Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, 40207-40315 [2014-15840]

Download as PDF Vol. 79 Friday, No. 133 July 11, 2014 Part II Department of Health and Human Services mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Centers for Medicare & Medicaid Services 42 CFR Parts 405, 411, 413, et al. Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies; Proposed Rule VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\11JYP2.SGM 11JYP2 40208 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405, 411, 413 and 414 [CMS–1614–P] RIN 0938–AS13 Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. AGENCY: This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal selfadjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. E.S.T. on September 2, 2014. ADDRESSES: In commenting, please refer to file code CMS–1614–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 SUMMARY: VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 You may submit comments in one of four ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to https://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–1614–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–1614–P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. 4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period: a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445– G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201. (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD— Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244– 1850. If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786–9994 in advance to schedule your arrival with one of our staff members. Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Stephanie Frilling, (410) 786–4507, for issues related to the ESRD PPS, the PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 ESRD PPS CY 2015 Base Rate and Payment for Frequent Hemodialysis. Michelle Cruse, (410) 786–7540, for issues related to the ESRD PPS and the Low Volume Payment Adjustment. Karen Reinhardt, (410) 786–0189, for issues related to the ESRD PPS and the Outlier Payment Policy. Wendy Tucker, (410) 786–3004, for issues related to the ESRD PPS and Wage Index. Heidi Oumarou, (410) 786–7342, for issues related to the ESRD PPS Market Basket Update. Anita Segar, (410) 786–4614, for issues related to the ESRD QIP. Christopher Molling (410) 786–6399 and Hafsa Vahora (410) 786–7899 for issues related to the methodology for making national price adjustments based upon information gathered from the DMEPOS CBP. Sandhya Gilkerson, (410) 786–4085, for issues related to the alternative payment methodologies under the CBP. Sandhya Gilkerson, (410) 786–4085 and Michelle Peterman, 410–786–2581 for issues related to the clarification of the statutory Medicare hearing aid coverage exclusion. Michelle Peterman, (410) 786–2591 for issues related to the definition of minimal self-adjustment at 414.402. Janae James (410) 786–0801 for issues related to CHOW and breach of contract appeals. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: https:// www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951. Electronic Access This Federal Register document is also available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Government Printing Office. This database can be accessed via the internet at https://www.gpo.gov/fdsys/. Addenda Are Only Available Through the Internet on the CMS Web site In the past, a majority of the Addenda referred to throughout the preamble of our proposed and final rules were available in the Federal Register. However, the Addenda of the annual proposed and final rules will no longer be available in the Federal Register. Instead, these Addenda to the annual proposed and final rules will be available only through the Internet on the CMS Web site. The Addenda to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) rules are available at: https://www.cms.gov/ ESRDPayment/PAY/list.asp. Readers who experience any problems accessing any of the Addenda to the proposed and final rules of the ESRD PPS that are posted on the CMS Web site identified above should contact Stephanie Frilling at 410–786–4507. Table of Contents mstockstill on DSK4VPTVN1PROD with PROPOSALS2 To assist readers in referencing sections contained in this preamble, we are providing a Table of Contents. Some of the issues discussed in this preamble affect the payment policies, but do not require changes to the regulations in the Code of Federal Regulations (CFR). I. Executive Summary A. Purpose 1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) 2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) 3. