flux 
dialyzer) completed the study. Per the applicant, QoL was assessed at 
baseline and after 12 weeks of treatment using the KDQoL Short Form-36, 
and pruritus was assessed using a questionnaire and visual analog 
scale. The applicant stated that the study concluded that laboratory 
markers, including serum albumin, did not differ between the two groups 
after 12 weeks, though removals of kappa and lambda free light chains 
were greater for THERANOVA than high-flux dialyzer. The applicant noted 
that the results showed that the THERANOVA group had lower mean scores 
for morning pruritus distribution (1.29 <plus-minus> 0.46 vs. 1.64 
<plus-minus> 0.64, p = 0.034) and frequency of scratching during sleep 
(0.25 <plus-minus> 0.53 vs. 1.00 <plus-minus> 1.47, p = 0.023), 
compared to the high-flux group. The applicant also stated that in the 
same study, the THERANOVA group also had statistically significant 
higher scores (indicating better QoL) in KDQoL domains for physical 
functioning (75.2 <plus-minus> 20.8 vs. 59.8 <plus-minus> 30.1, p = 
0.042) and physical role (61.5 <plus-minus> 37.6 vs. 39.0 <plus-minus> 
39.6, p = 0.047), compared to the high-flux group.\109\
---------------------------------------------------------------------------

    \109\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
---------------------------------------------------------------------------

    To support its claim of improved QoL scores, the applicant referred 
to a study by Penny et al. (2021). According to the applicant, this was 
a single-center interventional pilot study with 28 patients established 
on maintenance HD. The single-arm study consisted of 2-week observation 
(baseline at conventional HF-HD) followed by 12 weeks of HDx. The study 
also had an extension phase; where patients had a 2-week baseline 
period, followed by 24 weeks of HDx, and then an 8-week washout period 
in which patients returned to HF-HD to assess the presence of any 
carryover effect. The applicant stated that health-related quality of 
life (HRQoL) was assessed

[[Page 38517]]

using the dynamic PROM instrument, LEVIL, twice weekly. The applicant 
noted that 22 patients completed all study procedures to contribute to 
the full 12-week analysis. The applicant asserted that the study 
results demonstrated that 73 percent of participants who had low 
overall health-related QoL at baseline with HF-HD (mean, 51.5 <plus-
minus> 10.2; range, 36.1-69.3) had a statistically significant 
improvement at 8 weeks after switching to HDx (mean, 64.6 <plus-minus> 
16.2; p=0.001) and at 12 weeks (67.2 <plus-minus> 16.9; p=0.001). The 
applicant stated that the study also found that all participants had a 
statistically significant improvement in `feeling washed out/drained' 
from baseline with HF-HD (mean, 40.3 <plus-minus> 20.5; range, 8.7-
67.4) to HDx at 8 weeks (59.9 <plus-minus> 22.8; p=0.001) and at 12 
weeks (64.7 <plus-minus> 19.6; p < 0.001). The applicant noted that 
likewise, 73 percent of study participants assessed on their `feeling 
of general well-being' had a statistically significant improvement from 
baseline with HF-HD (mean, 43 <plus-minus> 14.1; range, 19.7-69.5) to 
HDx at 8 weeks (65.2 <plus-minus> 21.9; p < 0.001) and at 12 weeks 
(66.3 <plus-minus> 17.7; p=0.002). Additionally, the applicant stated 
that 73 percent of study participants who experienced poor `sleep 
quality' had a statistically significant improvement from baseline with 
HF-HD (37.2 <plus-minus> 20.1; range, 7.2-66.2) after 4 weeks with HDx 
(mean, 52.8 <plus-minus> 26.7; p=0.01), and continually improved at 8 
weeks (57 <plus-minus> 22.2; p=0.002) and 12 weeks (61.7 <plus-minus> 
24.5; p <0.001).\110\
---------------------------------------------------------------------------

    \110\ Penny J., Jarosz P., Salerno F., Lemoine S., McIntyre CW. 
Impact of Expanded Hemodialysis Using Medium Cut-off Dialyzer on 
Quality of Life: Application of Dynamic Patient-Reported Outcome 
Measurement Tool. Kidney Medicine. Published 2021, Jul. 29. https://doi.org/10.1016/j.xkme.2021.05.010.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA is associated with 
reducing restless leg syndrome (RLS) by 10 percent or more, the 
applicant stated that RLS is another common and debilitating side 
effect of long-term dialysis. The applicant noted that an estimated 6.6 
percent to 62 percent of patients on long-term dialysis therapy suffer 
from RLS,\111\ with one study suggesting 20 to 25 percent of ESRD 
patients demonstrated overt (moderate to severe) RLS.\112\ The 
applicant asserted that extreme discomfort of RLS worsens during 
periods of physical inactivity and at night,\113\ contributing to sleep 
loss and sleep deprivation in ESRD patients, and that loss of sleep 
carries over into the day for many patients, leaving them feeling 
lethargic and preventing them from fully engaging in daily activities. 
The applicant also noted that a study found that RLS among HD patients 
is associated with a significant increase in new cardiovascular events, 
that these events increased with the severity of RLS, and that HD 
patients with RLS had a higher risk of mortality than their non-RLS 
peers.\114\ The applicant also described an additional study that found 
RLS was associated with significantly higher risk of developing 
cardiovascular events, strokes, and all-cause mortality among ESRD 
patients.\115\ The applicant explained that RLS is treated with many 
medications such as dopamine antagonists, benzodiazepines, anti-
epileptics, iron dextran, Vitamin C, and intradialytic aerobic 
exercise--all of which produce side effects and only provide limited 
improvement in RLS symptoms.\116\ The applicant stated that medical 
interventions for RLS in dialysis populations have not been 
particularly effective, are costly, and may contribute to polypharmacy 
and adverse drug reactions in a population already at risk.\117\
---------------------------------------------------------------------------

    \111\ Kavanagh D., et al. Restless legs syndrome in patients on 
dialysis Am J. Kidney Dis. 2004 May;43(5):763-71.
    \112\ Winkelman J.W., Chertow G.M., Lazarus J.M.. Restless legs 
syndrome in end-stage renal disease. Am J. Kidney
    \113\ Kavanagh D., et al. Restless legs syndrome in patients on 
dialysis Am J. Kidney Dis. 2004 May;43(5):763-71.
    \114\ La Manna G., et al. Restless legs syndrome enhances 
cardiovascular risk and mortality in patients with end-stage kidney 
disease undergoing long-term haemodialysis treatment. Nephrol Dial 
Transplant.2011;26(6):1976-83.
    \115\ Lin C.H., et al. Restless legs syndrome is associated with 
cardio/cerebrovascular events and mortality in end-stage renal 
disease. Eur J. Neurol. 2015;22(1):142-9.
    \116\ Gopaluni S., Sherif M., Ahmadouk N.A. Interventions for 
chronic kidney disease-associated restless legs syndrome. Cochrane 
Database Syst Rev 2016; 11: CD010690.
    \117\ Gopaluni S., Sherif M., Ahmadouk N.A. Interventions for 
chronic kidney disease-associated restless legs syndrome. Cochrane 
Database Syst Rev 2016; 11: CD010690.
---------------------------------------------------------------------------

    To support its claim that THERANOVA is associated with reducing 
RLS, the applicant referred to a multi-center, observational 
prospective cohort study by Alarcon et al. (2021) which assessed 992 
individuals with HF-HD at baseline, who switched to THERANOVA and were 
observed over a 12-month period. The applicant explained that changes 
in KDQoL 36-Item Short Form Survey domains, Dialysis Symptom Index 
(DSI), and RLS 12 months after switching to THERANOVA were compared 
with the patient baseline responses on high-flux dialyzers. Per the 
applicant, the study found a significant decrease in the proportion of 
patients diagnosed with RLS from 22.1 percent at baseline to 12.5 
percent at 6 months, and 10 percent at 12 months (p < 0.0001). 
Additionally, the applicant stated that a post hoc comparison showed 
statistically significant differences between each pair of repeated 
observations (baseline vs. 6 months: p <0.0001; baseline vs. 12 months: 
p <0.0001; 6 vs. 12 months: p=0.003).\118\
---------------------------------------------------------------------------

    \118\ Alarcon J.C., Bunch A., Ardila F., et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA reduces the rate of 
subsequent therapeutic interventions, such as the use of ESAs, iron, 
and insulin, the applicant stated that almost all dialysis patients and 
those with CKD experience anemia as a side effect of their treatment, 
which contributes negative clinical outcomes such as weakness, 
irregular heartbeat, shortness of breath, dizziness and 
lightheadedness, chest pain, and headaches.\119\ The applicant stated 
that anemia significantly impairs QoL for dialysis patients and 
requires additional treatment, and that ESAs are a widely used 
treatment that mitigates anemia by enabling the body to produce more 
red blood cells. The applicant asserted that reductions in ESA 
treatment can preserve or enhance patient QoL and can generate savings 
to the Medicare program.
---------------------------------------------------------------------------

    \119\ Mayo Clinic's overview of anemia, available at https://www.mayoclinic.org/diseases-conditions/anemia/symptoms-causes/syc-20351360.
---------------------------------------------------------------------------

    With regard to iron supplementation, the applicant noted that iron 
supplements are another important treatment for patients with renal 
failure and anemia. The applicant explained that iron deficiency occurs 
more frequently among patients with ESRD because of an increase in 
external losses of iron, a decreased ability to store iron in the body, 
and potential deficits in intestinal iron absorption.\120\ The 
applicant asserted that reductions in iron treatment can preserve or 
enhance patient QoL and can generate savings to the Medicare 
program.\121\
---------------------------------------------------------------------------

    \120\ Fishbane S., Maesaka J.K., Iron management in end-stage 
renal disease, American Journal of Kidney Diseases, Volume 29, Issue 
3, 1997, Pages 319-333, ISSN 0272-6386, Accessed at: https://doi.org/10.1016/S0272-6386(97)90192-X.
    \121\ Estimated cost to Medicare based on The Moran Company, an 
HMA Company analysis calculated using 2020 ESRD claims with IV iron 
valued at ASP+6%.
---------------------------------------------------------------------------

    Finally, with regard to insulin use, the applicant stated that 
diabetes is a common comorbidity in ESRD

[[Page 38518]]

patients,\122\ and many ESRD patients require additional insulin 
administration. The applicant asserted that through reductions in 
insulin use, Medicare could realize cost savings of $3,949 annually per 
diabetes patient.\123\
---------------------------------------------------------------------------

    \122\ Approximately one in three adults with diabetes also have 
CKD. See CDC, Diabetes and Chronic Kidney Disease, https://www.cdc.gov/diabetes/managing/diabetes-kidney-disease.html.
    \123\ Average cost per patient for insulin taken from KFF report 
on Part D spending, available at https://www.kff.org/medicare/issue-brief/how-much-does-medicare-spend-on-insulin/.
---------------------------------------------------------------------------

    To support its claim of reduced rate of subsequent therapeutic 
interventions such as reduced need for and use of ESAs, iron, and 
insulin, the applicant referred to three sources. The first source, 
Lim, Jeon, et al. (2020), was a secondary analysis of a prospective, 
open-label, randomized controlled trial by Lim, Park, et al. 
(2020).\124\ Lim, Park, et al. (2020) was previously described. 
According to the applicant, the primary outcome of the secondary 
analysis was the change in erythropoietin resistance index (ERI; U/kg/
wk/g/dL) between baseline and 12 weeks. The applicant stated that the 
study found statistically significant decreases in ESA dose, weight-
adjusted ESA dose, and erythropoiesis resistance index for THERANOVA 
patients, compared to the high-flux dialyzer group at 12 weeks (p < 
0.05). The applicant also stated that there was a statistically 
significant higher serum iron level in the THERANOVA group at 12 weeks 
(iron [7g/dL]: 72.1 <plus-minus> 25.4 vs. 55.9 <plus-minus> 25.0), 
(p=0.029), indicating an improvement in iron metabolism as a potential 
clinical marker for the reduced need of iron supplementation.\125\
---------------------------------------------------------------------------

    \124\ Lim J.H., Park Y., Yook J.M., et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \125\ Lim J.H., Jeon Y., Yook J.M., et al. Medium cut-off 
dialyzer improves erythropoiesis stimulating agent resistance in a 
hepcidin-independent manner in maintenance hemodialysis patients: 
results from a randomized controlled trial. Sci Rep. 
2020;10(1):16062. Published 2020 Sep 29. doi:10.1038/s41598-020-
73124-x.
---------------------------------------------------------------------------

    The applicant also referred to the Sanabria et al. (2021) study, 
previously described, of 81 patients (Year 1, HF-HD; Year 2, HDx with 
THERANOVA). The applicant stated the study concluded that there was a 
statistically significant reduction in the mean dose of ESA after 
switching from HF-HD to HDx with THERANOVA (p=0.0361).\126\ The 
applicant also stated that the study found a statistically significant 
reduction in the mean dose of intravenous iron from 73.46 mg/month with 
HF-HD to 66.36 mg/month with HDx with THERANOVA (p=0.003).\127\
---------------------------------------------------------------------------

    \126\ Sanabria R.M., Hutchison C.A., Vesga J.I., Ariza J.G., 
Sanchez R., Suarez A.M. Expanded Hemodialysis and Its Effects on 
Hospitalizations and Medication Usage: A Cohort Study. Nephron 
2021;145:179-187. doi: 10.1159/000513328.
    \127\ Ibid.
---------------------------------------------------------------------------

    Finally, the applicant referred to the Ariza et al. (2021) study, 
described previously in this section of the proposed rule. The 
applicant stated that study authors found a statistically significant 
reduction in the dosage per patient per year of ESA in international 
units from 181,318 with HF-HD (95 percent CI: 151,647- 210,988) to 
168,124 with HDx with THERANOVA (95 percent CI: 138,452-197,794; p 
<0.01) as well as a statistically significant reduction in dosage per 
patient per year of iron in milligrams from 959 with HF-HD (95% CI: 
760-1158) to 759 with HDx (95 percent CI: 560-958; p <0.01).\128\ The 
applicant also asserted that the study found a statistically 
significant reduction in dosage per patient per year of insulin in 
international units from 5383 with HF-HD (95 percent CI: 3274-7490) to 
3434 with HDx with THERANOVA (95 percent CI: 1327-5543; p <0.01).\129\
---------------------------------------------------------------------------

    \128\ Ariza, J.G., Walton, S.M., Suarez, A.M., Sanabria, M., 
Vesga, J.I. An initial evaluation of expanded hemodialysis on 
hospitalizations, drug utilization, costs, and patient utility in 
Colombia. Ther Apher Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \129\ Ibid.
---------------------------------------------------------------------------

    The applicant also referred to CMS' final determination and public 
comments regarding its CY 2021 TPNIES application, as summarized in the 
CY 2021 ESRD PPS final rule (85 FR 71453 through 71458). The applicant 
stated that stakeholders largely provided favorable comments and 
supported TPNIES approval for THERANOVA. The applicant noted that in 
particular, physicians who used THERANOVA and had direct patient 
experience with the product strongly supported the application.\130\ 
The applicant also noted that some stakeholders, however, expressed 
concerns about THERANOVA's CY 2021 TPNIES application. Specifically, 
the applicant stated that commenters noted that the supporting studies 
had small sample sizes that did not represent the U.S. patient 
population, and that the duration of the studies was too short. The 
applicant also stated that some stakeholders expressed a belief that 
HDx with THERANOVA may result in decreased albumin levels, potentially 
causing harm to patients. The applicant asserted that with the updated 
and additional information provided in its CY 2023 application, the 
applicant has addressed these concerns.
---------------------------------------------------------------------------

    \130\ See for example, Dr. Peter Stenvinkel (Karolinska 
University Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0038; Dr. Vincenzo Cantaluppi (Novara University Hospital) 
at https://beta.regulations.gov/comment/CMS-2020-0079-0066; Dr. 
Colin Hutchison (Central Hawkes Bay Health Centre) at https://beta.regulations.gov/comment/CMS-2020-0079-0065; Dr. Andrew 
Davenport (Royal Free Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0037; Dr. Mario Cozzolino (University of 
Milan) at https://beta.regulations.gov/comment/CMS-2020-0079-0062; 
Dr. Jang-Hee Cho (Kyungpook National University Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0061.
---------------------------------------------------------------------------

    The applicant asserted that all substantial clinical improvement 
claims included in its CY 2023 application are now supported by at 
least one study that has undergone full peer review and has been 
published, or accepted for publication and is being prepared for 
publishing. The applicant explained that the application's supporting 
studies feature statistically significant findings and have a range of 
appropriate sample sizes, such as Molano-Trivi[ntilde]o et al., 
n=1,098,\131\ and Alarcon et al., n=992,\132\ previously described. The 
applicant explained that additionally, many studies evaluated 
THERANOVA's impacts over an extended period, including year-long 
evaluations after patients transitioned from conventional therapy to 
HDx therapy, for example, Sanabria et al.\133\ and Ariza et al.,\134\ 
previously described. The applicant stated that it considers the 
studies supporting the application and their findings to be applicable 
and generalizable to the U.S. Medicare population, and that this 
generalizability is bolstered by the additional U.S.-specific 
information and findings. The applicant asserted that while it does not 
believe that results in sample populations would significantly differ 
from results in the U.S. patient population, the application also now 
includes additional evidence that

[[Page 38519]]

directly addressed U.S. patients, including: a new study on U.S. 
hospitalization rates; new survey data from U.S. patients, health care 
providers, and payers, which demonstrated THERANOVA's value, clinical 
improvements, and QoL enhancements; \135\ and includes new testimonials 
in support of the TPNIES application for THERANOVA from U.S. kidney 
care providers: a nephrologist with 10 years of experience, dialysis 
nurse with 15 years of experience, and a pediatric dialysis nurse 
practitioner with over 10 years of experience. The applicant noted that 
the survey data came from three separate double-blinded surveys 
presented to each respondent group with information about THERANOVA's 
benefits and then assessed reactions--including patients' interest in 
switching from their current HD therapy to THERANOVA's HDx therapy, the 
likelihood that health care providers would recommend THERANOVA to 
patients and colleagues, and payers' evaluations of THERANOVA's 
potential to generate value for their health plans and patient 
enrollees. The applicant noted that overall, patients overwhelmingly 
wanted to use THERANOVA, health care providers strongly indicated that 
they would recommend THERANOVA to patients and peers, and payers 
identified several of THERANOVA's improvements as generating value. The 
applicant asserted that the peer-validated studies, and additional 
evidence that further addresses the U.S. patient population, provide 
the support necessary to conclude that THERANOVA is a substantial 
clinical improvement over existing technologies.
---------------------------------------------------------------------------

    \131\ Molano A.P., Hutchison C.A., Sanchez R., Rivera A.S., 
Buitrago G., Dazzarola M.P., Munevar M., Guerrero M., Vesga J.I., 
Sanabria M., Medium Cut-Off Versus High-Flux Hemodialysis Membranes 
and Clinical Outcomes: A Cohort Study Using Inverse Probability 
Treatment Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
    \132\ Alarcon J.C., Bunch A., Ardila F., et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \133\ Sanabria R.M., Hutchison C.A., Vesga J.I., Ariza J.G., 
Sanchez R., Suarez A.M. Expanded Hemodialysis and Its Effects on 
Hospitalizations and Medication Usage: A Cohort Study. Nephron 
2021;145:179-187. doi: 10.1159/000513328
    \134\ Ariza, J.G., Walton, S.M., Suarez, A.M., Sanabria, M., 
Vesga, J.I. An initial evaluation of expanded hemodialysis on 
hospitalizations, drug utilization, costs, and patient utility in 
Colombia. Ther Apher Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \135\ Patient Preference for a Future Dialyzer Study, prepared 
by Beghou Consulting on behalf of Baxter International. Survey 
results; December 2021.
---------------------------------------------------------------------------

    The applicant also stated that in addition to THERANOVA's 
demonstrated effectiveness, additional evidence demonstrates 
THERANOVA's safety. The applicant explained that in the time since it 
submitted the CY 2021 TPNIES application to CMS, FDA reviewed 
THERANOVA's randomized, controlled clinical IDE trial and additional 
evidence supporting THERANOVA's safety and effectiveness, and granted 
marketing authorization. The applicant stated that the IDE trial 
demonstrated that THERANOVA's HDx therapy provides superior removal of 
harmful LMMs while maintaining adequate serum albumin levels.\136\ The 
applicant noted that FDA's comprehensive review and subsequent approval 
of THERANOVA establishes THERANOVA's safety and effectiveness for its 
intended use: treatment of chronic kidney failure.
---------------------------------------------------------------------------

    \136\ Weiner D., et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
---------------------------------------------------------------------------

(b) CMS Preliminary Assessment of Substantial Clinical Improvement 
Claims and Sources
    After a review of the information provided by the applicant, we 
note that the applicant submitted the full, published peer-reviewed 
papers for several of the abstracts, posters, and incomplete 
manuscripts that were previously submitted with its CY 2021 TPNIES 
application,<SUP>137 138 139 140 141 142</SUP> and the remaining 
evidence submitted with the CY 2023 application was new. We have 
identified the following concerns regarding THERANOVA and the 
substantial clinical improvement eligibility criteria for the TPNIES. 
We note that, consistent with Sec.  413.236(c), CMS will announce its 
final determination regarding whether THERANOVA meets the substantial 
clinical improvement criteria and other eligibility criteria for the 
TPNIES in the CY 2023 ESRD PPS final rule.
---------------------------------------------------------------------------

    \137\ Alarcon J.C., Bunch A., Ardila F., et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \138\ Ariza, J.G., Walton, S.M., Suarez, A.M., Sanabria, M., 
Vesga, J.I. An initial evaluation of expanded hemodialysis on 
hospitalizations, drug utilization, costs, and patient utility in 
Colombia. Ther Apher Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \139\ Bolton S., Gair R., Nilsson L.G., Matthews M., Stewart L., 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas.2021;12:315-321 https://doi.org/10.2147/PROM.S325016.
    \140\ Lim J.H., Jeon Y., Yook J.M., et al. Medium cut-off 
dialyzer improves erythropoiesis stimulating agent resistance in a 
hepcidin-independent manner in maintenance hemodialysis patients: 
results from a randomized controlled trial. Sci Rep. 
2020;10(1):16062. Published 2020 Sep 29. doi:10.1038/s41598-020-
73124-x.
    \141\ Lim J.H., Park Y., Yook J.M., et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \142\ Sanabria R.M., Hutchison C.A., Vesga J.I., Ariza J.G., 
Sanchez R., Suarez A.M. Expanded Hemodialysis and Its Effects on 
Hospitalizations and Medication Usage: A Cohort Study. Nephron 
2021;145:179-187. doi: 10.1159/000513328.
---------------------------------------------------------------------------

    With respect to the applicant's claim that THERANOVA leads to 
reduced hospitalization rates, we note that the applicant included 
studies from the previous submission and supplemented with newer 
studies, such as the Tran et. al. (2021) poster abstract. We note that 
the poster abstract was a post hoc analysis of a previous open-label 
study,\143\ which had an average follow-up period of 4.5 months in the 
THERANOVA group. We question whether this short time period is 
sufficient to see changes in hospitalization from interventions aimed 
at increasing clearance of uremic toxins. It may be helpful to see if 
this outcome is sustained in longer term follow-up.\144\
---------------------------------------------------------------------------

    \143\ Weiner D., et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
    \144\ Tran H., Falzon L., Bernardo A., Beck W., Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
---------------------------------------------------------------------------

    We also note that, although authors in the Molano et. al. (2022) 
study used inverse probability treatment weighting (IPTW), the study 
was unblinded and could influence treatment decisions in the group 
using the THERANOVA dialyzer. Moreover, we note that patients seemed 
healthier in the THERANOVA arm, and had more fistulas, fewer catheters, 
and higher Karnofsky indices. We also note that the THERANOVA arm had 
more intensive dialysis at baseline and throughout the duration of the 
study (Kt/V of 1.7 vs. 1.6), suggestive of more intensive small 
molecule clearance and more intensive dialysis overall. Therefore, it 
is unclear whether the outcome differences between the two arms could 
be due to factors other than the dialyzer type. We question whether 
IPTW would be sufficient to overcome these biases, especially the Kt/V 
bias, which persisted even after the baseline period.\145\
---------------------------------------------------------------------------

    \145\ Molano A.P., Hutchison C.A., Sanchez R., Rivera A.S., 
Buitrago G., Dazzarola M.P., Munevar M., Guerrero M., Vesga J.I., 
Sanabria M., Medium Cut-Off Versus High-Flux Hemodialysis Membranes 
and Clinical Outcomes: A Cohort Study Using Inverse Probability 
Treatment Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
---------------------------------------------------------------------------

    In addition, we note that the studies by Ariza et al. (2021) \146\ 
and Sanabria et al. (2021),\147\ using the same study sample 
population, were limited by absence of a control group, and had non-
significant differences in hospitalization rate between baseline HF-HD 
and after switching to HDx: 0.77

[[Page 38520]]

(95 percent CI: 0.60-0.98, 61 events) to 0.71 (95 percent CI: 0.55-
0.92, 57 events), p=0.6987.
---------------------------------------------------------------------------

    \146\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \147\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R., 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
---------------------------------------------------------------------------

    With respect to the applicant's claim that THERANOVA leads to 
improved QoL, we note that in the study by Lim, Park, et al. (2020), it 
is unclear if these findings could result from chance alone, when 
considering the many QoL outcomes examined, due to multiple-hypothesis 
testing concerns. In particular, we note that differences associated 
with use of THERANOVA were statistically significant in only 2 out of 
26 QoL outcomes assessed, and in both cases the p-value was greater 
than 0.04. We also note that although the THERANOVA group had lower 
mean scores for morning pruritus distribution (p=0.034), there was a 
non-significant difference in afternoon pruritis distribution between 
the two groups (p=0.347).\148\
---------------------------------------------------------------------------

    \148\ Lim JH, Park Y., Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
---------------------------------------------------------------------------

    Overall, we note that most of studies in the updated evidence 
submitted for the CY 2023 application are open-label and observational, 
which may potentially bias results. We also note that many of the 
studies are single-arm studies that do not employ a control group, 
which may make it difficult to determine if observed improvements in 
clinical outcomes are due to the use of THERANOVA or if the 
improvements may have also occurred with previously available dialysis 
membranes.<SUP>149 150 151 152</SUP>
---------------------------------------------------------------------------

    \149\ Bolton S., Gair R., Nilsson LG, Matthews M., Stewart L., 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas.2021;12:315-321 https://doi.org/10.2147/PROM.S325016.
    \150\ Penny J., Jarosz P., Salerno F., Lemoine S., McIntyre CW. 
Impact of Expanded Hemodialysis Using Medium Cut-off Dialyzer on 
Quality of Life: Application of Dynamic Patient-Reported Outcome 
Measurement Tool. Kidney Medicine. Published 2021, Jul. 29. https://doi.org/10.1016/j.xkme.2021.05.010.
    \151\ Alarcon JC, Bunch A., Ardila F., et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \152\ Lim JH, Jeon Y., Yook JM, et al. Medium cut-off dialyzer 
improves erythropoiesis stimulating agent resistance in a hepcidin-
independent manner in maintenance hemodialysis patients: results 
from a randomized controlled trial. Sci Rep. 2020;10(1):16062. 
Published 2020 Sep 29. doi:10.1038/s41598-020-73124-x.
---------------------------------------------------------------------------

    We are inviting public comment as to whether THERANOVA meets the 
TPNIES substantial clinical improvement criteria.
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    With respect to the sixth TPNIES eligibility criterion under Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
did not address this criterion within its application. However, 
THERANOVA does not meet the definition of a capital-related asset, as 
defined in Sec.  413.236(a)(2), because it is not an asset that the 
ESRD facility has an economic interest in through ownership and is 
subject to depreciation.\153\ We welcome comments on THERANOVA's status 
as a non-capital related asset.
---------------------------------------------------------------------------

    \153\ See also: CMS Provider Reimbursement Manual, Chapter 1, 
Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

d. Continuation of Approved Transitional Add-On Payment Adjustments for 
New and Innovative Equipment and Supplies for CY 2023
    In this section of the proposed rule, we provide a table that 
identifies the one item that was approved for the TPNIES for CY 2022 
\154\ and which is still in the TPNIES payment period, as specified in 
Sec.  413.236(d)(1), for CY 2023. CMS will continue paying for this 
item using the TPNIES for CY 2023. This table also identifies the 
item's HCPCS coding information as well as the payment adjustment 
effective date and end date.
---------------------------------------------------------------------------

    \154\ 86 FR 61889 through 61906.
    [GRAPHIC] [TIFF OMITTED] TP28JN22.015
    
e. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for New Renal Dialysis Drugs or Biological Products for CY 
2023
    Under Sec.  413.234(c)(1), a new renal dialysis drug or biological 
product that is considered included in the ESRD PPS base rate is paid 
the TDAPA for 2 years. In December 2021, CMS approved 
Korsuva<SUP>TM</SUP> (difelikafalin) for the TDAPA under the ESRD PPS, 
effective April 1, 2022. Implementation instructions are specified in 
CMS Transmittal 11295,\155\ dated March 15, 2022, and available at: 
https://www.cms.gov/files/document/r11295CP.pdf.
---------------------------------------------------------------------------

    \155\ CMS Transmittal 11295 rescinded and replaced CMS 
Transmittal 11278, dated February 24, 2022.
---------------------------------------------------------------------------

    In this section of the proposed rule, we provide a table that 
identifies the one new renal dialysis drug that was approved for the 
TDAPA effective in CY 2022, and for which the TDAPA payment period as 
specified in Sec.  413.234(c)(1) will continue in CY 2023. This table 
also identifies the product's HCPCS coding information as well as the 
payment adjustment effective date and end date.

[[Page 38521]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.016

D. Request for Information About Addressing Issues of Payment for New 
Renal Dialysis Drugs and Biological Products After Transitional Drug 
Add-On Payment Adjustment (TDAPA) Period Ends

1. Background on the TDAPA
    Section 217(c) of PAMA required the Secretary to establish a 
process for including new injectable and intravenous (IV) products into 
the ESRD PPS bundled payment as part of the CY 2016 ESRD PPS 
rulemaking. Therefore, in the CY 2016 ESRD PPS final rule (80 FR 69013 
through 69027), we finalized a process based on our longstanding drug 
designation process that allowed us to include new injectable and 
intravenous products into the ESRD PPS bundled payment and, when 
appropriate, modify the ESRD PPS payment amount. We codified this 
process in our regulations at 42 CFR 413.234. We finalized that the 
process is dependent upon the ESRD PPS functional categories, 
consistent with the drug designation process we have followed since the 
implementation of the ESRD PPS in 2011. As we explained in the CY 2016 
ESRD PPS final rule (80 FR 69014), when we implemented the ESRD PPS, 
drugs and biological products were grouped into functional categories 
based on their action. This was done for the purpose of adding new 
drugs or biological products with the same functions to the ESRD PPS 
bundled payment as expeditiously as possible after the drugs are 
commercially available so beneficiaries have access to them. As we 
stated in the CY 2011 ESRD PPS final rule, we did not specify all of 
the drugs and biological products within these categories because we 
did not want to inadvertently exclude drugs that may be substitutes for 
drugs we identified and we wanted the ability to reflect new drugs and 
biological products developed or changes in standards of practice (75 
FR 49052).
    In the CY 2016 ESRD PPS final rule, we finalized the definition of 
an ESRD PPS functional category in Sec.  413.234(a) as a distinct 
grouping of drugs or biologicals, as determined by CMS, whose end 
action effect is the treatment or management of a condition or 
conditions associated with ESRD (80 FR 69077).
    We finalized a policy in the CY 2016 ESRD PPS final rule that if a 
new renal dialysis injectable or IV product falls within an existing 
functional category, the new injectable drug or IV product is 
considered included in the ESRD PPS bundled payment and no separate 
payment is available. The new injectable or IV product qualifies as an 
outlier service. We noted in that rule that the ESRD bundled market 
basket updates the ESRD PPS base rate annually and accounts for price 
changes of the drugs and biological products.
    We also finalized in the CY 2016 ESRD PPS final rule that, if the 
new renal dialysis injectable or IV product does not fall within an 
existing functional category, the new injectable or IV product is not 
considered included in the ESRD PPS bundled payment and the following 
steps occur. First, an existing ESRD PPS functional category is revised 
or a new ESRD PPS functional category is added for the condition that 
the new injectable or IV product is used to treat or manage. Next, the 
new injectable or IV product is paid for using the TDAPA codified in 
Sec.  413.234(c). Finally, the new injectable or IV product is added to 
the ESRD PPS bundled payment following payment of the TDAPA.
    In the CY 2016 ESRD PPS final rule, we finalized a policy in Sec.  
413.234(c) to pay the TDAPA until sufficient claims data for rate 
setting analysis for the new injectable or IV product are available, 
but not for less than 2 years. The new injectable or IV product is not 
eligible as an outlier service during the TDAPA period. We established 
that following the TDAPA period, the ESRD PPS base rate will be 
modified, if appropriate, to account for the new injectable or IV 
product in the ESRD PPS bundled payment.
    In CYs 2019 and 2020 ESRD PPS final rules (83 FR 56927 through 
56949 and 84 FR 60653 through 60677, respectively), we made several 
revisions to the drug designation process regulations at Sec.  413.234. 
In the CY 2019 ESRD PPS final rule, we revised regulations at Sec.  
413.234(a), (b), and (c) to reflect that the process applies for all 
new renal dialysis drugs and biological products that are FDA approved 
regardless of the form or route of administration. In addition, we 
revised Sec.  413.234(b) and (c) to expand the TDAPA to all new renal 
dialysis drugs and biological products, rather than just those in new 
ESRD PPS functional categories. In the CY 2020 ESRD PPS final rule, we 
revised Sec.  413.234(b) and added paragraph (e) to exclude from TDAPA 
eligibility generic drugs approved by FDA under section 505(j) of the 
Federal Food, Drug, and Cosmetic Act and drugs for which the new drug 
application is classified by the FDA as Type 3, 5, 7 or 8, Type 3 in 
combination with Type 2 or Type 4, or Type 5 in combination with Type 
2, or Type 9 when the ``parent NDA'' is a Type 3, 5, 7, or 8, effective 
January 1, 2020.
    Under our current TDAPA policy at Sec.  413.234(c), a new renal 
dialysis drug or biological product that falls within an existing ESRD 
PPS functional category is considered included in the ESRD PPS base 
rate and is paid the TDAPA for 2 years. After the TDAPA period, the 
base rate will not be modified. If the new renal dialysis drug or 
biological product does not fall within an existing ESRD PPS functional 
category, it is not considered included in the ESRD PPS base rate, and 
it will be paid the TDAPA until sufficient claims data for rate setting 
analysis is available, but not for less than 2 years. After the TDAPA 
period, the ESRD PPS base rate will be modified, if appropriate, to 
account for the new renal dialysis drug or biological

[[Page 38522]]

product in the ESRD PPS bundled payment.
    As discussed in the CY 2019 and CY 2020 ESRD PPS final rules, for 
new renal dialysis drugs and biological products that fall into an 
existing ESRD PPS functional category, the TDAPA helps ESRD facilities 
to incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provides additional 
payments for such associated costs, and promotes competition among the 
products within the ESRD PPS functional categories, while focusing 
Medicare resources on products that are innovative (83 FR 56935; 84 FR 
60654). For new renal dialysis drugs and biological products that do 
not fall within an existing ESRD PPS functional category, the TDAPA is 
a pathway toward a potential base rate modification (83 FR 56935).
    For the complete history of the TDAPA policy, including the pricing 
methodology, please see the CY 2016 ESRD PPS final rule (80 FR 69023 
through 69024), CY 2019 ESRD PPS final rule (83 FR 56932 through 
56948), and CY 2020 ESRD PPS final rule (84 FR 60653 through 60681).
2. Current Issues and Concerns of Interested Parties
    In the CY 2019 ESRD PPS final rule, we discussed that a commenter 
stated concern over beneficiary access issues at the end of the TDAPA 
period. We responded by noting the drug or biological product will 
become eligible under the outlier policy after the TDAPA period if it 
is not considered to be a composite rate drug. We stated that we expect 
that if a beneficiary is responding well to a drug or biological 
product paid for using the TDAPA that they will continue to have access 
to that therapy after the TDAPA period ends (83 FR 56941). Since 2019, 
dialysis associations and pharmaceutical representatives have expressed 
concerns to CMS about payment following the TDAPA period for new renal 
dialysis drugs and biological products that are paid for using the 
TDAPA. They asserted that unless money is added to the ESRD PPS base 
rate for these drugs and biological products, similar to what occurred 
with calcimimetics (85 FR 71406 through 71410), then it is unlikely 
that ESRD facilities would be able to sustain the expense of these 
drugs and biological products when the TDAPA period ends. Further, they 
cautioned that uncertainty about payment could affect ESRD facility 
adoption of these drugs and biological products during the TDAPA 
period. To date, calcimimetics are the only renal dialysis drugs or 
biological products that have been paid for using the TDAPA and 
incorporated into the ESRD PPS bundled payment following the TDAPA 
payment period. There have been no other renal dialysis drugs or 
biological products that have completed their TDAPA payment period, and 
as a result CMS does not yet have data on other drugs or biological 
products in order to evaluate the specific risks and access challenges 
that interested parties have raised.
    As mentioned in the CY 2019 (83 FR 56941) and CY 2020 (84 FR 60672 
and 60693) ESRD PPS final rules, many commenters suggested a rate-
setting exercise at the end of TDAPA for all new renal dialysis drugs 
and biological products. We responded by noting that we do not believe 
adding dollars to the ESRD PPS base rate would be appropriate for new 
drugs that fall into the ESRD PPS functional categories given that the 
purpose of the TDAPA for these drugs is to help ESRD facilities 
incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provide additional 
payments for such associated costs, and promote competition among the 
products within the ESRD PPS functional categories. In addition, we 
explained that the ESRD PPS base rate already includes money for renal 
dialysis drugs and biological products that fall within an existing 
ESRD PPS functional category. Under a PPS, Medicare makes payments 
based on a predetermined, fixed amount that reflects the average 
patient, and there will be patients whose treatment costs at an ESRD 
facility would be more or less than the ESRD PPS payment amount. A 
central objective of the ESRD PPS and of prospective payment systems in 
general is for facilities to be efficient in their resource use.
    We also note that price changes to the ESRD bundled payment are 
updated annually by the ESRDB market basket, which includes a 
pharmaceuticals cost category weight, as noted in section 
II.B.1.a.(1)(b) of this proposed rule. In addition, our analysis of 
renal dialysis drugs and biological products paid for under the ESRD 
PPS has found costs and utilization to have decreased over time 
relative to market basket growth for some high volume formerly 
separately billable renal dialysis drugs. Therefore, we believe that 
any potential methodology for an add-on payment adjustment in these 
circumstances should adapt to changes in price and utilization over 
time.
3. Suggestions for Possible Methodologies for an Add-On Payment 
Adjustment for Certain Renal Dialysis Drugs and Biological Products 
Within an Existing Functional Category
    Section 1881(b)(14)(D)(iv) of the Act provides that the ESRD PPS 
may include such other payment adjustments as the Secretary determines 
appropriate, such as a payment adjustment--(I) for pediatric providers 
of services and renal dialysis facilities; (II) by a geographic index, 
such as the index referred to in paragraph (12)(D), as the Secretary 
determines to be appropriate; and (III) for providers of services or 
renal dialysis facilities located in rural areas. In response to the 
patient access concerns discussed previously in this section of the 
proposed rule, we are considering whether it would be appropriate to 
establish an add-on payment adjustment for certain renal dialysis drugs 
and biological products in existing ESRD PPS functional categories 
after their TDAPA period ends. We note that any add-on payment 
adjustment would be subject to the Medicare Part B beneficiary co-
insurance payment under ESRD PPS. We are considering a number of 
methods that could be used to develop an add-on payment adjustment for 
these drugs and biological products. The methods presented below differ 
in terms of which formerly separately billable renal dialysis drugs and 
biological products would be considered for a potential add-on payment 
adjustment. We note that under these potential options, we would apply 
a reconciliation methodology only when an add-on payment adjustment 
would align resource use with payment for a renal dialysis drug or 
biological product in an existing ESRD PPS functional category.
    <bullet> Reconcile the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in the expenditure per treatment across all 
other formerly separately billable renal dialysis drugs and biological 
products. For example, if the reduction in the cost of all formerly 
separately billable renal dialysis drugs and biological products per 
treatment excluding the renal dialysis drug or biological product that 
was paid for using the TDAPA is $5 and the cost per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA is $10, the add-on payment adjustment per treatment would be $10 
minus $5, which is $5. The reductions in formerly separately billable 
renal dialysis drug and biological products expenditures

[[Page 38523]]

per treatment would be calculated by using the difference between these 
expenditures in the most recent year with claims data available and 
these expenditures in the current base year for the ESRDB market 
basket, proposed to be CY 2020 in this rule. For example, if the rule 
year for which we are calculating the add-on payment adjustment is CY 
2023 and the base year for the ESRDB market basket is CY 2020, the 
reduction in formerly separately billable renal dialysis drugs and 
biological products expenditures would be the difference between these 
expenditures in CY 2021 (the year with the most recent claims data) and 
those in CY 2020.
    <bullet> Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs or biological products, where such 
reduction can be empirically attributed to the renal dialysis drug or 
biological product that was paid for using the TDAPA. For example, if 
the utilization of the renal dialysis drug or biological product that 
was paid for using the TDAPA was found to be statistically associated 
with reduction in expenditure of one drug in an ESRD PPS functional 
category amounting to $1 per treatment, and the cost per treatment of 
the renal dialysis drug or biological product that was paid for using 
the TDAPA is $10, the add-on payment adjustment per treatment would be 
$10 minus $1, which is $9.
    <bullet> Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs that fall into one or more ESRD PPS 
functional categories, where such expenditure reduction is data-driven, 
based on end action effect, to be attributable to the renal dialysis 
drug or biological product that was paid for using the TDAPA. Such a 
data-driven determination would be made by CMS. For example, if the 
cost per treatment of the renal dialysis drug or biological product 
that was paid for using the TDAPA is $10 and the reduction in the 
expenditure for other clinically related formerly separately billable 
renal dialysis drugs is $0.50 per treatment, the add-on payment 
adjustment would be $10 minus $0.50, which is $9.50.
    <bullet> Only use the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA. For example, if the per treatment cost of the renal dialysis 
drug or biological product that was paid for using the TDAPA is $10, 
this would be the amount of the add-on payment adjustment.
4. Request for Information on an Add-On Payment Adjustment After the 
TDAPA Period Ends
    We are considering options regarding an add-on payment adjustment 
for certain renal dialysis drugs and biological products in existing 
ESRD PPS functional categories after the TDAPA period ends. We are 
issuing a request for information to seek feedback from the public on 
the following questions. When responding, please note the question to 
which your comment is addressing.
    <bullet> Is an add-on payment adjustment for certain renal dialysis 
drugs and biological products in existing ESRD PPS functional 
categories after the TDAPA period ends needed? If so, why? What 
criteria should CMS establish to determine which renal dialysis drugs 
or biological products would be included in the calculation for an add-
on payment adjustment after the TDAPA period ends?
    <bullet> If an add-on payment adjustment for certain renal dialysis 
drugs and biological products in existing ESRD PPS functional 
categories after the TDAPA period is needed, are the methods discussed 
in section II.D.4 of this proposed rule sufficient to address the add-
on payment adjustment?
    ++ Which method would be most appropriate?
    ++ Are there changes to the methodologies that CMS should consider 
to improve our ability to align payment for renal dialysis services 
with resource utilization? Please provide as much detail as possible.
    ++ Are there other methodologies that CMS should consider? Please 
provide as much detail as possible.
    While we will not be responding to specific comments submitted in 
response to this RFI, we intend to use this input to inform future 
policy development. Any potential payment policies related to this RFI 
would be proposed through a separate notice and comment rulemaking. We 
look forward to receiving feedback on these topics, and note that 
responses to the RFI should focus on how the suggestions could be 
applied to the ESRD PPS. Data to support any proposed approaches will 
be extremely important, so please include any data that supports your 
comments.