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) B. Summary of the Major Provisions 1. ESRD PPS 2. ESRD QIP 3. DMEPOS C. Summary of Costs and Benefits 1. Impacts of the Proposed ESRD PPS 2. Impacts for ESRD QIP 3. Impacts for DMEPOS II. Calendar Year (CY) 2015 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) B. Routine Updates and Proposed Policy Changes to the CY 2015 ESRD PPS 1. ESRD PPS Base Rate a. Changes to the Drug Utilization Adjustment i. The Drug Utilization Adjustment Finalized in CY 2014 ESRD PPS Final Rule ii. PAMA Changes to the Drug Utilization Adjustment b. Payment Rate Update for CY 2015 c. CY 2015 ESRD PPS Wage Index Budget Neutrality Adjustment d. Labor-Related Share VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 2. ESRD Bundled Market Basket and LaborRelated Share a. Background b. Rebasing and Revision the ESRD Bundled Market Basket i. Cost Category Weights ii. Proposed Price Proxies for the CY 2012 ESRDB Market Basket iii. Proposed Market Basket Estimate for the CY 2015 ESRDB PPS Update c. Proposed Productivity Adjustment d. Calculation of the Proposed ESRDB Market Basket Update, Adjusted for Multifactor Productivity for CY 2015 e. Labor-Related Share 3. The Proposed CY 2015 ESRD PPS Wage Indices a. Background b. Proposed Implementation of New Labor Market Delineations c. Transition Period 4. Proposed Revisions to the Outlier Policy a. Proposed Changes to the Outlier Services MAP Amounts and Fixed Dollar Loss Amounts b. Outlier Policy Percentage C. Restatement of Policy Regarding Reporting and Payment for More than Three Dialysis Treatments per Week – 1. Reporting More than Three Dialysis Treatments per Week on Claims 2. Medical Necessity for More Than Three Treatments per Week D. Delay of Payment for Oral-Only Drugs under the ESRD PPS E. ESRD Drug Categories Included in the ESRD PPS Base Rate F. Low-Volume Payment Adjustment (LVPA) 1 . Background 2. The United States Government Accountability Office Study on the LVPA a. The GAO’s Main Findings b. The GAO’s Recommendations 3. Clarification of the LVPA Policy a. Hospital-Based ESRD Facilities b. Cost Reporting Periods Used for Eligibility G. Continued Use of ICD–9–CM Codes and Corrections to the ICD–10–CM Codes Eligible for the Comorbidity Payment Adjustment III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) A. Background B. Considerations in Updating and Expanding Quality Measures under the ESRD QIP C. Web sites for Measure Specifications D. Updating the NHSN Bloodstream Infection in Hemodialysis Outpatients Clinical Measure for the PY 2016 ESRD QIP and Future Payment Years E. Oral-Only Drugs Measures in the ESRD QIP F. Proposed Requirements for the PY 2017 ESRD QIP 1. Proposed Revision to the Expanded ICH CAHPS Reporting Measure 2. Proposed Measures for the PY 2017 ESRD QIP a. PY 2016 Measures Continuing in PY 2017 and Future Payment Years b. Proposal to Determine when a Measure is ‘‘Topped-Out’’ in the ESRD QIP, and PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 40209 Proposal to Remove a Topped-Out Measure from the ESRD QIP, Beginning with PY 2017 c. New Measures Proposed for PY 2017 and Future Payment Years i. Proposed Standardized Readmission Ratio (SRR) Clinical Measure 3. Proposed Performance Period for the PY 2017 ESRD QIP 4. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the PY 2017 ESRD QIP a. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures in the PY 2017 ESRD QIP b. Estimated Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures Proposed for the PY 2017 ESRD QIP c. Proposed Performance Standards for the PY 2017 Reporting Measures 5. Proposal for Scoring the PY 2017 ESRD QIP Measures a. Scoring Facility Performance on Clinical Measures Based on Achievement b. Scoring Facility Performance on Clinical Measures Based on Improvement 6. Weighting the Total Performance Score 7. Proposed Minimum Data for Scoring Measures for the PY 2017 ESRD QIP and Proposal for Changing Attestation Process for Patient Minimums 8. Proposed Payment Reductions for the PY 2017 ESRD QIP 9. Proposal for Data Validation 10. Proposal to Monitor Access to Dialysis Facilities 11. Proposed Extraordinary Circumstances Exception G. Proposed Requirements for the PY 2018 ESRD QIP Beginning in PY 2018 1. Proposal to Modify the Mineral Metabolism Reporting Measure 2. Proposed New Measures for the PY 2018 ESRD QIP and Future Payment Years a. Proposed Standardized Transfusion Ratio (STrR) Clinical Measure b. Proposal to Adopt the Pediatric Peritoneal Dialysis Adequacy Clinical Measure and Add the Proposed Measure to the Dialysis Adequacy Measure Topic c. Proposed ICH CAHPS Clinical Measure d. Proposed Screening for Clinical Depression and Follow-Up Reporting Measure e. Proposed Pain Assessment and FollowUp Reporting Measure f. Proposed NHSN Healthcare Personnel Influenza Vaccination Reporting Measure 2. Proposed Performance Period for the PY 2018 ESRD QIP 3. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the PY 2018 ESRD QIP a. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures in the PY 2018 ESRD QIP b. Estimated Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures Proposed for the PY 2018 ESRD QIP c. Proposed Performance Standards for the PY 2018 Reporting Measures E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40210 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 4. Proposal for Scoring the PY 2018 ESRD QIP Measures a. Scoring Facility Performance on Clinical Measures Based on Achievement b. Scoring Facility Performance on Clinical Measures Based on Improvement c. Proposal for Scoring the ICH CAHPS Clinical Measure d. Proposals for Calculating Facility Performance on Reporting Measures 5. Proposed Minimum Data for Scoring Measures for the PY 2018 ESRD QIP 6. Proposal for Calculating the Clinical Measure Domain Score 7. Proposal for Calculating the Reporting Measure Domain Score, the Reporting Measure Adjuster, and the TPS for the PY 2018 ESRD QIP 8. Example of the Proposed PY 2018 ESRD QIP Scoring Methodology H. Future Considerations for Stratifying ESRD QIP Measures for Dual-Eligible Beneficiaries IV. Technical Corrections for 42 Part 405 V. Methodology for Adjusting DMEPOS Payment Amounts using Information from Competitive Bidding Programs A. Background 1. Payment Basis for Certain DMEPOS 2. Fee Schedule Payment Methodologies 3. Regional Fee Schedule Payment Methodology for P&O 4. DMEPOS Competitive Bidding Programs Payment Rules 5. Adjusting Payment Amounts using Information from the DMEPOS Competitive Bidding Program 6. Diversity of Costs 7. Advanced Notice of Proposed Rulemaking B. Proposed Provisions 1. Proposed Regional Adjustments Limited by National Parameters a. Regional Payment Adjustments 1. P&O Regional Fee Weights—CMS Region 1 (Boston) (Weighted by Total Paid Claims for Dates of Service from July 1, 1991, thru June 30, 1992) b. National Parameters c. Rural and Frontier State Adjustments d. Areas Outside the Contiguous United States 2. Methodology for Items and Services Included in Limited Number of Competitive Bidding Programs 3. Adjusted Payment Amounts for Accessories used with Different Types of Base Equipment 4. Adjustments to Single Payment Amounts that Result from Unbalanced Bidding 5. National Mail Order Program—Northern Mariana Islands 6. Updating Adjusted Payment Amounts 7. Summary of Proposed Methodologies VI. Proposed Payment Methodologies and Payment Rules for Durable Medical Equipment and Enteral Nutrition Furnished under the Competitive Bidding Program A. Background B. Proposed Provisions 1. Payment on a continuous rental basis for select items a. Enteral nutrition b. Oxygen and oxygen equipment VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 c. Standard manual wheelchairs d. Standard power wheelchairs e. CPAP and respiratory assist devices f. Hospital beds g. Transition rules h. Beneficiary-owned equipment 2. Responsibility for repair of beneficiaryowned power wheelchairs furnished under CBPs 3. Phasing in the proposed payment rules in CBAs 4. Submitting bids for items paid on a continuous rental basis VII. Scope of Hearing Aid Coverage Exclusion A. Background B. Current Issues C. Proposed Provisions VIII. Definition of Minimal Self-Adjustment of Orthotics Under Competitive Bidding A. Background B. Current Issues C. Proposed Provisions IX. Revision to Change of Ownership Rules to Allow Contract Suppliers to Sell Specific Lines of Business A. Background B. Proposed Provisions X. Proposed Changes to the Appeals Process for Termination of Competitive Bidding Contract XI. Technical Change Related to Submitting Bids for Infusion Drugs under the DMEPOS Competitive Bidding Program XII. Accelerating Health Information Exchange XIII. Collection of Information Requirements XIV. Response to