E. Requests for Information on Health Equity Issues Within the ESRD PPS 
With a Focus on the Pediatric Payment

1. Background
    CMS is committed to achieving equity in health care for our 
beneficiaries by recognizing and working to redress inequities in our 
policies and programs that serve as barriers to access to care and 
quality health outcomes. In this proposed rule, ``health equity means 
the attainment of the highest level of health for all people, where 
everyone has a fair and just opportunity to attain their optimal health 
regardless of race, ethnicity, disability, sexual orientation, gender 
identity, socioeconomic status, geography, preferred language, or other 
factors that affect access to care and health outcomes.'' \156\
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    \156\ https://www.cms.gov/pillar/health-equity.
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    Significant and persistent inequities in health care outcomes exist 
in the United States. Belonging to a racial or ethnic minority group; 
living with a disability; being a member of the LGBTQ+ community; 
living in a rural area; or being near or below the Federal Poverty 
Level, are factors frequently associated with worse health 
outcomes.<SUP>157 158 159 160 161 162 163 164</SUP> Numerous studies 
have shown that among Medicare beneficiaries, individuals belonging to 
a racial or ethnic minority group often experience delays in care, 
receive lower quality of care, report dissatisfactory experiences of 
care, and experience more frequent hospital readmissions and procedural 
complications than white patients and

[[Page 38524]]

patients with a higher levels of 
income.<SUP>165 166 167 168 169 170</SUP> When compared to FFS 
beneficiaries not receiving renal dialysis services, FFS beneficiaries 
receiving renal dialysis services are disproportionately young, male, 
disabled, Black/African-American, low income as measured by dually 
eligible Medicare and Medicaid status, and reside in an urban 
setting.\171\
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    \157\ Joynt KE, Orav E., Jha AK. Thirty-Day Readmission Rates 
for Medicare Beneficiaries by Race and Site of Care. JAMA. 2011; 
305(7):675-681.
    \158\ Lindenauer PK, Lagu T., Rothberg MB, et al. Income 
Inequality and 30-Day Outcomes After Acute Myocardial Infarction, 
Heart Failure, and Pneumonia: Retrospective Cohort Study. British 
Medical Journal. 2013; 346.
    \159\ Trivedi AN, Nsa W., Hausmann LRM, et al. Quality and 
Equity of Care in U.S. Hospitals. New England Journal of Medicine. 
2014; 371(24):2298-2308.
    \160\ Polyakova, M., et al. Racial Disparities In Excess All-
Cause Mortality During The Early COVID-19 Pandemic Varied 
Substantially Across States. Health Affairs. 2021; 40(2): 307-316.
    \161\ Rural Health Research Gateway. Rural Communities: Age, 
Income, and Health Status. Rural Health Research Recap. November 
2018. Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-income-health-status-recap.pdf.
    \162\ https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \163\ www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
    \164\ Poteat TC, Reisner SL, Miller M., Wirtz AL. COVID-19 
Vulnerability of Transgender Women With and Without HIV Infection in 
the Eastern and Southern U.S. Preprint. medRxiv. 
2020;2020.07.21.20159327. Published 2020 Jul 24. doi:10.1101/
2020.07.21.20159327.
    \165\ Martino, SC, Elliott, MN, Dembosky, JW, Hambarsoomian, K, 
Burkhart, Q, Klein, DJ, Gildner, J, and Haviland, AM. Racial, 
Ethnic, and Gender Disparities in Health Care in Medicare Advantage. 
Baltimore, MD: CMS Office of Minority Health. 2020.
    \166\ Guide to Reducing Disparities in Readmissions. CMS Office 
of Minority Health. Revised August 2018. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Readmissions_Guide.pdf.
    \167\ Singh JA, Lu X, Rosenthal GE, Ibrahim S., Cram P. Racial 
disparities in knee and hip total joint arthroplasty: an 18-year 
analysis of national Medicare data. Ann Rheum Dis. 2014 Dec; 
73(12):2107-15.
    \168\ Rivera-Hernandez M., Rahman M., Mor V., Trivedi AN. Racial 
Disparities in Readmission Rates among Patients Discharged to 
Skilled Nursing Facilities. J Am Geriatr Soc. 2019 Aug;67(8):1672-
1679.
    \169\ Joynt KE, Orav E., Jha AK. Thirty-Day Readmission Rates 
for Medicare Beneficiaries by Race and Site of Care. JAMA. 
2011;305(7):675-681.
    \170\ Tsai TC, Orav EJ, Joynt KE. Disparities in surgical 30-day 
readmission rates for Medicare beneficiaries by race and site of 
care. Ann Surg. Jun 2014;259(6):1086-1090.
    \171\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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a. Underserved Communities in the ESRD Medicare Population
    During the TEP held in December 2021, CMS's ESRD data contractor 
provided data stratified by the following factors to TEP participants 
in order to identify subpopulations for which health disparities may 
exist among the ESRD population: sex, age, race/ethnicity, urban/rural 
residence, socioeconomic status proxy (combines both dual eligibility 
and receipt of premium subsidy for Part D), original reason for 
Medicare entitlement, and the Area Deprivation Index (ADI) for the 
beneficiary's residence (which also serves as a proxy for socioeconomic 
status). Definitions for these categories as well as relevant results, 
based on enrollment numbers in January 2020, are detailed below.
    <bullet> Sex \172\--The ESRD PPS population was 58.7 percent male 
compared to 46.9 percent male in the non-ESRD Medicare population.
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    \172\ Sex is derived from the Enrollment Database (EDB), and is 
categorized into male and female. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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    <bullet> Age \173\--The ESRD PPS population was younger than the 
non-ESRD Medicare population, in part because ESRD is a qualifying 
condition for Medicare, regardless of age, if the individual otherwise 
meets Social Security benefit qualifications.\174\ Approximately 40 
percent of the ESRD PPS beneficiary population was younger than 60 
compared to 10 percent in the non-ESRD Medicare population.
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    \173\ Beneficiary age (in years) is measured at the beginning of 
each month, and is obtained from the Medicare beneficiary birth date 
variable in the EDB Record Identification Code (RIC) A Table. The 
following seven age groups are used for all relevant data 
presentation for this TEP: less than 12, 13-17, 18-44, 45-59, 60-69, 
70-79, and 80. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
    \174\ Section 226A of the Act; 42 CFR 406.13.
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    <bullet> Original Reason for Medicare Entitlement--The ESRD 
Medicare population had a higher proportion of beneficiaries entitled 
to Medicare due to disability compared to the non-ESRD population. 
Forty-seven percent of the ESRD population was originally eligible for 
Medicare due to disability (with or without ESRD), compared to 21 
percent for the non-ESRD Medicare population.\175\
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    \175\ ESRD beneficiaries are stratified into four mutually 
exclusive categories based on their original Medicare entitlement: 
(1) less than 65 years of age and had both ESRD and disability at 
time of enrollment; (2) less than 65 years of age and had ESRD at 
time of enrollment; (3) less than 65 years of age and were disabled 
at time of enrollment; and (4) those who aged into Medicare (and 
were diagnosed with ESRD after turning 65). Placeholder for TEP 4 
Report.
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    <bullet> Race and Ethnicity \176\--Members of racial or ethnic 
minority groups comprised a larger proportion of the ESRD Medicare 
population compared to the non-ESRD Medicare population. This was 
especially true among Blacks/African-Americans who comprised 34.5 
percent of the ESRD population, compared to 8.9 percent of the non-ESRD 
Medicare population.
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    \176\ Beneficiary race and ethnicity information is derived from 
the Research Triangle Institute (RTI) race algorithm, as obtained 
from CMS Common Medicare Environment (CME) data. This data provides 
seven mutually exclusive categories: Non-Hispanic White, Black/
African American, Asian or Pacific Islander, Hispanic, American 
Indian or Alaska Native, and Other/Unknown. Placeholder for TEP 4 
Report.
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    <bullet> Urban and Rural Residency \177\--ESRD Medicare 
beneficiaries were more likely to reside in urban areas than the non-
ESRD Medicare population. Approximately 84 percent of ESRD 
beneficiaries lived in urban areas, while approximately 79.6 percent of 
the non-ESRD Medicare population lived in urban areas.
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    \177\ The Core-Based Statistical Area (CBSA) designations are 
used to determine urban or rural residency status. Beneficiaries 
whose county of residence is located within a CBSA are deemed urban 
residents. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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    <bullet> Socioeconomic status proxy \178\--42.5 percent of the ESRD 
Medicare population was dually eligible for Medicare and Medicaid as 
compared to 15.4 percent of the non-ESRD Medicare population. As 
compared to the non-ESRD Medicare population, ESRD Medicare 
beneficiaries were more likely to be enrolled in Medicare Part D (73 
percent ESRD PPS as compared to 61 percent of non-ESRD Medicare 
beneficiaries). Among ESRD Medicare beneficiaries, Non-Hispanic White 
beneficiaries are less likely to be enrolled in Medicare Part D (70.0 
percent Part D enrollment) compared to other groups (ranging from 72.3 
to 77.2 percent enrolled in Part D).\179\
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    \178\ Among Medicare Part D enrollees, Medicare benefit status 
was derived from monthly enrollment status and low-income status in 
EDB. Both the beneficiary's dual eligibility status (whether the 
beneficiary was eligible for both Medicare and Medicaid in a given 
month) and Premium Subsidy status (whether the beneficiary was 
receiving any level of premium subsidy in a given month) were 
considered in determining the beneficiary's Medicare benefit status. 
https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
    \179\ This result is believed to be due to the fact non-white 
beneficiaries are more often dually eligible for Medicare and 
Medicaid compared to White beneficiaries. The low-income subsidies 
provided to dually eligible beneficiaries gives them the means to 
enroll in Part D, which is likely why this percentage is slightly 
higher for non-whites.
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    <bullet> ADI \180\--ESRD Medicare beneficiaries were more likely to 
be living in socioeconomically disadvantaged neighborhoods compared to 
non-ESRD Medicare beneficiaries, approximately 29 percent of the ESRD 
PPS population resided in the most disadvantaged ADI percentiles (76th 
to 100th percentile) compared to 19.2 percent of non-ESRD Medicare 
beneficiaries. ESRD beneficiaries who were socioeconomically 
disadvantaged were more likely to be enrolled in Medicare Part D than 
those less disadvantaged. Based on the demographics of the Medicare 
ESRD

[[Page 38525]]

beneficiaries, it is clear that this population represents many 
individuals who belong to underserved communities, thus there is a need 
to be vigilant to combat any health disparities that emerge in the ESRD 
PPS.
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    \180\ ADI is a measure constructed by the Health Resources and 
Services Administration, and has been validated, refined and adapted 
by researchers at the University of Wisconsin, Madison, to rank 
neighborhoods (geographically localized communities within a larger 
cities, towns, suburbs or rural areas) by socioeconomic 
disadvantage, specifically factoring in income, education, 
employment, and housing quality. From these percentile rankings, six 
mutually exclusive categories of ADI Rankings are constructed with 
the 1st to 5th percentile being the least disadvantaged and 95th to 
100th percentile being most disadvantaged. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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b. CMS Activities To Advance Health Equity
    The CMS Framework for Health Equity outlines a path to advance 
health equity that aims to support Quality Improvement Network Quality 
Improvement Organizations; federal, state, local, and tribal 
organizations; providers; researchers; policymakers; beneficiaries and 
their families; and other interested parties in activities to advance 
health equity.\181\ The CMS Framework for Health Equity focuses on five 
core priority areas which inform our policies and programs: (1) Expand 
the collection, reporting, and analysis of standardized data; (2) 
Assess causes of disparities within CMS programs and address inequities 
in policies and operations to close gaps; (3) Build capacity of health 
care organizations and the workforce to reduce health and health care 
disparities; (4) Advance language access, health literacy, and the 
provision of culturally tailored services and, (5) Increase all forms 
of accessibility to health care services and coverage.\182\ The CMS 
Quality Strategy \183\ and Meaningful Measures Framework \184\ also 
include elimination of disparities as central principles. CMS also 
requested information in the CY 2022 ESRD PPS proposed rule on revising 
several related CMS programs to make reporting of health disparities 
based on social risk factors and race and ethnicity more comprehensive 
and actionable for ESRD facilities, providers, and patients (86 FR 
36362 through 36367).
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    \181\ Centers for Medicare & Medicaid Services Office of 
Minority Health. The CMS Framework for Health Equity 2022-2032. 
Available at: https://www.cms.gov/sites/default/files/2022-04/CMS%20Framework%20for%20Health%20Equity_2022%2004%2006.pdf.
    \182\ Centers for Medicare & Medicaid Services Office of 
Minority Health. Framework for Health Equity 2022-2032. Available 
at: https://www.cms.gov/sites/default/files/2022-04/CMS%20Framework%20for%20Health%20Equity_2022%2004%2006.pdf.
    \183\ Centers for Medicare & Medicaid Services. CMS Quality 
Strategy. 2016. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/CMS-Quality-Strategy.pdf.
    \184\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.
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    CMS's efforts aimed at advancing health equity to date have 
included providing transparency of health disparities, supporting 
health care providers and health officials with evidence-informed 
solutions to address social determinants of health and advance health 
equity, and reporting to providers on gaps in quality. Some of those 
efforts are:
    <bullet> The CMS Mapping Medicare Disparities Tool, which is an 
interactive map that identifies areas of disparities and is a starting 
point to understand and investigate geographic, racial and ethnic 
differences in health outcomes for Medicare patients.\185\
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    \185\ https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH-Mapping-Medicare-Disparities.
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    <bullet> The Rural-Urban Disparities in Health Care in Medicare 
Report, which details rural-urban differences in health care 
experiences and clinical care.\186\
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    \186\ Centers for Medicare & Medicaid Services. Rural-Urban 
Disparities in Health Care in Medicare. 2019. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Rural-Urban-Disparities-in-Health-Care-in-Medicare-Report.pdf.
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    <bullet> The CMS Innovation Center's Accountable Health Communities 
Model, which includes standardized collection of health-related social 
needs data.
    <bullet> The Guide to Reducing Disparities, which provides an 
overview of key issues related to disparities in readmissions and 
reviews set of activities that can help hospital leaders reduce 
readmissions in diverse populations.\187\
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    \187\ Guide to Reducing Disparities in Readmissions. CMS Office 
of Minority Health. Revised August 2018. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Readmissions_Guide.pdf.
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    <bullet> The Chronic Kidney Disease Disparities: Educational Guide 
for Primary Care, which is intended to foster the development of 
primary care practice teams in order to enhance care for patients who 
are medically underserved with chronic kidney disease and are at risk 
of progression of disease or complications. The guide provides 
information about disparities in the care of patients with chronic 
kidney disease, presents potential actions that may improve care and 
suggests other available resources that may be used by primary care 
practice teams in caring for vulnerable patients.\188\
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    \188\ CMS. Chronic Kidney Disease Disparities: Educational Guide 
for Primary Care. February 2020. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
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    These efforts are informed by reports by the National Academies of 
Science, Engineering and Medicine and the Office of the Assistant 
Secretary for Planning and Evaluation, which have examined the 
influence of social risk factors on several of our programs.
2. Technical Expert Panel (TEP) Focused on Health Disparities 
Represented in the ESRD PPS
    CMS continues to work with federal and private entities to better 
collect and leverage data on social determinants of health to improve 
our understanding of how these factors can be better measured in order 
to reduce health disparities and advance health equity. We continue to 
work to improve our understanding of this important issue and to 
identify policy solutions that achieve the goal of attaining health 
equity for all patients. One of the efforts demonstrating our ongoing 
commitment to uncover hidden disparities within the ESRD PPS includes 
the recently held TEP focused on improving CMS's ability to detect and 
reduce health disparities for our beneficiaries receiving renal 
dialysis services.
    Over the last several years, CMS has been working towards a 
potential refinement of the ESRD PPS. This effort has included focused 
data analysis by CMS and included input of interested parties. Four 
contractor-led TEPs, each with a focus on different aspects of the ESRD 
PPS, have been convened. The specific objective for the latest TEP 
(December 2021) was to gather input from diverse interested parties on 
health disparities arising among patients who are historically 
medically underserved and are represented in the ESRD PPS patient 
populations. The TEP included 16 panelists representing ESRD 
facilities, nephrologists, patient advocates, and representatives from 
professional associations and industry groups. The contractor presented 
results of analysis of health disparities that can be measured by 
currently collected data. Panelists responded with their 
interpretations of these results and provided their insights about what 
they thought were hidden disparities not currently measured. Ideas and 
suggestions for potential changes to data collection for the ESRD PPS 
to better measure and potentially reduce health disparities were 
offered.
    CMS is using this CY 2023 ESRD PPS proposed rule to issue an RFI on 
the topic of health equity issues within the ESRD PPS to obtain input 
from a broader spectrum of interested parties with a goal of improving 
CMS's ability to detect and reduce health disparities for our 
beneficiaries receiving renal dialysis services. The TEP did not 
provide formal recommendations, but provided discussion items and 
suggestions in a subsequent report. TEP presentation materials and 
summary

[[Page 38526]]

reports can be found at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Educational_Resources.
a. TEP Discussion and Comments From Interested Parties
    During the 2021 ESRD PPS TEP, panelists discussed various topics, 
including the types of direct patient care labor used in renal dialysis 
care, the case-mix payment adjustment model, subpopulations at risk of 
health disparities and for whom data are not currently available, and 
the special case of pediatric patients receiving renal dialysis 
services. The following is a synopsis of those discussion topics with 
the exception of pediatric renal dialysis services which is discussed 
in section II.E.4 of this proposed rule. For a more complete summary, 
please review the TEP Summary Report.\189\
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    \189\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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(1) Direct Patient Care Labor Categories in Dialysis Care
    CMS's contractor explained that direct patient care labor 
categories under the ESRD PPS include social workers, nutritionists, 
and other staff, but does not include nephrologists, as they are paid 
separately for their services to dialysis patients. The ESRD facility 
cost report includes lines for administrative and managerial staff. The 
base rate can be broken down into a direct patient care labor-related 
portion and a non-direct patient care labor-related portion, and that 
the direct patient care labor-related portion is multiplied by the 
facilities' CBSA wage index for the included job categories. In areas 
of the country with high wages, the wage index value usually exceeds 
one, increasing the labor-related portion of the base rate. The current 
wage index for the ESRD PPS is based on a pre-reclassified acute care 
hospital wage index and is not derived specifically from ESRD facility 
cost reports.\190\ Panelists and other interested parties have 
commented that actual direct patient care labor costs associated with 
providing renal dialysis services are not currently being accurately 
captured and additional direct patient care labor categories should be 
explored.
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    \190\ Pre-reclassified wage index in ESRD PPS means that wages 
for all hospital registered nurses are combined to obtain the CBSA-
specific wages for RNs in ESRD facilities.
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(2) Case-Mix Model
    The goal of case mix adjustment is to ensure payment accuracy, 
meaning payment for a treatment corresponds with expected resource use 
and cost for that treatment. As noted in the CY 2011 ESRD PPS final 
rule (75 FR 49034), resources required to furnish routine renal 
dialysis services such as staff and equipment time vary by patient. 
Because of the variation in resources required to furnish routine 
dialysis to individuals with varying patient characteristics, 
facilities that treat a greater than average proportion of resource-
intensive patients could be economically disadvantaged if they are paid 
a rate based on average resources. In addition, patients who are 
costlier than average to dialyze may face difficulties gaining access 
to care because a fixed composite payment rate could create a 
disincentive to treat such patients. The purpose of a case-mix 
adjustment based on patient characteristics is to make higher payments 
to ESRD facilities treating more resource-intensive patients, according 
to objective quantifiable criteria. To that end, the goal is to protect 
access to care for the least healthy and most costly beneficiaries and 
adequately compensate facilities with high proportion of those 
beneficiaries.
    The ESRD PPS also includes a facility level adjustment designed to 
align ESRD facility resource use with payment. Facility level 
adjustments account for additional costs that facilities incur 
resulting from treatment volume, location, and proportion of high cost 
treatments (75 FR 49116 through 49127). At the facility level, 
panelists suggested that ESRD facilities located in areas with low 
physician to patient ratios and in disadvantaged areas also be 
considered.
Patient Characteristics and Comorbidities
    Patient characteristics and comorbidities that best predicted 
variation in renal dialysis service costs were introduced in the CY 
2011 ESRD PPS final rule (75 FR 49034) and revised in the CY 2016 PPS 
final rule (80 FR 68974 through 68979). The four case-mix adjusters are 
patient age, body surface area (BSA), low body mass index (BMI) and 
comorbidities (hereditary hemolytic or sickle cell anemia, 
myelodysplastic syndromes, gastrointestinal (GI) tract bleeding with 
hemorrhage, and pericarditis). Panelists noted that BSA and BMI are 
often correlated. Panelists stated there were other factors they 
believe were important to include in the case mix adjustment and 
suggested replacing the current low incidence comorbidities with 
others. One panelist suggested that upper GI bleeds be removed from the 
present list of comorbidities in favor of coronary artery disease 
history, diabetes history, and hypertension. Another panelist offered 
that respiratory failures should be considered, due to the frequency of 
this comorbidity they see in their practice. Finally, panelists 
strongly urged that CMS investigate the direct use of social 
determinants of health in the case-mix adjustment within the ESRD PPS.
(3) Subpopulations With Observable Disparities in Treatment or Outcomes 
Related to ESRD
    Panelists noted the existence of patient sub-populations for whom 
data are not currently available that likely experience health 
disparities with regard to their treatment of ESRD. These include 
beneficiaries at ESRD facilities with low physician to patient ratios, 
as a lack of sufficient physician staffing could lead to poor access to 
care. Panelists also suggested that patients who are experiencing 
homelessness, undocumented, have limited English proficiency, and those 
that have mental health issues, should be considered subgroups at risk 
as well. They noted that many patients fit into more than one of these 
high-risk subgroups. Some panelists questioned whether the ADI was the 
best measure of neighborhood disadvantage as it does not consider 
availability of health resources within neighborhood groupings; 
however, they did not offer suggestions for any alternative measures.
(4) Payment Accuracy
    Payment accuracy, for the purposes of the TEP discussion, was 
defined as how well ESRD PPS payments are aligned with observed costs 
for providing dialysis treatment. Panelists largely agreed that there 
was general alignment of costs and payments through the ESRD PPS, but 
they noted that there were patient groups and provider types for which 
payments were inadequate. The focus of these analyses was to explore 
potential disparities in payment accuracy among patient groups and 
provider types that might exacerbate health disparities. CMS's 
contractor presented information on payment accuracy across patient 
demographic subgroups (including age, sex, race/ethnicity), and 
facility types (including rural, low volume and geographically isolated 
facilities; and wage index and facility ownership type.) The panelists 
discussed at length the relationship between geographic isolation, 
patient access to care, and resulting costs. Panel members suggested 
that access to public transportation may be a relatively

[[Page 38527]]

accurate marker of geographic isolation (defined as the distance 
between ESRD facilities) in urban areas. They also noted that 
geographic isolated communities were likely to have few primary care 
facilities and are also more likely to be ``food deserts.'' The 
panelists suggested that beneficiaries residing in these areas also 
experience difficulties in obtaining timely care for other medical 
conditions, such as diabetes, hypertension, and cardiovascular disease. 
They further noted that geographic isolation and difficulties in 
gaining access to care often results in a gaining access to care often 
results in a renal dialysis patient population with a greater burden of 
disease. Finally, panelists observed that patients in geographically 
isolated areas often turned to the renal dialysis facility for their 
unmet medical care needs. The panelists urged CMS to consider an upward 
payment adjustment for isolated facilities in areas where low income 
and low resources drive up the costs of providing care.
    The panel focused much of their discussion around patient 
populations that faced special challenges in access to renal dialysis 
services and for whom the cost of care was likely higher, but who were 
not accounted for in current data collection activities under the ESRD 
PPS. The panel identified some of these patient subgroups to include: 
patients with housing insecurity as they are ineligible for both organ 
transplantation and home renal dialysis and thus dialyze in-center 
indefinitely; patients that are disabled or amputees who may require 
transfer assistance or extensive wound care; patients in hospice; 
patients who are not treatment compliant because of limited English 
proficiency, low health literacy, or behavior or mental health 
problems.
(5) Incorporation of ESRD PPS Payment Adjustments Based on Social 
Determinants of Health
    Discussions during the December 2021 TEP discussion on SDOH were 
based on the definition of SDOH referring to non-biological factors 
that affect health status in a population.\191\ The TEP members 
suggested making greater use of SDOH in the case-mix payment adjustment 
to help address additional costs associated with caring for patients 
with underlying social and economic risk factors (including, for 
example, housing insecurity, language barriers, lack of transportation, 
etc.) that make getting to and adhering to renal dialysis treatment 
more difficult and costlier for health care providers.
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    \191\ https://academic.oup.com/ije/article/35/4/1111/686451. A 
reference for social determinants of health can be found at the 
following website: https://health.gov/healthypeople/priority-areas/social-determinants-health.
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    There are many factors that can contribute to increased costs. One 
panelist noted that their ESRD facility caseload included patients who 
were undocumented, experiencing homelessness, and had mental health 
issues, and these types of issues should be considered in payment 
models. Panelists strongly suggested that in order to better 
characterize the factors associated with increased treatment costs for 
these medically vulnerable and historically underserved patients who 
are at high-risk for adverse health outcomes, efforts should be made to 
standardize the collection of SDOH among patients enrolled in the ESRD 
PPS. They suggested several means of collecting this information 
including making more extensive use of the SDOH on the 2728 ESRD 
Medical Evidence Report Form (which is completed at the initiation of 
renal dialysis services); using SDOH screening tools and embedding them 
in patient enrollment materials; and using validated third party 
patient experience surveys. The panelists also suggested that this 
information be collected using Z codes in Medicare claims so that it 
could be updated on a regular basis, but cautioned that this would 
increase reporting burden on the facilities. The panelists also 
suggested that placing a modifier on claims to indicate the need for 
intensive resource utilization during renal dialysis services (for 
example, for amputees) may help better identify these costly patients. 
Another panelist suggested the focus should be on acting on the data 
already available instead of collecting more data.
    Following the presentation on differences in treatment patterns 
among subgroups of the ESRD patient population, the panelist discussion 
focused on the following topics: home renal dialysis services, 
additional data elements that should be collected, potential payment 
changes to address disparities, and transportation. Panelists discussed 
potential reasons for differential use of home renal dialysis 
modalities and the need to track preventive care measures delivered 
through the more advanced stages of CKD. They also stated that better 
data on such patient characteristics as health literacy, English 
language proficiency, and transportation availability for treatment 
would help policymakers better understand treatment choices and 
treatment adherence.
    Panelists also discussed treatment frequency and missed treatments 
in response to data presented by the contractor. While treatment 
frequencies did not vary significantly across patient race/ethnicity or 
proxies for income status, the following difference were found for the 
occurrence of missed treatments: American Indian/Alaska Native and 
Black/African American beneficiaries, beneficiaries with proxies 
(Medicare and Medicaid benefits, and ADI ranking) indicating lower 
socioeconomic status, and beneficiaries living in urban areas.\192\ 
Some panelists suggested that missed treatments be incorporated into 
the case-mix adjustment; however, it was noted that the overall number 
of missed treatments is very small, across facility types. CMS data 
indicated on average, only one tenth of one percent of treatments are 
missed.
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    \192\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-presentation-december-2021.pdf; slides 77, 78, 80, and 81.
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3. Request for Information on Advancing Health Equity Under the ESRD 
PPS
    CMS plans to continue working with health care providers, the 
public, and other key interested parties on these important issues to 
identify policy solutions that achieve the goals of attaining health 
equity for all patients. Specifically, we are requesting comments on 
improving CMS's ability to detect and reduce health disparities for our 
beneficiaries receiving renal dialysis services. When responding, 
please note the question to which your comment is addressing.
    Specifically, we are inviting public comment on the following:
    <bullet> What kind of refinements to the ESRD PPS payment policy 
could mitigate health disparities and promote health equity?
    <bullet> Are there specific comorbidities that should be examined 
when calculating the case-mix adjustment that would help better 
represent the ESRD population and help address health disparities? 
Please describe in detail and provide specific data or recommendations 
for analytical frameworks and data sources that CMS should use in 
evaluating such comorbidities.
    <bullet> Are there specific subpopulations whose needs are not 
adequately accounted for by the current ESRD PPS payment policy and 
should be evaluated for potential health disparities?
    <bullet> What are the challenges, and suggested ways to address, 
defining and collecting accurate and standardized, self-identified 
demographic information (including information on race and

[[Page 38528]]

ethnicity, disability, sexual orientation, gender identity, 
socioeconomic status, geography, and language preference) for the 
purposes of reporting, stratifying data by population, and other data 
collection efforts that would refine ESRD PPS payment policy.
    ++ What impact do SDOHs have on resource use and treatment costs 
for patients who are medically underserved?
    ++ Which SDOHs should data collection include?
    ++ How should data regarding SDOH be collected? How should such 
data be used in the ESRD PPS to help mitigate health disparities and 
promote health equity?
    <bullet> How can CMS use existing data sources to better identify 
unmet needs among specific subpopulations that could result in health 
disparities?
    <bullet> How can CMS revise case-mix categories in the ESRD PPS to 
better represent underserved populations?
    <bullet> Are there actions CMS could potentially consider under the 
ESRD PPS to help prevent or mitigate potential bias in renal dialysis 
technologies, treatments, or clinical tools that rely on clinical 
algorithms? What are the relevant considerations for evaluating the 
effectiveness of such actions?
    While we will not be responding to specific comments submitted in 
response to this RFI, we intend to use this input to inform future 
policy development. We look forward to receiving feedback on these 
topics, and we note that responses to the RFI should focus on how the 
suggestions could be applied to the ESRD PPS. Data to support any 
proposed revisions will be extremely important, so please include any 
data that supports your comments. CMS would propose any potential 
changes to payment policies through a separate notice and comment 
rulemaking.
4. Health Disparities Faced by Pediatric Patients Receiving Renal 
Dialysis Services Within the ESRD PPS
a. Background and Pediatric Dialysis Overview \193\
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    \193\ ESRD TEP Summary Report of TEP held on December 10-11, 
2020, p. 18-19. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    Compared to the Medicare dialysis adult population, the Medicare 
dialysis pediatric population is much smaller, comprising approximately 
0.14 percent of the total ESRD patient population in 2019. 
Consequently, only 1.4 percent of ESRD facilities that furnish 
treatment in 2019 were pediatric facilities,\194\ where ``pediatric 
facilities'' is defined as those providing at least 100 pediatric 
dialysis treatments in 2019. These facilities are mostly located in 
urban areas and typically based in a children's hospital or major 
medical center. Pediatric facilities are also either very small 
(furnishing less than 4,000 treatments per year) or very large 
(furnishing at least 10,000 treatments per year). Pediatric facilities 
also have higher direct patient care labor expenditures than adult 
facilities. The overall median person-hours of direct patient care 
labor per treatment in hospital-based facilities in 2019 was one hour 
more for pediatric facilities than for those serving adult Medicare 
dialysis patients. Registered nurses and licensed practical nurses 
contributed roughly double the person-hours toward a pediatric dialysis 
treatment compared to an adult dialysis treatment.
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    \194\ As per the 2020 TEP, 1.4 percent of all ESRD facilities 
were designated pediatrics, when defining pediatrics as >100 
treatments/yr in 2019. See: https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-presentation-december-2020.pdf.
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    To examine pediatric dialysis treatment patterns during the TEP, 
the pediatric dialysis patient population was stratified into two age 
groups: patients younger than age 13 years old and those ages 13 to 17 
years old. Pediatric patients younger than age 13 are more likely to 
dialyze using home peritoneal dialysis when compared to patients ages 
13 to 17 and adults. Use of in-center hemodialysis increases as 
patients get older, and this modality was the most frequently used for 
teenagers (aged 13-17) and adults. Lastly, weekly treatment frequency 
tends to be very similar between the teenage and adult populations. 
Differences in treatment frequency mainly lie in the 99th percentile of 
pediatric patients younger than 13 years of age, who receive an average 
of five in-center hemodialysis sessions per week, a frequency rarely 
seen in the adult population.
b. TEP Discussion and Comments From Interested Parties
    CMS has continued to hear concerns from organizations associated 
with pediatric dialysis about underpayment of pediatric renal dialysis 
services under the current ESRD PPS payment model. These organizations 
emphasize that pediatric renal dialysis services require significantly 
different staffing and supply needs from those of adults. Most of these 
organizations agree there is a need for more finely tuned cost data for 
pediatric dialysis. Many organizations support CMS efforts to explore 
ways to improve collecting pediatric-specific data to better 
characterize the necessary resources and associated costs of delivering 
pediatric ESRD care. During the December 2020 TEP, panelists provided 
suggestions for the pediatric dialysis payment adjustment.\195\ Those 
ideas were also discussed in the CY 2022 ESRD PPS proposed rule (86 FR 
36398; 36402 through 36404). Since pediatric dialysis patients 
represent the smallest sub-population in the Medicare ESRD PPS, CMS is 
using this RFI to ask interested parties to comment on health 
disparities that may exist for this population, and we are requesting 
input through this RFI on how changes to the ESRD PPS, including 
changes to data collection procedures, may help reduce any such 
disparities.
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    \195\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    As noted earlier in this RFI, one of the efforts demonstrating CMS' 
ongoing commitment to closing the health equity gap includes the 
recently held TEP focused on health disparities represented in the ESRD 
PPS. See section II.E.2. of this proposed rule for more information 
about this TEP. The specific objective for this TEP (December 2021) was 
to gather input from a diverse group of interested parties on health 
disparities arising among patient groups represented in the ESRD PPS 
who are historically underserved. Issues regarding the pediatric 
population were discussed.
    Comments from interested parties regarding the payment model for 
pediatric renal dialysis services have mostly focused on the high total 
cost of care for pediatric patients. Interested parties also have noted 
that although pediatric patients disproportionately receive treatment 
in hospital-based facilities, the hospital cost report (CMS Form 2552-
10) does not distinguish between dialysis costs for pediatric and adult 
populations.
(1) Labor
    Interested parties have commented during the TEPs and in response 
to prior rulemaking that the current collection of information does not 
account for the amount of staff time and the specialized staffing that 
is needed to provide care to this population. Many noted that costs 
unique to pediatric dialysis, such as child life specialists, 
developmental and behavioral psychologists, pediatric dieticians, and 
social workers, are not adequately captured in current cost reports or 
claims, and therefore are not

[[Page 38529]]

accounted for in pediatric adjustments (86 FR 36402). Commenters have 
explained that pediatric comorbidities require unique specialized care 
and that the cost of specialized direct patient care labor and supplies 
are not captured in the ESRD PPS.
(2) Case Mix
    According to data provided by CMS's data contractor, compared to 
the national average, the ratio of payment relative to cost, 
standardized relative to the national average for pediatric dialysis 
treatment was the lowest among ESRD beneficiary age groups. Panelists 
asserted that the information that is currently collected in the 
Medicare cost report data do not enable CMS to estimate the true costs 
of treating pediatric patients. They also assert that key comorbidities 
for pediatric patient population are not included in case-mix 
adjustment. Furthermore, there are several challenges in the 
statistical analysis of pediatric dialysis costs. CMS adjusts the per 
treatment base rate for pediatric patients to account for patient age 
and treatment modality (42 CFR 413.235(b)). The small number of 
patients in this population reduces the precision of statistical models 
in estimating the true cost of treatment for pediatric dialysis. 
Another difficulty is disentangling composite rate costs for adult 
versus pediatric patients from the hospital-based facility cost report 
data, as these cost reports do not distinguish between adult and 
pediatric costs.\196\
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    \196\ ESRD TEP Summary Report of TEP held on December 10-11, 
2020, p. 19. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    Commenters have generally supported CMS' efforts to explore ways to 
improve collecting pediatric-specific data to better characterize the 
necessary resources and associated costs of delivering pediatric ESRD 
care. In the CY 2022 ESRD PPS final rule (86 FR 61997), commenters 
suggested CMS make refinements to better capture costs by examining a 
breakdown of patient age groups, pediatric-specific dialysis supplies, 
additional overhead at hospital outpatient ESRD facilities, 
psychosocial support, specialized pharmacy needs and other costs unique 
to the pediatric population for home dialysis.
(3) Pediatric Comorbidities
    One TEP panelist also noted that the comorbidities currently used 
in case-mix adjustment do not include those commonly seen in the 
pediatric population, such as seizure disorders, developmental delays, 
and congenital anomalies. The panelist and an organization representing 
pediatric nephrologists suggested other pediatric comorbidities should 
be considered when calculating the patient level case-mix adjuster. 
Those comorbidities are:
    <bullet> Failure to thrive/feeding disorders--80 percent of 
children under 6 years of age require a G-tube and feeding pump for 
management of oral aversion or supplemental enteral nutrition to 
promote growth and ensure appropriate cognitive development;
    <bullet> Congenital anomalies requiring subspecialty intervention 
(cardiac, orthopedic, colorectal);
    <bullet> Congenital bladder/urinary tract anomalies;
    <bullet> Non-kidney solid organ or stem cell transplant;
    <bullet> Neurocognitive impairment;
    <bullet> Global developmental delay;
    <bullet> Cerebral palsy;
    <bullet> Seizure disorder;
    <bullet> Chronic lung disease (including dependency on continuous 
positive airway pressure machines and ventilators);
    <bullet> Inability to ambulate or transfer;
    <bullet> Vision impairment; and
    <bullet> Feeding tube dependence.
    During the discussion about the inability to transfer, inability to 
ambulate, and needs assistance with daily activities, one panelist 
noted some centers include these comorbidities for their patients, but 
others don't because they see them as age-related. For example, a 10-
month old shouldn't be expected to ambulate. Therefore, the panel 
recommend that these conditions also have a designation as age-related 
which will probably result in more accurate and meaningful data for 
CMS.
5. Request for Information Regarding Dialysis for Pediatric ESRD 
Patients
    CMS plans to continue working with health care providers, the 
public, and other key interested parties on these important issues to 
identify policy solutions that achieve the goals of attaining health 
equity for all patients. Specifically, we are requesting comments on 
improving CMS's ability to detect and reduce health disparities within 
the ESRD PPS payment program for pediatric patients receiving renal 
dialysis services. When responding, please note the question to which 
your comment is addressing.
    Specifically, we are inviting public comment on the following:
    <bullet> Please provide any information and supporting 
documentation about whether there are health disparities in this sub-
population.
    <bullet> How could refinements to the ESRD PPS payment policy 
mitigate health disparities in the pediatric population?
    <bullet> Should a pediatric dialysis payment include a specific 
payment modifier on the claim so that costs for providing pediatric 
dialysis can be further delineated with alternative payment sub-options 
(for example, age related or comorbidity related)?
    <bullet> Are there specific comorbidities that should be examined 
when calculating the case-mix adjuster that would help better represent 
the pediatric ESRD population and help address health inequities? 
Please describe in detail and provide specific data or recommendations 
for analytical frameworks and data sources that CMS should use in 
evaluating such conditions.
    <bullet> Are there other direct patient care labor categories that 
should be considered when determining the cost to provide renal 
dialysis services to pediatric patients, and if so, which ones?
    <bullet> How should CMS revise case-mix categories in the ESRD PPS 
to better represent the pediatric population?
    <bullet> Are there SDOH that are specific to the pediatric ESRD 
population?
    While we will not be responding to specific comments submitted in 
response to this RFI, we intend to use this input to inform future 
policy development. We look forward to receiving feedback on these 
topics, and note that responses to the RFI should focus on how the 
suggestions could be applied to the ESRD PPS. Data to support any 
proposed revisions will be extremely important, so please include any 
data that supports your comments. CMS would propose any potential 
changes to payment policies through a separate notice and comment 
rulemaking.

III. Calendar Year (CY) 2023 Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury (AKI)

A. Background

    The Trade Preferences Extension Act of 2015 (TPEA) (Pub. L. 114-27) 
was enacted on June 29, 2015, and amended the Act to provide coverage 
and payment for dialysis furnished by an ESRD facility to an individual 
with acute kidney injury (AKI). Specifically, section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA amended section 1834 of the Act by adding a subsection (r) to 
provide

[[Page 38530]]

payment, beginning January 1, 2017, for renal dialysis services 
furnished by renal dialysis facilities or providers of services paid 
under section 1881(b)(14) of the Act to individuals with AKI at the 
ESRD PPS base rate, as adjusted by any applicable geographic adjustment 
applied under section 1881(b)(14)(D)(iv)(II) of the Act and adjusted 
(on a budget neutral basis for payments under section 1834(r) of the 
Act) by any other adjustment factor under section 1881(b)(14)(D) of the 
Act that the Secretary elects.
    In the CY 2017 ESRD PPS final rule, we finalized several coverage 
and payment policies to implement subsection (r) of section 1834 of the 
Act and the amendments to section 1881(s)(2)(F) of the Act, including 
the payment rate for AKI dialysis (81 FR 77866 through 77872 and 
77965). We interpret section 1834(r)(1) of the Act as requiring the 
amount of payment for AKI dialysis services to be the base rate for 
renal dialysis services determined for a year under the ESRD PPS base 
rate as set forth in Sec.  413.220, updated by the ESRD bundled market 
basket percentage increase factor minus a productivity adjustment as 
set forth in Sec.  413.196(d)(1), adjusted for wages as set forth in 
Sec.  413.231, and adjusted by any other amounts deemed appropriate by 
the Secretary under Sec.  413.373. We codified this policy in Sec.  
413.372 (81 FR 77965).

B. Proposed Annual Payment Rate Update for CY 2023

1. CY 2023 AKI Dialysis Payment Rate
    The payment rate for AKI dialysis is the ESRD PPS base rate 
determined for a year under section 1881(b)(14) of the Act, which is 
the finalized ESRD PPS base rate, including the applicable annual 
productivity-adjusted market basket payment update, geographic wage 
adjustments, and any other discretionary adjustments, for such year. We 
note that ESRD facilities have the ability to bill Medicare for non-
renal dialysis items and services and receive separate payment in 
addition to the payment rate for AKI dialysis.
    As discussed in section II.B.1.d of this proposed rule, the 
proposed CY 2023 ESRD PPS base rate is $264.09, which reflects the 
application of the proposed CY 2023 wage index budget-neutrality 
adjustment factor of 0.999992 and the CY 2023 proposed ESRDB market 
basket increase of 2.8 percent reduced by the productivity adjustment 
of 0.4 percentage point, that is, 2.4 percent. Accordingly, we are 
proposing a CY 2023 per treatment payment rate of $264.09 for renal 
dialysis services furnished by ESRD facilities to individuals with AKI. 
This payment rate is further adjusted by the wage index, as discussed 
in the next section of this proposed rule
2. Geographic Adjustment Factor
    Under section 1834(r)(1) of the Act and regulations at Sec.  
413.372, the amount of payment for AKI dialysis services is the base 
rate for renal dialysis services determined for a year under section 
1881(b)(14) of the Act (updated by the ESRD bundled market basket and 
reduced by the productivity adjustment), as adjusted by any applicable 
geographic adjustment factor applied under section 
1881(b)(14)(D)(iv)(II) of the Act. Accordingly, we apply the same wage 
index under Sec.  413.231 that is used under the ESRD PPS and discussed 
in section II.B.1.b of this proposed rule. The AKI dialysis payment 
rate is adjusted by the wage index for a particular ESRD facility in 
the same way that the ESRD PPS base rate is adjusted by the wage index 
for that facility (81 FR 77868). Specifically, we apply the wage index 
to the labor-related share of the ESRD PPS base rate that we utilize 
for AKI dialysis to compute the wage adjusted per-treatment AKI 
dialysis payment rate. As stated previously, we are proposing a CY 2023 
AKI dialysis payment rate of $264.09, adjusted by the ESRD facility's 
wage index. We are also proposing that the wage index floor increase 
discussed in section II.B.1.b.(2) of this proposed rule and the 
permanent 5-percent cap on wage index decreases discussed in section 
II.B.1.b.(3) of this proposed rule that we are proposing to apply under 
the ESRD PPS would apply in the same way to AKI dialysis payments to 
ESRD facilities.

IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)

A. Background

    For a detailed discussion of the End-Stage Renal Disease Quality 
Incentive Program's (ESRD QIP's) background and history, including a 
description of the Program's authorizing statute and the policies that 
we have adopted in previous final rules, we refer readers to the 
following final rules:
    <bullet> CY 2011 ESRD PPS final rule (75 FR 49030);
    <bullet> CY 2012 ESRD PPS final rule (76 FR 628);
    <bullet> CY 2012 ESRD PPS final rule (76 FR 70228);
    <bullet> CY 2013 ESRD PPS final rule (77 FR 67450);
    <bullet> CY 2014 ESRD PPS final rule (78 FR 72156);
    <bullet> CY 2015 ESRD PPS final rule (79 FR 66120);
    <bullet> CY 2016 ESRD PPS final rule (80 FR 68968);
    <bullet> CY 2017 ESRD PPS final rule (81 FR 77834);
    <bullet> CY 2018 ESRD PPS final rule (82 FR 50738);
    <bullet> CY 2019 ESRD PPS final rule (83 FR 56922);
    <bullet> CY 2020 ESRD PPS final rule (84 FR 60648);
    <bullet> CY 2021 ESRD PPS final rule (85 FR 71398); and
    <bullet> CY 2022 ESRD PPS final rule (86 FR 61874).
    We have also codified many of our policies for the ESRD QIP at 42 
CFR 413.177 and Sec.  413.178.

B. Flexibilities for the ESRD QIP in Response to the Public Health 
Emergency (PHE) Due to COVID-19

1. Measure Suppression Policy for the Duration of the COVID-19 PHE
    In the CY 2022 ESRD PPS final rule, we finalized a measure 
suppression policy for the duration of the COVID-19 Public Health 
Emergency (PHE) (86 FR 61910 through 61913). We stated that we had 
previously identified the need for flexibility in our quality programs 
to account for the impact of changing conditions that are beyond 
participating facilities' control. We identified this need because we 
would like to ensure that facilities are not affected negatively when 
their quality performance suffers not due to the care provided, but due 
to external factors, such as the COVID-19 PHE.
    Specifically, we finalized a policy for the duration of the PHE for 
COVID-19 that enables us to suppress the use of measure data for 
scoring and payment adjustments if we determine that circumstances 
caused by the COVID-19 PHE have affected the measures and the resulting 
Total Performance Scores (TPSs) significantly. We also finalized the 
adoption of Measure Suppression Factors which will guide our 
determination of whether to suppress an ESRD QIP measure for one or 
more program years where the baseline or performance period of the 
measure overlaps with the PHE for COVID-19. The finalized Measure 
Suppression Factors are as follows:
    <bullet> Measure Suppression Factor 1: Significant deviation in 
national performance on the measure during the COVID-19 PHE, which 
could be significantly better or significantly worse compared to 
historical performance during the immediately preceding program years.
    <bullet> Measure Suppression Factor 2: Clinical proximity of the 
measure's

[[Page 38531]]

focus to the relevant disease, pathogen, or health impacts of the 
COVID-19 PHE.
    <bullet> Measure Suppression Factor 3: Rapid or unprecedented 
changes in:
    ++ clinical guidelines, care delivery or practice, treatments, 
drugs, or related protocols, or equipment or diagnostic tools or 
materials; or
    ++ the generally accepted scientific understanding of the nature or 
biological pathway of the disease or pathogen, particularly for a novel 
disease or pathogen of unknown origin.
    <bullet> Measure Suppression Factor 4: Significant national 
shortages or rapid or unprecedented changes in:
    ++ healthcare personnel;
    ++ medical supplies, equipment, or diagnostic tools or materials; 
or
    ++ patient case volumes or facility-level case mix.
    We also stated that we would still provide confidential feedback 
reports to facilities on their measure rates on all measures to ensure 
that they are made aware of the changes in performance rates that we 
have observed. We also stated that we would publicly report suppressed 
measure data with appropriate caveats noting the limitations of the 
data due to the PHE for COVID-19. We strongly believe that publicly 
reporting these data would balance our responsibility to provide 
transparency to consumers and uphold safety while ensuring that 
hospitals are not unfairly scored or penalized through payment under 
the ESRD QIP.
    We are not proposing any changes to the measure suppression policy 
in this proposed rule.
2. Proposals To Suppress Six ESRD QIP Measures for PY 2023
a. Background
    COVID-19 has had significant negative health effects--on 
individuals, communities, nations, and globally. Consequences for 
individuals who have COVID-19 include morbidity, hospitalization, 
mortality, and post-COVID conditions (also known as long COVID). As of 
early March 2022, over 78 million COVID-19 cases, 4.5 million new 
COVID-19 related hospitalizations, and 900,000 COVID-19 deaths have 
been reported in the U.S.\197\ Provisional life expectancy data for CY 
2020 showed that COVID-19 reduced life expectancy by 1.5 years overall, 
with the estimated impact disproportionately affecting minority 
communities.\198\ According to this analysis, the estimated life 
expectancy reduction for Black and Latino populations is three times 
the estimate when comparing to the white population.\199\ With a death 
toll surpassing that of the 1918 influenza pandemic, COVID-19 is the 
deadliest disease in American history.\200\
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    \197\ https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/index.html.
    \198\ Arias E, Tejada-Vera B, Ahmad F, Kochanek KD. Provisional 
life expectancy estimates for 2020. Vital Statistics Rapid Release; 
no 15. Hyattsville, MD: National Center for Health Statistics. July 
2021. DOI: https://dx.doi.org/10.15620/cdc:107201.
    \199\ Andrasfay, T., & Goldman, N. (2021). Reductions in 2020 US 
life expectancy due to COVID-19 and the disproportionate impact on 
the Black and Latino populations. Proceedings of the National 
Academy of Sciences of the United States of America, 118(5), 
e2014746118. https://www.pnas.org/content/118/5/e2014746118.
    \200\ Branswell, Helen. Covid overtakes 1918 Spanish flu as 
deadliest disease in U.S. history. STAT. September 20, 2021. 
Available at: https://www.statnews.com/2021/09/20/covid-19-set-to-overtake-1918-spanish-flu-as-deadliest-disease-in-american-history/.
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    Additionally, impacts of the pandemic continued to accelerate in 
2021 as compared with 2020. The Delta variant of COVID-19 (B.1.617.2) 
surfaced in the United States in early-to-mid 2021. Studies have shown 
that the Delta variant was up to 60 percent more transmissible than the 
previously dominant Alpha variant in 2020.\201\ Further, in November 
2021, the number of COVID-19 deaths for 2021 surpassed the total deaths 
for 2020. According to Center for Disease Control and Prevention (CDC) 
data, the total number of deaths involving COVID-19 reached 385,453 in 
2020 and 451,475 in 2021.\202\ With this increased transmissibility and 
morbidity associated with the Delta variant, we remain concerned about 
using measure data that is significantly impacted by COVID-19 for 
scoring and payment purposes for the PY 2023 program year.
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    \201\ Allen H, Vusirikala A, Flannagan J, et al. Increased 
Household Transmission of COVID-19 cases associated with SARS-CoV-2 
Variant of Concern B.1.617.2: a national case-control study. Public 
Health England. 2021.
    \202\ https://www.cdc.gov/nchs/nvss/vsrr/covid19/index.htm.
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    In the CY 2022 ESRD PPS final rule, we finalized the suppression of 
the following measures for the PY 2022 program year:

<bullet> Standardized Hospitalization Ratio (SHR) clinical measure
<bullet> Standardized Readmission Ratio (SRR) clinical measure
<bullet> Long-Term Catheter Rate clinical measure
<bullet> In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS) Survey Administration clinical 
measure

    Since the publication of the CY 2022 ESRD PPS final rule, we have 
conducted analyses on all ESRD QIP measures to determine whether and 
how COVID-19 has impacted the validity of the data used to calculate 
these measures for PY 2023. Our findings from these analyses are 
discussed below. Based on those analyses, we are proposing to suppress 
the following measures for PY 2023:
    <bullet> SHR clinical measure (under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years);
    <bullet> SRR clinical measure (under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years);
    <bullet> Long-Term Catheter Rate clinical measure (under Measure 
Suppression Factor 1, Significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse compared to historical performance during 
the immediately preceding program years);
    <bullet> In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS) Survey Administration clinical 
measure (under Measure Suppression Factor 1, Significant deviation in 
national performance on the measure during the COVID-19 PHE, which 
could be significantly better or significantly worse compared to 
historical performance during the immediately preceding program years; 
and Measure Suppression Factor 4, Significant national shortages or 
rapid or unprecedented changes in:
    ++ healthcare personnel; or
    ++ patient case volumes or facility-level case mix);
    <bullet> Percentage of Prevalent Patients Waitlisted (PPPW) 
clinical measure (under Measure Suppression Factor 1, Significant 
deviation in national performance on the measure during the COVID-19 
PHE, which could be significantly better or significantly worse 
compared to historical performance during the immediately preceding 
program years; and Measure Suppression Factor 4, Significant national 
shortages or rapid or unprecedented changes in:
    ++ patient case volumes or facility-level case mix); and
    <bullet> Kt/V Dialysis Adequacy clinical measure (under Measure 
Suppression Factor 1, Significant deviation in national performance on 
the measure during the COVID-19 PHE, which could

[[Page 38532]]

be significantly better or significantly worse compared to historical 
performance during the immediately preceding program years).
    In the CY 2021 ESRD PPS final rule, we finalized that the mTPS for 
PY 2023 would be 57, and also finalized an associated payment reduction 
scale (85 FR 71471). However, as discussed below, we are proposing in 
this proposed rule to update the mTPS and payment reduction scale to 
reflect our proposal to suppress six measures for PY 2023, which is 
almost half of the current ESRD QIP measure set. We are also proposing 
to amend 413.178(a)(8) to state that the definition of the mTPS does 
not apply to PY 2023. The measures that we are proposing to score for 
PY 2023 are the Clinical Depression Screening and Follow-Up reporting 
measure, the Standardized Fistula Rate clinical measure, the 
Hypercalcemia clinical measure, the Standardized Transfusion Ratio 
(STrR) reporting measure, the Ultrafiltration Rate reporting measure, 
the Medication Reconciliation for Patients Receiving Care at Dialysis 
Facilities (MedRec) reporting measure, the National Healthcare Safety 
Network (NHSN) Bloodstream Infection (BSI) clinical measure, and the 
NHSN Dialysis Event reporting measure. The proposed re-calculated mTPS 
for PY 2023 would be 80. If one or more of our measure suppression 
proposals is not finalized, then we would to revise the mTPS for PY 
2023 so that it includes all measures that we finalize for scoring for 
PY 2023. We are also proposing to codify these proposals in our 
regulations by adding a new 413.178(i), which specifies that we will 
calculate a measure rate for each of the suppressed measures, but will 
not score facility performance on those suppressed measures or include 
them in the facility's TPS for PY 2023. Proposed 413.178(i) would also 
define the mTPS for PY 2023 as the total performance score that an ESRD 
facility would receive if, during the baseline period, it performed at 
the 50th percentile of national ESRD facility performance on the 
measures described in proposed 413.178(i)(2). As discussed in section 
IV.C of this proposed rule, we are also proposing to calculate the 
performance standards for PY 2023 using CY 2019 data, and are proposing 
to revise our regulations at 413.178(d)(2) to reflect this proposal.
    We continue to be concerned about the impact of the COVID-19 PHE, 
but we are encouraged by the rollout of COVID-19 vaccinations and 
treatment for those diagnosed with COVID-19 and we believe that 
facilities are better prepared to treat patients with COVID-19. Our 
measure suppression policy focuses on a short-term, equitable approach 
during this unprecedented PHE, and was not intended for indefinite 
application. Additionally, we want to emphasize the long-term 
importance of incentivizing quality care tied to payment. The ESRD QIP 
is an example of our long-standing effort to link payments to 
healthcare quality in the dialysis facility setting.\203\
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    \203\ CMS has also partnered with the CDC in a joint Call to 
Action on safety, which is focused on our core goal to keep patients 
safe. Fleisher et al. (2022). New England Journal of Medicine. 
Article available here: https://www.nejm.org/doi/full/10.1056/NEJMp2118285?utm_source=STAT+Newsletters&utm_campaign=8933b7233e-MR_COPY_01&utm_medium=email&utm_term=0_8cab1d7961-8933b7233e-151759045.
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    We understand that the COVID-19 PHE is ongoing and unpredictable in 
nature, however, we believe that 2022 has a more promising outlook in 
the fight against COVID-19. As we enter the third year of the pandemic, 
healthcare providers have gained experience managing the disease, 
surges of COVID-19 infection, and adjusting to supply chain 
fluctuations. In 2022 and the upcoming years, we anticipate continued 
availability and increased uptake in the use of vaccinations,\204\ 
including the availability and use of vaccination for young children 
ages 5 to 11, who were not eligible for vaccination for the majority of 
2021 and for whom only 32 percent had received at least one dose as of 
February 23, 2022.<SUP>205 206</SUP> Additionally, FDA has expanded 
availability of at-home COVID-19 treatment, having issued the first 
emergency use authorizations (EUAs) for two oral antiviral drugs for 
the treatment of COVID-19 in December 2021.<SUP>207 208</SUP> Finally, 
the Biden-Harris Administration has mobilized efforts to distribute 
home test kits,\209\ N-95 masks,\210\ and increase COVID-19 testing in 
schools,\211\ providing more treatment and testing to the American 
people. Therefore, our goal is to continue resuming the use of all 
measure data for scoring and payment adjustment purposes beginning with 
the PY 2024 ESRD QIP. That is, for PY 2024, for each facility, we would 
plan to calculate measure scores for all of the measures in the ESRD 
QIP measure set for which the facility reports the minimum number of 
cases. We would then calculate a TPS for each eligible facility and use 
the established methodology to determine whether the facility would 
receive a payment reduction for the given payment year. We understand 
that the PHE for COVID-19 is ongoing and unpredictable in nature, and 
we would continue to assess the impact of the PHE on measure data used 
for the ESRD QIP.
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    \204\ Schneider, E. et al. (2022). The Commonwealth Fund. 
Responding to Omicron: Aggressively Increasing Booster Vaccinations 
Now Could Prevent Many Hospitalizations and Deaths. Available at: 
https://www.commonwealthfund.org/blog/2022/responding-omicron.
    \205\ KFF, Update on COVID-19 Vaccination of 5-11 Year Olds in 
the U.S., https://www.kff.org/coronavirus-covid-19/issue-brief/update-on-covid-19-vaccination-of-5-11-year-olds-in-the-u-s/.
    \206\ https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-infections/children-and-covid-19-vaccination-trends/.
    \207\ U.S. Food and Drug Administration. (2021). Coronavirus 
(COVID-19) Update: FDA Authorizes First Oral Antiviral for Treatment 
of COVID-19. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-first-oral-antiviral-treatment-covid-19.
    \208\ U.S. Food and Drug Administration. (2021). Coronavirus 
(COVID-19) Update: FDA Authorizes Additional Oral Antiviral for 
Treatment of COVID-19 in Certain Adults. Available at: https://
www.fda.gov/news-events/press-announcements/coronavirus-covid-19-
update-fda-authorizes-additional-oral-antiviral-treatment-covid-19-
certain#:~:text=Today%2C%20the%20U.S.%20Food%20and,progression%20to%2
0severe%20COVID%2D19%2C.
    \209\ The White House. (2022). Fact Sheet: The Biden 
Administration to Begin Distributing At-Home, Rapid COVID-19 Tests 
to Americans for Free. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/14/fact-sheet-the-biden-administration-to-begin-distributing-at-home-rapid-covid-19-tests-to-americans-for-free/.
    \210\ Miller, Z. 2021. The Washington Post. Biden to give away 
400 million N95 masks starting next week Available at: https://www.washingtonpost.com/politics/biden-to-give-away-400-million-n95-masks-starting-next-week/2022/01/19/5095c050-7915-11ec-9dce-7313579de434_story.html.
    \211\ The White House. (2022). FACT SHEET: Biden-Harris 
Administration Increases COVID-19 Testing in Schools to Keep 
Students Safe and Schools Open. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/12/fact-sheet-biden-harris-administration-increases-covid-19-testing-in-schools-to-keep-students-safe-and-schools-open/.
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b. Proposal To Suppress the SHR Clinical Measure for PY 2023
    In this proposed rule, we are proposing to suppress the SHR 
clinical measure for PY 2023 program year under Measure Suppression 
Factor 1, Significant deviation in national performance on the measure 
during the COVID-19 PHE, which could be significantly better or 
significantly worse as compared to historical performance during the 
immediately preceding program years. We refer readers to the CY 2022 
ESRD PPS final rule for previous analysis on the impact of the COVID-19 
PHE on SHR clinical measure performance (86 FR 61914 through 61915). 
The SHR clinical measure is an all-cause, risk-standardized rate of 
hospitalizations during a 1-year observation window. The standardized 
hospitalization ratio is

[[Page 38533]]

defined as the ratio of the number of hospital admissions that occur 
for Medicare ESRD dialysis patients treated at a particular facility to 
the number of hospitalizations that would be expected given the 
characteristics of the facility's patients and the national norm for 
facilities. This measure is calculated as a ratio but can also be 
expressed as a rate. The intent of the SHR clinical measure is to 
improve health care delivery and care coordination to help reduce 
unplanned hospitalization among ESRD patients.
    Based on our analysis of Medicare dialysis patient data from 
January 2021 through September 2021, we found that hospitalizations 
involving patients diagnosed with COVID-19 resulted in higher mortality 
rates, higher rates of discharge to hospice or skilled nursing 
facilities, and lower rates of discharge to home than hospitalizations 
involving patients who were not diagnosed with COVID-19. Specifically, 
the hospitalization rate for Medicare dialysis patients diagnosed with 
COVID-19 was up to three times greater than the hospitalization rate 
during the same period for Medicare dialysis patients who were not 
diagnosed with COVID-19, which is much greater than the relative risk 
of hospitalization for any other comorbidity. Similar to our analysis 
in the CY 2022 ESRD PPS final rule (86 FR 61915), we believe that this 
indicates that COVID-19 has had a significant impact on the 
hospitalization rate for dialysis patients. Because COVID-19 Medicare 
dialysis patients are at significantly greater risk of hospitalization, 
and the SHR clinical measure was not developed to account for the 
impact of COVID-19 on this patient population, we continue to be 
concerned about the effects of the observed COVID-19 hospitalizations 
on the SHR clinical measure. We also note that the waves of the Delta 
and Omicron variants during 2021 affected different regions of the 
country at different rates depending on factors like time of year, 
geographic density, state and local policies, and health care system 
capacity.<SUP>212 213</SUP> Because of the increased hospitalization 
risk associated with COVID-19 and the Medicare dialysis patient 
population, we are concerned that these regional differences in COVID-
19 rates have led to distorted hospitalization rates such that we could 
not reliably make national, side-by-side comparisons of facility 
performance on the SHR clinical measure.
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    \212\ Cuadros DF, Miller FD, Awad S, Coule P, MacKinnon NJ. 
Analysis of Vaccination Rates and New COVID-19 Infections by US 
County, July-August 2021. JAMA Netw Open. 2022;5(2):e2147915. 
doi:10.1001/jamanetworkopen.2021.47915
    \213\ Iuliano AD, Brunkard JM, Boehmer TK, et al. Trends in 
Disease Severity and Health Care Utilization During the Early 
Omicron Variant Period Compared with Previous SARS-CoV-2 High 
Transmission Periods--United States, December 2020-January 2022. 
MMWR Morb Mortal Wkly Rep 2022;71:146-152. DOI: http://dx.doi.org/10.15585/mmwr.mm7104e4external icon.
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    We also analyzed data from January 2020 through September 2021, 
which indicates that hospitalization \214\ and mortality rates \215\ 
were 6 times higher in the ESRD population. Although our measure 
suppression analysis focuses on CY 2020 and CY 2021 data and we only 
have partial CY 2021 data available at this time, we believe that the 
remaining 2021 data will continue to show similar trends. Not only are 
there effects on patients diagnosed with COVID-19, but our data 
indicates that the presence of the virus continued to strongly affect 
hospital admission patterns of dialysis patients through September 2021 
and we believe that similar effects will be seen in October through 
December 2021 data.
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    \214\ https://www.cms.gov/files/document/medicare-covid-19-data-snapshot-services-through-2021-08-21.pdf.
    \215\ Turgutalp, K., Ozturk, S., Arici, M. et al. Determinants 
of mortality in a large group of hemodialysis patients hospitalized 
for COVID-19. BMC Nephrol 22, 29 (2021). https://doi.org/10.1186/s12882-021-02233-0.
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    Following emergence of the Delta variant in 2021, we have also 
observed disproportionate increases in COVID-19 cases and related 
deaths among ESRD beneficiaries. Similarly, emergence of the Omicron 
variant in December 2021 was followed by another mortality spike. 
Because the COVID-19 pandemic generally, and the Delta and Omicron 
waves specifically, swept through geographic regions of the country 
unevenly, we are additionally concerned that facilities in different 
regions of the country would have been affected differently throughout 
2021, thereby skewing measure performance and affecting national 
comparability. Based on the impact of COVID-19 on SHR results, 
including the continued deviation in measurement, we believe that the 
SHR clinical measure meets our criteria for Factor 1 where performance 
data would significantly deviate from historical data performance and 
would be considered unreliable. Therefore, we believe that the 
resulting performance measurement on the SHR clinical measure would not 
be sufficiently reliable or valid for use in the ESRD QIP for scoring 
and payment adjustment purposes.
    We believe that the SHR clinical measure is an important part of 
the ESRD QIP measure set. However, we are concerned that the COVID-19 
PHE would continue affecting measure performance on the current SHR 
clinical measure such that we would not be able to score facilities 
fairly or equitably on it for PY 2023. However, we are proposing to 
continue to collect the measure's claims data from participating 
facilities so that we can monitor the effect of the circumstances on 
quality measurement and determine the appropriate policies in the 
future. We also propose to continue providing confidential feedback 
reports to facilities as part of program activities to ensure that they 
are made aware of the changes in performance rates that we observe. We 
intend to publicly report PY 2023 data where feasible and appropriately 
caveated.
    In the CY 2022 ESRD PPS final rule, we stated that we were 
currently exploring ways to adjust effectively for the systematic 
effects of the COVID-19 PHE on hospital admissions for the SHR clinical 
measure (86 FR 61915). We discuss our technical specifications update 
to the SHR clinical measure to risk-adjust for patients with a history 
of COVID-19 in section IV.B.3 of this proposed rule.
    We welcome public comment on our proposal to suppress the SHR 
clinical measure for PY 2023.
c. Proposal To Suppress the SRR Clinical Measure for PY 2023
    In this proposed rule, we are proposing to suppress the SRR 
clinical measure for the PY 2023 program year under Measure Suppression 
Factor 1, significant deviation in national performance on the measure 
during the COVID-19 PHE, which could be significantly better or 
significantly worse compared to historical performance during the 
immediately preceding program years. We refer readers to the CY 2022 
ESRD PPS final rule for previous analysis on the impact of the COVID-19 
PHE on SRR clinical measure performance (86 FR 61915 through 61916). 
The SRR clinical measure assesses the number of readmission events for 
the patients at a facility, relative to the number of readmission 
events that would be expected based on overall national rates and the 
characteristics of the patients at that facility as well as the number 
of discharges. The intent of the SRR clinical measure is to improve 
care coordination between ESRD facilities and hospitals to improve 
communication prior to and post discharge.
    Based on our analysis, we have found that index discharge 
hospitalizations involving dialysis patients diagnosed

[[Page 38534]]

with COVID-19 resulted in lower readmissions and higher mortality rates 
within the first 7 days in 2021. We used index hospitalizations 
occurring from January 2020 through August 2021 to identify eligible 
index hospitalizations and unplanned hospital readmissions. Focusing on 
the partial year data for 2021, we found that total hospital 
readmissions, average number of index discharges, and average number of 
readmissions were lower than in full-year data for 2018 and 2019. We 
note that our analysis of 2020 data revealed that overall average 
readmission rates were similar to pre-COVID years, but that 
hospitalization in COVID-19 patients resulted in very different 
outcomes, with increased in-hospital and early post-discharge death and 
increased discharge to subacute rehabilitation facilities. Although our 
measure suppression focuses on CY 2021 data and we only have partial CY 
2021 data available at this time, we believe that the remaining 2021 
data will continue to show similar trends. Our analysis of partial year 
data for 2021 found that average re-admission rates were slightly lower 
overall compared to 2018 and 2019. Although we are still analyzing the 
data for 2021, we believe that similar to 2020, these competing 
outcomes of index hospitalization continue to have a significant effect 
on readmission rates, affecting interpretation of hospitalization 
outcomes between COVID-associated and non-COVID events. Based on this 
demonstrated association between recent COVID-19 infection and altered 
patterns of hospitalization and readmission compared to those for non-
infected ESRD patients, we remain concerned about the effects of these 
observations on the calculations for the SRR clinical measure. We note 
that our preliminary analyses only looked at data through August 2021, 
which would not fully capture readmission data from the Delta or 
Omicron surges of the COVID-19 PHE. Based on the impact of COVID-19 on 
SRR results, including the continued deviation in measurement, we 
believe that the SRR clinical measure meets our criteria for Factor 1 
where performance data would significantly deviate from historical data 
performance and would be considered unreliable. Therefore, we believe 
that the resulting performance measurement on the SRR clinical measure 
would not be sufficiently reliable or valid for use in the PY 2023 ESRD 
QIP for scoring and payment adjustment purposes.
    We believe that the SRR clinical measure is an important part of 
the ESRD QIP Program measure set. However, we remain concerned that the 
PHE for the COVID-19 pandemic continues to affect measure performance 
on the current SRR clinical measure such that we would not be able to 
score facilities fairly or equitably on it for PY 2023. Additionally, 
we propose continuing to collect the measure's claims data from 
participating facilities so that we can monitor the effect of the 
circumstances on quality measurement and determine the appropriate 
policies in the future. We would also continue to provide confidential 
feedback reports to facilities as part of program activities to ensure 
that they are made aware of the changes in performance rates that we 
observe. We intend to publicly report PY 2023 data where feasible and 
appropriately caveated.
    In the CY 2022 ESRD PPS final rule, we stated that we were 
currently exploring ways to adjust effectively for the systematic 
effects of the COVID-19 PHE on hospital admissions for the SRR clinical 
measure (86 FR 61916). We discuss our technical specifications update 
to the SRR clinical measure to risk-adjust for patients with a history 
of COVID-19 in section IV.B.3 of this proposed rule.
    We welcome public comment on our proposal to suppress the SRR 
clinical measure for PY 2023.
d. Proposal To Suppress the Long-Term Catheter Rate Clinical Measure 
for PY 2023
    In this proposed rule, we are proposing to suppress the Long-Term 
Catheter Rate clinical measure for PY 2023 program year under Measure 
Suppression Factor 1, significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse as compared to historical performance 
during the immediately preceding program years. We refer readers to the 
CY 2022 ESRD PPS final rule for previous analysis on the impact of the 
COVID-19 PHE on the Long-Term Catheter Rate clinical measure for PY 
2022 (86 FR 61917).
    In the CY 2018 ESRD PPS final rule, we finalized the inclusion of 
the Hemodialysis Vascular Access: Long-Term Catheter Rate clinical 
measure in the ESRD QIP measure set beginning with the PY 2021 program 
(82 FR 50778). The Long-Term Catheter Rate clinical measure is defined 
as the percentage of adult hemodialysis patient-months using a catheter 
continuously for three months or longer for vascular access. The 
measure is based on vascular access data reported in CMS' ESRD Quality 
Reporting System (EQRS) (previously, CROWNWeb) and excludes patient-
months where a patient has a catheter in place and has a limited life 
expectancy. The measure evaluates the vascular access type used to 
deliver hemodialysis. The intent of the Long-Term Catheter Rate 
clinical measure is to improve health care delivery and patient safety.
    Our analysis based on the available data indicated that long-term 
catheter use rates increased significantly during the COVID-19 PHE. 
Average long-term catheter rates were averaging around 12 percent 
during the period CY 2017 through early CY 2020. As we noted in the CY 
2022 ESRD PPS final rule, we observed an increase in long-term catheter 
rates during the pandemic in CY 2020, with rates reaching a peak of 
14.7 percent in June 2020 and declining slightly to 14.3 percent in 
July and August 2020 (86 FR 61917). After remaining around 12 percent 
for 3 consecutive years, in the CY 2022 ESRD PPS final rule we stated 
that we view a sudden 2 percent increase in average long-term catheter 
rates as a significant deviation compared to historical performance 
during immediately preceding years (86 FR 61917). Since then, we have 
observed a steady rate increase throughout CY 2021, with unadjusted 
catheter rates reaching a peak of 17.9 percent in September 2021. By 
contrast, the unadjusted catheter rates in CY 2019 peaked at 12 
percent. We believe that the steep increase in catheter rates during CY 
2021 indicates a significant deviation in performance on the Long-Term 
Catheter Rate clinical measure. We are concerned that the COVID-19 PHE 
continues to impact the ability of ESRD patients to seek treatment from 
medical providers regarding their catheter use, either due to 
difficulty accessing treatment due to COVID-19 precautions at 
healthcare facilities, or due to increased patient reluctance to seek 
medical treatment because of risk of COVID-19 precautions at healthcare 
facilities, or due to increased patient reluctance to seek medical 
treatment because of risk of COVID-19 exposure and increased associated 
health risks, and that these contributed to the significant increase in 
long-term catheter use rates.
    We believe that the Long-Term Catheter Rate clinical measure is an 
important part of the ESRD QIP measure set. However, we are concerned 
that the PHE for COVID-19 affected measure performance on the current 
Long-Term Catheter Rate clinical measure such that we would not be able 
to score facilities fairly or equitably on it for PY 2023. 
Additionally, participating facilities

[[Page 38535]]

would continue to report the measure's data to CMS so that we could 
monitor the effect of the circumstances on quality measurement and 
determine the appropriate policies in the future. We would also 
continue to provide confidential feedback reports to facilities as part 
of program activities to ensure that they are made aware of the changes 
in performance rates that we observe. We also intend to publicly report 
PY 2023 data where feasible and appropriately caveated.
    We welcome public comment on our proposal to suppress the Long-Term 
Catheter Rate clinical measure for PY 2023.
e. Proposal To Suppress the ICH CAHPS Clinical Measure for PY 2023
    We are proposing to suppress the ICH CAHPS measure for the PY 2023 
program year under Measure Suppression Factor 1, significant deviation 
in national performance on the measure during the PHE for COVID-19, 
which could be significantly better or significantly worse as compared 
to historical performance during the immediately preceding program 
years and Measure Suppression Factor 4, significant national shortages 
or rapid or unprecedented changes in healthcare personnel and patient 
case mix. We would calculate facilities' ICH CAHPS measure rates, but 
we would not use these measure rates to generate achievement or 
improvement points for this measure. Participating facilities would 
continue to report the measure data to CMS so that we can monitor the 
effect of the circumstances on quality measurement and consider 
appropriate policies in the future. We would continue to provide 
confidential feedback reports to facilities as part of program 
activities to allow facilities to track the changes in performance 
rates that we observe. We also intend to publicly report CY 2021 
measure rate data where feasible and appropriately caveated. As noted 
in section IV.B.1 of this proposed rule, we believe that publicly 
reporting suppressed measure data is an important step in providing 
transparency and upholding the quality of care and safety for 
consumers.
    In the CY 2022 ESRD PPS final rule (86 FR 61916 through 61917), we 
finalized our proposal to suppress the ICH CAHPS clinical measure for 
the PY 2022 program year under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years. Based on our analysis of CY 2020 ICH CAHPS 
data, we finalized our proposal to suppress the ICH CAHPS clinical 
measure for PY 2022 because we found a significant decrease in response 
scores as compared to previous years. Our most recent analysis that 
includes Spring 2021 ICH CAHPS data shows a continued deviation in ICH 
CAHPS scores.
    The ICH CAHPS clinical measure is scored based on three composite 
measures and three global ratings.\216\ Global ratings questions employ 
a scale of 0 to 10, worst to best; each of the questions within a 
composite measure use either ``Yes'' or ``No'' responses, or response 
categories ranging from ``Never'' to ``Always'' to assess the patient's 
experience of care at a facility. Facility performance on each 
composite measure is determined by the percent of patients who choose 
``top-box'' responses (that is, most positive or ``Always'') to the ICH 
CAHPS survey questions in each domain. The ICH CAHPS survey is 
administered twice yearly, once in the spring and once in the fall.
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    \216\ Groupings of questions and composite measures can be found 
at https://ichcahps.org/Portals/0/SurveyMaterials/ICH_Composites_English.pdf.
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    Our most recent data indicates that, although the number of 
participating facilities that submitted data has increased from pre-
COVID-19 levels, the number of completed interviews has dropped 
dramatically. For example, in Spring and Fall 2019, facilities reported 
98,868 and 96,255 completed interviews, respectively. By contrast, in 
Spring and Fall 2021, only 82,987 and 61,930 completed interviews were 
submitted, respectively. In other words, although a larger number of 
facilities are submitting ICH CAHPS data, fewer patients within each of 
those facilities are completing interviews and, as a result, a fewer 
number of facilities are meeting the survey minimum to be included in 
the measure for ESRD QIP scoring purposes because of the continuing 
impact of the PHE.
    We believe that these data may also reflect a rapid and 
unprecedented change in healthcare personnel, as staffing shortages may 
have had an impact on some of the top box rating scores.
    During the course of the PHE, an unprecedented number of healthcare 
personnel have left the workforce or ended their employment in 
healthcare settings.\217\ This healthcare personnel shortage worsened 
in 2021, with hospitals across the United States reporting 296,466 days 
of critical staffing shortages, an increase of 86 percent from the 
159,320 days of critical staffing shortages hospitals reported in 
2020.\218\ Although there is no specific data regarding the healthcare 
personnel shortages in facilities, reports indicate that facilities 
have experienced similar staffing shortages.\219\ Healthcare workers, 
especially those in areas with higher infection rates, have reported 
serious psychological symptoms, including anxiety, depression, and 
burnout.<SUP>220 221</SUP>
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    \217\ Health Affairs, COVID-19's Impact on Nursing Shortages, 
The Rise of Travel Nurses, and Price Gouging (Jan. 28, 2022), 
https://www.healthaffairs.org/do/10.1377/forefront.20220125.695159/.
    \218\ https://healthdata.gov/Hospital/COVID-19-Reported-Patient-Impact-and-Hospital-Capa/g62h-syeh.
    \219\ National Kidney Foundation, COVID-19 and its Impact on 
Kidney Patients Utilizing U.S. Dialysis Centers (Jan. 18, 2022), 
https://www.kidney.org/news/covid-19-and-its-impact-kidney-patients-utilizing-u-s-dialysis-centers. See also, Becker's Hospital Review, 
Supply shortages disrupt dialysis care in Texas (Jan. 28, 2022), 
https://www.beckesrhospitalreview.com/supply-chain/supply-shortages-disrupt-dialysis-care-in-texas.html. WBIW, Pandemic causing supply 
shortages for dialysis patients, staffing shortage for providers 
(Feb. 22, 2022), https://www.wibw.com/2022/02/22/pandemic-causing-supply-shortages-dialysis-patients-staffing-shortage-providers/. 
Spectrum News, Worker shortage sends dialysis patients scrambling 
for treatment (October 4, 2021), https://spectrumlocalnews.com/nys/hudson-valley/news/2021/10/01/worker-shortage-sends-dialysis-patients-scrambling-for-treatment.
    \220\ Kriti Prasad, Colleen McLoughlin, Martin Stillman, Sara 
Poplau, Elizabeth Goelz, Sam Taylor, Nancy Nankivil, Roger Brown, 
Mark Linzer, Kyra Cappelucci, Michael Barbouche, Christine A. 
Sinsky. Prevalence and correlates of stress and burnout among U.S. 
healthcare workers during the COVID-19 pandemic: A national cross-
sectional survey study. EClinicalMedicine, Volume 35. 2021. 100879. 
ISSN 2589-5370. https://doi.org/10.1016/j.eclinm.2021.100879.
    \221\ Vizheh, M., Qorbani, M., Arzaghi, S.M. et al. The mental 
health of healthcare workers in the COVID-19 pandemic: A systematic 
review. J Diabetes Metab Disord 19, 1967-1978 (2020). https://doi.org/10.1007/s40200-020-00643-9.
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    Additionally, reports of staff shortages have varied widely 
geographically. In January 2021, half of the hospitals in New Mexico 
and over 40 percent of the hospitals in Vermont, Rhode Island, West 
Virginia, and Arizona reported staffing shortages.\222\ Conversely, in 
that same week, less than 10 percent of hospitals in Washington, DC, 
Connecticut, Alaska, Illinois, New York, Maine, Montana, Idaho, Texas, 
South Dakota, and Utah reported staffing shortages. We believe that 
these staffing shortages reported by hospitals are

[[Page 38536]]

similar to those experienced by facilities, and that the shortages 
experienced by ESRD facilities may be even worse due to the highly 
specialized nature of nephrology staff. Given the wide variance in 
reported staffing shortages, and the impact staffing shortages may have 
on ICH CAHPS top box rating scores, we believe our proposal to suppress 
the ICH CAHPS measure fairly addresses the geographic disparity in the 
impact of the COVID-19 PHE on participating facilities.
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    \222\ U.S. News, States With the Biggest Hospital Staffing 
Shortages (Jan. 13, 2022), https://www.usnews.com/news/health-news/articles/2022-01-13/states-with-the-biggest-hospital-staffing-shortages (citing data from the HHS, CDC, and Assistant Secretary 
for Preparedness and Response Community Profile Report, updated 
frequently and available here: https://healthdata.gov/Health/COVID-19-Community-Profile-Report/gqxm-d9w9).
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    Due to the emergence of COVID-19 variants, such as the Delta and 
Omicron variants that have arisen from COVID-19 and our belief that 
facilities have experienced worsening staffing shortages in Q3 and Q4 
2021,<SUP>223 224</SUP> we anticipate that Fall 2021 data would 
continue to demonstrate a deviation in national performance such that 
scoring this measure would not allow us to reliably make national, 
side-by-side comparisons of facility performance on the ICH CAHPS 
measure. We believe that suppressing this measure for the PY 2023 would 
address concerns about the potential unintended consequences of 
penalizing facilities for deviations in measure performance resulting 
from the impact of the COVID-19 PHE.
---------------------------------------------------------------------------

    \223\ Bloomberg, U.S. Hospital Staff Shortages Hit Most in a 
Year on Covid Surge, https://www.bloomberg.com/news/articles/2022-01-05/one-in-five-u-s-hospitals-face-staffing-shortages-most-in-year 
(citing HHS data).
    \224\ Fresenius Medical Care Press Release, Statement regarding 
COVID-19 related supply and staff shortages. Available at: https://fmcna.com/company/covid-19-resource-center/.
---------------------------------------------------------------------------