Comments XV. Economic Analyses A. Regulatory Impact Analysis 1. Introduction 2. Statement of Need 3. Overall Impact B. Detailed Economic Analysis 1. CY 2015 End-Stage Renal Disease Prospective Payment System a. Effects on ESRD Facilities b. Effects on Other Providers c. Effects on the Medicare Program d. Effects on Medicare Beneficiaries e. Alternatives Considered 2. End-Stage Renal Disease Quality Incentive Program 3. DMEPOS Provisions C. Accounting Statement XVI. Regulatory Flexibility Act Analysis XVII. Unfunded Mandates Reform Act Analysis XVIII. Federalism Analysis XIX. Congressional Review Act XX. Files Available to the Public via the Internet Regulations Text Acronyms Because of the many terms to which we refer by acronym in this final rule, we are listing the acronyms used and their corresponding meanings in alphabetical order below: AHRQ—Agency for Healthcare Research and Quality ANOVA—Analysis of Variance ANPRM—Advanced Notice of Proposed Rulemaking PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 ARM—Adjusted Ranking Metric ASP—Average Sales Price ATRA—The American Taxpayer Relief Act of 2012 BEA—Bureau of Economic Analysis BLS—Bureau of Labor Statistics BMI—Body Mass Index CBA—Competitive Bidding Area CBP—Competitive Bidding Program CBSA—Core based statistical area CCN—CMS Certification Number CDC—Centers for Disease Control and Prevention CfC—Conditions for Coverage CHOW—Change of Ownership CKD—Chronic Kidney Disease CPAP—Continuous positive airway pressure CY—Calendar Year DFC—Dialysis Facility Compare DME—Durable Medical Equipment DMEPOS—Durable Medical Equipment, Prosthetics, Orthotics, and Supplies ESA—Erythropoiesis stimulating agent ESRD—End-Stage Renal Disease ESRDB End-Stage Renal Disease bundled ESRD PPS— End-Stage Renal Disease Prospective Payment System FDA—Food and Drug Administration GEM—General Equivalence Mappings HCP—Healthcare Personnel HD—Hemodialysis HAIs—Healthcare-Acquired Infections HCPCS—Healthcare Common Procedure Coding System HCFA—Health Care Financing Administration HLM—Hierarchical Logistic Modeling HHS—Department of Health and Human Services ICD—International Classification of Diseases ICD–9–CM—International Classification of Disease, 9th Revision, Clinical Modification ICD–10–CM—International Classification of Disease, 10th Revision, Clinical Modification ICH CAHPS—In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems IGI—IHS Global Insight IIC—Inflation-indexed charge IOLs—Intraocular Lenses IPPS—Inpatient Prospective Payment System ICH CAHPS—In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Services IUR—Inter-unit reliability MAC—Medicare Administrative Contractor MAP—Medicare Allowable Payment MFP—Multifactor Productivity MIPPA—Medicare Improvements for Patients and Providers Act of 2008 MLR—Minimum Lifetime Requirement MSA—Metropolitan statistical areas NAMES—National Association of Medical Equipment Suppliers NHSN—National Health Safety Network NQF—National Quality Forum NQS—National Quality Strategy OBRA—Omnibus Budget Reconciliation Act OMB—Office of Management and Budget P&O—Prosthetics and orthotics PAMA—Protecting Access to Medicare Act of 2014 PC—Product category PD—Peritoneal Dialysis E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules PEN—Parenteral and enteral nutrition PFS—Physician Fee Schedule QIP—Quality Incentive Program RMA—Reporting Measure Adjuster RSPA—Regional single payment amounts RUL—Reasonable useful lifetime SAF—Standard Analysis File SHR—Standardized Hospitalization Ratio Admissions SMR—Standardized Mortality Ratio SPA—Single payment amount STrR—Standardized Transfusion Ratio TENS—Transcutaneous electrical nerve stimulation TEP—Technical Expert Panel TPS—Total Performance Score VBP—Value Based Purchasing I. Executive Summary A. Purpose mstockstill on DSK4VPTVN1PROD with PROPOSALS2 1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) On January 1, 2011, we implemented the ESRD PPS, a case-mix adjusted bundled prospective payment system for renal dialysis services furnished by ESRD facilities. This rule proposes to update and make revisions to the EndStage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. Section 1881(b)(14) of the Social Security Act (the Act), as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110–275), and section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act (Pub. L. 111– 148), established that beginning CY 2012, and each subsequent year, the Secretary shall annually increase