    Therefore, we are proposing to suppress the ICH CAHPS measure for 
the PY 2023 ESRD QIP under Measure Suppression Factors 1 and 4.
    We welcome public comment on this proposal.
f. Proposal To Suppress the PPPW Clinical Measure for PY 2023
    In this proposed rule, we are proposing to suppress the PPPW 
clinical measure for PY 2023 under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse as compared to historical performance during the immediately 
preceding program years, as well as under Measure Suppression Factor 4, 
significant national shortages or rapid or unprecedented changes in 
patient case volumes or facility-level case mix.
    The PPPW clinical measure is a process measure that assesses the 
percentage of patients at each facility who were on the kidney or 
kidney-pancreas transplant waitlist averaged across patients prevalent 
on the last day of each month during the performance period. Given the 
importance of kidney transplantation to patient survival and quality of 
life, as well as the variability in waitlist rates among facilities, we 
adopted the PPPW clinical measure in the CY 2019 ESRD PPS final rule to 
encourage facilities to coordinate care with transplant centers to 
waitlist patients (83 FR 57003 through 57008).
    In the CY 2022 ESRD PPS final rule (86 FR 61914), several 
commenters recommended that CMS suppress the PPPW clinical measure, 
noting that the COVID-19 PHE had a significant negative impact on 
transplant surgeries, referrals, and waitlists, as well as other 
related areas. A few commenters also noted that waitlist additions 
significantly decreased during the COVID-19 PHE. At the time, we 
responded that our analysis of the relevant data available at the time 
of the proposed rule indicated temporal declines in waitlist removal 
among prevalent patients and similarly a decline in waitlisting and 
transplants in incident ESRD patients in March 2020 through May 2020 
compared to prior years. We also observed that trends generally 
returned to normal starting in June and July 2020 and reflected data 
similar to prior years. However, we also indicated that we would 
continue to monitor and review the data and would consider proposing in 
a future rulemaking to suppress one or more individual ESRD QIP 
measures for a future ESRD QIP payment year if we conclude that 
circumstances caused by the COVID-19 PHE have affected those measures 
and the resulting TPSs based on CY 2021 data.
    After reviewing data for the PPPW clinical measure for CY 2021, we 
believe that circumstances caused by the COVID-19 PHE have affected our 
ability to make reliable national, side-by-side comparisons of facility 
performance on the PPPW measure. Recent analyses indicate that measure 
performance has declined over the course of the COVID-19 PHE. Although 
the initial disruptions in care and associated effects on the PPPW 
measure at the beginning of the COVID-19 PHE initially stabilized, we 
have since observed a continuous decrease in the levels of PPPW 
clinical measure performance. We believe this decrease is indicative 
overall of the significant impact of the COVID-19 PHE on the measure. 
For example, in January 2019, the monthly PPPW rate was 19 percent. By 
contrast, the monthly PPPW rate for December 2021 was 16.9 percent, 
which we believe reflects a significant deviation in national 
performance on the measure. We have also observed that a greater number 
of facilities would receive lower scores in PY 2023 as compared to PY 
2022, reflecting poorer performance overall on the measure. For 
example, our simulations indicate that the percentage of facilities 
receiving scores lower than 5 (out of 10; a higher score reflects 
better performance) have increased at almost every data point. Notably, 
the percentage of facilities estimated to receive a score of 0, 1, or 2 
increased the most between the PY 2022 and PY 2023, indicating that 
facilities are more likely to receive a lower score in PY 2023. 
Moreover, the percentage of facilities receiving scores higher than 5 
on the PPPW clinical measure in PY 2023 have decreased at each data 
point. Given the correlation between decreasing scores and the 
pandemic's impact on care delivery and patient ability to access the 
appropriate level of care in light of COVID-19 precautions, we believe 
that the COVID-19 PHE continues to have a significant impact on the 
PPPW clinical measure during CY 2021.
    Our analysis of the available data indicates that the COVID-19 PHE 
has had significant effects on the PPPW clinical measure and would 
result in significant deviation in national performance on the measure 
during the COVID-19 PHE. Not only are there effects on patients 
diagnosed with COVID-19, but the presence of the virus strongly 
affected treatment patterns of dialysis patients in CY 2020 and 
continued to do so in CY 2021, and we are concerned that similar 
effects would be seen in the balance of the 2021 calendar year as the 
PHE had continued. Because the Delta variant and the Omicron variant 
surged through geographic regions of the country unevenly, we are 
concerned that facilities in different regions of the country would 
have been affected differently throughout the 2021 year, thereby 
skewing measure performance and affecting national comparability due to 
significant and unprecedented changes in patient case volumes or 
facility-level case mix. Given the limitations of the data available to 
us for CY 2021, we believe the resulting performance measurement on the 
PPPW clinical measure would not be sufficiently reliable or valid for 
use in the ESRD QIP for scoring and payment adjustment purposes.
    We believe that the PPPW clinical measure is an important part of 
the ESRD QIP measure set. However, we are concerned that the ongoing 
COVID-19 PHE has affected measure performance

[[Page 38537]]

on the current PPPW clinical measure such that we would not be able to 
score facilities fairly or equitably on it. Additionally, we would 
continue to collect the measure's data from participating facilities so 
that we could monitor the effect of the circumstances on quality 
measurement and determine the appropriate policies in the future. We 
would also continue to provide confidential feedback reports to 
facilities as part of program activities to ensure that they are made 
aware of the changes in performance rates that we observe. We also 
intend to publicly report PY 2023 data where feasible and appropriately 
caveated.
    We are currently exploring ways to adjust effectively for the 
systematic effects of the COVID-19 PHE on the PPPW clinical measure. 
However, we are still working to improve these COVID-19 adjustments and 
verify the validity of a potential modified version of the PPPW 
clinical measure as additional data become available. As an 
alternative, we considered whether we could exclude patients with a 
diagnosis of COVID-19 from the PPPW clinical measure cohort, but we 
determined suppression would provide additional time and months of data 
for us to more thoroughly evaluate a broader range of alternatives. We 
want to ensure that the measure reflects care provided to ESRD patients 
and we are concerned that excluding otherwise eligible patients may not 
accurately reflect the care provided, particularly given the unequal 
distribution of COVID-19 patients across facilities over time.
    We welcome public comment on our proposal to suppress the PPPW 
clinical measure for PY 2023.
g. Proposal To Suppress the Kt/V Dialysis Adequacy Clinical Measure for 
PY 2023
    In this proposed rule, we are proposing to suppress the Kt/V 
Dialysis Adequacy clinical measure for PY 2023 program year under 
Measure Suppression Factor 1, Significant deviation in national 
performance on the measure during the COVID-19 PHE, which could be 
significantly better or significantly worse as compared to historical 
performance during the immediately preceding program years. We refer 
readers to the CY 2022 ESRD PPS final rule for previous analysis on the 
overall impact of the COVID-19 PHE on ESRD quality measure performance 
(86 FR 61910 through 61913).
    The Kt/V Dialysis Adequacy clinical measure is the percentage of 
all patient months for patients whose delivered dose of dialysis 
(either hemodialysis or peritoneal dialysis) met the specified 
threshold during the reporting period. The Kt/V Dialysis Adequacy 
clinical measure is defined as a measure of dialysis sufficiency where 
K is dialyzer clearance, t is dialysis time, and V is total body water 
volume. The measure evaluates the success of achieving the delivered 
dialysis dose. The intent of the Kt/V measure is to improve health care 
delivery by providing facilities with evidence-based parameters for 
optimizing ESRD patient outcomes over time.
    In the CY 2022 ESRD PPS final rule (86 FR 61910), several 
commenters recommended that CMS suppress the Kt/V Dialysis Adequacy 
clinical measure, noting that the COVID-19 PHE had a significant impact 
on catheter rates, which has a corresponding impact on the Kt/V 
measure, as patients with catheters will have lower Kt/V rates. One 
commenter also noted the Kt/V Dialysis Adequacy clinical measure should 
be suppressed under Suppression Factor 1, due to significant deviation 
in national measure performance. At the time, we responded there was 
not sufficient data to determine whether suppression was appropriate 
for the Kt/V Dialysis Adequacy clinical measure. Although performance 
on the Kt/V Dialysis Adequacy clinical measure deviated temporarily, 
our analysis indicated that Kt/V rates stabilized shortly thereafter 
and reflected measure performance similar to prior years. Based on our 
analysis at the time, Kt/V rates in CY 2020 were similar to rates in CY 
2019 until April where they dropped by an average of 0.4 percent. 
However, beginning in June 2020, Kt/V rates were the same as or higher 
than national average rates in March 2020.
    After reviewing data for the Kt/V Dialysis Adequacy clinical 
measure for CY 2020 and CY 2021, we believe that circumstances caused 
by the COVID-19 PHE have affected the measure and the resulting TPS. 
Although the initial disruptions of care at the beginning of the COVID-
19 PHE, associated with multiple transient changes to factors that 
contribute to dialysis adequacy (Kt/V), were temporary, we have 
observed continued deviations in Kt/V clinical measure performance over 
the past 2 years and we believe that this is indicative of the 
significant impact of the COVID-19 PHE on the measure. Notably, delays 
in hemodialysis treatment, due to COVID-19 infection or logistical 
challenges with care delivery, exacerbated ESRD sequelae including 
hyperkalemia, uremic encephalopathy, and fluid volume overload.\225\ 
The confluence of these factors likely contributed to declines in Kt/V 
clinical measure performance.
---------------------------------------------------------------------------

    \225\ Connerney, M., Sattar, Y., Rauf, H., Mamtani, S., Ullah, 
W., Michaelson, N., Dhamrah, U., Lal, N., Latchana, S., & Stern, 
A.S. (2021). Delayed hemodialysis in COVID-19: Case series with 
literature review. Clinical nephrology. Case studies, 9, 26-32. 
https://doi.org/10.5414/CNCS110240.
---------------------------------------------------------------------------

    Our simulations comparing PY 2022 scoring distributions with 
estimated PY 2023 scoring distributions show that the percentage of 
facilities receiving scores less than 7 (out of 10; a higher score 
reflects better performance) have increased at almost every data point, 
whereas the percentage of facilities receiving scores higher than 7 
have decreased at almost every data point. The percentage of facilities 
receiving a score of score of 0, 1, 2, 3, or 4 increased the most 
between the 2 years, indicating that facilities are more likely to 
receive a lower score in PY 2023. Given the correlation between 
decreasing scores and the pandemic's impact on care delivery and 
patient ability to access the appropriate level of care in light of 
COVID-19 precautions,\226\ we believe that the COVID-19 PHE continued 
to have a significant impact on the Kt/V clinical measure during CY 
2021.
---------------------------------------------------------------------------

    \226\ National Kidney Foundation, COVID-19 and its Impact on 
Kidney Patients Utilizing U.S. Dialysis Centers (Jan. 18, 2022), 
https://www.kidney.org/news/covid-19-and-its-impact-kidney-patients-utilizing-u-s-dialysis-centers.
---------------------------------------------------------------------------

    Our analysis of the available data indicates that the COVID-19 PHE 
has had significant effects on the Kt/V Dialysis Adequacy clinical 
measure for ESRD patients and would result in significant deviation in 
national performance on the measure during the COVID-19 PHE, which 
could be significantly worse as compared to historical performance 
during the immediately preceding program years. Because the Delta 
variant and Omicron variant surged through geographic regions of the 
country unevenly, we are concerned that facilities in different regions 
of the country have been affected differently throughout the 2021 
calendar year, resulting in skewing of measure performance and 
affecting national comparability due to significant and unprecedented 
changes in patient case volumes or facility-level case mix. We note 
that our scoring simulations indicate that a high percentage of 
facilities would receive a score of zero for PY 2023. Given the 
limitation of the data available to us for CY 2021, we believe the 
resulting performance measurement of the Kt/V Dialysis Adequacy 
clinical measure would not be sufficiently reliable or valid for use in 
the ESRD QIP for

[[Page 38538]]

scoring and payment adjustment purposes.
    We believe that the Kt/V Dialysis Adequacy clinical measure is an 
important part of the ESRD QIP measure set. However, we are concerned 
that the ongoing COVID-19 PHE has affected measure performance on the 
current Kt/V Dialysis Adequacy clinical measure such that we would not 
be able to score facilities fairly or equitably on it. Moreover, we 
would continue to collect the measure's data from participating 
facilities so that we could monitor the effect of the COVID-19 PHE 
circumstances on quality measurement and determine the appropriate 
policies in the future. We would also continue to provide confidential 
feedback reports to facilities as part of program activities to ensure 
that they are made aware of the changes in performance rates that we 
observe. We also intend to publicly report PY 2023 data where feasible 
and appropriately caveated.
    We are currently exploring ways to adjust effectively for the 
systematic effects of the COVID-19 PHE on the Kt/V Dialysis Adequacy 
clinical measure. However, we are still working to improve these COVID-
19 adjustments and verify the validity of a potential modified version 
of the Kt/V Dialysis Adequacy clinical measure as additional data 
become available.
    We welcome public comment on our proposal to suppress the Kt/V 
Dialysis Adequacy clinical measure for PY 2023.
3. Technical Measure Specification Updates To Include a Covariate 
Adjustment for COVID-19 for the SHR and SRR Measures Beginning With PY 
2025
    In the CY 2013 ESRD PPS final rule, we finalized a subregulatory 
process to incorporate technical measure specification updates into the 
measure specifications we have adopted for the ESRD QIP (77 FR 67475 
through 67477).
    As we continue to evaluate the effects of COVID-19 on the ESRD QIP 
measure set, we have observed both short-term effects on both hospital 
admissions and readmissions. In addition, for some patients COVID-19 
continues to have lasting effects, including but not limited to 
fatigue, cough, palpitations, and others potentially related to organ 
damage, post viral syndrome, and post-critical care syndrome.\227\ 
These clinical conditions could affect a patient's risk of 
complications following an index admission or readmission and, as a 
result, impact a facility's performance on the SHR clinical measure or 
the SRR clinical measure. In order to account for case mix among 
facilities, the current risk adjustment approach for these measures 
include covariates for clinical comorbidities that are relevant and 
have relationships with the outcome, for example patient history of 
diabetes or obesity. Therefore, in order to adequately account for 
patient case mix, we are further modifying the technical measure 
specifications for the SHR and SRR measures to include a covariate 
adjustment for patient history of COVID-19. We believe these changes 
are technical in nature because they do not substantively change the 
measures themselves and, therefore, are not required to be implemented 
through rulemaking.
---------------------------------------------------------------------------

    \227\ Raveendran, A.V., Jayadevan, R. and Sashidharan, S., Long 
COVID: An overview. Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8056514/. Accessed on December 15, 2021.
---------------------------------------------------------------------------

    This inclusion of the covariate adjustment for patient history of 
COVID-19 would be effective beginning with the PY 2025 program year for 
the SHR clinical measure and the SRR clinical measure, and we would 
also apply this adjustment for purposes of calculating the performance 
standards for that program year. As discussed in section IV.E.1.b, we 
are proposing to convert the STrR reporting measure to a clinical 
measure beginning with PY 2025. We are also considering whether it 
would be appropriate to add a covariate adjustment for patient history 
of COVID-19 to the STrR clinical measure, beginning with PY 2025, and 
will announce that technical update, if appropriate, at a later date.
    For more information on the application of covariate adjustments, 
including the technical updates we are announcing in this proposed 
rule, please see the Technical Specifications for ESRD QIP Measures 
(available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications) and 
the CMS ESRD Measures Manual (available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/06_MeasuringQuality).
C. Proposed Updates to the Performance Standards Applicable to the PY 
2023 Clinical Measures
    Our current policy is to automatically adopt a performance and 
baseline period for each year that is 1 year advanced from those 
specified for the previous payment year (84 FR 60728). Under this 
policy, CY 2021 is currently the performance period and CY 2020 is the 
baseline period for the PY 2023 ESRD QIP. However, under the nationwide 
ECE that we granted in response to the COVID-19 PHE, first and second 
quarter data for CY 2020 are excluded from scoring for purposes of the 
ESRD QIP (85 FR 54829 through 54830). Accordingly, in the CY 2022 ESRD 
PPS final rule (86 FR 61922 through 61923), for PY 2024, we finalized 
calculating performance standards using CY 2019 data due to concerns 
about using partial year data (86 FR 61922 through 61923). Similarly, 
we are concerned that it would be difficult to assess performance 
standards for PY 2023 based on partial year data. Our preliminary 
analysis indicates that the effect of the excluded data could create 
inflated performance standards for PY 2023 and we would potentially be 
required to use these for future payment years due to the requirement 
that the prior year's standard cannot be higher than the current year's 
standard. This may skew achievement and improvement thresholds for 
facilities and therefore may result in performance standards that do 
not accurately reflect levels of achievement and improvement.
    Our current policy substitutes the performance standard, 
achievement threshold, and/or benchmark for a measure for a performance 
year if final numerical values for the performance standard, 
achievement threshold, and/or benchmark are worse than the numerical 
values for that measure in the previous year of the ESRD QIP (82 FR 
50764). We adopted this policy because we believe that the ESRD QIP 
should not have lower performance standards than in previous years and 
therefore, adopted flexibility to substitute the performance standard, 
achievement threshold, and benchmark in appropriate cases.
    Although the lower performance standards would be substituted with 
those from the prior year, the higher performance standards would be 
used to set performance standards for certain measures, even though 
they would be based on partial year data. We continue to be concerned 
that this may create performance standards for certain measures that 
would be difficult for facilities to attain with 12 months of data.
    Therefore, we are proposing to calculate the performance standards 
for PY 2023 using CY 2019 data, which are the most recently available 
full calendar year of data we can use to calculate those standards. Due 
to the impact of CY 2020 data that are excluded from the ESRD QIP for 
scoring purposes, we believe that using CY 2019 data for performance 
standard setting purposes is appropriate. We are also proposing to 
amend 413.178(d)(2) to reflect both our

[[Page 38539]]

proposed updates applicable to the PY 2023 performance standards, as 
well as our previously finalized update to the PY 2024 performance 
standards.
    We welcome public comments on this proposal.

D. Technical Updates to the SRR and SHR Clinical Measures Beginning 
With the PY 2024 ESRD QIP

    In the CY 2017 ESRD PPS final rule, we adopted the SHR clinical 
measure under the authority of section 1881(h)(2)(B)(ii) of the Act (81 
FR 77906 through 77911). The SHR clinical measure is a National Quality 
Forum (NQF)-endorsed all-cause, risk-standardized rate of 
hospitalizations during a 1-year observation window. The standardized 
hospitalization ratio is defined as the ratio of the number of hospital 
admissions that occur for Medicare ESRD dialysis patients treated at a 
particular facility to the number of hospitalizations that would be 
expected given the characteristics of the facility's patients and the 
national mean for facilities. In the CY 2015 ESRD PPS final rule, we 
adopted the SRR clinical measure under the authority of section 
1881(h)(2)(B)(ii) of the Act (79 FR 66174 through 66182). The 
standardized readmission ratio is defined as the ratio of the number of 
observed unplanned 30-day hospital readmissions to the number of 
expected unplanned 30-day hospital readmissions. Both the SHR clinical 
measure and the SRR clinical measure are calculated as a ratio, but can 
also be expressed as a rate.
    Hospitalization and readmission rates vary across facilities even 
after adjustment for patient characteristics, suggesting that 
hospitalizations and readmissions might be influenced by facility 
practices. Both an adjusted facility-level standardized hospitalization 
ratio and an adjusted facility-level standardized readmissions ratio, 
accounting for differences in patients' characteristics, play an 
important role in identifying potential quality issues, and help 
facilities provide cost-effective quality health care to help reduce 
admissions or readmissions to the hospital for dialysis patients as 
well as limit escalating medical costs. We have weighted scoring of the 
SHR clinical measure and the SRR clinical measure to reflect the 
importance of the measures on the quality of patient care. In the CY 
2019 ESRD PPS final rule, the SHR clinical measure and the SRR clinical 
measure each accounted for 14 percent of the TPS (83 FR 56992). In CY 
2019, with average weights of more than 15 percent (after reweighting 
of missing measures), the SHR clinical measure and the SRR clinical 
measure were the two measures with the largest weight in calculating 
the TPS for each facility.
    In the CY 2013 ESRD PPS final rule, we finalized a subregulatory 
process to incorporate technical measure specification updates into the 
measure specifications we have adopted for the ESRD QIP (77 FR 67475 
through 67477). We are updating the technical specifications to revise 
how we express the results of the SHR clinical measure and the SRR 
clinical measure so that those results are expressed as a Risk-
Standardized Hospitalization Rate (RSHR) and a Risk-Standardized 
Readmission Rate (RSRR), respectively. Stakeholders have previously 
expressed concern that the SHR clinical measure and the SRR clinical 
measure are difficult to interpret and track facility performance over 
time when expressed as ratios, and have recommended expressing those 
ratios as rates when scoring. Although there are widespread national 
improvements in hospitalization rates and readmission rates, individual 
facilities may not their own improvement reflected if their measure 
results are reflected as ratios because SHR and SRR measures 
effectively standardize the ratios to 1.0 each calendar year and all 
facilities' ratios are calculated using national-level performance in 
each calendar year. Another concern stakeholders have raised is that 
the ratios are difficult to understand and to determine how to use 
these ratios for quality improvement efforts.
    In light of these concerns, we are updating the technical 
specifications to change the scoring methodology for the SRR clinical 
measure and the SHR clinical measure such that a facility's results are 
expressed as a rate in the performance period that is compared directly 
to its rate in the baseline period. In response to public comments 
indicating a perception that overall facility performance on ESRD QIP 
measures was recently improving as payment reductions were increasing, 
we assessed trends in facility performance through 2019 to examine 
facility performance on the SHR clinical measure and the SRR clinical 
measure over time. We also calculated the RSHR and the RSRR. We 
calculated the RSHR by multiplying SHR by the national observed 
hospitalization rate (per patient-year at risk) in the calendar year. 
Similarly, we multiplied the SRR by the national observed readmission 
rate (per index discharge) in the calendar year to determine the RSRR. 
Both ESRD QIP and Dialysis Facility Reports (DFR) data were used in 
these analyses. Data from ESRD QIP were available from CYs 2018 to 2019 
for the SRR clinical measure and from CYs 2015 to 2019 for the SHR 
clinical measure. Additionally, we used data from the publicly 
available DFRs from CYs 2010 to 2018 for the SHR clinical measure and 
from CYs 2014 to 2018 for the SRR clinical measure to compare to the 
ESRD QIP calculations.
    We believe these changes are technical in nature because they do 
not substantively change the measures themselves and, therefore, are 
not required to be implemented through rulemaking. Our analysis found 
that expressing the measure performance as a rate instead of a ratio 
would communicate the same information in a clearer way. After the SHR 
clinical measure and the SRR clinical measure were added to the ESRD 
QIP measure set, that SHR and SRR distributions were similar from year 
to year. Median SHR has consistently remained below 1.0, while median 
SRR has remained around 1.0 each year. RSHR and RSRR have remained 
stable since then as well. These trends show that as ESRD QIP payment 
reductions were increasing from PY 2018 to PY 2020 (corresponding to CY 
2016 to CY 2018 facility performance for most measures), we do not find 
evidence of overall declines in risk-adjusted hospitalization and 
readmission rates. Furthermore, in recent years, the national 
readmission or hospitalization rates have been relatively stable or 
slightly increasing. Therefore, revising how we express SHR or SRR 
measure results to be expressed as RSHR or RSRR, respectively, each 
year would not result in higher ESRD QIP scores.
    Our analysis found that expressing the SHR clinical measure and SRR 
clinical measure results as rates would reflect the same level of 
measure performance as expressing those results as ratios, and we 
believe that expressing the measure results rates would help providers 
and patients better understand a facility's performance on the 
measures, and would be more intuitive for a facility to track its 
performance from year to year.
    Further, this technical update would also more closely align with 
the measure result calculation methodology for the ESRD QIP with that 
used in the Dialysis Facility Compare Star Ratings Program. For star 
ratings calculations, an adjustment factor is applied for the 
standardized ratio measures, accounting for differences in population 
event rates between the baseline period and evaluation period data, so 
that an adjusted evaluation period ratio (a proxy for rate converted 
from ratio) value reflects the same value it would

[[Page 38540]]

have in the baseline period.\228\ We provide the currently finalized 
performance standards for the PY 2024 SHR and SRR clinical measures in 
Table 16, and the revised PY 2024 performances standards for the 
updated SHR and SRR clinical measures in Table 17.
---------------------------------------------------------------------------

    \228\ The University of Michigan Kidney Epidemiology and Cost 
Center. (2018). Technical Notes on the Dialysis Facility Compare 
Quality of Patient Care Star Rating Methodology for the October 2018 
Release. Available at: https://dialysisdata.org/sites/default/files/content/Methodology/Updated_DFC_Star_Rating_Methodology_for_October_2018_Release.pdf.
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BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP28JN22.017

[GRAPHIC] [TIFF OMITTED] TP28JN22.018

    We welcome public comments on this technical update.

E. Proposed Updates to Requirements Beginning With the PY 2025 ESRD QIP

1. PY 2025 ESRD QIP Measure Set
    Under our current policy, we retain all ESRD QIP measures from year 
to year unless we propose through rulemaking to remove them or 
otherwise provide notification of immediate removal if a measure raises 
potential safety issues (77 FR 67475). Accordingly, the PY 2025 ESRD 
QIP measure set would include the same 14 measures as the PY 2024 ESRD 
QIP measure set (85 FR 71465 through 71466). In section IV.E.1.a of 
this proposed rule, we are also proposing to adopt a COVID-19 
Vaccination Coverage among Healthcare Personnel (HCP) reporting measure 
beginning in PY 2025. In section IV.E.1.b of this proposed rule, we are 
proposing to convert the STrR reporting measure to a clinical measure 
beginning in PY 2025, and in section IV.E.1.c, we are proposing to 
convert the Hypercalcemia clinical measure to a reporting measure 
beginning in PY 2025. These measures are described in Table 18 in this 
proposed rule. For the most recent information on each measure's 
technical specifications for PY 2025, we refer readers to the CMS ESRD 
Measures Manual for the 2022 Performance Period.\229\
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    \229\ https://www.cms.gov/files/document/esrd-measures-manual-v70.pdf.

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[[Page 38541]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.019

BILLING CODE 4120-01-C
    We discuss our proposal to adopt the COVID-19 Vaccination Coverage 
among Healthcare Personnel (HCP) reporting measure, our proposal to 
convert the

[[Page 38542]]

STrR reporting measure to a clinical measure, and our proposal to 
convert the Hypercalcemia clinical measure to a reporting measure in 
the following sections.
a. Proposal To Adopt the COVID-19 Vaccination Coverage Among Healthcare 
Personnel (HCP) Reporting Measure Beginning With the PY 2025 ESRD QIP
(1) Background
    On January 31, 2020, the Secretary declared a PHE for the U.S. in 
response to the global outbreak of SARS-CoV-2, a novel (new) 
coronavirus that causes a disease named ``coronavirus disease 2019'' 
(COVID-19).\230\ COVID-19 is a contagious respiratory infection \231\ 
that can cause serious illness and death. Older individuals and those 
with underlying medical conditions are considered to be at higher risk 
for more serious complications from COVID-19.\232\
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    \230\ U.S. Dept of Health and Human Services, Office of the 
Assistant Secretary for Preparedness and Response. (2020). 
Determination that a Public Health Emergency Exists. Available at: 
https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
    \231\ Centers for Disease Control and Prevention. (2020). Your 
Health: Symptoms of Coronavirus. Available at: https://www.cdc.gov/coronavirus/2019-ncov/symptoms-testing/symptoms.html.
    \232\ Ibid.
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    COVID-19 has had significant negative health effects--on 
individuals, communities, and the nation as a whole. Consequences for 
individuals who have COVID-19 include morbidity, hospitalization, 
mortality, and post-COVID conditions (also known as long COVID). As of 
March 16, 2022, over 79 million COVID-19 cases, over 4.5 million new 
COVID-19 related hospitalizations, and almost 965,000 COVID-19 deaths 
have been reported in the U.S.\233\
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    \233\ https://covid.cdc.gov/covid-data-tracker#datatracker-home.
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    The CDC has confirmed that the three main ways that COVID-19 is 
spread are: (1) Breathing in air when close to an infected person who 
is exhaling small droplets and particles that contain the virus; (2) 
Having these small droplets and particles that contain virus land on 
the eyes, nose, or mouth, especially through splashes and sprays like a 
cough or sneeze; and (3) Touching eyes, nose, or mouth with hands that 
have the virus on them.\234\ According to the CDC, those at greatest 
risk of infection are persons who have had prolonged, unprotected close 
contact (that is, within 6 feet for 15 minutes or longer) with an 
individual with confirmed SARS-CoV-2 infection, regardless of whether 
the individual has symptoms.\235\ Although personal protective 
equipment (PPE) and other infection-control precautions can reduce the 
likelihood of transmission in health care settings, COVID-19 can spread 
between healthcare personnel (HCP) and patients, or from patient to 
patient, given the close contact that may occur during the provision of 
care.\236\ The CDC has emphasized that health care settings can be 
high-risk places for COVID-19 exposure and transmission.\237\
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    \234\ Centers for Disease Control and Prevention. (2021). How 
COVID-19 Spreads. Accessed on July 15, 2021 at: https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/how-covid-spreads.html.
    \235\ Centers for Disease Control and Prevention. (2021). When 
to Quarantine. Accessed on April 2, 2021 at: https://www.cdc.gov/coronavirus/2019-ncov/if-you-are-sick/quarantine.html.
    \236\ Centers for Disease Control and Prevention. (2021). 
Interim U.S. Guidance for Risk Assessment and Work Restrictions for 
Healthcare Personnel with Potential Exposure to COVID-19. Accessed 
on April 2 at: https://www.cdc.gov/coronavirus/2019-ncov/hcp/faq.html#Transmission.
    \237\ Dooling, K, McClung, M, et al. ``The Advisory Committee on 
Immunization Practices' Interim Recommendations for Allocating 
Initial Supplies of COVID-19 Vaccine--United States, 2020.'' Morb 
Mortal Wkly Rep. 2020; 69(49): 1857-1859. Available at: https://www.cdc.gov/mmwr/volumes/69/wr/mm6949e1.htm.
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    Vaccination is a critical part of the nation's strategy to 
effectively counter the spread of COVID-19 and ultimately help restore 
societal functioning.\238\ On December 11, 2020, FDA issued the first 
Emergency Use Authorization (EUA) for a COVID-19 vaccine in the 
U.S.\239\ Subsequently, FDA issued EUAs for additional COVID-19 
vaccines \240\ and, after a rigorous review process, granted approval 
to two vaccines.\241\
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    \238\ Centers for Disease Control and Prevention. (2020). COVID-
19 Vaccination Program Interim Playbook for Jurisdiction Operations. 
Accessed on April 3, 2021 at: https://www.cdc.gov/vaccines/imz-managers/downloads/COVID-19-Vaccination-Program-Interim_Playbook.pdf.
    \239\ U.S. Food and Drug Administration. (2020). Pfizer-BioNTech 
COVID-19 Vaccine EUA Letter of Authorization. Available at https://www.fda.gov/media/150386/download. (as reissued on September 22, 
2021).
    \240\ U.S. Food and Drug Administration. (2020). Moderna COVID-
19 Vaccine EUA Letter of Authorization. Available at https://www.fda.gov/media/144636/download (as reissued on August 12, 2021); 
U.S. Food and Drug Administration. (2021). Janssen COVID-19 Vaccine 
EUA Letter of Authorization. Available at https://www.fda.gov/media/146303/download (as reissued on June 10, 2021).
    \241\ FDA Approves First COVID-19 Vaccine, Available at https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine. Spikevax and Moderna COVID-19 Vaccine, Available 
at: https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/spikevax-and-moderna-covid-19-vaccine.
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    We believe that it is important to incentivize and track HCP 
vaccination for COVID-19 in facilities through quality measurement in 
order to protect health care workers, patients, and caregivers, and to 
help sustain the ability of these facilities to continue serving their 
communities throughout the PHE and beyond. We recognize the importance 
of COVID-19 vaccination, and have finalized proposals to include a 
COVID-19 HCP vaccination measure in quality reporting programs for 
other care settings, such as the Inpatient Psychiatric Facility Quality 
Reporting Program (86 FR 42633 through 42640), the Hospital Inpatient 
Quality Reporting Program (86 FR 45374 through 45382), the PPS-Exempt 
Cancer Hospital Quality Reporting (PCHQR) Program (86 FR 45428 through 
45434), the Long-Term Care Hospital Quality Reporting Program (LTCH 
QRP) (86 FR 45438 through 45446), the Inpatient Rehabilitation Facility 
Quality Reporting Program (IRF QRP) (86 FR 42385 through 42396), and 
the Skilled Nursing Facility Quality Reporting Program (86 FR 42480 
through 42489).
    HCP are at risk of carrying COVID-19 infection to patients, 
experiencing illness or death themselves as a result of contracting 
COVID-19, and transmitting COVID-19 to their families, friends, and the 
general public. For further information regarding the importance of 
vaccination among HCP, we refer readers to the ``Omnibus COVID-19 
Health Care Staff Vaccination,'' an interim final rule with comment 
that was issued on November, 11, 2021, requiring COVID-19 vaccination 
of eligible staff at health care facilities that participate in the 
Medicare and Medicaid programs (such as facilities participating in 
ESRD QIP) (86 FR 61556 through 615560). We believe that facilities 
should track the level of vaccination among their HCP as part of their 
efforts to assess and reduce the risk of transmission of COVID-19 
within their facilities. HCP vaccination can potentially reduce illness 
that leads to work absence and limit disruptions to care.\242\ Data 
from influenza vaccination demonstrates that provider uptake of the 
vaccine is associated with that provider recommending vaccination to 
patients,\243\ and we believe that HCP COVID-19 vaccination in 
facilities could similarly increase uptake among that patient 
population. We also believe

[[Page 38543]]

that publishing the HCP vaccination rates would be helpful to many 
patients, including those who are at high-risk for developing serious 
complications from COVID-19 such as dialysis patients, as they choose 
facilities from which to seek treatment. Patients undergoing 
hemodialysis face greater risk for adverse health outcomes if they 
contract COVID-19 and during the Delta and Omicron surges of 2021, 
increases in case rates were directly proportionate to vaccination 
rates at the county level across the United States <SUP>244 245</SUP> 
Under CMS' Meaningful Measures Framework, the COVID-19 HCP Vaccination 
measure would address the quality priority of ``Promoting Effective 
Prevention and Treatment of Chronic Disease'' through the Meaningful 
Measures Area of ``Preventive Care.''
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    \242\ Centers for Disease Control and Prevention. Overview of 
Influenza Vaccination among Health Care Personnel. October 2020. 
(2020) Accessed March 16, 2021 at: https://www.cdc.gov/flu/toolkit/long-term-care/why.htm.
    \243\ Measure Applications Partnership Coordinating Committee 
Meeting Presentation. March 15, 2021. (2021) Accessed March 16, 2021 
at: http://www.qualityforum.org/Project_Pages/MAP_Coordinating_Committee.aspx.
    \244\ Cuadros DF, Miller FD, Awad S, Coule P, MacKinnon NJ. 
Analysis of Vaccination Rates and New COVID-19 Infections by US 
County, July-August 2021. JAMA Netw Open. 2022;5(2):e2147915. 
doi:10.1001/jamanetworkopen.2021.47915.
    \245\ Iuliano AD, Brunkard JM, Boehmer TK, et al. Trends in 
Disease Severity and Health Care Utilization During the Early 
Omicron Variant Period Compared with Previous SARS-CoV-2 High 
Transmission Periods--United States, December 2020-January 2022. 
MMWR Morb Mortal Wkly Rep 2022;71:146-152. DOI: http://dx.doi.org/10.15585/mmwr.mm7104e4external icon.
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(2) Overview of Measure
    The COVID-19 HCP Vaccination measure is a process measure developed 
by the CDC to track COVID-19 vaccination coverage among HCP in non-
long-term care facilities such as ESRD facilities.
    The denominator is the number of HCP eligible to work in the ESRD 
facility for at least one day during the reporting period (as described 
in section IV.E.1.a.(5)) excluding persons with contraindications to 
COVID-19 vaccination that are described by the CDC.<SUP>246 247</SUP>
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    \246\ Centers for Disease Control and Prevention. 
Contraindications and precautions. (2021) Accessed January 7, 2022 
at: https://www.cdc.gov/vaccines/covid-19/info-by-product/clinical-considerations.html#Contraindications.
    \247\ Centers for Disease Control and Prevention. Measure 
Specification: NHSN COVID-19 Vaccination Coverage Updated August 
2021. (2021) Accessed March 29, 2022 at: https://www.cdc.gov/nhsn/pdfs/nqf/covid-vax-hcpcoverage-508.pdf.
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    The numerator is the cumulative number of HCP eligible to work in 
the ESRD facility for at least one day during the reporting period (as 
described in section IV.E.1.a.(5)) and who received a complete 
vaccination course against COVID-19 using an FDA-authorized or approved 
vaccine for COVID-19. A complete vaccination course is defined under 
the specific FDA EUA or approval and may require multiple doses or 
regular revaccination.<SUP>248 249</SUP> Vaccination coverage is 
defined, for purposes of this measure, as the percentage of HCP 
eligible to work at the facility for at least 1 day who received a 
complete vaccination course against COVID-19. The specifications for 
this measure are available at https://www.cdc.gov/nhsn/nqf/index.html.
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    \248\ Measure Applications Partnership Coordinating Committee 
Meeting Presentation. March 15, 2021. (2021) Accessed March 16, 2021 
at: http://www.qualityforum.org/Project_Pages/MAP_Coordinating_Committee.aspx.
    \249\ Centers for Disease Control and Prevention. Measure 
Specification: NHSN COVID-19 Vaccination Coverage Updated August 
2021. (2021) Accessed March 29, 2022 at: https://www.cdc.gov/nhsn/pdfs/nqf/covid-vax-hcpcoverage-508.pdf.
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(3) Review by the Measure Applications Partnership
    The COVID-19 HCP Vaccination measure was included on the publicly 
available ``List of Measures under Consideration for December 21, 
2020'' (MUC List), a list of measures under consideration for use in 
various Medicare programs.\250\ When the Measure Applications 
Partnership (MAP) Hospital Workgroup convened on January 11, 2021, it 
reviewed measures on the MUC List including the COVID-19 HCP 
Vaccination measure. The MAP Hospital Workgroup recognized that the 
proposed measure represents a promising effort to advance measurement 
for an ongoing and evolving national pandemic and that it would bring 
value to the ESRD QIP measure set by providing transparency about an 
important COVID-19 intervention to help prevent infections in HCP and 
patients.\251\ The MAP Hospital Workgroup also stated that collecting 
information on COVID-19 vaccination coverage among HCP, and providing 
feedback to facilities, would allow facilities to benchmark coverage 
rates and improve coverage in their facility. The MAP Hospital 
Workgroup further noted that reducing rates of COVID-19 in HCP may 
reduce transmission among a patient population that is highly 
susceptible to illness and disease, and also reduce instances of staff 
shortages due to illness.\252\
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    \250\ National Quality Forum. List of Measures Under 
Consideration for December 21, 2020. Accessed at: https://www.cms.gov/files/document/measures-under-consideration-list-2020-report.pdf on January 29 2021.
    \251\ Measure Applications Partnership. MAP Preliminary 
Recommendations 2020-2021. Accessed on January 24, 2021 at: http://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \252\ Ibid.
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    In its preliminary recommendations, the MAP Hospital Workgroup did 
not support this measure for rulemaking, subject to potential for 
mitigation.\253\ To mitigate its concerns, the MAP Hospital Workgroup 
believed that the measure needed well-documented evidence, finalized 
specifications, testing, and NQF endorsement prior to 
implementation.\254\ Subsequently, the MAP Coordinating Committee 
reviewed the COVID-19 HCP Vaccination measure and the preliminary 
recommendation of the Hospital Workgroup, and decided to recommend 
conditional support for rulemaking contingent on CMS bringing the 
measure back to the MAP once the specifications were further 
refined.\255\ In its final report, the MAP further noted that the 
measure would add value to the ESRD QIP measure set by providing 
visibility into an important intervention to limit COVID-19 infections 
in HCP and the ESRD patients for whom they provide care.\256\
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    \253\ Ibid.
    \254\ Ibid.
    \255\ Measure Applications Partnership. 2020-2021 MAP Final 
Recommendations. Accessed on February 23, 2021 at: http://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \256\ Measure Applications Partnership. 2020-2021 MAP Final 
Recommendations. Accessed on February 23, 2021 at: http://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
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    In response to the MAP's request that CMS return with the measure 
once the specifications are further refined, we met with the MAP 
Coordinating Committee accompanied by the CDC on March 15, 2021 to 
address vaccine availability, the alignment of the COVID-19 HCP 
Vaccination measure as closely as possible with the Influenza HCP 
vaccination measure (NQF #0431) specifications, and the definition of 
HCP used in the measure. At this meeting, with the CDC, we also 
presented preliminary findings from ongoing testing of the numerator of 
COVID-19 HCP Vaccination measure, which showed that the numerator data 
should be feasible and reliable.\257\ Testing of the numerator, the 
number of HCP vaccinated, involved a comparison of vaccination data 
reported to the CDC by long-term care facilities (LTCFs) through the 
CDC's National Healthcare Safety Network (NHSN) with data reported to 
the CDC through the federal pharmacy partnership program for delivering 
vaccination to LTC facilities. These two data collection systems are 
independent but show high correlation. In initial analyses of the first 
month of

[[Page 38544]]

vaccination from December 2020 to January 2021, the number of HCP 
vaccinated in approximately 1,200 facilities was highly correlated 
between these two systems with a correlation coefficient of nearly 90 
percent in the second two weeks of reporting.\258\ Because of the high 
correlation across a large number of facilities, including ESRD 
facilities, and the high number of HCP within those facilities 
receiving at least one dose of the COVID-19 vaccine, we believe these 
data indicate the measure is feasible and reliable for use in the ESRD 
QIP.
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    \257\ For more information on testing results and other measure 
updates, please see the Meeting Materials (including Agenda, 
Recording, Presentation Slides, Summary, and Transcript) of the 
March 15, 2021 meeting available at https://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367.
    \258\ Ibid.
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(4) NQF Endorsement
    Section 1881(h)(2)(B)(i) of the Act states that subject to 
subparagraph (ii), any measure specified by the Secretary for the ESRD 
QIP must have been endorsed by the entity with a contract under section 
1890(a) of the Act. The National Quality Forum (NQF) currently holds 
this contract. Under 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 as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    The proposed COVID-19 HCP Vaccination measure is not NQF endorsed. 
The CDC, in collaboration with CMS, submitted the measure for 
consideration in the NQF Fall 2021 measure cycle.
    Because this measure is not NQF-endorsed, we considered whether 
there are other available measures that assess COVID-19 vaccination 
rates among HCP. We found no other feasible and practical measures on 
the topic of COVID-19 vaccination among HCP, therefore the exception in 
section 1881(h)(2)(B)(ii) of the Act applies. We believe it is 
important to propose this measure as quickly as feasible to address the 
ongoing COVID-19 pandemic and to prepare for potential future waves of 
COVID-19 variants, including the potential continued negative impact of 
COVID-19 infection on the ESRD patient population as well as HCP 
staffing shortages due to COVID-19 infection among staff.
(5) Data Collection, Submission, and Reporting
    We are proposing quarterly reporting deadlines for the ESRD QIP and 
a 12-month performance period. Facilities would report the measure 
through the NHSN web-based surveillance system.\259\ Facilities 
currently use the NHSN web-based system to report two ESRD QIP 
measures, the NHSN Bloodstream Infection (BSI) clinical measure and the 
NHSN Dialysis Event reporting measure.
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    \259\ Centers for Disease Control and Prevention. Surveillance 
for Weekly HCP COVID-19 Vaccination. Accessed at: https://www.cdc.gov/nhsn/hps/weekly-covid-vac/index.html on January 7, 2022.
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    To report this measure, we propose that facilities would collect 
the numerator and denominator for the COVID-19 HCP vaccination measure 
for at least one self-selected week during each month of the reporting 
quarter and submit the data to the NHSN Healthcare Personal Safety 
(HPS) Component before the quarterly deadline to meet ESRD QIP 
requirements. While it would be ideal to have HCP vaccination data for 
every week of each month, we are mindful of the time and resources that 
facilities would need to report the data. Thus, in collaboration with 
the CDC, we determined that data from at least one week of each month 
would be sufficient to obtain a reliable snapshot of vaccination levels 
among a facility's healthcare personnel while balancing the costs of 
reporting. If a facility submits more than one week of data in a month, 
the most recent week's data would be used to calculate the measure, as 
we believe the most recent week's data would provide the most currently 
available information. For example, if first and third week data are 
submitted, third week data would be used. If first, second, and fourth 
week data are submitted, fourth week data would be used. Each quarter, 
we propose that the CDC would calculate a single quarterly COVID-19 HCP 
vaccination coverage rate for each facility, which would be calculated 
by taking the average of the data from the three weekly rates submitted 
by the facility for that quarter. We would publicly report the most 
recent quarterly COVID-19 HCP vaccination coverage rate as calculated 
by the CDC.
    As described in section IV.E.1.a.(2) of this proposed rule, 
facilities would report the number of HCP eligible to have worked at 
the facility during the self-selected week that the facility reports 
data for in NHSN (denominator) and the number of those HCP who have 
received a complete course of a COVID-19 vaccination (numerator) during 
the same self-selected week.
    We welcome public comment on our proposal to add a new measure, 
COVID-19 Vaccination Coverage among HCP, to the ESRD QIP measure set 
beginning with PY 2025.
b. Proposed Updates to the Standardized Transfusion Ratio (STrR) 
Reporting Measure Beginning With PY 2025
    Under section 1881(h)(2)(A)(iv)(I) of the Act, the ESRD QIP has a 
statutory requirement to include an anemia management measure in the 
Program's measure set, and the STrR reporting measure currently 
satisfies that statutory requirement. In the CY 2015 ESRD PPS final 
rule (79 FR 66192 through 66197), we finalized the adoption of the STrR 
clinical measure to address gaps in the quality of anemia management, 
beginning with the PY 2018 ESRD QIP. The NQF endorsed a revised version 
of the STrR clinical measure in 2016, and in the CY 2018 ESRD PPS final 
rule (82 FR 50771 through 50774), we adopted the revised version of the 
STrR clinical measure beginning with the PY 2021 ESRD QIP.
    Commenters to the CY 2019 ESRD PPS proposed rule raised concerns 
about the validity of the modified STrR measure (NQF #2979) finalized 
for adoption beginning with PY 2021 (83 FR 56993 through 56994). 
Commenters specifically stated that due to the new level of coding 
specificity required under the ICD-10-CM/PCS coding system, many 
hospitals were no longer accurately coding blood transfusions. The 
commenters further stated that because the STrR clinical measure was 
calculated using hospital data, the rise of inaccurate blood 
transfusion coding by hospitals had negatively affected the validity of 
the STrR measure (83 FR 56993 through 56994).
    In the CY 2020 ESRD PPS final rule (84 FR 60720 through 60723), we 
finalized our proposal to convert the STrR clinical measure to a 
reporting measure while we examined these validity concerns. 
Accordingly, we finalized that, beginning with PY 2022, we would score 
the STrR measure so that facilities that meet previously finalized 
minimum data and eligibility requirements would receive a score on the 
STrR reporting measure based on the successful reporting of data, not 
on the values actually reported. We stated our desire to ensure that 
the Program's scoring methodology results in fair and reliable STrR 
measure scores because those scores are linked to facilities' TPS and 
possible payment reductions. We also stated our belief that the most 
appropriate way to continue fulfilling the statutory requirement to 
include a measure of anemia management in the Program while ensuring 
that facilities are not adversely affected during our

[[Page 38545]]

continued examination of the measure was to convert the STrR clinical 
measure to a reporting measure.
    In November 2020, the NQF renewed its endorsement of the STrR 
clinical measure after performing an ad hoc review based on updates we 
made to the measure's specifications to address coding and validity 
concerns. Under the revised STrR clinical measure, inpatient 
transfusion events are identified using a broader definition that 
includes revenue center codes only, ICD procedure codes (alone or with 
revenue codes), or value codes alone or in combination. We believe that 
these updates would result in identification of a greater number of 
inpatient transfusion events compared to the previously implemented 
STrR clinical measure. In addition, the revised STrR clinical measure 
would effectively mitigate a provider coding bias that was exacerbated 
by the conversion from ICD-9 to ICD-10 code sets in late CY 2015.
    In light of the NQF's endorsement and adoption of the updated STrR 
clinical measure specifications, we are proposing to convert the STrR 
reporting measure to the revised STrR clinical measure using the 
revised specifications that were endorsed by the NQF. We believe that 
previous validity concerns have been adequately examined and addressed, 
that facilities have had sufficient time to gain experience with the 
updated measure specifications through reporting the updated measure 
for Dialysis Facility Compare, and converting back to the STrR clinical 
measure would be consistent with our intent to more closely align with 
NQF measure specifications where feasible (84 FR 60724).
    In addition to our proposal to convert the STrR reporting measure 
to a clinical measure, we are also proposing to update the scoring 
methodology for the STrR clinical measure so that facilities that meet 
previously finalized minimum data and eligibility requirements would 
receive a score on the STrR clinical measure based on the actual 
clinical values reported by the facility, rather than the successful 
reporting of the data. We are also proposing to express the proposed 
STrR clinical measure as a rate, rather than as a ratio. We believe 
that converting the STrR clinical measure to be expressed as a rate 
would help providers and patients better understand a facility's 
performance on the measures, and would be more intuitive for a facility 
to track its performance from year to year. To assess the impact of 
expressing STrR measure results as rates, we multiplied the facility 
level STrR by the national average transfusion rate. Our analysis found 
that the difference between the distribution of STrR measure scores 
expressed as a ratio and expressed as a rate was generally less than 1 
percent. Therefore, we believe that expressing STrR measure results as 
a rate would not result in different ESRD QIP scores. This approach 
would also align with our technical updates to the SHR clinical measure 
and the SRR clinical measure, as discussed in section IV.D of this 
proposed rule.
    We welcome public comment on our proposals.
c. Proposal To Convert the Hypercalcemia Clinical Measure to a 
Reporting Measure Beginning With PY 2025
    Section 1881(h)(2)(A)(iv)(II) of the Act states that the measures 
specified for the ESRD QIP must include, 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, in the CY 2014 ESRD PPS final rule (78 FR 72200 
through 72203), we adopted the Hypercalcemia clinical measure as part 
of the ESRD QIP measure set, which we believed would encourage adequate 
management of bone mineral metabolism and disease in patients with 
ESRD.
    In recent years, we have received numerous public comments 
expressing concern about the role and weight of the Hypercalcemia 
clinical measure in the ESRD QIP. Many stakeholders have indicated that 
they believe the measure is topped out, pointing out that the NQF has 
placed the measure in Reserve Status because of high facility 
performance and minimal room for improvement. As a result, the ability 
to distinguish meaningful differences in performance between facilities 
is substantially reduced because small random variations in measure 
rates can result in different scores. Others have expressed concern 
about whether the Hypercalcemia clinical measure is the best measure in 
the bone mineral metabolism domain to impact patient outcomes.
    Taking into account these persistent concerns expressed by 
stakeholders, we are currently examining the continued viability of the 
Hypercalcemia clinical measure as part of the ESRD QIP measure set. We 
also acknowledge that there may be other measures of bone mineral 
metabolism that are more informative or effective than the 
Hypercalcemia clinical measure, such as the serum phosphorus 
measure.\260\
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    \260\ CMS ESRD QIP PY 2020 Final Measure Technical 
Specifications. Accessed May 18, 2022 at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/Downloads/PY-2020-Technical-Specification.pdf.
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    Although recent annual measure analyses have indicated that the 
Hypercalcemia clinical measure may not be fully topped out based on the 
statistical criteria that we adopted in the CY 2015 ESRD PPS final rule 
(79 FR 66174), they also indicate that the measure is very close to 
being topped out. Under our previously adopted methodology, a clinical 
measure is considered to be topped out if national measure data show 
(1) statistically indistinguishable performance levels at the 75th and 
90th percentiles; and (2) a truncated coefficient of variation (TCV) of 
less than or equal to 0.1. To determine whether a clinical measure is 
topped out, we initially focus on the top distribution of facility 
performance on each measure and note if their 75th and 90th percentiles 
are statistically indistinguishable. Then, to ensure that we properly 
account for the entire distribution of scores, we analyze the truncated 
coefficient of variation (TCV) for the measure. Based on a 2017 
analysis using CY 2015 CROWNWeb measure data, the Hypercalcemia 
clinical measure did not meet both conditions. Although the TCV was 
less than 1 percent, the difference between the 75th percentile (0.91) 
was statistically distinguishable from the 90th percentile (0.32). 
However, given that the TCV was so low and was calculated by removing 
the lower and upper 5th percentiles, we believe it is possible that 
certain outliers in the 90th percentile could have skewed the 
statistically distinguishable part of the topped out analysis. In other 
words, although the Hypercalcemia clinical measure is not considered 
topped out based on our previously adopted methodology, we believe that 
it is very close to being topped out based on the available data and 
are concerned that small differences in measure performance may 
disproportionately impact a facility's score on the measure.
    Therefore, we are proposing to convert the Hypercalcemia clinical 
measure to a reporting measure beginning in PY 2025 while we explore 
possible replacement measures that would be more clinically meaningful 
for purposes of quality improvement. We are also proposing to update 
the scoring methodology so that facilities that meet previously 
finalized minimum data and eligibility requirements would receive a

[[Page 38546]]

score on the Hypercalcemia reporting measure based on the successful 
reporting of the data, rather than the actual clinical values reported 
by the facility. Facilities would be scored using the following 
equation, beginning in PY 2025:
[GRAPHIC] [TIFF OMITTED] TP28JN22.042

If finalized, the Hypercalcemia reporting measure would be in our 
proposed Reporting Measure Domain, which we discuss in section IV.E.2.
    We welcome public comments on our proposal to convert the 
Hypercalcemia clinical measure to a reporting measure, beginning in PY 
2025.
2. Proposed Revisions To Measure Domains and to the Domain and Measure 
Weights Used To Calculate the Total Performance Score (TPS) Beginning 
With the PY 2025 ESRD QIP
    In the CY 2019 ESRD PPS final rule (83 FR 56991 through 56992), we 
finalized revisions to the ESRD QIP measure domains. Specifically, we 
eliminated the Reporting Domain and reorganized the Clinical Domain 
into three distinct domains: Patient & Family Engagement Domain, Care 
Coordination Domain, and Clinical Care Domain. We stated that adopting 
these topics as separate domains would result in a measure set that is 
more closely aligned with the priority areas in the Meaningful Measures 
Framework.\261\ We also continued use of the Patient Safety Domain, 
which aligns with the Meaningful Measures Framework priority to make 
care safer by reducing harm caused in the delivery of care. In that 
rule, we finalized our proposal to eliminate the Reporting Measure 
Domain from the ESRD QIP scoring methodology, beginning in PY 2021, 
because there would no longer be any measures in that domain as a 
result of our finalized proposals to reassign the Ultrafiltration Rate 
and Clinical Depression Screening and Follow-Up Reporting measures to 
the Clinical Care Measure Domain and the Care Coordination Measure 
Domain, respectively (83 FR 56991 through 56997).
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    \261\ CMS website, Meaningful Measures Framework. Available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.
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    In the CY 2019 ESRD PPS final rule, we also stated our intent to 
reassess how the finalized ESRD QIP measure domains and domain weights 
affect TPSs awarded under the Program in the future (83 FR 56995). We 
take numerous factors into account when determining appropriate domain 
and measure weights, including clinical evidence, opportunity for 
improvement, clinical significance, and patient and provider burden. We 
also consider criteria previously used to determine appropriate domain 
and measures weights, including: (1) The number of measures and measure 
topics in a proposed domain; (2) how much experience facilities have 
had with the measures and measure topics in a proposed domain; and (3) 
how well the measures align with CMS's highest priorities for quality 
improvement for patients with ESRD (79 FR 66214) (that is, the 
Meaningful Measures Framework priorities, which includes our preferred 
emphasis on patient outcomes).
    Currently, ESRD QIP measures are weighted and distributed across 
four measure domains: Patient & Family Engagement, Care Coordination, 
Clinical Care, and Safety. Based on changes to the measure set since PY 
2021, including adoption of the Medication Reconciliation (MedRec) 
reporting measure, the PPPW clinical measure, and the measure-related 
proposals in this proposed rule, we have reassessed the impact of the 
ESRD QIP measure domains and domain weights on TPSs, and we believe it 
is necessary to increase incentives for improving performance by 
increasing the weights on measures where there is the most room for 
improvement, especially on patient clinical outcomes. Therefore, we are 
proposing to create a new Reporting Measure Domain which would include 
the four current reporting measures in the ESRD QIP measure set, as 
well as the proposed COVID-19 HCP Vaccination reporting measure and the 
proposed Hypercalcemia reporting measure. We note that we are proposing 
to convert the STrR reporting measure to a clinical measure, as 
discussed in section IV.E.1.b of this proposed rule, and as a result, 
we are proposing that the proposed STrR clinical measure would be 
placed in the Clinical Care Measure Domain.
    We are also proposing to update the domain weights and individual 
measure weights in the Care Coordination Domain, Clinical Care Domain, 
and Safety Domain accordingly to accommodate the new Reporting Measure 
Domain and individual reporting measures therein. As the ESRD QIP 
measure set has evolved over the years, we believe this would help to 
address concerns regarding the impact of individual measure performance 
on a facility's TPS, while also further incentivizing improvement on 
clinical measures. For a comparison of current and proposed measure 
domains and weighting, please see Table 19 and Table 20.
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    We welcome public comment on our proposal to create a new Reporting 
Domain and to update the existing domains and measure weights used to 
calculate the TPS, beginning with PY 2025.
3. Estimated Performance Standards for the PY 2025 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as required by section 1881(h)(4)(B) of the Act, and must 
be established prior to the beginning of the performance period for the 
year involved, as required by section 1881(h)(4)(C) of the Act. We 
refer

[[Page 38548]]

readers to the CY 2013 ESRD PPS final rule (76 FR 70277) for a 
discussion of the achievement and improvement standards that we have 
established for clinical measures used in the ESRD QIP. We define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively.
    In the CY 2022 ESRD PPS final rule (86 FR 61927), we set the 
performance period for the PY 2025 ESRD QIP as CY 2023 and the baseline 
period as CY 2021. We note that, for the six measures we are proposing 
to suppress in section IV.B.2 of this proposed rule, we would continue 
to use CY 2019 data as the baseline period for those measures. We 
believe that this is consistent with our established policy to use the 
prior year's numerical values for the performance standards if the most 
recent full CY's final numerical values are worse. For the measures 
that we are proposing to suppress for PY 2023, this would result in no 
measure data that could be used for CY 2021 baseline period. Therefore, 
this would result in worse performance standards for those suppressed 
measures in PY 2025. In this proposed rule, we are estimating the 
performance standards for the PY 2025 clinical measures in Table 21 
using data from CY 2019, which is the most recent data available. We 
intend to update these standards for the non-suppressed measures, using 
CY 2021 data, in the CY 2023 ESRD PPS final rule.

[[Page 38549]]

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    In addition, we summarize in Table 22 existing requirements for 
successful reporting on reporting measures in the PY 2025 ESRD QIP.

[[Page 38550]]

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[[Page 38551]]


4. Eligibility Requirements for the PY 2025 ESRD QIP
    Our current minimum eligibility requirements for scoring the ESRD 
QIP measures are described in Table 23. We are not proposing any 
changes to these eligibility requirements for the PY 2025 ESRD QIP in 
this proposed rule.
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5. Payment Reduction Scale for the PY 2025 ESRD QIP
    Under our current policy, a facility does not receive a payment 
reduction for a payment year in connection with its performance under 
the ESRD QIP if it achieves a TPS that is at or above the minimum TPS 
(mTPS) that we establish for the payment year. We have defined the mTPS 
in our regulations at 42 CFR 413.178(a)(8) as, with respect to a 
payment year, the TPS that an ESRD

[[Page 38552]]

facility would receive if, during the baseline period it performed at 
the 50th percentile of national performance on all clinical measures 
and the median of national ESRD facility performance on all reporting 
measures.
    Our current policy, which is codified at 42 CFR 413.177 of our 
regulations, also implements the payment reductions on a sliding scale 
using ranges that reflect payment reduction differentials of 0.5 
percent for each 10 points that the facility's TPS falls below the mTPS 
(76 FR 634 through 635).
    For PY 2025, based on available data, a facility must meet or 
exceed a mTPS of 55 in order to avoid a payment reduction. We note that 
the mTPS estimated in this proposed rule is based on data from CY 2019 
instead of the PY 2025 baseline period (CY 2021) because CY 2021 data 
are not yet available.
    We refer readers to Table 19 of this proposed rule for the 
estimated values of the 50th percentile of national performance for 
each clinical measure. Under our current policy, a facility that 
achieves a TPS below 55 would receive a payment reduction based on the 
TPS ranges indicated in Table 24.
[GRAPHIC] [TIFF OMITTED] TP28JN22.025

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    We intend to update the mTPS for PY 2025, as well as the payment 
reduction ranges for that payment year, in the CY 2023 ESRD PPS final 
rule.

F. Updates for the PY 2026 ESRD QIP

1. Continuing Measures for the PY 2026 ESRD QIP
    Under our previously adopted policy, the PY 2025 ESRD QIP measure 
set would also be used for PY 2026. We are not proposing to adopt any 
new measures beginning with the PY 2026 ESRD QIP.
2. Performance Period for the PY 2026 ESRD QIP
    We continue to believe that 12-month performance and baseline 
periods provide us sufficiently reliable quality measure data for the 
ESRD QIP. Under this policy, we would adopt CY 2024 as the performance 
period and CY 2022 as the baseline period for the PY 2026 ESRD QIP.
    We are not proposing any changes to this policy.
3. Performance Standards for the PY 2026 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as required by section 1881(h)(4)(B) of the Act, and must 
be established prior to the beginning of the performance period for the 
year involved, as required by section 1881(h)(4)(C) of the Act. We 
refer readers to the CY 2012 ESRD PPS final rule (76 FR 70277) for a 
discussion of the achievement and improvement standards that we have 
established for clinical measures used in the ESRD QIP. We define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively.
a. Performance Standards for Clinical Measures in the PY 2026 ESRD QIP
    At this time, we do not have the necessary data to assign numerical 
values to the achievement thresholds, benchmarks, and 50th percentiles 
of national performance for the clinical measures because we do not 
have CY 2021 data. We intend to publish these numerical values, using 
CY 2021 data, in the CY 2023 ESRD PPS final rule.
b. Performance Standards for the Reporting Measures in the PY 2026 ESRD 
QIP
    In the CY 2019 ESRD PPS final rule, we finalized the continued use 
of existing performance standards for the Screening for Clinical 
Depression and Follow-Up reporting measure, the Ultrafiltration Rate 
reporting measure, the NHSN Dialysis Event reporting measure, and the 
MedRec reporting measure (83 FR 57010 through 57011). We would continue 
use of these performance standards in PY 2026. In sections IV.E.1.c and 
IV.E.1.a of this proposed rule, we are proposing to convert the 
Hypercalcemia clinical measure to a reporting measure and to add the 
COVID-19 Vaccination Coverage among HCP reporting measure to the ESRD 
QIP measure set beginning with PY 2025, and would include these in the 
performance standards for reporting measures in the PY 2026 ESRD QIP if 
this proposal is finalized.
4. Scoring the PY 2026 ESRD QIP
a. Scoring Facility Performance on Clinical Measures
    In the CY 2014 ESRD PPS final rule, we finalized policies for 
scoring performance on clinical measures based on achievement and 
improvement (78 FR 72215 through 72216). In the CY 2019 ESRD PPS final 
rule, we finalized a policy to continue use of this methodology for 
future payment years (83 FR 57011) and we codified these scoring 
policies at 42 CFR 413.178(e). In section IV.E.1.b of this proposed 
rule,

[[Page 38553]]

we are proposing to update our scoring methodology beginning with PY 
2025.
b. Scoring Facility Performance on Reporting Measures
    Our policy for scoring performance on reporting measures is 
codified at 42 CFR 413.178(e), and more information on our scoring 
policy for reporting measures can be found in the CY 2020 ESRD PPS 
final rule (84 FR 60728). We previously finalized policies for scoring 
performance on the NHSN Dialysis Event reporting measure in the CY 2018 
ESRD PPS final rule (82 FR 50780 through 50781), as well as policies 
for scoring the MedRec reporting measure and Clinical Depression 
Screening and Follow-up reporting measure in the CY 2019 ESRD PPS final 
rule (83 FR 57011). We also previously finalized the scoring policy for 
the STrR reporting measure in the CY 2020 ESRD PPS final rule (84 FR 
60721 through 60723). In the CY 2021 ESRD PPS final rule, we finalized 
our updated scoring methodology for the Ultrafiltration Rate reporting 
measure (85 FR 71468 through 71470). In section IV.E.1.c of this 
proposed rule, we are proposing to update our scoring methodology as 
part of our proposal to convert the Hypercalcemia clinical measure to a 
reporting measure beginning with PY 2025. We are also proposing to 
adopt a scoring methodology as part of our proposal to add the COVID-19 
Vaccination Coverage among HCP reporting measure to the ESRD QIP 
measure set beginning with PY 2025, as discussed in section IV.E.1.a of 
this proposed rule.
5. Weighting the Measure Domains and the TPS for PY 2026
    Under our current policy, we assign the Patient & Family Engagement 
Measure Domain a weight of 15 percent of the TPS, the Care Coordination 
Measure Domain a weight of 30 percent of the TPS, the Clinical Care 
Measure Domain a weight of 40 percent of the TPS, and the Safety 
Measure domain a weight of 15 percent of the TPS.
    In the CY 2019 ESRD PPS final rule, we finalized a policy to assign 
weights to individual measures and a policy to redistribute the weight 
of unscored measures (83 FR 57011 through 57012). In the CY 2020 ESRD 
PPS final rule, we finalized a policy to use the measure weights we 
finalized for PY 2022 for the PY 2023 ESRD QIP and subsequent payment 
years, and also to use the PY 2022 measure weight redistribution policy 
for the PY 2023 ESRD QIP and subsequent payment years (84 FR 60728 
through 60729).
    In section IV.E.2 of this proposed rule, we are proposing the 
addition of a new Reporting Measure Domain, and we are proposing new 
weights for the four existing measure domains, beginning in PY 2025. If 
finalized, we would update the measure weights and domains and the TPS 
for PY 2026 accordingly in the final rule.

G. Requests for Information (RFI) on Topics Relevant to ESRD QIP

1. Request for Information on Quality Indicators for Home Dialysis 
Patients
    In this proposed rule, we are seeking public comments on potential 
indicators of quality for patients who receive dialysis at home in 
order to support the use of home dialysis for ESRD patients where it is 
appropriate. While home-based dialysis may not meet the needs of every 
patient, home dialysis has clear benefits for those who are suitable 
candidates. Often, it may be more convenient for many ESRD patients, 
and survivability rates for home dialysis are comparable to those of 
transplant recipients and in-center hemodialysis.\262\
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    \262\ ASPE Report, Advancing American Kidney Health, p. 24. 
Available at https://aspe.hhs.gov/system/files/pdf/262046/AdvancingAmericanKidneyHealth.pdf.
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    There are two general types of dialysis: hemodialysis (HD), in 
which an artificial filter outside of the body is used to clean the 
blood; and peritoneal dialysis (PD), in which the patient's peritoneum, 
covering the abdominal organs, is used as the dialysis membrane. HD is 
conducted at an ESRD facility, usually three times a week, or at a 
patient's home, often at a greater frequency. PD most commonly occurs 
at the patient's home. (Although PD can be furnished within an ESRD 
facility, it is very rare. For purposes of this RFI, we consider PD to 
be exclusively a home modality.) Assuming that either modality would be 
clinically appropriate, whether a patient selects HD or PD may depend 
on a number of factors, such as patient education before dialysis 
initiation, social and care partner support, socioeconomic factors, and 
patient perceptions and preference.\263\ \264\
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    \263\ Stack AG. Determinants of Modality Selection among 
Incident US Dialysis Patients: Results from a National Study. 
Journal of the American Society of Nephrology. 2002; 13: 1279-1287. 
Doi 1046-6673/1305-1279.
    \264\ Miskulin DC, et al. Comorbidity and Other Factors 
Associated With Modality Selection in Incident Dialysis Patients: 
The CHOICE Study. American Journal of Kidney Diseases. 2002; 39(2): 
324-336. Doi 10.1053/ajkd.2002.30552.
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    When Medicare began coverage for individuals with ESRD in 1973, 
more than 40 percent of dialysis patients in the U.S. were on home 
hemodialysis (HHD). More favorable reimbursement for outpatient 
dialysis and the introduction in the 1970s of continuous ambulatory 
peritoneal dialysis, which required less intensive training, 
contributed to a relative decline in HHD utilization.\265\ Overall, the 
proportion of home dialysis patients in the U.S. declined from 1988 to 
2012, with the number of home dialysis patients increasing at a slower 
rate relative to the total number of all dialysis patients. As cited in 
a U.S. Government Accountability Office (GAO) report, according to U.S. 
Renal Data System (USRDS) data, approximately 16 percent of the 104,000 
dialysis patients in the U.S. received home dialysis in 1988; however, 
by 2012, the rates of HHD and PD utilization were 2 and 9 percent, 
respectively.\266\
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    \265\ Blagg CR. A Brief History of Home Hemodialysis. Annals in 
Renal Replacement Therapy. 1996; 3: 99-105.
    \266\ United States Government Accountability Office. End Stage 
Renal Disease: Medicare Payment Refinements Could Promote Increased 
Use of Home Dialysis (GAO-16-125). October 2015.
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    Currently, the majority of ESRD patients receiving dialysis receive 
HD in an ESRD facility. At the end of 2016, 63.1 percent of all 
prevalent ESRD patients--meaning patients already diagnosed with ESRD--
in the U.S. were receiving HD, 7.0 percent were being treated with PD, 
and 29.6 percent had a functioning kidney transplant.\267\ Among HD 
cases, 98.0 percent used in-center HD, and 2.0 percent used HHD.\268\ 
We note that once they are stable on a specific modality, patients are 
infrequently aware that they are able to change modalities. In 2018, 72 
percent of Black ESRD patients received in-center hemodialysis versus 
only 57 percent of White patients. This data point may indicate that a 
greater number of white ESRD patients receive home dialysis than Black 
patients.\269\
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    \267\ United States Renal Data System, Annual Data Report, 2018. 
Volume 2. Chapter 1: Incidence, Prevalence, Patient Characteristics, 
and Treatment Modalities. https://www.usrds.org/2018/view/v2_01.aspx.
    \268\ United States Renal Data System, Annual Data Report, 2018. 
Volume 2. Chapter 1: Incidence, Prevalence, Patient Characteristics, 
and Treatment Modalities. https://www.usrds.org/2018/view/v2_01.aspx.
    \269\ National Kidney Foundation. https://www.kidney.org/news/newsroom/fsindex. Accessed 11/15/2021.
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    Research suggests that dialyzing at home is associated with lower 
overall medical expenditures than dialyzing in-center. Key factors that 
may be related to lower expenditures include potentially lower rates of 
infection associated with dialysis treatment, fewer hospitalizations, 
cost differentials between PD and HD services and supplies, and lower 
operating costs for

[[Page 38554]]

dialysis providers for providing home dialysis.\270\ \271\ \272\ \273\ 
\274\
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    \270\ Walker R, Marshall MR, Morton RL, McFarlane P, Howard K. 
The cost-effectiveness of contemporary home hemodialysis modalities 
compared with facility hemodialysis: A systematic review of full 
economic evaluations. Nephrology. 2014; 19: 459-470 doi: 10.1111/
nep.12269.
    \271\ Walker R, Howard K, Morton R. Home hemodialysis: A 
comprehensive review of patient-centered and economic 
considerations. ClinicoEconomics and Outcomes Research. 2017; 9: 
149-161.
    \272\ Howard K, Salkeld G, White S, McDonald S, Chadban S, Craig 
J, Cass A. The cost effectiveness of increasing kidney 
transplantation and home-based dialysis. Nephrology. 2009; 14: 123-
132 doi: 10.1111/j.1440-1797.2008.01073.x.
    \273\ Quinn R, Ravani P, Zhang X, Garg A, Blake P, Austin P, 
Zacharias JM, Johnson JF, Padeya S, Verreli M, Oliver M. Impact of 
Modality Choice on Rates of Hospitalization in Patients Eligible for 
Both Peritoneal Dialysis and Hemodialysis. Peritoneal Dialysis 
International. 2014; 34(1): 41-48 doi: 10.3447/pdi.2012.00257.
    \274\ Sinnakirouchenan R, Holley, J. Peritoneal Dialysis Versus 
Hemodialysis: Risks, Benefits, and Access Issues. Advances in 
Chronic Kidney Disease. 2011; 18(6): 428-432. doi: 10.1053/
j.ackd.2011.09.001.
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    We believe that increasing rates of home dialysis has the potential 
to not only reduce Medicare expenditures, but also to preserve or 
enhance the quality of care for ESRD beneficiaries. In fact, recent 
studies show substantial support among nephrologists and patients for 
dialysis treatment at home.\275\ \276\ \277\ \278\ \279\ Although some 
measures in the ESRD QIP apply to home dialysis facilities, certain 
measures do not apply to facilities that have high rates of home 
dialysis. For example, home dialysis facilities are generally not 
eligible for scoring on the ICH-CAHPS measure, the Long-Term Catheter 
Rate clinical measure, the Standardized Fistula Rate measure, and the 
NHSN BSI clinical measure. Therefore, many of these facilities are 
eligible for fewer measures than facilities that provide in-center 
hemodialysis only. As increasing numbers of ESRD patients use home 
dialysis therapies,\280\ we are interested in learning more about 
potential indicators of quality of care for home dialysis patients that 
are not currently being captured by the ESRD QIP. Therefore, we are 
seeking comments on strategies to monitor and assess the quality of 
care delivered to patients who receive dialysis at home. We are also 
seeking comments on how to support more equitable access to home 
dialysis across different ESRD patient populations.
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    \275\ Rivara MB, Mehrotra R. The Changing Landscape of Home 
Dialysis in the United States. Current Opinion in Nephrology and 
Hypertension.2014; 23(6):586-591.doi:10.1097/MNH0000000000000066.
    \276\ Mehrotra R, Chiu YW, Kalantar-Zadeh K, Bargman J, Vonesh 
E. Similar Outcomes With Hemodialysis and Peritoneal Dialysis in 
Patients With End-Stage Renal Disease. Archives of Internal 
Medicine. 2011; 171(2): 110-118. Doi:10.1001/archinternmed.2010.352.
    \277\ Ghaffarri A, Kalantar-Zadeh K, Lee J, Maddux F, Moran J, 
Nissenson A. PD First: Peritoneal Dialysis as the Default Transition 
to Dialysis Therapy. Seminars in Dialysis. 2013; 26(6): 706-713. 
doi: 10.1111/sdi.12125.
    \278\ Ledebo I, Ronco C. The best dialysis therapy? Results from 
an international survey among nephrology professionals. Nephrology 
Dialysis Transplantation.2008;6:403-408.doi:10.1093/ndtplus/sfn148.
    \279\ Schiller B, Neitzer A, Doss S. Perceptions about renal 
replacement therapy among nephrology professionals. Nephrology News 
& Issues. September 2010; 36-44.
    \280\ United States Renal Data System, 2018 Annual Data Report. 
Available at https://www.usrds.org/2018/view/v2_01.aspx.
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    We welcome comments on these issues.
2. Request for Information on Potential Future Inclusion of Two Social 
Drivers of Health Measures
(1) Background
    Our commitment to supporting facilities in building equity into 
their healthcare delivery practices centers on empowering their 
workforce to recognize and eliminate health disparities that 
disproportionately impact people with ESRD, such as, individuals who 
are members of racial and ethnic minority groups, have low incomes, 
and/or reside in rural areas. In the CY 2022 ESRD PPS final rule, we 
noted our intention to initiate additional request(s) for information 
(RFIs) on closing the health equity gap, including identification of 
the most relevant social risk factors for people with ESRD (86 FR 
61930). Health-related social needs (HRSNs), defined as individual-
level, adverse social conditions that negatively impact a person's 
health or healthcare, are significant risk factors associated with 
worse health outcomes as well as increased healthcare utilization.\281\ 
We believe that consistently pursuing identification of HRSNs would 
have two significant benefits. First, because social risk factors 
disproportionately impact underserved communities, promoting screening 
for these factors could serve as evidence-based building blocks for 
supporting facilities and health systems in actualizing commitment to 
address disparities, improve health equity, and implement associated 
equity measures to track progress.\282\ Second, these measures could 
support ongoing quality improvement initiatives by providing data with 
which dialysis providers would be able to stratify patient risk and 
organizational performance.
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    \281\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. June 
2021. Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion. Accessed: November 23, 2021.
    \282\ American Hospital Association. (2020). Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at: 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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    We are investigating potential integration of screening for health-
related social needs into the ESRD QIP measure set. This type of 
screening was the subject of the recently ended Accountable Health 
Communities (AHC) Model, which was implemented by the CMS Innovation 
Center.\283\ The Innovation Center developed the AHC Model based on 
evidence that addressing health-related social needs (HRSNs) through 
enhanced linkages between health systems and community-based 
organizations can improve health outcomes and reduce costs.\284\ HRSNs, 
defined as individual-level social conditions that negatively impact a 
person's health, are significant risk factors associated with adverse 
health outcomes and increased healthcare utilization, including 
excessive emergency department (ED) visits and avoidable 
hospitalizations.\285\ \286\ Unmet HRSNs, such as food insecurity, 
inadequate or unstable housing, and inadequate transportation may 
increase risk for onset of chronic conditions, such as ESRD, and 
accelerate exacerbation of related adverse health outcomes.\287\ \288\ 
\289\
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    \283\ Additional information about the Accountable Health 
Communities Model is available at: https://innovation.cms.gov/innovation-models/ahcm.
    \284\ RTI International. (2020). Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \285\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \286\ Alley, D. E., C. N. Asomugha, P. H. Conway, and D. M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \287\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \288\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \289\ Laraia, B.A. (2013). Food Insecurity and Chronic Disease. 
Advances in Nutrition, 4: 203-212, doi: 10.3945/an.112.003277.

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[[Page 38555]]

    We believe consistent identification of HRSNs among people with 
ESRD would have two significant benefits that would contribute to 
reduction in health disparities and improvements in quality and 
efficiency of dialysis care delivery. First, due to the association 
between chronic condition risk and HRSNs, screening for these needs 
could serve as evidence-based building blocks for supporting ESRD 
facilities and health systems in addressing persistent disparities and 
tracking progress towards closing the health equity gap in the ESRD 
population. Second, these measures would support ongoing quality 
improvement initiatives, specifically, care coordination for ESRD 
patients, by providing data with which to potentially stratify quality 
performance in dialysis providers. This is especially relevant in 
settings where a disproportionate number of patients have HRSNs and 
adverse healthcare outcomes, including hospital readmissions, that 
result in higher penalties related to diminished quality 
performance.\290\ \291\ We believe these measures align with The CMS 
Quality Strategy Goals around effective care coordination and 
prevention and treatment of chronic conditions.\292\ We note that 
advancing health equity by addressing the health disparities that 
underlie the country's health system is one of our strategic pillars 
and a Biden-Harris Administration priority.\293\ In this proposed rule, 
we seek public comment on the potential future inclusion of two related 
measures discussed later in this section.
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    \290\ National Academies of Sciences, Engineering, and 
Medicine.2017. Accounting for social risk factors in Medicare 
payment. Washington, DC: The National Academies Press. doi: 
10.17226/23635.
    \291\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \292\ Centers for Medicare & Medicaid Services. (2021) CMS' 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
    \293\ Brooks-LaSure, C. (2021). My First 100 Days and Where We 
Go From Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
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(2) Screening for Social Drivers of Health Measure
    Significant and persistent health disparities in the United States 
result in adverse health outcomes for people with ESRD.\294\ \295\ The 
COVID-19 pandemic has illuminated the detrimental interaction between 
HRSNs, adverse health outcomes, and healthcare utilization in the 
United States.\296\ \297\ Individuals from racial and ethnic minority 
groups and with lower incomes are less likely to receive recommended 
care for CKD risk factors and are also less likely to reduce CKD risk 
through recommended treatment goals.\298\ \299\ \300\ \301\ 
Consequently, some groups are more likely to progress from CKD to ESRD 
and less likely to be under the care of a nephrologist before starting 
dialysis.\302\ Individuals from racial and ethnic minority groups with 
ESRD are more likely to have 30-day hospital readmissions when compared 
to non-Hispanic White patients.\303\ Emerging evidence has shown that 
specific social risk factors are directly associated with health 
outcomes and healthcare utilization and costs.\304\ \305\ \306\ \307\ 
Of particular concern among people with ESRD are barriers to treatment 
prior to and after diagnosis, including inadequate access to healthy 
foods, unstable housing, limited transportation, and community safety 
concerns.\308\ \309\
---------------------------------------------------------------------------

    \294\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \295\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \296\ Centers for Disease Control. CDC COVID-19 Response Health 
Equity Strategy: Accelerating Progress Towards Reducing COVID-19 
Disparities and Achieving Health Equity. July 2020. Available at: 
https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 2021.
    \297\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \298\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \299\ Benjamin O, Lappin SL. End-Stage Renal Disease. [Updated 
2021 Sep 16]. In: Stat Pearls [internet]. Treasure Island (FL): 
StatPearls Publishing; 2022. Available from: https://www.ncbi.nlm.nih.gov/books/NBK499861/.
    \300\ Norris, K.C., Williams, S.F., Rhee, C.M., Nicholas, S.B., 
Kovesdy, C.P., et al. (2017). Hemodialysis Disparities in African 
Americans: The Deeply Integrated Concept of Race in the Social 
Fabric of Our Society. Seminars in Dialysis 30(3):213-223. 
doi:10.1111/sdi.12589.
    \301\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
    \302\ Norton, J.M., Moxey-Mims, M.M., Eggers, P.W., Narva, A.S., 
Star, R.A., Kimmel, P.L., & Rodgers, G.P. (2016). Social 
Determinants of Racial Disparities in CKD. Journal of the American 
Society of Nephrology: JASN, 27(9), 2576-2595. https://doi.org/10.1681/ASN.2016010027.
    \303\ CMS (2014). Health Disparities Among Aged ESRD 
Beneficiaries, 2014. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/ESRD-Infographic.pdf.
    \304\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \305\ Dean, E.B., French, M.T., Mortensen, K. (2020). Health 
Services Research 55 (Supplement 2): 883-893. doi: 10.1111/1475-
6773.13283.
    \306\ Berkowitz, S.A., Kalkhoran, S., Edwards, S.T., Essien, 
U.R., Baggett, T.P. (2018). Unstable Housing and Diabetes-Related 
Emergency Department Visits and Hospitalization: A Nationally 
Representative Study of Safety-Net Clinic Patients. Diabetes Care 
41: 933-939. https://doi.org/10.2337/dc17-1812.
    \307\ National Academies of Sciences, Engineering, and Medicine 
2019. Dialysis Transportation: The Intersection of Transportation 
and Healthcare. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25385.
    \308\ Ibid.
    \309\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
---------------------------------------------------------------------------

    We believe improvement in care coordination between ESRD 
facilities, hospitals, and community-based organizations would yield 
better health outcomes for people with ESRD and quality performance for 
dialysis and other healthcare providers. Recognizing the importance of 
social drivers of health, this year we have proposed to include social 
drivers of health screening measures in the Hospital Inpatient Quality 
Reporting Program (87 FR 28497 through 28506). We believe that 
screening for social drivers of health would similarly help inform 
facilities and other healthcare providers of the impact of HRSNs in 
people with ESRD, including their health outcomes and healthcare 
utilization. The measure would assess the proportion of adult patients 
who are screened for social drivers of health in five core domains, 
including food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety.
    The goal is to lay the groundwork for potential future measures 
that focus on the development of an action plan to address these HRSNs, 
including efficiently navigating patients to available resources and 
strengthening the system of community-based supports where resources 
are lacking. Collecting baseline data via this measure would be crucial 
in informing design of future measures that could enable us to set 
appropriate performance targets. While widespread interest in 
addressing HRSNs exists, action is inconsistent, specifically in ESRD 
facilities. We are exploring potential future inclusion of social

[[Page 38556]]

drivers of health screening measures to the ESRD QIP. Therefore, we are 
seeking public comment on adding a new measure, Screening for Social 
Drivers of Health, to the ESRD QIP measure set in the next rulemaking 
cycle. The measure would assess the proportion of a facility's patients 
that are screened for one or more social drivers of health in the five 
core domains.
    We believe facilities should screen for HRSNs among their patients 
to assess and increase the effectiveness of care coordination. Referral 
to community-based organizations can potentially reduce avoidable 
hospitalizations and disruptions to dialysis care. Data demonstrate 
that an overwhelming majority of people with ESRD travel outside their 
homes for dialysis three times per week, round trip, and that 
transportation challenges contribute to shortened treatment episodes 
and adverse health outcomes.\310\ \311\ We believe screening for HRSNs 
like transportation in people with ESRD and targeted care coordination 
that links them to community-based services could improve health 
outcomes in this population. We also believe that publishing social 
drivers of health screening rates would be helpful to many patients who 
need additional care coordination but may experience reluctance in 
seeking assistance due to concerns for personal stigmatization. Under 
our Meaningful Measures Framework, the Screening for Social Drivers of 
Health measure would address the quality priority ``Promoting Effective 
Prevention and Treatment of Chronic Disease'' through the Meaningful 
Measures Area ``Management of Chronic Conditions.''
---------------------------------------------------------------------------

    \310\ Ibid.
    \311\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
---------------------------------------------------------------------------

(3) Screen Positive Rate for Social Drivers of Health Measure
    We believe it is important to screen patients with ESRD for HRSNs 
that can negatively impact health outcomes and contribute to avoidable 
hospitalizations. Unmet HRSNs can interrupt dialysis treatment and 
other routine care, including preventive health screenings, that is 
essential for ESRD-related conditions. Many patients treated in ESRD 
facilities have other chronic conditions that require consistent, 
multidisciplinary care to maintain their health.<SUP>312 313</SUP> 
Household food insecurity has been associated with reliance on energy-
dense foods which increase risks for onset of diabetes and 
hypertension, the leading causes of ESRD.\314\ Housing instability and 
transportation difficulties both contribute to interruptions in 
dialysis care which leads to avoidable 
hospitalizations.<SUP>315 316</SUP> Additionally, the COVID-19 pandemic 
has highlighted associations between disproportionate health risk, 
hospitalization, and adverse health outcomes.<SUP>317 318</SUP> 
Capturing HRSN data may facilitate strengthening of linkages between 
facilities, medical providers (inpatient and outpatient), and 
community-based organizations which potentially could enhance care 
coordination for this group. Therefore, we are seeking public comment 
on the possible addition of a new measure, Screen Positive Rate for 
Social Drivers of Health, to the ESRD QIP measure set in future 
rulemaking. The measure would assess the proportion of patients who 
screen positive for HRSNs in five core domains, including food 
insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety. We also believe that publishing 
screen positive rates for social drivers of health would be helpful to 
many patients who need additional care coordination but may experience 
reluctance in seeking assistance due to concerns for personal 
stigmatization. Under our Meaningful Measures Framework, the Screening 
for Social Drivers of Health measure would address the quality priority 
``Promoting Effective Prevention and Treatment of Chronic Disease'' 
through the Meaningful Measures Area ``Management of Chronic 
Conditions.''
---------------------------------------------------------------------------

    \312\ Benjamin O, Lappin SL. End-Stage Renal Disease. [Updated 
2021 Sep 16]. In: Stat Pearls [internet]. Treasure Island (FL): 
StatPearls Publishing; 2022. Available from: https://www.ncbi.nlm.nih.gov/books/NBK499861/.
    \313\ Norris, K.C., Williams, S.F., Rhee, C.M., Nicholas, S.B., 
Kovesdy, C.P., et al. (2017). Hemodialysis Disparities in African 
Americans: The Deeply Integrated Concept of Race in the Social 
Fabric of Our Society. Seminars in Dialysis 30(3):213-223. 
doi:10.1111/sdi.12589.
    \314\ Laraia, B.A. (2013). Food Insecurity and Chronic Disease. 
Advances in Nutrition, 4: 203-212, doi: 10.3945/an.112.003277.
    \315\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \316\ National Academies of Sciences, Engineering, and Medicine 
2019. Dialysis Transportation: The Intersection of Transportation 
and Healthcare. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25385.
    \317\ Centers for Disease Control. CDC COVID-19 Response Health 
Equity Strategy: Accelerating Progress Towards Reducing COVID-19 
Disparities and Achieving Health Equity. July 2020. Available at: 
https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 2021.
    \318\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
---------------------------------------------------------------------------

    We welcome public comment on potentially adding these two related 
Social Drivers of Health measures to the ESRD QIP measure set. We also 
welcome public comment on data collection, submission, and reporting 
for these two measures.
3. Request for Information on Overarching Principles for Measuring 
Healthcare Quality Disparities Across CMS Quality Programs
a. Background
    Significant and persistent inequities in healthcare outcomes exist 
in the United States. Belonging to a racial or ethnic minority group; 
being a member of a religious minority; living with a disability; being 
a member of the LGBTQ+ community; living in a rural area; or being near 
or below the poverty level, are often associated with worse health 
outcomes.<SUP>319 320 321 322</SUP><SUP> 323 324 325 326 327</SUP> We 
are committed to achieving equity in healthcare outcomes for our

[[Page 38557]]

beneficiaries by supporting healthcare providers' quality improvement 
activities to reduce health disparities, enabling beneficiaries to make 
more informed decisions, and promoting healthcare provider 
accountability for healthcare disparities.\328\
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    \319\ Joynt KE, Orav E, Jha AK. (2011). Thirty-day readmission 
rates for Medicare beneficiaries by race and site of care. JAMA, 
305(7):675-681.
    \320\ Milkie Vu et al. Predictors of Delayed Healthcare Seeking 
Among American Muslim Women, Journal of Women's Health 26(6) (2016) 
at 58; S.B. Nadimpalli, et al., The Association between 
Discrimination and the Health of Sikh Asian Indians.
    \321\ Lindenauer PK, Lagu T, Rothberg MB, et al. (2013). Income 
inequality and thirty-day outcomes after acute myocardial 
infarction, heart failure, and pneumonia: Retrospective cohort 
study. British Medical Journal, 346.
    \322\ Trivedi AN, Nsa W, Hausmann LRM, et al. (2014). Quality 
and equity of care in U.S. hospitals. New England Journal of 
Medicine, 371(24):2298- 2308.
    \323\ Polyakova, M., et al. (2021). Racial disparities in excess 
all-cause mortality during the early COVID-19 pandemic varied 
substantially across states. Health Affairs, 40(2): 307-316.
    \324\ Rural Health Research Gateway. (2018). Rural communities: 
age, income, and health status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-incomehealth-status-recap.pdf.
    \325\ HHS Office of Minority Health. (2020). Progress Report to 
Congress: 2020 Update on the Action Plan to Reduce Racial and Ethnic 
Health Disparities. Available at: https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \326\ Heslin, KC, Hall, JE. (2021). Sexual Orientation 
Disparities in Risk Factors for Adverse COVID-19-Related Outcomes, 
by Race/Ethnicity--Behavioral Risk Factor Surveillance System, 
United States, 2017-2019. MMWR Morb Mortal Wkly Rep 2021;70:149-154. 
Available at: https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
    \327\ Poteat TC, Reisner SL, Miller M, Wirtz AL. (2020). COVID-
19 vulnerability of transgender women with and without HIV infection 
in the Eastern and Southern U.S. preprint. medRxiv. 2020;2020.07.21. 
20159327. doi:10.1101/2020.07.21.20159327.
    \328\ Centers for Medicare and Medicaid Services. (2016). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
Qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
---------------------------------------------------------------------------

    Health equity is an important component of an equitable society. 
Equity, as defined in Executive Order 13985, is ``the consistent and 
systematic fair, just, and impartial treatment of all individuals, 
including individuals who belong to underserved communities that have 
been denied such treatment, such as Black, Latino, and Indigenous and 
Native American persons, Asian Americans and Pacific Islanders and 
other persons of color; members of religious minorities; lesbian, gay, 
bisexual, transgender, and queer (LGBTQ+) persons; persons with 
disabilities; persons who live in rural areas; and persons otherwise 
adversely affected by persistent poverty or inequality.'' \329\
---------------------------------------------------------------------------

    \329\ https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
---------------------------------------------------------------------------

    We define health equity as the attainment of the highest level of 
health for all people, where everyone has a fair and just opportunity 
to attain their optimal health regardless of race, ethnicity, 
disability, sexual orientation, gender identity, religion, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes. We are working to 
advance health equity by designing, implementing, and operationalizing 
policies and programs that support health for all the people served by 
our programs, eliminating avoidable differences in health outcomes 
experienced by people who are disadvantaged or underserved, and 
providing the care and support that our beneficiaries need to 
thrive.\330\
---------------------------------------------------------------------------

    \330\ Centers for Medicare & Medicaid Services. (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
---------------------------------------------------------------------------

    Such disparities in health outcomes and healthcare access are the 
result of multiple factors including differences in access to routine 
dialysis and primary care which contribute to health disparities among 
patients with ESRD. We discussed the impact of these disparities on 
patients with ESRD in our request for information on closing the health 
equity gap in the CY 2022 ESRD PPS proposed rule (86 FR 36362). Because 
we are working toward the goal of all ESRD patients receiving high 
quality dialysis treatment and other healthcare, irrespective of 
individual characteristics, we are committed to supporting dialysis 
providers and health systems in building a culture of equity that 
focuses on educating and empowering the healthcare workforce to 
recognize and eliminate health disparities in ESRD patients.\331\
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    \331\ Centers for Medicare and Medicaid Services. (2016). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
Qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
---------------------------------------------------------------------------

    Closing the health equity gap would require multipronged approaches 
that effectively address the many drivers of health disparities. As 
summarized in the CY 2022 ESRD PPS final rule request for information, 
we noted our intention to initiate additional request(s) for 
information (RFIs) on closing the health equity gap, including 
identification of the most relevant social risk factors for people with 
ESRD (86 FR 61930). Advancing health equity would require a variety of 
efforts across the healthcare system. The reduction in healthcare 
disparities is one aspect of improving equity that we have prioritized. 
In the CY 2022 ESRD PPS final rule request for information, ``Closing 
the Health Equity Gap in CMS Hospital Quality Programs'' (86 FR 61928 
through 61937), we described programs and policies we have implemented 
over the past decade with the aim of identifying and reducing 
healthcare disparities, including: the CMS Mapping Medicare Disparities 
Tool \332\ and the CMS Disparity Methods stratified reporting.\333\ CMS 
has also begun efforts supporting implementation of the National 
Standards for Culturally and Linguistically Appropriate Services (CLAS) 
in Health and Health Care (78 FR 58539); \334\ as well as improvement 
of the collection of social determinants of health in standardized 
patient assessment data in four post-acute care settings and the 
collection of health-related social need data by model participants in 
the CMMI Accountable Health Communities Model.<SUP>335 336 337</SUP>
---------------------------------------------------------------------------

    \332\ Centers for Medicare and Medicaid Services. (2021). CMS 
Office of Minority Health. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH-Mapping-Medicare-Disparities.
    \333\ Centers for Medicare and Medicaid Services. Disparity 
Methods Confidential Reporting. Available at: https://qualitynet.cms.gov/inpatient/measures/disparity-methods.
    \334\ https://www.federalregister.gov/documents/2013/09/24/2013-23164/national-standards-for-culturally-and-linguistically-appropriate-services-clas-in-health-and-health.
    \335\ Centers for Medicare and Medicaid Services. (2021). 
Accountable Health Communities Model. Available at: https://innovation.cms.gov/innovation-models/ahcm.
    \336\ https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf.
    \337\ Centers for Medicare and Medicaid Services. (2021). IMPACT 
Act Standardized Patient Assessment Data Elements. Available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/-IMPACT-Act-Standardized-Patient-Assessment-Data-Elements.
---------------------------------------------------------------------------

    Measuring healthcare disparities and reporting these results to 
healthcare providers is a cornerstone of our approach to advancing 
healthcare equity. It is important to consistently measure differences 
in care received by different groups of our beneficiaries, and this can 
be achieved by methods to stratify quality measures. Measure 
stratification is defined for this purpose as calculating measure 
results for specific groups or subpopulations of patients. Assessing 
healthcare disparities through stratification is only one method for 
using healthcare quality measurement to address health equity, but it 
is an important approach that allows healthcare providers to tailor 
quality improvement initiatives, decrease disparity, track improvement 
over time, and identify opportunities to evaluate upstream drivers of 
health. The use of measure stratification to assess disparities has 
been identified by CMS Office of Minority Health (CMS OMH) as well as 
by external organizations such as the American Hospital Association as 
a critical component of an organized response to health 
disparities.<SUP>338 339</SUP> To date, we have performed analyses of 
disparities in our quality programs by using a series of stratification 
methodologies identifying quality of care for patients with heightened 
social risk or with demographic characteristics with associations to 
poorer outcomes.
---------------------------------------------------------------------------

    \338\ Centers for Medicare & Medicaid Services. (2021). Building 
an Organizational Response to Health Disparities [Fact Sheet]. U.S. 
Department of Health and Human Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \339\ Improving Health Equity Through Data Collection and Use: A 
Guide for Hospital Leaders. (2011). Available at: http://www.hpoe.org/Reports-HPOE/improvinghealthequity3.2011.pdf.
---------------------------------------------------------------------------

    As efforts to improve methods and sources of social determinant and 
demographic data collection mentioned previously are ongoing, we would 
continue to evaluate opportunities to expand these current measure 
stratification reporting initiatives with existing sources of data. We 
aim to provide comprehensive and actionable information on health 
disparities to healthcare providers participating in our quality 
programs, in part, by starting with confidential reporting of 
stratified measure results that highlight potential gaps in care 
between groups of patients

[[Page 38558]]

using existing data sources. This includes examining and reporting 
disparities in care across additional social risk factors and 
demographic variables associated with historic disadvantage in the 
healthcare system, and examining disparities across additional 
healthcare quality measures, and in new care settings. As disparity 
measurement initiatives expand through the use of measure 
stratification, it is important to model efforts off of existing best 
practices by continuing to gather stakeholder feedback and to make use 
of lessons learned in the development of existing disparity reporting 
efforts.
    Specific efforts aimed at closing the health equity gap in ESRD 
patients include the Chronic Kidney Disease Disparities: Educational 
Guide for Primary Care, which is intended to foster the development of 
primary care practice teams in order to enhance care for medically 
underserved patients with CKD and are at risk of progression of disease 
or complications,\340\ and the CMS ETC Model, which aims to test the 
effectiveness of adjusting certain Medicare payments to encourage more 
home dialysis and kidney transplants, support beneficiary modality 
choice, and preserve or improve quality of care provided to ESRD 
beneficiaries while reducing Medicare expenditures.\341\
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    \340\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
    \341\ CMS (2021). ESRD Treatment Choices (ETC) Model. Available 
at: https://innovation.cms.gov/innovation-models/esrd-treatment-choices-model.
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    Measuring healthcare disparities and reporting the results to 
dialysis providers is under consideration as a central component of our 
approach to closing the health equity gap in patients with ESRD. 
Stratification of quality measures would facilitate consistent 
measurement of differences in care received and subsequent outcomes by 
different groups of patients. Stratification is one of several 
methodological approaches to estimating health disparities that would 
support facilities in tailoring quality improvement initiatives to 
reduce disparities and track improvement over time. We have identified 
stratification as a critical component of an organized response to 
health disparities.<SUP>342 343</SUP> To date, we have employed 
stratification techniques in a few programs to evaluate quality of care 
for patients with disproportionate social risk burden and demographic 
characteristics associated with adverse health outcomes. For example, 
in the FY 2018 IPPS/LTCH PPS final rule, the Hospital Inpatient Quality 
Reporting Program introduced confidential reporting of hospital quality 
measure data stratified by dual eligibility (82 FR 38403 through 
38409).
---------------------------------------------------------------------------

    \342\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \343\ http://www.hpoe.org/Reports-HPOE/improvinghealthequity3.2011.pdf.
---------------------------------------------------------------------------

    As efforts to improve methods and sources of social determinant and 
demographic data collection are ongoing, we intend to continue to 
evaluate opportunities to expand these current measure stratification 
reporting initiatives with existing sources of data. We anticipate 
expanding our efforts to provide comprehensive and actionable 
information on health disparities to dialysis providers participating 
in the ESRD QIP by providing measure stratification results to 
highlight potential gaps in care among patient groups. This includes 
examining and reporting disparities in care across specific social risk 
factors and demographic variables associated with historic disadvantage 
in ESRD care in particular and examining disparities across ESRD QIP 
measures. We aim to gather feedback from technical experts and dialysis 
providers as we evaluate existing best practices for measure 
stratification methods and reporting approaches applied to health 
disparity evaluation. As disparity measurement initiatives expand 
through the use of measure stratification, it is important to model 
efforts off of existing best practices by continuing to gather 
stakeholder feedback and to make use of lessons learned in the 
development of existing disparity reporting efforts.
    There are several key considerations that we intend to consider 
when advancing the use of measurement and stratification as tools to 
address healthcare disparities and advance healthcare equity. We seek 
input on key considerations in five specific areas that could inform 
our approach. Each is described in more detail later in this section:
    <bullet> Identification of Goals and Approaches for Measuring 
Healthcare Disparities and Using Measure Stratification in ESRD QIP--
This section identifies the approaches for measuring healthcare 
disparities through measure stratification in CMS quality reporting 
programs.
    <bullet> Guiding Principles for Selecting and Prioritizing Measures 
for Disparity Reporting--This section describes considerations that 
could inform the selection of ESRD QIP measures to prioritize for 
stratification.
    <bullet> Principles for Social Risk Factor and Demographic Data 
Selection and Use--This section describes social risk factor and 
demographic data that we would consider investigating for use in 
stratifying ESRD QIP measures for healthcare disparity measurement. 
Dialysis and other healthcare providers would use their own demographic 
data to address disparities affecting their patients.
    <bullet> Identification of Meaningful Performance Differences--This 
section reviews several strategies for identifying meaningful 
differences in performance when ESRD QIP measures apply stratification 
or disparity reporting that are easily understood but remain useable by 
dialysis providers.
    <bullet> Guiding Principles for Reporting Disparity Results--This 
final section reviews considerations we would take into account in 
determining how ESRD QIP would report disparity results to dialysis 
providers, as well as the ways different reporting strategies would 
hold providers accountable.
    We would then solicit public input on these topics.
b. Identification of Goals and Approaches for Measuring Healthcare 
Disparities and Using Measure Stratification in ESRD QIP
    Our goal in developing methods to measure disparities in care is to 
provide actionable and useful results to dialysis providers. By 
quantifying healthcare disparities (that is, through quality measure 
stratification), we aim to provide useful tools for dialysis providers 
and facilities to drive improvements. We believe these results would 
support dialysis providers and facilities efforts in examining the 
underlying drivers of disparities in their patients' care and to 
develop their own innovative and targeted quality improvement 
interventions. With stratified disparity information available, it may 
be possible to drive system-wide advancement through incremental, 
provider-level improvement.
    There are multiple conceptual approaches to stratifying measures 
for reporting health disparities. In recent years, we have focused on 
identifying healthcare disparities by reporting stratified results for 
acute care hospitals in two complementary ways. First, stratification 
by a given social risk factor or demographic variable has generated 
measure results for subgroups of patients cared for by individual 
providers that can be directly compared. This type of comparison 
identifies important disparities, such as gaps in care and outcomes 
between patient groups. This approach is sometimes referred to as 
``within-provider'' disparity. This can be done for most

[[Page 38559]]

measures that include patient-level data and can be helpful to 
quantitatively express a provider's disparity in care. However, similar 
to the measure itself, the approach to perform this type of comparison 
would differ based on the measure's complexity. For example, when risk 
adjustment is used in the measure, the stratification approach would 
have to be adapted to address clinical risk adjustment.\344\ Second, a 
provider's performance on a measure for only the subgroup of patients 
with that social risk factor can be compared to other providers' 
performance for that same subgroup of patients (sometimes referred to 
as ``across-provider'' disparities measurement). This type of 
comparison illuminates the healthcare provider's performance for only 
the population with a given social risk factor, allowing comparisons 
for specific performance to be better understood and compared to peers 
or state and national benchmarks. These approaches are reviewed and 
recommended by The Assistant Secretary of Planning and Evaluation 
(ASPE) as ways to measure health equity in their 2020 Report to 
Congress.\345\
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    \344\ Centers for Medicare & Medicaid Services. (2015). Risk 
Adjustment Fact Sheet. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/Risk-Adjustment-Fact-Sheet.pdf.
    \345\ ASPE. (2020). Social Risk Factors and Performance in 
Medicare's Value-Based Purchasing Program: The Second of Two Reports 
Required by the Improving Medicare Post-Acute Care Transformation 
(IMPACT) Act of 2014. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195191/Second-IMPACT-SES-Report-to-Congress.pdf.
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    Alone, each approach may provide an incomplete picture of 
disparities in care for a particular measure, but when reported 
together with overall quality performance can give detailed information 
about where differences in care exist. For example, a dialysis provider 
may underperform when compared to national averages for patients with a 
given risk factor, but if they also underperform for patients without 
that risk factor, the measured difference, or disparity in care, could 
be negligible even though performance for the group historically 
underserved group remains poor. In this case, simply stratifying the 
measure results could show little difference in care between patient 
groups within the facility, comparing results for only the group that 
has been historically marginalized would signal the need to improve 
care for this population.
    We are especially sensitive to the need to ensure all disparity 
reporting avoids measurement bias. Stratified results must be carefully 
examined for potential measurement or algorithmic bias that is 
introduced through stratified reporting.\346\ Furthermore, results of 
stratified reporting must be evaluated for any type of selection bias 
that fails to capture disparity due inadequate representation of 
subgroups of patients in measure cohorts. During measure re-evaluation, 
we would aim to carefully examine stratified results and methods to 
mitigate the potential for drawing incorrect conclusion from results.
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    \346\ Obermeyer Z., Powers B., Vogeli C., Mullainathan S. 
Dissecting racial bias in an algorithm used to manage the health of 
populations. Science. 2019;366(6464):447-53.
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c. Guiding Principles for Selecting and Prioritizing Measures for 
Disparity Reporting
    We intend to begin our efforts to provide stratified reporting for 
ESRD QIP measures, provided they offer meaningful and valid feedback to 
dialysis and other healthcare providers on their care for ESRD patients 
that may face social disadvantage or other forms of discrimination or 
bias. Further development of stratified reporting of ESRD QIP measures 
can provide dialysis and other healthcare providers with more granular 
results that support targeting resources and initiatives to improve 
health equity. We are mindful that it may not be possible to calculate 
stratified results for all ESRD QIP measures, or there may be 
situations where stratified reporting may not be desired. To help 
inform prioritization of the candidate ESRD QIP measures for stratified 
reporting, we aim to receive feedback on several systematic principles 
under consideration that we believe would help us prioritize measures 
for disparity reporting across programs.
    These considerations, when assessed within the context of specific 
programs, like the ESRD QIP, help gauge the utility and potential uses 
of stratified measure results to provide usable and impactful 
information on disparity broadly across our programs. While we aim to 
standardize approaches where possible, we also recognize that the 
variety of measures and care settings involved and the contextual 
nature of stratified reporting would require decisions to be made at 
the program level.
    We have developed the following guiding principles for prioritizing 
ESRD QIP measures for disparity reporting:
    <bullet> Prioritize validated clinical quality measures--When 
considering disparity reporting of stratified quality measures, there 
are several advantages to focusing on recognized measures which have 
met industry standards for measure reliability and validity. First, 
existing measures highlight agreed upon priority areas for quality 
measurement specific to the program setting, which have been developed 
under adherence to the CMS Measures Management System Blueprint \347\ 
and have been reviewed for their clinical and population relevance by 
experts knowledgeable about the nuances of care delivered in these 
settings. Furthermore, these measures have been reviewed for clinical 
significance, applicability, and scientific rigor by additional 
organizations, such as the National Quality Forum (NQF), and have been 
selected for inclusion in programs with their recommendations in mind. 
Adapting these existing tools to measure disparity through 
stratification maintains adherence to predefined measurement priorities 
and utilizes a great deal of extant expert and methodological 
validation. The application of stratified reporting to validated 
clinical quality measures which are used across the healthcare sector 
also aim to mitigate any potential additional administrative burden on 
healthcare providers, hospitals, and facilities.
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    \347\ Centers for Medicare and Medicaid Services. (2020). CMS 
Measures Management System Blueprint (Blueprint v 16.0).Available 
at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/MMS/Downloads/Blueprint.pdf.
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    <bullet> Prioritizing Measures with Identified Disparity in 
Treatment or Outcomes Among Participating Facilities for Selected 
Social or Demographic Factors--Candidate ESRD QIP measures for 
stratification should be supported by evidence of underlying healthcare 
disparities in the procedure, condition, or outcome being measured. A 
review of peer-reviewed research studies should be conducted to 
identify disparities related to treatment or procedure the measure 
evaluates, or outcome used to score the measure, and should carefully 
consider both social risk factors and patient demographics. Disparity 
related to the measure could be based on the outcome or procedures and 
practices assessed by the measure. In addition, analysis of Medicare-
specific data should be done in order to demonstrate evidence of 
disparity in care for some or most healthcare providers that treat 
Medicare patients. In addition to disparities in outcomes and quality, 
consideration should also be given to conditions that have highly 
disproportionate prevalence in certain populations.
    <bullet> Prioritize Measures with Sufficient Sample Size to Allow 
for Reliable and Representative Comparisons--Sample

[[Page 38560]]

size holds specific significance for statistical calculations; however, 
it holds additional importance in the context of disparity reporting. 
Candidate measures for stratification would need to have sufficient 
sample size of enrollees to ensure that reported results of the 
disparity calculation are reliable and representative. This may be 
challenging if cohorts with a given social risk factor are small.
    ESRD QIP may further consider measures for disparity reporting 
based on the utility of the stratified information, namely, 
prioritizing measures for stratification that show large differences in 
care between patient groups. Large differences in care for patients 
along social or demographic lines may indicate high potential that 
targeted initiatives could be effective. This is only one consideration 
in identifying the most meaningful differences in care, however, as 
initiatives designed for measures that show small disparities, but have 
very large cohorts, may have very large aggregate impacts on the 
national scale.
    <bullet> Prioritize Outcome Measures and Measures of Access and 
Appropriateness of Care--Quality measurement in CMS programs often 
focus on outcomes of care, such as mortality or readmission, as high 
priority quality measures. For example, two key ESRD QIP outcome 
measures are the SHR clinical measure and the SRR clinical measure, 
which we are updating so that the measure results are expressed as 
rates. Such outcome measures remain a priority in the context of 
disparities measurement. However, measures that focus on access, when 
available, are also critical tools for addressing healthcare 
disparities. Measures that address healthcare access can counterbalance 
the risk of creating perverse incentives, for example, whereby a 
facility may improve its performance on existing quality measures by 
limiting access to care for populations who are historically 
underserved.
    To complement measure stratification focused on clinical outcomes, 
the ESRD QIP would consider prioritizing measures with a focus on 
access to or appropriateness of care. These measures, when reported in 
tandem with clinical outcomes, would provide a broader picture of care 
provided at a facility, illuminate potential performance drivers, and 
identify organizations that fail to address access to care barriers for 
patient sub-groups. We acknowledge that the measurement of access and 
appropriateness of care is a growing field, and quality measures in 
these areas are limited. However, as our ability to measure these 
facets of healthcare improve, they would be high priority for measure 
stratification.
d. Principles for Social Risk Factor and Demographic Data Selection and 
Use
    There are numerous non-clinical drivers of health associated with 
patient outcomes, including social risk factors such as socioeconomic 
status, housing availability, and nutrition, as well as marked inequity 
in outcomes based on patient demographics such as race and ethnicity, 
being a member of a minority religious group, geographic location, 
sexual orientation and gender identity, religion, and disability 
status.<SUP>348 349 350 351 352 353 354 355</SUP> The World Health 
Organization (WHO) defines social risk factors as ``non-medical factors 
that influence health outcomes. They are the conditions in which people 
are born, grow, work, live, and age, and the wider set of forces and 
systems shaping the conditions of daily life.'' \356\ These include 
factors such as income, education, job insecurity, food insecurity, 
housing, social inclusion and non-discrimination, access to affordable 
health services, and any others. Research has indicated that these 
social factors may have as much or more impact on health outcomes as 
clinical care itself.<SUP>357 358</SUP> Additionally, differences in 
outcomes based on patient race and ethnicity have been identified as 
significant, persistent, and of high priority for CMS and other federal 
agencies.\359\
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    \348\ Joynt KE, Orav E, Jha AK (2011). Thirty-day readmission 
rates for Medicare beneficiaries by race and site of care. JAMA, 
305(7):675-681.
    \349\ Lindenauer PK, Lagu T., Rothberg MB, et al. (2013). Income 
inequality and thirty-day outcomes after acute myocardial 
infarction, heart failure, and pneumonia: retrospective cohort 
study. British Medical Journal, 346.
    \350\ Trivedi AN, Nsa W, Hausmann LRM, et al. (2014). Quality 
and equity of care in U.S. hospitals. New England Journal of 
Medicine, 371(24):2298- 2308.
    \351\ Polyakova, M, et al. (2021). Racial disparities in excess 
all-cause mortality during the early COVID-19 pandemic varied 
substantially across states. Health Affairs, 40(2): 307-316.
    \352\ Rural Health Research Gateway. (2018). Rural communities: 
Age, income, and health status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-incomehealth-status-recap.pdf.
    \353\ HHS Office of Minority Health (2020). 2020 Update on the 
Action Plan to Reduce Racial and Ethnic Health Disparities. 
Available at: https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \354\ Poteat TC, Reisner SL, Miller M, Wirtz AL (2020). COVID-19 
vulnerability of transgender women with and without HIV infection in 
the Eastern and Southern U.S. medRxiv [Preprint]. 
2020.07.21.20159327. doi: 10.1101/2020.07.21.20159327. PMID: 
32743608; PMCID: PMC7386532.
    \355\ Milkie Vu et al. Predictors of Delayed Healthcare Seeking 
Among American Muslim Women, Journal of Women's Health 26(6) (2016) 
at 58; S.B. Nadimpalli, et al., The Association between 
Discrimination and the Health of Sikh Asian Indians.
    \356\ World Health Organization. Social Determinants of Health. 
Available at: https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
    \357\ Hood, C., Gennuso K., Swain G., Catlin B. (2016). County 
Health Rankings: Relationships Between Determinant Factors and 
Health Outcomes. Am J Prev Med. 50(2):129-135. doi:10.1016/
j.amepre.2015.08.024.
    \358\ Chepaitis, A.E., Bernacet, A., Kordomenos, C., Greene, 
A.M., Walsh, E.G. (2020). Addressing social determinants of health 
in demonstrations under the financial alignment initiative. RTI 
International. Available at: https://innovation.cms.gov/data-and-reports/2021/fai-sdoh-issue-brief.
    \359\ White House. (2021). Executive Order On Advancing Racial 
Equity and Support for Underserved Communities Through the Federal 
Government. Available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
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    In prioritizing among social risk factors and demographic 
variables, disability, and other markers of disadvantage for stratified 
reporting, the ESRD QIP would develop approaches that have the most 
relevance for the existing measure set. Patient reported data are 
considered to be the gold standard for evaluating care for patients 
with social risk factors or who belong to certain demographic groups as 
this is the most accurate way to attribute social risk.\360\ Although 
some of this information is currently reported on Form 2728--ESRD 
Medical Evidence Report Medicare Entitlement And/Or Patient 
Registration (OMB control number 0938-0046), we believe that additional 
development of patient-reported social risk factor and demographic 
variable data sources may be necessary to collect data that is complete 
enough to consider for disparity reporting. Currently, there are many 
efforts underway to further develop data collection for self-reported 
patient social risk and demographic variables. Yet, given that data 
sources are small, they may only have the ability to provide 
statistically significant disparity results for a small proportion of 
care facilities.
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    \360\ Jarr[iacute]n OF, Nyandege AN, Grafova I B, Dong X., Lin 
H. (2020). Validity of race and ethnicity codes in Medicare 
administrative data compared with gold-standard self-reported race 
collected during routine home health care visits. Med Care, 
58(1):e1-e8. doi: 10.1097/MLR.0000000000001216. PMID: 31688554; 
PMCID: PMC6904433.
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    We would continue to evaluate patient-reported sources of social 
risk and demographic information. Until validated data are available, 
we are considering three sources of social risk and demographic data 
that would allow us to report stratified measure results:

[[Page 38561]]

    <bullet> Billing and Administrative Data--The majority of quality 
measurement tools used in our quality programs focus on utilizing 
existing enrollment and claims data for Medicare beneficiaries. Using 
these existing data to assess disparity, for example by the use of dual 
enrollment for Medicare and Medicaid, allows for high impact analyses 
with negligible facility burden. There are, however, limitations in 
these data's usability for stratification analysis. Our current 
administrative race and ethnicity data have been shown to have 
historical inaccuracies due to limited collection classifications and 
attribution techniques, and are generally considered not to be accurate 
enough for stratification and disparity analyses.\361\ International 
Classification of Diseases,10th Revision (ICD-10) codes for 
socioeconomic and psychosocial circumstances (``Z codes'' Z55 to Z65) 
represent an important opportunity to document patient-level social 
risk factors in Medicare beneficiaries, however, they are rarely used 
in clinical practice, limiting their usability in disparities 
measurement.\362\ If the collection of social risk factor data improves 
in administrative data, we would continue to evaluate its applicability 
for stratified reporting in the future.
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    \361\ Jarr[iacute]n OF, Nyandege AN, Grafova IB., Dong X., Lin 
H. (2020). Validity of race and ethnicity codes in Medicare 
administrative data compared with gold-standard self-reported race 
collected during routine home health care visits. Med Care, 
58(1):e1-e8. doi: 10.1097/MLR.0000000000001216. PMID: 31688554; 
PMCID: PMC6904433.
    \362\ Centers for Medicare & Medicaid Services, Office of 
Minority Health. (2021). Utilization of Z codes for social 
determinants of health among Medicare fee-for-service beneficiaries, 
2019. Available at: https://www.cms.gov/files/document/z-codes-data-highlight.pdf.
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    Dual eligibility is a widely used proxy for low socioeconomic 
status and is an exception to the previously discussed limitations, 
making it an effective indicator for worse outcomes due to low 
socioeconomic status. The use of dual eligibility in social risk factor 
analyses was supported by ASPE's First and Second Reports to 
Congress.<SUP>363 364</SUP> These reports found that in the context of 
VBP programs, dual eligibility, as an indicator of social risk, was 
among the most powerful predictors of poor health outcomes among those 
social risk factors that ASPE examined and tested.
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    \363\ Office of the Assistant Secretary for Planning and 
Evaluation. (2016). Social risk factors and performance under 
Medicare's value-based purchasing programs. Available at: https://aspe.hhs.gov/reports/report-congress-social-risk-factors-performance-under-medicares-value-based-purchasing-programs.
    \364\ Office of the Assistant Secretary For Planning and 
Evaluation. (2020). Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at: https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
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    <bullet> Area-based Indicators of Social Risk Information and 
Patient Demographics--Area-based indicators pool area-level information 
to create approximations of patient risk or describe the neighborhood 
or context that a patient resides in. Popular among them are the use of 
the American Community Survey (ACS), which is commonly used to 
attribute social risk to populations at the ZIP code or Federal 
Information Processing Standards (FIPS) county level. Several indices, 
such as the Agency for Healthcare Research and Quality (AHRQ) 
Socioeconomic Status (SES) Index,\365\ Centers for Disease Control and 
Prevention/Agency for Toxic Substances and Disease Registry Social 
Vulnerability Index (CDC/ATSDR SVI),\366\ and Health Resources and 
Services Administration Area Deprivation Index,\367\ combine multiple 
indicators of social risk into a single score which can be used to 
provide multifaceted contextual information about an area and may be 
considered as an efficient way to stratify measures that include many 
social risk factors.
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    \365\ Bonito A., Bann C., Eicheldinger C., Carpenter L. (2008). 
Creation of New Race-Ethnicity Codes and Socioeconomic Status (SES) 
Indicators for Medicare Beneficiaries. Final Report, Sub-Task 2. 
(Prepared by RTI International for the Centers for Medicare & 
Medicaid Services through an interagency agreement with the Agency 
for Healthcare Research and Policy, under Contract No. 500-00-0024, 
Task No. 21) AHRQ Publication No. 08-0029-EF. Rockville, MD, Agency 
for Healthcare Research and Quality.
    \366\ Flanagan, B.E., Gregory, E.W., Hallisey, E.J., Heitgerd, 
J.L., Lewis, B. (2011). A social vulnerability index for disaster 
management. Journal of Homeland Security and Emergency Management, 
8(1). Available at: https://www.atsdr.cdc.gov/placeandhealth/svi/img/pdf/Flanagan_2011_SVIforDisasterManagement-508.pdf.
    \367\ Center for Health Disparities Research. About the 
Neighborhood Atlas. Available at: https://www.neighborhoodatlas.medicine.wisc.edu/.
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    <bullet> Imputed Sources of Social Risk Information and Patient 
Demographics--Imputed data sources use statistical techniques to 
estimate patient-reported factors, including race and ethnicity. In the 
case of race and ethnicity, indirect estimation improves upon imperfect 
and incomplete data by drawing on information about a person's name and 
address and the linkage of those variables to race and ethnicity. One 
such tool is the Medicare Bayesian Improved Surname Geocoding (MBISG) 
method (currently in version 2.1), which combines information from 
administrative data, surname, and residential location to estimate 
patient race and ethnicity.\368\ This tool was originally developed by 
the RAND Corporation, and further customized for the Medicare 
population to improve existing CMS administrative data on race and 
ethnicity.
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    \368\ Haas A., Elliott M.N., Dembosky J.W., Adams J.L., Wilson-
Frederick S.M., Mallett J.S. et al. (2019). Imputation of race/
ethnicity to enable measurement of HEDIS performance by race/
ethnicity. Health Serv Res, 54(1):13-23. doi: 10.1111/1475-
6773.13099. Epub 2018 Dec 3. PMID: 30506674; PMCID: PMC6338295. 
Available at: https://pubmed.ncbi.nlm.nih.gov/30506674/.
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    The MBISG 2.1 method does not assign a single race and ethnicity to 
an individual; instead, it generates a set of six probabilities, each 
estimating what the individual would self-identify as given a set of 
racial and ethnic groups to choose from including: American Indian or 
Alaska Native, Asian or Pacific Islander, Black, Hispanic, Multiracial, 
and White. In no case would the estimated probability be used for 
making inferences about a beneficiary; only self-reported data on race 
and ethnicity should be used for that purpose. However, in aggregate, 
these results can provide insight and accurate information at the 
population level, such as the patients of a given facility, or the 
members of a given plan. MBISG 2.1 is currently used by CMS' OMH to 
undertake various analyses, such as comparing scores on clinical 
quality of care measures from the Healthcare Effectiveness Database and 
Information Set (HEDIS) by race and ethnicity for Medicare Part C/D 
health plans, and in developing a Health Equity Summary Score (HESS) 
for Medicare Advantage (MA) health plans.\369\
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    \369\ Agniel D., Martino S.C., Burkhart Q., Hambarsoomian K., 
Orr N., Beckett M.K, et al. (2021). Incentivizing excellent care to 
at-risk groups with a health equity summary score. J Gen Intern Med, 
36(7):1847-1857. doi: 10.1007/s11606-019-05473-x. Epub 2019 Nov 11. 
PMID: 31713030; PMCID: PMC8298664. Available at: https://pubmed.ncbi.nlm.nih.gov/31713030/.
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    While the use of area-based indicators and imputed data sources are 
not meant to replace efforts to improve patient-level data collection, 
we are considering how they might be used to quickly begin population-
level disparity reporting of stratified measure results while being 
conscientious about data limitations.
    Imputed data sources, particularly when used to identify patient 
populations for measurement, must be carefully evaluated for their 
potential to negatively affect the populations being studied. For this 
reason, imputed data sources should only be considered after 
significant validation study has been completed, including evaluation 
by key stakeholders for face validity, and any calculations that 
incorporate these

[[Page 38562]]

methods should be continuously evaluated for the accuracy of their 
results and the necessity of their use. While neither imputed nor area-
level geographic data should be considered a replacement for improved 
data collection, researchers have found their use to be a simple and 
cost-efficient way to make general estimations of social risk at a 
community level.\370\ Even more potent, when patient-level information 
is not available, are the combination of several sources of imputed or 
area-level data to provide diverse perspectives on social risk of a 
population.
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    \370\ Bi, Q., He, F., Konty, K., Gould, L.H., Immerwahr, S., & 
Levanon Seligson, A. (2020). ZIP code-level estimates from a local 
health survey: Added value and limitations. Journal of Urban Health: 
Bulletin of the New York Academy of Medicine, 97(4), 561-567.
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e. Identification of Meaningful Performance Differences
    In examining potential ways to report disparity data in the ESRD 
QIP, including the results of quality measure stratification, we would 
consider different approaches to identifying meaningful differences in 
performance. Stratified results can be presented in a number of ways to 
describe to providers how well or poorly they are performing, or how 
they perform when compared to other care facilities. For this reason, 
it is important to identify how best to present meaningful differences 
in performance for measures of disparity reporting. We aim to provide 
information that offers meaningful information to dialysis providers. 
While we aim to use standardized approaches where possible, identifying 
differences in performance on stratified results would be made at the 
program level due to contextual variations across programs and 
settings. We look forward to feedback on the benefits and limitations 
of the possible reporting approaches we have described in this Request 
for Information.
    <bullet> Statistical Differences--When aiming to examine 
differences in disparities results among facilities, the use of 
statistical testing can be helpful. There are many statistical 
approaches that can be used to reliably group results, such as using 
confidence intervals, creating cut points based on standard deviations, 
or using a clustering algorithm. Importantly, these approaches may 
result in groupings that are statistically different, but not 
meaningfully different depending on the distribution of results.
    <bullet> Rank Ordering and Percentiles--Ordering healthcare 
providers in a ranked system is another option for reporting disparity 
results in a meaningful way. In this system, facilities could be ranked 
based on their performance on disparity measures to quickly allow them 
to compare their performance to other similar healthcare providers. 
This approach works well as a way for facilities to easily compare 
their own performance against others; however, a potential drawback is 
that it does not identify the overall magnitude of disparity. For 
example, if a measure shows large disparity in care for patients based 
on a given factor, and that degree of disparity has very little 
variation between healthcare providers, the difference between the top 
and bottom ranked facilities would be very small even if the overall 
disparity is large.
    <bullet> Threshold Approach--A categorization system could also be 
considered for reporting disparity results. In this system, facilities 
could be grouped based on their performance using defined metrics, such 
as fixed intervals of results of disparity measures, indicating 
different levels of performance. Using a categorized system may be more 
easily understood by stakeholders by giving a clear indication that 
outcomes are not considered equal. However, this method does not convey 
the degree of disparity between facilities or the potential for 
improvement based on the performance of other facilities. Furthermore, 
it requires a determination of what is deemed `acceptable disparity' 
when developing categories.
    <bullet> Benchmarking--Benchmarking, or comparing individual 
results to, for example, state or national averages, is another 
potential reporting strategy. This type of approach could be done, 
especially in combination with a ranked or threshold approach, to give 
facilities more information about how they compare to the average care 
for a patient group.
    Another consideration for each of these approaches is grouping 
similar care settings together for comparison through a peer grouping 
step, especially if a ranked system is used to compare facilities. 
Stakeholders have argued that comparisons between facilities have 
limited meaning if the facilities are not similar, and that peer 
grouping would improve their ability to interpret results. Overall, the 
value of peer grouping must be weighed against the potential to set 
different standards of meaningful disparity among different care 
settings.
f. Guiding Principles for Reporting Disparity Results
    There are several options for reporting of disparity results to 
drive improvements in quality. Confidential reporting, or reporting 
results privately to providers, is an approach we have used for new 
newly adopted measures in a CMS quality program to give providers an 
opportunity to become more familiar with calculation methods and to 
begin improvement activities before other forms of reporting. Providing 
early results to facilities is an important way to provide facilities 
the information they need to design impactful strategies to reduce 
disparity. Public reporting, or reporting results publicly, is a second 
reporting option. This method could provide ESRD QIP participants and 
ESRD patients with important information on facility quality, and by 
turn relies on market forces to incentivize healthcare providers to 
improve and become more competitive in their markets without directly 
influencing payment from CMS. Payment accountability could potentially 
offer a direct line for us to reward healthcare providers for having 
low disparity rates, or for performing well for medically underserved 
population groups.
    We are exploring the most optimal methods of reporting disparity 
results. Initially, confidential reporting may be prudent for 
facilities and healthcare providers to understand stratification 
methodology and the presentation of stratified results, and to begin to 
implement programs to reduce disparities at their facilities. We are 
considering this approach to begin having an impact on disparity, while 
allowing providers time to interpret results and set up processes to 
address disparities.
    It would be important to carefully consider the context of 
reporting, including measure specifications, data sources, care 
setting, and dialysis providers' and patients' perspectives before 
implementing a reporting strategy. Earlier in this RFI, we identified 
risks to applying stratification to all measures using all available 
social risk factor and demographic variables, such as the chance that 
unexpected results may exacerbate disparity. We intend to consider 
these risks compared to the benefits of different reporting strategies 
when developing implementation plans.
    Regardless of the methods used to report results, it is important 
to report stratified measure data alongside overall measure results. 
Review of both measure results along with stratified results can 
illuminate greater levels of detail about quality of care for subgroups 
of patients, providing important information to drive quality 
improvement. Unstratified quality measure results address general 
differences in quality of care between

[[Page 38563]]

healthcare providers and promote improvement for all patients, but 
unless stratified results are available, it is unclear if there are 
subgroups of patients that benefit most from initiatives. Notably, even 
if overall quality measure scores improve, without identifying and 
measuring differences in outcomes between groups of patients, it is 
impossible to track progress in reducing disparity for patients with 
heightened risk of poor outcomes.
g. Solicitation of Public Comments
    The goal of this request for information is to describe key 
considerations that we would acknowledge when advancing the use of 
measure stratification as one quality measurement tool to address 
healthcare disparities and advance health equity in the ESRD QIP. This 
is important as a means of setting priorities and expectations for the 
use of stratified measures. We specifically note that several important 
factors may limit the use of stratification or may need to be taken 
into consideration.
    We invite general comments on the principles and approaches listed 
previously, or additional thoughts about disparity measurement or 
stratification guidelines suitable for overarching consideration across 
our programs. Specifically, we invite comment on:
    <bullet> Overarching goals for measuring disparity that should be 
considered across CMS quality programs, including: the importance of 
pairing stratified results to evaluate gaps in care among groups of 
patients attributed to a given facility and comparison of care for a 
subgroup of patients across facilities, and the goal that these 
stratified results are reported alongside overall measure results to 
have a comprehensive view of disparities.
    <bullet> Principles to consider for prioritization of measures for 
disparity reporting, including prioritizing stratification for: valid 
clinical quality measures; measures with established disparities in 
care; measures that have adequate sample size and representation among 
facilities; and, measures that consider access and appropriateness of 
care.
    <bullet> Principles to be considered for the selection of social 
risk factors and demographic data for use measuring disparities, 
including the importance of identifying new social risk factor and 
demographic variables to use to stratify measures. We also seek comment 
on the use of imputed and area based social risk and demographic 
indicators for measure stratification when patient reported data are 
unavailable.
    <bullet> Preferred ways that meaningful differences in disparity 
results can be identified or should be considered.
    <bullet> Guiding principles for the use and application of the 
results of disparity measurement, such as providing confidential 
reporting initially versus public reporting.

V. End-Stage Renal Disease Treatment Choices (ETC) Model

A. Background

    Section 1115A of the Act authorizes the Innovation Center to test 
innovative payment and service delivery models expected to reduce 
Medicare, Medicaid, and CHIP expenditures while preserving or enhancing 
the quality of care furnished to such programs' beneficiaries. The 
purpose of the ETC Model is to test the effectiveness of adjusting 
certain Medicare payments to ESRD facilities and Managing Clinicians to 
encourage greater utilization of home dialysis and kidney 
transplantation, support beneficiary modality choice, reduce Medicare 
expenditures, and preserve or enhance the quality of care. As described 
in the Specialty Care Models final rule (85 FR 61114), beneficiaries 
with ESRD are among the most medically fragile and high-cost 
populations served by the Medicare program. ESRD Beneficiaries require 
dialysis or kidney transplantation to survive, and the majority of ESRD 
beneficiaries receiving dialysis receive hemodialysis in an ESRD 
facility. However, as described in the Specialty Care Models final 
rule, alternative renal replacement modalities to in-center 
hemodialysis, including home dialysis and kidney transplantation, are 
associated with improved clinical outcomes, better quality of life, and 
lower costs than in-center hemodialysis (85 FR 61264).
    The ETC Model is a mandatory payment model. ESRD facilities and 
Managing Clinicians are selected as ETC Participants based on their 
location in Selected Geographic Areas--a set of 30 percent of Hospital 
Referral Regions (HRRs) that have been randomly selected to be included 
in the ETC Model, as well as HRRs with at least 20 percent of ZIP 
codes\TM\ located in Maryland.\371\ CMS excludes all U.S. Territories 
from the Selected Geographic Areas.
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    \371\ ZIP code\TM\ is a trademark of the United States Postal 
Service.
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    Under the ETC Model, ETC Participants are subject to two payment 
adjustments. The first is the Home Dialysis Payment Adjustment (HDPA), 
which is an upward adjustment on certain payments made to participating 
ESRD facilities under the ESRD Prospective Payment System (PPS) on home 
dialysis claims, and an upward adjustment to the Monthly Capitation 
Payment (MCP) paid to participating Managing Clinicians on home 
dialysis-related claims. The HDPA applies to claims with claim service 
dates beginning January 1, 2021, and ending December 31, 2023.
    The second payment adjustment under the ETC Model is the PPA. For 
the PPA, we assess ETC Participants' home dialysis rates and transplant 
rates during a Measurement Year (MY), which includes 12 months of 
performance data. Each MY has a corresponding PPA Period--a 6-month 
period that begins 6 months after the conclusion of the MY. We adjust 
certain payments for ETC Participants during the PPA Period based on 
the ETC Participant's home dialysis rate and transplant rate, 
calculated as the sum of the transplant waitlist rate and the living 
donor transplant rate, during the corresponding MY.
    Based on an ETC Participant's achievement in relation to benchmarks 
based on the home dialysis rate and transplant rate observed in 
Comparison Geographic Areas during the Benchmark Year, and the ETC 
Participant's improvement in relation to their own home dialysis rate 
and transplant rate during the Benchmark Year, we will make an upward 
or downward adjustment to certain payments to the ETC participant. The 
magnitude of the positive and negative PPAs for ETC Participants 
increases over the course of the Model. These PPAs apply to claims with 
claim service dates beginning July 1, 2022, and ending June 30, 2027.
    In the CY 2022 ESRD PPS final rule, we finalized a number of 
changes to the ETC Model. We made adjustments to the calculation of the 
home dialysis rate (86 FR 61951 through 61955) and the transplant rate 
(86 FR 61955 through 61959), and updated the methodology for 
attributing Pre-emptive Living Donor Transplant (LDT) Beneficiaries (86 
FR 61950 through 61951). We modified the achievement benchmarking and 
scoring methodology (86 FR 61959 through 61968), as well as the 
improvement benchmarking and scoring methodology (86 FR 61968 through 
61971). We specified the method and requirements for sharing 
performance data with ETC Participants (86 FR 61971 through 61984). We 
also made a number of updates and clarifications to the kidney disease 
patient education services waivers and made certain related 
flexibilities available to ETC Participants (86 FR 61984 through 
61994).

[[Page 38564]]

B. Proposed Updates to the ETC Model

1. Performance Payment Adjustment Achievement Scoring Methodology
    Under the ETC Model, the PPA is a positive or negative adjustment 
on dialysis and dialysis-related Medicare payments for both home 
dialysis and in-center dialysis. To calculate an ETC Participant's PPA, 
we assess the ETC Participant's performance on the home dialysis rate 
and the transplant rate in relation to achievement and improvement 
benchmarks, as described in 42 CFR 512.370(b) and (c), respectively.
    An ETC Participant's achievement is scored at the aggregation group 
level in relation to achievement benchmarks, which are constructed 
based on the home dialysis rate and transplant rate observed among 
aggregation groups located in Comparison Geographic Areas during 
corresponding Benchmark Years. Achievement benchmarks are percentile 
based, and set at the <30th, >=30th, >=50th, >=75th, and >=90th 
percentile of rates for Comparison Geographic Areas during the 
Benchmark Year. An ETC Participant receives the achievement points that 
that correspond with its performance, at the aggregation group level, 
on the home dialysis rate and transplant rate in relation to the 
achievement benchmarks, as described in Sec.  512.370(b)(1).
    In the CY 2022 ESRD PPS final rule, we modified the achievement 
benchmarking methodology such that, beginning MY3, achievement 
benchmarks are stratified based on the proportion of beneficiary years 
attributed to the ETC Participant's aggregation group for which 
attributed beneficiaries are dually eligible for Medicare and Medicaid 
or receive the Low Income Subsidy (LIS). Beginning MY3, we create two 
strata, with the cutpoint set at 50 percent of attributed beneficiary 
years being for attributed beneficiaries who were dual-eligible or 
received the LIS, as described in Sec.  512.370(b)(2).
    Based on subsequent analysis, we have found that stratifying 
achievement benchmarks in this way has increased the likelihood that 
the lowest benchmark--set at the 30th percentile--could be set at a 
home dialysis rate or transplant rate of zero. This change occurred 
because dividing the set of attributable beneficiaries in Comparison 
Geographic Areas into two strata means that there are fewer 
observations per strata, changing the underlying distributions.
    Awarding achievement points for a home dialysis rate or transplant 
rate of zero is inconsistent with the design and goals of the ETC 
Model. The purpose of the ETC Model is to test the use of certain 
payment adjustments to increase rates of home dialysis and 
transplantation, thereby improving or maintaining quality and reducing 
Medicare expenditures. Awarding achievement points, which are used to 
determine the magnitude and direction of an ETC Participant's PPA, for 
a home dialysis rate or a transplant rate of zero is antithetical to 
the ETC Model's design.
    To address this issue, we propose to further modify the achievement 
scoring methodology for the ETC Model. Specifically, we propose to add 
a requirement, to be codified in a new provision at Sec.  
512.370(b)(3), to specify that, beginning MY5, an ETC Participant's 
aggregation group must have a home dialysis rate or a transplant rate 
greater than zero to receive an achievement score for that rate. We 
seek comment on this proposal.
2. Kidney Disease Patient Education Services
    Under section 1861(ggg)(1) of the Act and Sec.  410.48 of our 
regulations, Medicare Part B covers outpatient, face-to-face kidney 
disease patient education services provided by certain qualified 
persons to beneficiaries with Stage IV chronic kidney disease. As noted 
in the Specialty Care Models final rule, kidney disease patient 
education services play an important role in educating patients about 
their kidney disease and helping them make informed decisions on the 
appropriate type of care and/or dialysis needed for them (85 FR 61337). 
In addition, as we noted in the Specialty Care Models final rule, 
kidney disease patient education services are designed to educate and 
inform beneficiaries about the effects of kidney disease, their options 
for transplantation, dialysis modalities, and vascular access (85 FR 
61337).
    Because kidney disease patient education services have been 
infrequently billed, we found it necessary for purposes of testing the 
ETC Model to waive select requirements of kidney disease patient 
education services as authorized in section 1861(ggg)(1) of the Act and 
in the implementing regulation at 42 CFR 410.48. Specifically, to 
broaden the availability of kidney disease patient education services 
under the ETC Model, we used our authority under section 1115A(d) of 
the Act to waive certain requirements for individuals and entities that 
furnish and bill for kidney disease patient education services. We 
codified these waivers at Sec.  512.397(b). These include waivers to 
allow a broader scope of beneficiaries to have access to kidney disease 
patient education services, as well as greater flexibility in how the 
kidney disease patient education services are performed. CMS also 
waived the requirement that only doctors, physician assistants, nurse 
practitioners, and clinical nurse specialists can furnish kidney 
disease patient education services to allow kidney disease patient 
education services to be provided by clinical staff under the direction 
of and incident to the services of the Managing Clinician who is an ETC 
Participant.
    Specifically, under Sec.  512.397(b)(1), kidney disease patient 
education services may be provided by ``qualified staff,'' which 
includes any qualified person (as defined at Sec.  410.48(a)) as well 
as clinical staff. In the CY 2022 ESRD PPS final rule (86 FR 61988), we 
defined ``clinical staff'' under 42 CFR 512.310 of our regulations to 
mean a licensed social worker or registered dietician/nutrition 
professional who furnishes services for which payment may be made under 
the physician fee schedule under the direction of and incident to the 
services of the Managing Clinician who is an ETC Participant.
    In addition, in the CY 2022 ESRD PPS final rule, we added a new 
provision at Sec.  512.397(c) permitting an ETC Participant to reduce 
or waive the 20 percent coinsurance requirement for kidney disease 
patient education services furnished on or after January 1, 2022, if 
several conditions are satisfied, including a requirement that the 
individual or entity that furnished the services is qualified staff and 
was not leased from or otherwise provided by an ESRD facility or 
related entity. We finalized this cost-sharing reduction policy because 
we believed this patient incentive would advance the ETC Model's goal 
of increasing access to kidney disease patient education services and 
make beneficiaries more aware of their choices in kidney treatment, 
including the choice of receiving home dialysis, self-dialysis, or 
nocturnal in-center dialysis, rather than traditional in-center 
dialysis. We also determined that under Sec.  512.397(c)(3), the 
federal anti-kickback statute safe harbor for CMS-sponsored model 
patient incentives (42 CFR 1001.952(ii)(2)) is available to protect the 
kidney disease patient education coinsurance waivers that satisfy the 
requirements of such safe harbor and Sec.  512.397(c)(1).
    We recognized in the CY 2022 ESRD PPS final rule that ESRD 
facilities and other entities sometimes enter into arrangements with 
clinicians or other

[[Page 38565]]

parties to provide certain services (86 FR 61991). We also recognized 
that some ETC Participants may wish to furnish kidney disease patient 
education services using staff or other resources furnished under a 
contractual arrangement with an ESRD facility or other entity. We were 
concerned, however, that even if such arrangements were structured to 
comply with all applicable fraud and abuse laws, they could 
nevertheless result in program abuse. Specifically, such arrangements 
could operate to circumvent the statutory prohibition against ESRD 
facilities furnishing kidney disease patient education services. For 
example, the staff or resources furnished to the ETC Participant from 
an ESRD facility or related entity could be used to market a specific 
ESRD facility or chain of ESRD facilities to beneficiaries who may need 
to choose an ESRD facility in the future. We stated that we did not 
believe that ETC Participants should obtain safe harbor protection for 
the reduction or waiver of cost-sharing on kidney disease patient 
education services if such services were furnished by personnel leased 
from an ESRD facility or related entity. We explained that a ``related 
entity'' would include any entity that is directly or indirectly owned 
in whole or in part by an ESRD facility and that this policy aligns 
with the statutory provision that excludes ESRD facilities from the 
individuals and entities that can furnish kidney disease patient 
education services.
    Currently, the prohibition against the furnishing of kidney disease 
patient education services by qualified staff who are leased from or 
otherwise provided by an ESRD facility or related entity does not apply 
unless an ETC Participant reduces or waives the beneficiary's 
coinsurance obligation for kidney disease patient education services. 
We propose that a similar prohibition would apply with respect to 
``clinical staff'' regardless of whether the ETC Participant is 
reducing or waiving the kidney disease patient education coinsurance 
obligation. Specifically, we are proposing to add a sentence to Sec.  
512.397(b)(1) stating that, for purposes of the waiver under Sec.  
512.397(b)(1) of our regulations, beginning for MY5, ``clinical staff'' 
may not be leased from or otherwise provided to the ETC Participant by 
an ESRD facility or related entity. Applying this prohibition on 
``clinical staff'' could also protect beneficiaries and their care 
choices, and limit the likelihood that the ``clinical staff'' furnished 
to the ETC Participant from an ESRD facility or related entity would 
result in steering a beneficiary to a specific ESRD facility or chain 
of ESRD facilities.
    To further ensure that beneficiaries are not unduly influenced to 
choose a particular ESRD facility, we are also considering whether the 
final rule should include a requirement that, for purposes of the 
waiver underSec.  512.397(b)(1), the content of the kidney disease 
patient education furnished by clinical staff cannot market a specific 
ESRD facility or chain of ESRD facilities to beneficiaries. However, we 
recognize that some forms of marketing can be quite subtle. For 
example, a beneficiary's treatment choices could be unduly biased if 
the beneficiary is made aware of the leased staff person's employment 
by an ESRD facility (for example, by the trainer's responses to 
beneficiary questions or discussion of personal experience, or even by 
a logo on the trainer's clothing or educational materials). Because it 
would be difficult for us to enforce this content restriction in many 
cases of subtle marketing, we do not think this restriction would 
sufficiently protect against improper influence of beneficiary choice 
with respect to the selection of an ESRD facility unless we also 
finalize our proposal to prohibit qualified staff from furnishing 
kidney disease patient education services if they are leased from or 
otherwise provided by an ESRD facility.
    We solicit public comments on these proposed changes to Sec.  
512.397(b)(1).
3. Publication of Participant Performance
    In the Specialty Care Models final rule, CMS established certain 
general provisions in subpart A of 42 CFR part 512 that apply to the 
ETC Model. One such general provision pertains to rights in data. 
Specifically, in the Specialty Care Models final rule, we stated that 
in order to enable CMS to evaluate the Innovation Center models 
(defined to include the ETC Model and Radiation Oncology Model) as 
required by section 1115A(b)(4) of the Act and to monitor the 
Innovation Center models pursuant to Sec.  512.150, in Sec.  512.140(a) 
we would use any data obtained in accordance with Sec. Sec.  512.130 
and 512.135 to evaluate and monitor the Innovation Center models (85 FR 
61124). We also stated that, consistent with section 1115A(b)(4)(B) of 
the Act, CMS would disseminate quantitative and qualitative results and 
successful care management techniques, including factors associated 
with performance, to other providers and suppliers and to the public. 
We stated that the data to be disseminated would include, but would not 
be limited to, patient de-identified results of patient experience of 
care and quality of life surveys, as well as patient de-identified 
measure results calculated based upon claims, medical records, and 
other data sources. We finalized these policies in 42 CFR 512.140(a).
    Consistent with these provisions, we intend to publish patient de-
identified results from all MYs of the ETC Model, including results 
from MYs that have already been completed. Specifically, for each MY, 
we intend to post the aggregate results for the home dialysis rate and 
the transplant rate for each aggregation group, as well as the 
individual components of each rate for the aggregation group as a 
whole. This would include the number of beneficiary months in home 
dialysis, self-dialysis, or nocturnal dialysis and the number of 
beneficiary months on the transplant waitlist, as well as the number of 
living donor transplants and, if applicable, pre-emptive living donor 
transplants performed. We would also identify all of the ESRD 
facilities or Managing Clinicians in the aggregation group for the MY. 
The results would be published on the ETC Model website. Given that the 
ETC Model includes a process for ETC Participants to request a targeted 
review of the calculation of the modality performance score (MPS)--
which is calculated based on the various rates we intend to publish--
CMS intends to publish these rates only after they have been finalized 
and CMS has resolved any targeted review requests timely received from 
ETC Participants under 42 CFR 512.390(c). We believe that the release 
of this information would inform the public about the cost and quality 
of care and about ETC Participants' performance in the ETC Model. This 
would supplement the annual evaluation reports that CMS is required to 
conduct and release to the public under section 1115A(b)(4) of the Act.
    We seek comment on our intent to post this information to our 
website, as well as the information we intend to post and the manner 
and timing of the posting.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork

[[Page 38566]]

Reduction Act of 1995 requires that we solicit comment on the following 
issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

1. ESRD QIP--Wage Estimates (OMB Control Numbers 0938-1289 and 0938-
1340)

    To derive wages estimates, we used data from the U.S. Bureau of 
Labor Statistics' May 2020 National Occupational Employment and Wage 
Estimates. In the CY 2016 ESRD PPS final rule (80 FR 69069), we stated 
that it was reasonable to assume that Medical Records and Health 
Information Technicians, who are responsible for organizing and 
managing health information data, are the individuals tasked with 
submitting measure data to CROWNWeb (now EQRS) and NHSN, as well as 
compiling and submitting patient records for the purpose of data 
validation studies. The most recently available median hourly wage of a 
Medical Records and Health Information Technician is $21.20 per 
hour.\372\ We also calculate fringe benefit and overhead at 100 
percent. We adjusted these employee hourly wage estimates by a factor 
of 100 percent to reflect current HHS department-wide guidance on 
estimating the cost of fringe benefits and overhead. We stated that 
these are necessarily rough adjustments, both because fringe benefits 
and overhead costs vary significantly from employer to employer and 
because methods of estimating these costs vary widely from study to 
study. Nonetheless, we stated that there is no practical alternative 
and we believe that these are reasonable estimation methods. Therefore, 
using these assumptions, we estimated an hourly labor cost of $42.40 as 
the basis of the wage estimates for all collections of information 
calculations in the ESRD QIP.
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    \372\ https://www.bls.gov/oes/current/oes292098.htm. Accessed on 
June 7, 2021.
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    We used this updated wage estimate, along with updated facility and 
patient counts to re-estimate the total information collection burden 
in the ESRD QIP for PY 2025 that we discussed in the CY 2022 ESRD QIP 
final rule (86 FR 61998 through 61999) and to estimate the total 
information collection burden in the ESRD QIP for PY 2026. We provide 
the re-estimated information collection burden associated with the PY 
2025 ESRD QIP and the newly estimated information collection burden 
associated with the PY 2026 ESRD QIP in section VII.C.3 of this 
proposed rule. Although we are also proposing updates for PY 2023 and 
PY 2024, these proposals would not affect our estimates of the annual 
burden associated with the program's information collection 
requirements, and therefore we are not updating our previously 
finalized information collection burdens associated with the PY 2023 or 
PY 2024 ESRD QIP in this proposed rule.

2. Estimated Burden Associated With the Data Validation Requirements 
for PY 2025 and PY 2026 (OMB Control Numbers 0938-1289 and 0938-1340)

    In the CY 2020 ESRD PPS final rule, we finalized a policy to adopt 
the CROWNWeb data validation methodology that we previously adopted for 
the PY 2016 ESRD QIP as the methodology we would use to validate 
CROWNWeb data for all payment years, beginning with PY 2021 (83 FR 
57001 through 57002). Although we are now using EQRS to report data 
that was previously reported in CROWNWeb, the data validation 
methodology remains the same. Under this methodology, 300 facilities 
are selected each year to submit 10 records to CMS, and we reimburse 
these facilities for the costs associated with copying and mailing the 
requested records. The burden associated with these validation 
requirements is the time and effort necessary to submit the requested 
records to a CMS contractor. In this proposed rule, we are not 
proposing any changes to the EQRS data validation process, however, we 
are updating these burden estimates using a newly available wage 
estimate of a Medical Records and Health Information Technician. In the 
CY 2020 ESRD PPS final rule, we estimated that it would take each 
facility approximately 2.5 hours to comply with this requirement (84 FR 
60787). If 300 facilities are requested to submit records, we estimated 
that the total combined annual burden for these facilities would be 750 
hours (300 facilities x 2.5 hours). Since we anticipate that Medical 
Records and Health Information Technicians or similar administrative 
staff would submit these data, we estimate that the aggregate cost of 
the EQRS data validation each year would be approximately $31,800 (750 
hours x $42.40), or an annual total of approximately $106.00 ($31,800/
300 facilities) per facility in the sample. The burden cost increase 
associated with these requirements would be revised in the information 
collection request (OMB control number 0938-1289).
    In the CY 2021 ESRD PPS final rule, we finalized our policy to 
reduce the number of records that a facility selected to participate in 
the NHSN data validation must submit to a CMS contractor, beginning 
with PY 2023 (85 FR 71471 through 71472). Under this finalized policy, 
a facility is required to submit records for 20 patients across any two 
quarters of the year, instead of 20 records for each of the first two 
quarters of the year. The burden associated with this policy is the 
time and effort necessary to submit the requested records to a CMS 
contractor. In this proposed rule, we are not proposing any changes to 
the NHSN data validation process, however, we are updating these burden 
estimates using a newly available wage estimate of a Medical Records 
and Health Information Technician. Applying our policy to reduce the 
number of records required from each facility participating in the NHSN 
validation, we estimated that it would take each facility approximately 
5 hours to comply with this requirement. If 300 facilities are 
requested to submit records each year, we estimated that the total 
combined annual burden hours for these facilities per year would be 
1,500 hours (300 facilities x 5 hours). Since we anticipate that 
Medical Records and Health Information Technicians or similar staff 
would submit these data, using the newly available wage estimate of a 
Medical Records and Health Information Technician, we estimate that the 
aggregate cost of the NHSN data validation each year would be 
approximately $63,600 (1,500 hours x $42.40), or a total of 
approximately $212 ($63,600/300 facilities) per facility in the sample. 
While the burden hours estimate would not change, the burden cost 
updates associated with these requirements would be revised in the 
information collection request (OMB control number 0938-1340).

3. EQRS Reporting Requirements for PY 2023 and PY 2024 (OMB Control 
Number 0938-1289)

    To determine the burden associated with the EQRS reporting 
requirements (previously known as the CROWNWeb reporting requirements), 
we look at the

[[Page 38567]]

total number of patients nationally, the number of data elements per 
patient-year that the facility would be required to submit to EQRS for 
each measure, the amount of time required for data entry, the estimated 
wage plus benefits applicable to the individuals within facilities who 
are most likely to be entering data into EQRS, and the number of 
facilities submitting data to EQRS. In the CY 2021 ESRD PPS final rule, 
we estimated that the burden associated with EQRS reporting 
requirements for the PY 2023 ESRD QIP was approximately $208 million 
(85 FR 71475).
    As discussed in section IV.B.2 of this proposed rule, we are 
proposing six measure suppressions that would apply for PY 2023. 
However, we believe that these proposals would not affect our estimates 
of the annual burden associated with the Program's information 
collection requirements, as facilities are still expected to continue 
to collect measure data during this time period. Although we are 
updating the SHR and SRR clinical measure results to be expressed as 
rates beginning in PY 2024 in section IV.D of this proposed rule, these 
technical updates would not affect our estimates of the annual burden 
associated with the Program's information collection requirements.

4. EQRS Reporting Requirements for PY 2025 and PY 2026 (OMB Control 
Number 0938-1289)

    To determine the burden associated with the EQRS reporting 
requirements (previously known as the CROWNWeb reporting requirements), 
we look at the total number of patients nationally, the number of data 
elements per patient-year that the facility would be required to submit 
to EQRS for each measure, the amount of time required for data entry, 
the estimated wage plus benefits applicable to the individuals within 
facilities who are most likely to be entering data into EQRS, and the 
number of facilities submitting data to EQRS. In the CY 2022 ESRD PPS 
final rule, we estimated that the burden associated with EQRS reporting 
requirements for the PY 2025 ESRD QIP was approximately $215 million 
for approximately 5,085,050 total burden hours (86 FR 61999).
    We are not proposing any changes in this proposed rule that would 
affect the burden associated with EQRS reporting requirements for PY 
2025 or PY 2026. However, we have re-calculated the burden estimate for 
PY 2025 using updated estimates of the total number of ESRD facilities, 
the total number of patients nationally, and wages for Medical Records 
and Health Information Technicians or similar staff as well as a 
refined estimate of the number of hours needed to complete data entry 
for EQRS reporting. Consistent with our approach in the CY 2022 ESRD 
PPS final rule (86 FR 61999), in this proposed rule we are estimating 
that the amount of time required to submit measure data to EQRS is 2.5 
minutes per element and are not using a rounded estimate of the time 
needed to complete data entry for EQRS reporting. There are 229 data 
elements for 532,931 patients across 7,717 facilities. At 2.5 minutes 
per element, this yields approximately 658.94 hours per facility. 
Therefore, the PY 2025 burden is 5,085,050 hours (658.94 hours x 7,717 
facilities). Using the wage estimate of a Medical Records and Health 
Information Technician, we estimate that the PY 2025 total burden cost 
is approximately $215 million (5,085,050 hours x $42.40). Although the 
burden hours and associated burden cost in this proposed rule are the 
same as we previously finalized in the CY 2022 ESRD PPS final rule (86 
FR 61999), we will update these numbers in the final rule if necessary. 
There is no net incremental burden change from PY 2025 to PY 2026 
because we are not changing the reporting requirements for PY 2026.

5. Additional Reporting Requirements Beginning With PY 2025

    In section IV.E.1.a of the preamble of this proposed rule, we are 
proposing to adopt a COVID-19 HCP Vaccination reporting measure 
beginning with the PY 2025 ESRD QIP. Facilities would submit data 
through the CDC NHSN. The NHSN is a secure, internet-based system 
maintained by the CDC and provided free. Currently, the CDC does not 
estimate burden for COVID-19 vaccination reporting under the CDC 
information collection requirement (ICR) approved under OMB control 
number 0920-1317 because the agency has been granted a waiver under 
section 321 of the National Childhood Vaccine Injury Act (NCVIA).\373\ 
Although the burden associated with the COVID-19 HCP Vaccination 
reporting measure is not accounted for under the CDC ICR 0920-1317 or 
0920-0666 due to the NCVIA waiver, the estimated cost and burden 
information are included in section VII.D.2.b and would be accounted 
for by the CDC under OMB control number 0920-1317.
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    \373\ Section 321 of the National Childhood Vaccine Injury Act 
(NCVIA) provides the PRA waiver for activities that come under the 
NCVIA, including those in the NCVIA at section 2102 of the Public 
Health Service Act (42 U.S.C. 300aa-2). Section 321 is not codified 
in the U.S. Code, but can be found in a note at 42 U.S.C. 300aa-1.
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    If you comment on these information collection, that is, reporting, 
recordkeeping, or third-party disclosure requirements, please submit 
your comments electronically as specified in the ADDRESSES section of 
this proposed rule.
    Comments must be received on/by August 29, 2022.

VII. Regulatory Impact Analysis

A. Statement of Need

1. ESRD PPS
    On January 1, 2011, we implemented the ESRD PPS, a case-mix 
adjusted, bundled PPS for renal dialysis services furnished by ESRD 
facilities as required by section 1881(b)(14) of the Social Security 
Act (the Act), as added by section 153(b) of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275). 
Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA, 
and amended by section 3401(h) of the Patient Protection and Affordable 
Care Act (the Affordable Care Act) (Pub. L. 111-148), established that 
beginning calendar year (CY) 2012, and each subsequent year, the 
Secretary of the Department of Health and Human Services (the 
Secretary) shall annually increase payment amounts by an ESRD market 
basket increase factor, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This rule 
proposes several routine updates and policy changes to the ESRD PPS for 
CY 2023. The proposed routine updates include the CY 2023 wage index 
values, the wage index budget-neutrality adjustment factor, the outlier 
payment threshold amounts, and the TPNIES offset amount. Failure to 
publish this proposed rule would result in ESRD facilities not 
receiving appropriate payments in CY 2023 for renal dialysis services 
furnished to ESRD beneficiaries.
    This rule also proposes a number of changes to improve payment 
stability and adequacy under the ESRD PPS. As discussed in section 
II.B.1.a.(1) of this proposed rule, we are proposing to rebase and 
revise the ESRDB market basket to reflect a CY 2020 base year. We are 
also proposing to increase the ESRD PPS wage index floor as discussed 
in section II.B.1.b.(3) of this proposed rule, and to apply a permanent 
5-percent cap on wage index decreases for CY 2023 and subsequent years, 
as discussed in section II.B.1.b.(2) of this proposed rule. Lastly, as 
discussed in section II.B.1.c.(4) of this proposed rule, we are 
proposing to change our

[[Page 38568]]

methodology for calculating the FDL amount for adults in order to 
target more effectively ESRD PPS outlier payments that equal 1 percent 
of total ESRD PPS payments. We believe that each of these proposed 
changes would improve payment stability and adequacy under the ESRD 
PPS.
    Furthermore, as discussed in section II.B.1.f. of this proposed 
rule, we are proposing to modify the definition of ``oral-only drug'' 
at Sec.  413.234(a) to specify that equivalence refers to functional 
equivalence, in line with our current drug designation process and 
reliance on the ESRD PPS functional categories. We believe this 
proposal would improve beneficiaries' access to renal dialysis drugs, 
promote health equity, and advance other goals as discussed in the 
proposal. Lastly, we are proposing to clarify the descriptions of 
several existing ESRD PPS functional categories to ensure our 
descriptions are as clear as possible for potential TDAPA applicants 
and the public. We believe this proposed clarification would improve 
public understanding of the ESRD PPS functional categories and drug 
designation process.
2. AKI
    This rule proposes routine updates to the payment for renal 
dialysis services furnished by ESRD facilities to individuals with AKI. 
As discussed in section III.B.2 of this proposed rule, we are also 
proposing to apply to all AKI dialysis payments in an ESRD facility the 
same wage index floor and permanent 5-percent cap on wage index 
decreases that we are proposing to apply under the ESRD PPS. We believe 
that these proposed changes would improve payment stability and 
adequacy for AKI dialysis in ESRD facilities. Failure to publish this 
proposed rule would result in ESRD facilities not receiving appropriate 
payments in CY 2023 for renal dialysis services furnished to patients 
with AKI in accordance with section 1834(r) of the Act.
3. ESRD QIP
    Section 1881(h)(1) of the Act requires a payment reduction of up to 
2 percent for eligible facilities that do not meet or exceed the mTPS 
established with respect to performance standards for the ESRD QIP each 
year. This proposed rule proposes updates for the ESRD QIP, including 
the proposed suppression of several ESRD QIP measures for PY 2023 under 
our previously finalized measure suppression policy, a proposed update 
to the PY 2023 performance standards, updates regarding the SHR 
clinical measure and the SRR clinical measure for PY 2024, and proposed 
updates regarding the STrR and Hypercalcemia measures, the proposed 
adoption of the COVID-19 HCP Vaccination reporting measure, as well as 
a proposal to create a new reporting measure domain and to re-weight 
current measure domains, beginning in PY 2025.
4. ETC Model
    As described in detail in section V of this proposed rule, we 
believe it is necessary to propose certain changes to the ETC Model. 
Under the proposed changes to the ETC Model, ETC Participants would 
continue to receive adjusted payments but beginning MY5, certain 
aspects of the ETC Model used to determine those payment adjustments 
would change. The proposed change to the PPA achievement scoring 
methodology is necessary to increase fairness and accuracy of the PPA. 
The proposed change to the kidney disease patient education services 
waiver and the discussion of our intent to disseminate participant-
level model performance information to the public are necessary to 
support ETC Participants operating in the ETC Model.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999), and the Congressional Review Act (5 U.S.C. 804(2))
    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). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with economically 
significant effects ($100 million or more in any 1 year). Based on our 
estimates, OMB's Office of Information and Regulatory Affairs has 
determined this rulemaking is ``economically significant'' as measured 
by the $100 million threshold. Accordingly, we have prepared a 
Regulatory Impact Analysis that to the best of our ability presents the 
costs and benefits of the rulemaking. We solicit comments on the 
regulatory impact analysis provided.

C. Impact Analysis

1. ESRD PPS
    We estimate that the proposed revisions to the ESRD PPS would 
result in an increase of approximately $320 million in payments to ESRD 
facilities in CY 2023, which includes the amount associated with 
proposed updates to the outlier thresholds, proposed payment rate 
update, proposed updates to the wage index, and continuation of the 
approved TPNIES from CY 2022.
2. AKI
    We estimate that the proposed updates to the AKI payment rate would 
result in an increase of approximately $2 million in payments to ESRD 
facilities in CY 2023.
3. ESRD QIP
    We estimate that the proposed updates to the ESRD QIP will result 
in an additional $37 million in estimated payment reductions across all 
facilities for PY 2025.
4. ETC Model
    We estimate that the proposed changes to the ETC Model would not 
impact the Model's projected direct savings from payment adjustments 
alone. We estimate that the Model would generate $28 million in direct 
savings related to payment adjustments over 6.5 years.

D. Detailed Economic Analysis

    In this section, we discuss the anticipated benefits, costs, and 
transfers associated with the changes proposed in

[[Page 38569]]

this proposed rule. Additionally, we estimate the total regulatory 
review costs associated with reading and interpreting this proposed 
rule.
1. Benefits
    Under the proposed CY 2023 ESRD PPS and AKI payment, ESRD 
facilities would continue to receive payment for renal dialysis 
services furnished to Medicare beneficiaries under a case-mix adjusted 
PPS. We continue to expect that making prospective payments to ESRD 
facilities would enhance the efficiency of the Medicare program. 
Additionally, we expect that updating ESRD PPS and AKI payments by 2.4 
percent based on the proposed CY 2023 ESRD PPS market basket update 
less the proposed CY 2023 productivity adjustment would improve or 
maintain beneficiary access to high quality care by ensuring that 
payment rates reflect the best available data on the resources involved 
in delivering renal dialysis services.
2. Costs
a. ESRD PPS and AKI
    We do not anticipate the provisions of this proposed rule regarding 
ESRD PPS and AKI rates-setting would create additional cost or burden 
to ESRD facilities.
b. ESRD QIP
    As discussed in section IV.B.2 of this proposed rule, we are 
proposing measure suppressions that would apply for PY 2023. However, 
we believe that none of the policies that we are proposing in this 
proposed rule would affect our estimates of the annual burden 
associated with the Program's information collection requirements, as 
facilities are still expected to continue to collect measure data 
during this time period. For PY 2025 and PY 2026, we have re-estimated 
the costs associated with the information collection requirements under 
the ESRD QIP with updated estimates of the total number of ESRD 
facilities, the total number of patients nationally, wages for Medical 
Records and Health Information Technicians or similar staff, and a 
refined estimate of the number of hours needed to complete data entry 
for EQRS reporting. We have made no changes to our methodology for 
calculating the annual burden associated with the information 
collection requirements for the EQRS validation study (previously known 
as the CROWNWeb validation study), the NHSN validation study, and EQRS 
reporting.
    In section IV.E.1.a of the preamble of this proposed rule, we are 
proposing to adopt a COVID-19 HCP Vaccination reporting measure 
beginning in PY 2025. Facilities would submit data through the CDC 
NHSN. The NHSN is a secure, internet-based system maintained by the CDC 
and provided free. Currently, the CDC does not estimate burden for 
COVID-19 vaccination reporting under the CDC PRA package approved under 
OMB control number 0920-1317 because the agency has been granted a 
waiver under section 321 of the National Childhood Vaccine Injury Act 
(NCVIA).\374\
---------------------------------------------------------------------------

    \374\ Section 321 of the National Childhood Vaccine Injury Act 
(NCVIA) provides the PRA waiver for activities that come under the 
NCVIA, including those in the NCVIA at section 2102 of the Public 
Health Service Act (42 U.S.C. 300aa-2). Section 321 is not codified 
in the U.S. Code, but can be found in a note at 42 U.S.C. 300aa-1.
---------------------------------------------------------------------------

    We estimate that it would take each facility, on average, 
approximately 1 hour per month to collect data for the COVID-19 HCP 
Vaccination reporting measure and enter it into NHSN. We have estimated 
the time to complete this entire activity, since it could vary based on 
provider systems and staff availability. This burden is comprised of 
administrative hours and wages. We believe it would take an 
Administrative Assistant \375\ between 45 minutes and 1 hour and 15 
minutes to enter this data into NHSN. For PY 2025 and subsequent years, 
facilities would incur an additional annual burden between 9 hours 
(0.75 hours/month x 12 months) and 15 hours (1.25 hours/month x 12 
months) per facility and between 69,453 hours (9 hours/facility x 7,717 
facilities) and 115,755 hours (15 hours/facility x 7,717 facilities) 
for all facilities. Each facility would incur an estimated cost of 
between $329.58 (9 hours x $36.62/hour) and $549.30 annually (15 hours 
x $36.62/hour). The estimated cost across all facilities would be 
between $2,543,368.86 ($329.58/facility x 7,717 facilities) and 
$4,238,948 ($549.30/facility x 7,717 facilities) annually. We recognize 
that many healthcare facilities are also reporting other COVID-19 data 
to HHS. We believe the benefits of reporting data on the COVID-19 HCP 
Vaccination reporting measure to monitor, track, and provide 
transparency for the public on this important tool to combat COVID-19 
outweigh the costs of reporting. We welcome comments on the estimated 
time to collect data and enter it into the NHSN.
---------------------------------------------------------------------------

    \375\ https://www.bls.gov/oes/current/oes436013.htm (accessed on 
March 29, 2022). The adjusted hourly wage rate of $36.62/hour 
includes an adjustment of 100 percent of the median hourly wage to 
account for the cost of overhead, including fringe benefits.
---------------------------------------------------------------------------

    We also updated the payment reduction scale using more recent data 
for the measures in the ESRD QIP measure set. We estimate approximately 
$215 million in information collection burden, which includes the cost 
of complying with this rule, and an additional $37 million in estimated 
payment reductions across all facilities for PY 2025, for an impact of 
$252 million as a result of the policies we have previously finalized 
and the policies we have proposed in this proposed rule.
    For PY 2026, we estimate that the proposed revisions to the ESRD 
QIP would result in $215 million in information collection burden, and 
$37 million in estimated payment reductions across all facilities, for 
an impact of $252 million as a result of the policies we have 
previously finalized and the policies we have proposed in this proposed 
rule.
3. Transfers
    We estimate that the proposed updates to the ESRD PPS and AKI 
payment rate would result in a total in increase of approximately $260 
million in payments to ESRD facilities in CY 2023, which includes the 
amount associated with updates to the outlier thresholds, and updates 
to the wage index. This estimate includes an increase of approximately 
$2 million in payments to ESRD facilities in CY 2023 due to the 
proposed updates to the AKI payment rate, of which approximately 20 
percent is increased beneficiary co-insurance payments. We estimate 
approximately $260 million in transfers from the federal government to 
ESRD facilities due to increased Medicare program payments and 
approximately $60 million in transfers from beneficiaries to ESRD 
facilities due to increased beneficiary co-insurance payments as a 
result of this proposed rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on last year's proposed rule will be the number of reviewers 
of this proposed rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed last year's rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we

[[Page 38570]]

thought that the number of past commenters would be a fair estimate of 
the number of reviewers of this rule. We welcome any comments on the 
approach in estimating the number of entities which will review this 
proposed rule. We also recognize that different types of entities are 
in many cases affected by mutually exclusive sections of this proposed 
rule, and therefore for the purposes of our estimate we assume that 
each reviewer reads approximately 50 percent of the rule. We seek 
comments on this assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $115.22 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 214 minutes 
(3.6 hours) for the staff to review half of this proposed rule, which 
is approximately 53,500 words. For each entity that reviews the rule, 
the estimated cost is $414.79 (3.6 hours x $115.22). Therefore, we 
estimate that the total cost of reviewing this regulation is 
$118,629.94 ($414.79 x 286).
5. Impact Statement and Table
a. CY 2023 End-Stage Renal Disease Prospective Payment System
(1) 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 2022 to estimated payments in CY 2023. To 
estimate the impact among various types of ESRD facilities, it is 
imperative that the estimates of payments in CY 2022 and CY 2023 
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 proposed rule, we used CY 2021 data from the Part A and 
Part B Common Working Files as of February 18, 2022, as a basis for 
Medicare dialysis treatments and payments under the ESRD PPS. We 
updated the 2021 claims to 2022 and 2023 using various updates. The 
proposed updates to the ESRD PPS base rate are described in section 
II.B.1.d of this proposed rule. Table 25 shows the impact of the 
estimated CY 2023 ESRD PPS payments compared to estimated payments to 
ESRD facilities in CY 2022.
BILLING CODE 4120-01-P
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[[Page 38571]]


[GRAPHIC] [TIFF OMITTED] TP28JN22.027

BILLING CODE 4120-01-C
    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 
proposed changes to the outlier payment policy described in section 
II.B.1.c of this proposed rule is shown in column C. For CY 2023, the 
impact on all ESRD facilities as a result of the proposed changes to 
the outlier payment policy would be a 0.7 percent increase in estimated 
payments. All ESRD facilities are anticipated to experience a positive 
effect in their estimated CY 2023 payments as a result of the proposed 
outlier policy changes.
    Column D shows the effect of the proposed update to the LRS for CY 
2023 of 55.2 percent. This proposed update is implemented in a budget 
neutral manner, so the total impact of this proposed change is 0.0 
percent; however, there are distributional effects of the change among 
different categories of ESRD facilities. Facilities located in rural 
areas are estimated to experience a 0.6 percent decrease in payments, 
and those located in urban areas are estimated to experience a 0.1 
percent increase in payments.
    Column E shows the effect of the proposed updates to the wage 
index, as described in section II.B.1.b of this proposed rule. That is, 
this column reflects the update from the CY 2022 ESRD PPS wage index 
continuing to use the 2018 OMB delineations as finalized in the CY 2021 
ESRD PPS final rule, with a basis of the FY 2023 pre-floor, pre-
reclassified IPPS hospital wage index data in a budget neutral manner. 
This column also includes the proposed increase of the wage index floor 
to 0.6000 and the proposed permanent 5-percent cap on wage index 
decreases. The total impact of this change is 0.0 percent; however, 
there are distributional effects of the change among different 
categories of ESRD facilities. The largest estimated increase would be 
7.1 percent for facilities located in Puerto Rico and the Virgin 
Islands, and the largest estimated decrease would be 0.6 percent for 
facilities in New England.
    Column F reflects the overall impact, that is, the effects of the 
proposed outlier policy changes, the updated wage index, and the 
proposed payment rate update as described in section II.B.1.d of this 
proposed rule. The proposed ESRD PPS payment rate update is 2.4 
percent, which reflects the proposed ESRDB market basket percentage 
increase factor for CY 2023 of 2.8 percent and the proposed 
productivity adjustment of 0.4 percent. We expect that overall ESRD 
facilities would experience a 3.1 percent increase in estimated 
payments in CY 2023. The categories of types of facilities in the 
impact table show impacts ranging from a 1.6 percent increase to an 8.1 
percent

[[Page 38572]]

increase in their CY 2023 estimated payments.
(2) Effects on Other Providers
    Under the ESRD PPS, Medicare pays ESRD facilities a single bundled 
payment for renal dialysis services, which may have been separately 
paid to other providers (for example, laboratories, durable medical 
equipment suppliers, and pharmacies) by Medicare prior to the 
implementation of the ESRD PPS. Therefore, in CY 2023, we estimate that 
the ESRD PPS will have zero impact on these other providers.
(3) Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in CY 2023 would be approximately $8.2 
billion. This estimate considers a projected decrease in fee-for-
service Medicare ESRD beneficiary enrollment of 2.0 percent in CY 2023.
(4) 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 
3.1 percent overall increase in the CY 2023 ESRD PPS payment amounts, 
we estimate that there would be an increase in beneficiary co-insurance 
payments of 3.1 percent in CY 2023, which translates to approximately 
$60 million.
(5) Alternatives Considered
(i) CY 2023 Impacts: 2019-2020 Versus 2021 Claims Data
    Each year CMS uses the latest available ESRD claims to update the 
outlier threshold, budget neutrality factor, and payment rates. Due to 
the COVID-19 PHE, we compared the impact of using CY 2019 or CY 2020 
claims against CY 2021 claims to determine if there was any substantial 
difference in the results that would justify potentially deviating from 
our longstanding policy to use the latest available data. Analysis 
suggested that ESRD utilization did not change substantially during the 
pandemic, likely due to the patients' vulnerability and need for these 
services. Consequently, we are proposing to use the CY 2021 data 
because it does not negatively impact ESRD facilities and keeps with 
our longstanding policy to make updates using the latest available ESRD 
claims data.
(ii) Proposed Outlier Methodology Alternatives
    As discussed in section II.B.1.c.(4) of this proposed rule, we are 
proposing a change to the methodology used to determine the outlier FDL 
amounts for adult beneficiaries. We also considered but did not propose 
maintaining the current outlier methodology or decreasing the 1.0 
percent outlier target. In addition, we considered but did not propose 
a reconciliation process for the outlier methodology.
b. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
(1) Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities for renal dialysis services 
furnished to individuals with AKI, it is necessary to compare estimated 
payments in CY 2022 to estimated payments in CY 2023. To estimate the 
impact among various types of ESRD facilities for renal dialysis 
services furnished to individuals with AKI, it is imperative that the 
estimates of payments in CY 2022 and CY 2023 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 proposed rule, we used CY 2021 data from the Part A and 
Part B Common Working Files as of February 18, 2022, as a basis for 
Medicare for renal dialysis services furnished to individuals with AKI. 
We updated the 2021 claims to 2022 and 2023 using various updates. The 
updates to the AKI payment amount are described in section III.B of 
this proposed rule. Table 26 shows the impact of the estimated CY 2023 
payments for renal dialysis services furnished to individuals with AKI 
compared to estimated payments for renal dialysis services furnished to 
individuals with AKI in CY 2022.
BILLING CODE 4120-01-P

[[Page 38573]]

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[[Page 38574]]


[GRAPHIC] [TIFF OMITTED] TP28JN22.029

BILLING CODE 4120-01-C
    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of AKI dialysis treatments (in thousands). Column C shows the effect of 
the proposed update to the LRS for CY 2023 of 55.2 percent. Column D 
shows the effect of the proposed CY 2023 wage indices, including the 
proposed increase to the wage index floor and the proposed 5-percent 
cap on wage index decreases.
    Column E shows the overall impact, that is, the effects of the 
proposed LRS, proposed wage index updates, and the proposed payment 
rate update of 2.4 percent, which reflects the proposed ESRDB market 
basket percentage increase factor for CY 2023 of 2.8 percent and the 
proposed productivity adjustment of 0.4 percent. We expect that overall 
ESRD facilities would experience a 2.4 percent increase in estimated 
payments in CY 2023. The categories of types of facilities in the 
impact table show impacts ranging from an increase of 0.0 percent to 
8.0 percent in their CY 2023 estimated payments.
(2) Effects on Other Providers
    Under section 1834(r) of the Act, as added by section 808(b) of 
TPEA, we are proposing to update the payment rate for renal dialysis 
services furnished by ESRD facilities to beneficiaries with AKI. The 
only two Medicare providers and suppliers authorized to provide these 
outpatient renal dialysis services are hospital outpatient departments 
and ESRD facilities. The patient and his or her physician make the 
decision about where the renal dialysis services are furnished. 
Therefore, this proposed change would have zero impact on other 
Medicare providers.
(3) Effects on the Medicare Program
    We estimate approximately $80 million would be paid to ESRD 
facilities in CY 2023 as a result of patients with AKI receiving renal 
dialysis services in the ESRD facility at the lower ESRD PPS base rate 
versus receiving those services only in the hospital outpatient setting 
and paid under the outpatient prospective payment system, where 
services were required to be administered prior to the TPEA.
(4) Effects on Medicare Beneficiaries
    Currently, beneficiaries have a 20 percent co-insurance obligation 
when they receive AKI dialysis in the hospital outpatient setting. When 
these services are furnished in an ESRD facility, the patients will 
continue to be responsible for a 20 percent coinsurance. Because the 
AKI dialysis payment rate paid to ESRD facilities is lower than the 
outpatient hospital PPS's payment amount, we expect beneficiaries to 
pay less co-insurance when AKI dialysis is furnished by ESRD 
facilities.
(5) Alternatives Considered
    As we discussed in the CY 2017 ESRD PPS proposed rule (81 FR 
42870), we considered adjusting the AKI payment rate by including the 
ESRD PPS case-mix adjustments, and other adjustments at section 
1881(b)(14)(D) of the Act, as well as not paying separately for AKI 
specific drugs and laboratory tests. We ultimately determined that 
treatment for AKI is substantially different from treatment for ESRD 
and the case-mix adjustments applied to ESRD patients may not be 
applicable to AKI patients and as such, including those policies and 
adjustment is inappropriate. We continue to monitor utilization and 
trends of items and services furnished to individuals with AKI for 
purposes of refining the payment rate in the future. This monitoring 
will assist us in developing knowledgeable, data-driven proposals.
c. ESRD QIP
(1) Effects of the PY 2023 and PY 2024 ESRD QIP on ESRD Facilities
    The ESRD QIP is intended to prevent reductions in the quality of 
ESRD facility services provided to beneficiaries. The general 
methodology that we use to determine a facility's TPS is described in 
our regulations at 42 CFR 413.178(e).
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2023 and PY 2024 ESRD QIP will apply to the 
ESRD PPS payments made to the facility for services furnished in CY 
2023 and CY 2024, respectively, as codified in our regulations at 42 
CFR 413.177.
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2025 ESRD QIP will apply to the ESRD PPS 
payments made to the facility for services furnished in CY 2025, as 
codified in our regulations at 42 CFR 413.177.
    For the PY 2023 ESRD QIP, we estimate that, of the 7,768 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 11.27 percent or 875 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2023. We are presenting an estimate for the PY 2023 ESRD QIP to 
update the estimated impact that was provided in the CY 2021 ESRD PPS 
final rule (85 FR 71479 through 71481). If our proposals are finalized 
as proposed, the total estimated payment reductions for all the 875 
facilities expected to receive a payment reduction in PY 2023 would be 
approximately $9,853,321.90. Facilities that do not receive a TPS do 
not receive a payment reduction.
    Table 27 shows the overall estimated distribution of payment 
reductions resulting from the PY 2023 ESRD QIP.

[[Page 38575]]

[GRAPHIC] [TIFF OMITTED] TP28JN22.030

    To estimate whether a facility would receive a payment reduction 
for PY 2023, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims, excluding the 
measures that we are proposing to suppress for PY 2023 as discussed in 
section IV.B.2 of this proposed rule. Payment reduction estimates are 
calculated using the most recent data available (specified in Table 28) 
in accordance with the policies finalized in this final rule. Measures 
used for the simulation are shown in Table 28.
[GRAPHIC] [TIFF OMITTED] TP28JN22.031

    For all measures except the six measures we are proposing to 
suppress in IV.B.2 of this proposed rule, as well as the STrR measure, 
measures with less than 11 patients for a facility were not included in 
that facility's TPS. For the STrR reporting measure, facilities were 
required to have at least 10 patient-years at risk in order to be 
included in the facility's TPS. Each facility's TPS was compared to an 
estimated mTPS and an estimated payment reduction table that were 
consistent with the proposed polices outlined in sections IV.B and IV.C 
of this proposed rule. Facility reporting measure scores were estimated 
using available data from CY 2019 and CY 2020 for MedRec. Facilities 
were required to have at least one measure in at least two domains to 
receive a TPS.
    To estimate the total payment reductions in PY 2023 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2019 and December 2019 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
(2) Effects of the PY 2025 ESRD QIP on ESRD Facilities
    For the PY 2025 ESRD QIP, we estimate that, of the 7,717 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 41 percent or 3,171 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2025. We are presenting an estimate for the PY 2025 ESRD QIP to 
update the estimated impact that was provided in the CY 2022 ESRD PPS 
final rule (86 FR 62008 through 62011). If our proposals are finalized 
as proposed, the total estimated payment reductions for all the 3,171 
facilities expected to receive a

[[Page 38576]]

payment reduction in PY 2025 would be approximately $37,167,805.51. 
Facilities that do not receive a TPS do not receive a payment 
reduction.
    Table 29 shows the overall estimated distribution of payment 
reductions resulting from the PY 2025 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TP28JN22.032

    To estimate whether a facility would receive a payment reduction 
for PY 2025, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates are calculated using the most recent data available 
(specified in Table 28) in accordance with the policies proposed in 
this proposed rule. Measures used for the simulation are shown in Table 
30.
[GRAPHIC] [TIFF OMITTED] TP28JN22.033

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For the SHR 
clinical measure and the SRR clinical measure, facilities were required 
to have at least 5 patient-years at risk and 11 index discharges, 
respectively, in order to be included in the facility's TPS. For the 
STrR reporting measure, which we are proposing to convert to a clinical 
measure beginning in PY 2025 in section IV.E.1.b of this proposed rule, 
facilities were required to have at least 10 patient-years at risk in 
order to be included in the facility's TPS. Each facility's TPS was 
compared to an estimated mTPS and an estimated payment reduction table 
that were consistent with the proposed polices outlined in section IV.E 
of this proposed rule. Facility reporting measure scores were estimated 
using available data from CY 2019 and CY 2020 for MedRec. Facilities 
were required to have at least one measure in at least two domains to 
receive a TPS.
    To estimate the total payment reductions in PY 2025 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2019 and December 2019 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 31 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2025. The table also 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and urban and by region), and

[[Page 38577]]

facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are using for the PY 2025 ESRD QIP, the actual 
impact of the PY 2025 ESRD QIP may vary significantly from the values 
provided here.
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(3) Effects of the PY 2026 ESRD QIP on ESRD Facilities
    For the PY 2026 ESRD QIP, we estimate that, of the 7,717 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 41 percent or 3,171 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2026. The total payment reductions for all the 3,171 facilities 
expected to receive a payment reduction is approximately 
$37,167,805.51. Facilities that do not receive a TPS do not receive a 
payment reduction.
    Table 32 shows the overall estimated distribution of payment 
reductions resulting from the PY 2026 ESRD QIP.

[[Page 38578]]

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    To estimate whether a facility would receive a payment reduction in 
PY 2026, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates were calculated using the most recent data 
available (specified in Table 32) in accordance with the policies 
proposed in this proposed rule. Measures used for the simulation are 
shown in Table 33.
[GRAPHIC] [TIFF OMITTED] TP28JN22.036

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For SHR and SRR, 
facilities were required to have at least 5 patient-years at risk and 
11 index discharges, respectively, in order to be included in the 
facility's TPS. For the STrR reporting measure, which we are proposing 
to convert to a clinical measure beginning in PY 2025 in section 
IV.E.1.b of this proposed rule, facilities were required to have at 
least 10 patient-years at risk in order to be included in the 
facility's TPS. Each facility's TPS was compared to an estimated mTPS 
and an estimated payment reduction table that incorporates the policies 
outlined in section IV.F of this proposed rule. Facility reporting 
measure scores were estimated using available data from CY 2019 and CY 
2020 for MedRec. Facilities were required to have at least one measure 
in at least two domains to receive a TPS.
    To estimate the total payment reductions in PY 2026 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2019 and December 2019 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 34 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2026. The table 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and urban and by region), and 
facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are using for the PY 2026 ESRD QIP, the actual 
impact of the PY 2026 ESRD QIP may vary significantly from the values 
provided here.
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[[Page 38579]]

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(4) Effects on Other Providers
    The ESRD QIP is applicable to ESRD facilities. We are aware that 
several of our measures impact other providers. For example, with the 
introduction of the SRR clinical measure in PY 2017 and the SHR 
clinical measure in PY 2020, we anticipate that hospitals may 
experience financial savings as facilities work to reduce the number of 
unplanned readmissions and hospitalizations. We are exploring various 
methods to assess the impact these measures have on hospitals and other 
facilities, such as through the impacts of the Hospital Readmissions 
Reduction Program and the Hospital-Acquired Condition Reduction 
Program, and we intend to continue examining the interactions between 
our quality programs to the greatest extent feasible.
(5) Effects on the Medicare Program
    For PY 2026, we estimate that the ESRD QIP would contribute 
approximately $37,167,805.51 in Medicare savings. For comparison, Table 
35 shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2026.

[[Page 38580]]

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(6) Effects on Medicare Beneficiaries
    The ESRD QIP is applicable to ESRD facilities. Since the Program's 
inception, there is evidence on improved performance on ESRD QIP 
measures. As we stated in the CY 2018 ESRD PPS final rule, one 
objective measure we can examine to demonstrate the improved quality of 
care over time is the improvement of performance standards (82 FR 
50795). As the ESRD QIP has refined its measure set and as facilities 
have gained experience with the measures included in the Program, 
performance standards have generally continued to rise. We view this as 
evidence that facility performance (and therefore the quality of care 
provided to Medicare beneficiaries) is objectively improving. We are in 
the process of monitoring and evaluating trends in the quality and cost 
of care for patients under the ESRD QIP, incorporating both existing 
measures and new measures as they are implemented in the Program. We 
would provide additional information about the impact of the ESRD QIP 
on beneficiaries as we learn more. However, in future years we are 
interested in examining these impacts through the analysis of available 
data from our existing measures.
---------------------------------------------------------------------------

    \376\ In the CY 2022 ESRD PPS final rule, we finalized our 
proposed special scoring methodology and payment policy for PY 2022 
(86 FR 61918 through 61919). Under this policy, we will not apply 
any payment reductions to ESRD facilities for PY 2022.
---------------------------------------------------------------------------

(7) Alternatives Considered
    In section IV.B.2 of this proposed rule, we are proposing to 
suppress six measures for PY 2023 due to the impacts of the COVID-19 
PHE on CY 2021 data. We considered not suppressing these six measures 
for PY 2023. However, we concluded that measure suppression was 
appropriate under our previously finalized measure suppression policy 
due to the impact of the COVID-19 PHE on these PY 2023 ESRD QIP 
measures. This approach would help to ensure that a facility would not 
be penalized for performance on measures which have been impacted by 
extraordinary circumstances beyond the facility's control.
d. ETC Model
(1) Overview
    The ETC Model is a mandatory payment model designed to test payment 
adjustments to certain dialysis and dialysis-related payments, as 
discussed in the Specialty Care Models final rule (85 FR 61114) and the 
CY 2022 ESRD PPS final rule (86 FR 61874), for ESRD facilities and for 
Managing Clinicians for claims with dates of service from January 1, 
2021 to June 30, 2027. The requirements for the ETC Model are set forth 
in 42 CFR part 512, subpart C.
    The changes proposed in this proposed rule (discussed in detail in 
section V.B of this proposed rule) would impact model payment 
adjustments for PPA Period 5, starting July 1, 2024. The proposed 
change that is most likely to affect the impact estimate for the ETC 
Model is the proposal to add a parameter to the PPA achievement scoring 
methodology such that an ETC Participant's aggregation group must have 
a positive home dialysis rate or transplant rate to receive an 
achievement score for that rate, as described in section V.B.1 of this 
proposed rule. We do not anticipate that the proposal to clarify the 
requirements for qualified staff to furnish and bill kidney disease 
patient education services under the ETC Model's Medicare program 
waivers, described in section V.B.2 of this proposed rule, would affect 
the impact estimate for the ETC Model.
    The ETC Model is not a total cost of care model. ETC Participants 
will still bill FFS Medicare, and items and services not subject to the 
ETC Model's payment adjustments will continue to be paid as they would 
in the absence of the ETC Model.
(2) Data and Methods
    A stochastic simulation was created to estimate the financial 
impacts of the proposed changes to the ETC Model relative to baseline 
expenditures, where baseline expenditures were defined as data from CYs 
2018 and 2019 without the proposed changes applied. The simulation 
relied upon statistical assumptions derived from retrospectively 
constructed ESRD facilities' and Managing Clinicians' Medicare dialysis 
claims, transplant claims, and transplant waitlist data reported during 
2018 and 2019, the most recent years of complete data available before 
the start of the ETC Model. Both datasets and the risk-adjustment 
methodologies for the ETC Model were developed by the CMS Office of the 
Actuary (OACT).
    For the modeling exercise used to estimate changes in payment to 
providers and suppliers and the resulting savings to Medicare, OACT 
maintained the previous method to simulate identification of ETC 
Participants (including aggregation group construction), beneficiary 
attribution (and exclusions), calculation

[[Page 38581]]

of home dialysis rates and transplant rates, calculation of achievement 
benchmarks, and calculation of improvement scores. For a detailed 
description of this methodology, see the detailed economic analysis 
included in the CY 2022 ESRD PPS final rule (86 FR 62012 through 
62014).
    Beginning for MY5 and beyond, the PPA achievement scoring 
methodology included one modification. Specifically, achievement scores 
were only awarded for the home dialysis rate or the transplant rate to 
ETC Participants in aggregation groups with a home dialysis rate or 
transplant rate greater than zero, respectively, in accordance with the 
proposed change described in section V.B.1 of this proposed rule. To 
clarify, no changes to the achievement scoring methodology were made to 
MY1 through MY4. For a detailed description of the methodology for 
simulating achievement scoring methodology, see the CY 2022 ESRD PPS 
final rule (86 FR 60213 through 60214).
    No changes were made to the payment structure for the HDPA 
calculation, as no changes were proposed. Similarly, no changes were 
made to the kidney disease patient education services utilization and 
cost calculations, as the proposed change does not impact expected 
utilization. For a detailed description of this methodology, see the 
detailed economic analysis included in the CY 2022 ESRD PPS final rule 
(86 FR 62014).
(3) Medicare Estimate--Primary Specification, Assume Proposed 
Achievement Scoring Update
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BILLING CODE 4120-01-C
    Table 36 summarizes the estimated impact of the ETC Model when the 
achievement benchmarks for each year are set using the average of the 
home dialysis rates for year t-1 and year t-2 for the HRRs randomly 
selected for participation in the ETC Model. We estimate that the 
Medicare program will save a net total of $43 million from the PPA and 
HDPA between January 1, 2021 and June 30, 2027 less $15 million in 
increased training and education expenditures. Therefore, the net 
impact to Medicare spending is estimated to be $28 million in savings. 
This is consistent with the net impact to Medicare spending estimated 
for the CY 2022 ESRD PPS final rule, in which the net impact to 
Medicare spending was

[[Page 38582]]

also estimated to be $28 million in savings (86 FR 62014 through 
62016).
    In Table 36, negative spending reflects a reduction in Medicare 
spending, while positive spending reflects an increase. The results for 
this table were generated from an average of 400 simulations under the 
assumption that benchmarks are rolled forward with a 1.5-year lag. For 
a detailed description of the key assumptions underlying the impact 
estimate, see the CY 2022 ESRD PPS final rule (86 FR 60214 through 
60216).
    As was the case in the Specialty Care Models final rule (85 FR 
61353) and the CY 2022 ESRD PPS final rule (86 FR 61874), the 
projections do not include the Part B premium revenue offset because 
the payment adjustments under the ETC Model will not affect beneficiary 
cost-sharing. Any potential effects on Medicare Advantage capitation 
payments were also excluded from the projections. This approach is 
consistent with how CMS has previously conveyed the primary FFS effects 
anticipated for an uncertain model without also assessing the potential 
impact on Medicare Advantage rates.
(4) Effects on the Home Dialysis Rate, the Transplant Rate, and Kidney 
Transplantation
    The changes proposed in this proposed rule would not impact the 
findings reported for the effects of the ETC Model on the home dialysis 
rate or the transplant rate described in the CY 2022 ESRD PPS final 
rule (86 FR 62017).
(5) Effects on Kidney Disease Patient Education Services and HD 
Training Add-Ons
    The changes proposed in this proposed rule would not impact the 
findings reported for the effects of the ETC Model on kidney disease 
patient education services and HD training add-ons described in the 
Specialty Care Models final rule (85 FR 61355) or the CY 2022 ESRD PPS 
final rule (85 FR 62017).
(6) Effects on Medicare Beneficiaries
    The changes proposed in this proposed rule would not impact the 
findings reported for the effects of ETC Model on Medicare 
beneficiaries regarding the ETC Model's likelihood of incentivizing 
ESRD facilities and Managing Clinicians to improve access to home 
dialysis and transplantation for Medicare beneficiaries.
    As previously noted in the Specialty Care Models final rule (85 FR 
61357) and the CY 2022 ESRD PPS final rule (86 FR 62017), we continue 
to anticipate that the ETC Model will have a negligible impact on the 
cost to beneficiaries receiving dialysis. Under current policy, 
Medicare FFS beneficiaries are generally responsible for 20 percent of 
the allowed charge for services furnished by providers and suppliers. 
This policy will remain the same for most beneficiaries under the ETC 
Model. However, we will waive certain requirements of title XVIII of 
the Act as necessary to test the PPA and HDPA under the ETC Model and 
hold beneficiaries harmless from any effect of these payment 
adjustments on cost sharing.
    In addition, the Medicare beneficiary's quality of life has the 
potential to improve if the beneficiary elects to have home dialysis, 
or nocturnal in-center dialysis, as opposed to in-center dialysis. As 
discussed in the Specialty Care Models final rule, studies have found 
that home dialysis patients experienced improved quality of life as a 
result of their ability to continue regular work schedules or life 
plans; as well as better overall, physical, and psychological health in 
comparison to other dialysis options (85 FR 61264 through 61270).
(7) Alternatives Considered
    Throughout this proposed rule, we have identified our policies and 
alternatives that we have considered, and provided information as to 
the likely effects of these alternatives and rationale for each of our 
policies
    This proposed rule addresses a model specific to ESRD. It provides 
descriptions of the requirements that we would waive, identifies the 
performance metrics and payment adjustments proposed to be tested, and 
presents rationales for our proposals, and where relevant, alternatives 
considered. We carefully considered the alternatives to this proposed 
rule. For context related to alternatives previously considered when 
establishing and modifying the ETC Model we refer readers to the 
Specialty Care Models final rule (85 FR 61114) and the CY 2022 ESRD PPS 
final rule (86 FR 61874), respectively, for more information on policy-
related stakeholder comments, our responses to those comments, and 
statements of final policy preceding the limited modifications proposed 
here.

E. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 37 showing the classification of the impact associated with the 
provisions of this proposed rule.
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[[Page 38583]]

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BILLING CODE 4120-01-C

F. Regulatory Flexibility Act Analysis (RFA)

    The 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. 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. Therefore, the number 
of small entities estimated in this RFA analysis includes the number of 
ESRD facilities that are either considered small businesses or 
nonprofit organizations.
    According to the Small Business Administration's (SBA) size 
standards \377\, an ESRD facility is classified as a small business if 
it has total revenues of less than $41.5 million in any 1 year. For the 
purposes of this analysis, we exclude the ESRD facilities that are 
owned and operated by LDOs and regional chains, which would have total 
revenues of more than $9.3 billion in any year when the total revenues 
for all locations are combined for each business (LDO or regional 
chain), and are not, therefore, considered small businesses. Because we 
lack data on individual ESRD facilities' receipts, we cannot determine 
the number of small proprietary ESRD facilities or the proportion of 
ESRD facilities' revenue derived from Medicare payments. Therefore, we 
assume that all ESRD facilities that are not owned by LDOs or regional 
chains are considered small businesses. Accordingly, we consider the 
466 facilities that are independent and 376 facilities that are 
hospital-based, as shown in the ownership category in Table 25, to be 
small businesses. These facilities represent approximately 11 percent 
of all ESRD facilities in our data set.
---------------------------------------------------------------------------

    \377\ More information available at http://www.sba.gov/content/small-business-size-standards (Kidney Dialysis Centers are listed as 
North American Industry Classification System (NAICS) code 621492 
with a size standard of $41.5 million).
---------------------------------------------------------------------------

    Additionally, we identified in our analytic file that there are 817 
facilities that are considered nonprofit organizations, which is 
approximately 10 percent of all ESRD facilities in our data set. In 
total, accounting for the 376 nonprofit ESRD facilities that are also 
considered small businesses, there are 1,283 ESRD facilities that are 
either small businesses or nonprofit organizations, which is 
approximately 16 percent of all ESRD facilities in our data set.
    For the ESRD PPS updates proposed in this rule, a hospital-based 
ESRD facility (as defined by type of ownership, not by type of ESRD 
facility) is estimated to receive a 3.7 percent increase in payments 
for CY 2023. An independent facility (as defined by ownership type) is 
estimated to receive a 3.2 percent increase in payments for CY 2023. As 
shown in Table 25, we estimate that the overall revenue impact of this 
proposed rule on all ESRD facilities is a positive increase to Medicare 
payments by approximately 3.1 percent.
    For AKI dialysis, we are unable to estimate whether patients would 
go to ESRD facilities, however, we have estimated there is a potential 
for $80 million in payment for AKI dialysis treatments that could 
potentially be furnished in ESRD facilities.
    For the ESRD QIP, we estimate that of the 3,171 ESRD facilities 
expected to receive a payment reduction as a result

[[Page 38584]]

of their performance on the PY 2025 ESRD QIP, 460 are ESRD small entity 
facilities. We present these findings in Table 29 (``Estimated 
Distribution of PY 2025 ESRD QIP Payment Reductions'') and Table 31 
(``Estimated Impact of QIP Payment Reductions to ESRD Facilities for PY 
2025'').
    For the ETC Model, this proposed rule includes as ETC Participants 
Managing Clinicians and ESRD facilities required to participate in the 
Model, pursuant to Sec.  512.325(a). We assume for the purposes of the 
regulatory impact analysis that the great majority of Managing 
Clinicians are small entities by meeting the SBA definition of a small 
business. The greater majority of ESRD facilities are not small 
entities, as they are owned, partially or entirely, by entities that do 
not meet the SBA definition of small entities. Under the ETC Model, the 
HDPA is a positive adjustment on payments for specified home dialysis 
and home dialysis-related services. The PPA, which includes both 
positive and negative adjustments on payments for dialysis and 
dialysis-related services, excludes aggregation groups with fewer than 
132 attributed beneficiary-months during the relevant year. The 
aggregation methodology groups ESRD facilities owned in whole or in 
part by the same dialysis organization within a Selected Geographic 
Area and Managing Clinicians billing under the same Tax Identification 
Number (TIN) within a Selected Geographic Area. Taken together, the low 
volume threshold exclusions and aggregation policies, coupled with the 
fact that the ETC Model affects Medicare payment only for select 
services furnished to Medicare FFS beneficiaires; we have determined 
that the provisions of the proposed rule for the ETC Model would not 
have a significant impact on spending for a substantial number of small 
entities.
    The HDPA is a positive adjustment on payments for specified home 
dialysis and home dialysis-related services. The PPA, which includes 
both positive and negative adjustments on payments for dialysis and 
dialysis-related services, excludes aggregation groups with fewer than 
132 attributed beneficiary-months during the relevant year. The 
aggregation methodology groups ESRD facilities owned in whole or in 
part by the same dialysis organization within a Selected Geographic 
Area and Managing Clinicians billing under the same Tax Identification 
Number (TIN) within a Selected Geographic Area, which increases the 
statistical liability of the home dialysis rate and the transplant rate 
for ETC Participants in the aggregation group. Taken together, the low 
volume threshold exclusions and aggregation policies, coupled with the 
fact that the ETC Model affects Medicare payment only for select 
services furnished to Medicare FFS beneficiaires; we have determined 
that the provisions of the proposed rule would not have a significant 
impact on spending for a substantial number of small entities.
    The economic impact assessment is based on estimated Medicare 
payments (revenues) and HHS's practice in interpreting the RFA is to 
consider effects economically ``significant'' only if greater than 5 
percent of providers reach a threshold of 3 to 5 percent or more of 
total revenue or total costs. As a result, since the overall estimated 
impact of these proposed updates is a net increase of greater than 3 
percent in revenue across almost all categories of ESRD facility, the 
Secretary has determined that this proposed rule will have a 
significant positive revenue impact on a substantial number of ESRD 
facilities identified as small entities.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 603 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. We do not 
believe this proposed 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 121 rural hospital-based 
ESRD facilities, we do not know how many of them are based at hospitals 
with fewer than 100 beds. However, overall, the 121 rural hospital-
based ESRD facilities will experience an estimated 2.8 percent increase 
in payments. Therefore, the Secretary has certified that this proposed 
rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.

G. Unfunded Mandates Reform Act Analysis (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2022, that 
threshold is approximately $165 million. This proposed rule does not 
mandate any requirements for state, local, or tribal governments, in 
the aggregate, or by the private sector of more than $165 million in 
any 1 year. Moreover, HHS interprets UMRA as applying only to unfunded 
mandates. We do not interpret Medicare payment rules as being unfunded 
mandates, but simply as conditions for the receipt of payments from the 
federal government for providing services that meet federal standards. 
This interpretation applies whether the facilities or providers are 
private, state, local, or tribal.

H. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. We have reviewed this proposed 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.

VIII. Response to Comments

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

IX. Files Available to the Public via the Internet

    The Addenda for the annual ESRD PPS proposed and final rule will no 
longer appear in the Federal Register. Instead, the Addenda will be 
available only through the internet and will be posted on the CMS 
website under the regulation number, CMS-1768-P at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. In addition to the 
Addenda, limited data set files are available for purchase at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile. Readers who experience 
any problems accessing the Addenda or LDS files, should contact CMS by 
sending an email to CMS at the following mailbox: 
<a href="/cdn-cgi/l/email-protection#71342223352110081c141f0531121c025f1919025f161e07"><span class="__cf_email__" data-cfemail="a6e3f5f4e2f6c7dfcbc3c8d2e6c5cbd588ceced588c1c9d0">[email protected]</span></a>.

[[Page 38585]]

    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on June 13, 2022.

List of Subjects

42 CFR Part 413

    Diseases, Health facilities, Medicare, Puerto Rico, Reporting and 
recordkeeping requirements.

42 CFR Part 512

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

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

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

0
1. The authority citation for part 413 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), 
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.

0
2. Section 413.178 is amended by revising paragraphs (a)(8) and (d)(2) 
and adding paragraph (i) to read as follows:


Sec.  413.178   ESRD quality incentive program.

    (a) * * *
    (8) Minimum total performance score (mTPS) means, with respect to a 
payment year except payment year 2023, the total performance score that 
an ESRD facility would receive if, during the baseline period, it 
performed at the 50th percentile of national ESRD facility performance 
on all clinical measures and the median of national ESRD facility 
performance on all reporting measures.
* * * * *
    (d) * * *
    (2) For purposes of paragraph (d)(1) of this section, the baseline 
period that applies to each of payment year 2023 and payment year 2024 
is calendar year 2019 for purposes of calculating the achievement 
threshold, benchmark and minimum total performance score, and calendar 
year 2019 for purposes of calculating the improvement threshold. The 
baseline period that applies to payment year 2025 is calendar year 2021 
for purposes of calculating the achievement threshold, benchmark and 
minimum total performance score, and calendar year 2022 for purposes of 
calculating the improvement threshold, and the performance period that 
applies to payment year 2025 is calendar year 2023. Beginning with 
payment year 2026, the performance period and corresponding baseline 
periods are each advanced 1 year for each successive payment year.
* * * * *
    (i) Special Rules for Payment Year 2023. (1) CMS will calculate a 
measure rate for, but will not score facility performance on or include 
in the TPS for any facility under paragraph (e) of this section, the 
following measures: Standardized Hospitalization Ratio (SHR) clinical 
measure, Standardized Readmission Ratio (SRR) clinical measure, Long-
Term Catheter Rate clinical measure, ICH CAHPS clinical measure, 
Percentage of Prevalent Patients Waitlisted (PPPW) clinical measure, 
and Kt/V Dialysis Adequacy clinical measure.
    (2) The mTPS for payment year 2023 is the total performance score 
that an ESRD facility would receive if, during the calendar year 2019 
baseline period, it performed at the 50th percentile of national ESRD 
facility performance on Standardized Fistula Rate clinical measure, 
Hypercalcemia clinical measure, NHSN Blood Stream Infection (BSI) 
clinical measure, and the median of national ESRD facility performance 
on Clinical Depression Screening and Follow-Up reporting measure, 
Standardized Transfusion Ratio (STrR) reporting measure, 
Ultrafiltration Rate reporting measure, NHSN Dialysis Event reporting 
measure, and Medication Reconciliation (MedRec) reporting measure.
0
3. Section 413.231 is amended by adding paragraphs (c) and (d) to read 
as follows:


Sec.  413.231  Adjustment for wages.

* * * * *
    (c) Beginning January 1, 2023, CMS applies a cap on decreases to 
the wage index, such that the wage index applied to an ESRD facility is 
not less than 95 percent of the wage index applied to that ESRD 
facility in the prior calendar year.
    (d) Beginning January 1, 2023, CMS applies a floor of 0.6000 to the 
wage index, such that the wage index applied to an ESRD facility is not 
less than 0.6000.


Sec.  413.234   [Amended]

0
4. In Sec.  413.234, amend paragraph (a) by adding the word 
``functional'' before the word ``equivalent'' in the definition of 
``Oral-only drug''.

PART 512--RADIATION ONCOLOGY MODEL AND END STAGE RENAL DISEASE 
TREATMENT CHOICES MODEL

0
5. The authority citation for part 512 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1315a, and 1395hh.

0
6. Section 512.370 is amended by revising paragraph (b) introductory 
text and adding paragraph (b)(3) to read as follows:


Sec.  512.370   Benchmarking and scoring.

* * * * *
    (b) Achievement Scoring. CMS assesses ETC Participant performance 
at the aggregation group level on the home dialysis rate and transplant 
rate against achievement benchmarks constructed based on the home 
dialysis rate and transplant rate among aggregation groups of ESRD 
facilities and Managing Clinicians located in Comparison Geographic 
Areas during the Benchmark Year. Achievement benchmarks are calculated 
as described in paragraph (b)(1) of this section and, for MY3 through 
MY10, are stratified as described in paragraph (b)(2) of this section. 
For MY5 through MY10, the ETC Participant's achievement score is 
subject to the restriction described in paragraph (b)(3) of this 
section.
* * * * *
    (3) For MY5 through MY10, CMS will assign an achievement score to 
an ETC Participant for the home dialysis rate or the transplant rate 
only if the ETC Participant's aggregation group has a home dialysis 
rate or a transplant rate greater than zero for the MY.
* * * * *
0
7. Section 512.397 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  512.397   ETC Model Medicare program waivers and additional 
flexibilities.

* * * * *
    (b) * * *
    (1) CMS waives the requirement under section 1861(ggg)(2)(A)(i) of 
the Act and Sec.  410.48(a) of this chapter that only doctors, 
physician assistants, nurse practitioners, and clinical nurse 
specialists can furnish kidney disease patient education services to 
allow kidney disease patient education services to be provided by 
clinical staff (as defined at Sec.  512.310) under the direction of and 
incident to the services of the Managing Clinician who is an ETC 
Participant. The kidney disease patient education services may be

[[Page 38586]]

furnished only by qualified staff (as defined at Sec.  512.310). 
Beginning MY5, only clinical staff that are not leased from or 
otherwise provided by an ESRD facility or related entity may furnish 
kidney disease patient education services pursuant to the waiver 
described in this section.
* * * * *

    Dated: June 17, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-13449 Filed 6-21-22; 4:15 pm]
BILLING CODE 4120-01-P


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