payment amounts by an ESRD market basket increase factor, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 632 of the American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112– 240) included several provisions that apply to the ESRD PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act, which required the Secretary, by comparing per patient utilization data from 2007 with such data from 2011, to reduce the single payment amount to reflect the Secretary’s utilization of ESRD-related drugs and biologicals. We finalized the amount of the drug utilization adjustment pursuant to this section in the CY 2014 ESRD PPS final rule with a 3- to 4-year transition (78 FR 72161 through 72170). Section 632(b) of ATRA prohibited the Secretary from paying for oral-only ESRD-related drugs and biologicals under the ESRD PPS before January 1, 2016. And finally, section 632(c) of ATRA requires the Secretary, by no later than January 1, 2016, to analyze the case mix payment VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 adjustments under section 1881(b)(14)(D)(i) of the Act and make appropriate revisions to those adjustments. On April 1, 2014, the Congress enacted the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113–93). PAMA section 217 includes several provisions that apply to the ESRD PPS. Specifically, sections 217(b)(1) and (2) of PAMA amend sections 1881(b)(14)(F) and (I) of the Act. We interpret the amendments to sections 1881(b)(14)(F) and (I) as replacing the drug utilization adjustment that was finalized in the CY 2014 ESRD PPS final rule with specific provisions that dictate what the market basket update will be for CY 2015 (0.0 percent) and how it will be reduced in CYs 2016 through 2018. Section 217(a)(1) of PAMA amends section 632(b)(1) of ATRA, which now provides that the Secretary may not pay for oralonly drugs and biologicals used for the treatment of ESRD under the ESRD PPS prior to January 1, 2024. Section 217(a)(2) further amends section 632(b)(1) of ATRA by adding a sentence that provides: ‘‘Notwithstanding section 1881(b)(14)(A)(ii) of the Social Security Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), implementation of the policy described in the previous sentence shall be based on data from the most recent year available.’’ Finally, PAMA section 217(c) provides that, as part of the CY 2016 ESRD PPS rulemaking, the Sectary shall establish a process for (1) determining when a product is no longer an oral-only drug; and (2) including new injectable and intravenous products into the ESRD PPS bundled payment. As discussed further below, section 212 of PAMA provides that the Secretary may not adopt ICD–10 prior to October 1, 2015. HHS has announced that it intends to issue an interim final rule that will require use of ICD–10 beginning October 1, 2015 and will require the continued use of ICD–9–CM through September 30, 2015. Therefore, the ESRD PPS will continue to use ICD–9 through September 30, 2015 and will require use of ICD–10 beginning October 1, 2015 for purposes of the comorbidity payment adjustment. 2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) This rule also proposes to set forth requirements for the ESRD Quality Incentive Program (QIP), including for payment years (PYs) 2017 and 2018. The program is authorized under section 1881(h) of the Social Security Act (the Act). The ESRD QIP is the most recent step in fostering improved PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 40211 patient outcomes by establishing incentives for dialysis facilities to meet or exceed performance standards established by CMS. 3. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) This proposed rule proposes a methodology for making national price adjustments to payments for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) paid under fee schedules based upon information gathered from the DMEPOS competitive bidding programs (CBPs) and proposes to phase in special payment rules in a limited number of competitive bidding areas (CBAs) under the CBP for certain, specified DME and enteral nutrition. This rule proposes to clarify the statutory Medicare hearing aid coverage exclusion under section 1862(a)(7) of the Act and the regulation at 42 CFR 411.15(d) to further specify the scope of this exclusion and to note certain devices excepted from the hearing aid exclusion. In addition, this rule proposes to update the definition of minimal self-adjustment at § 414.402 to note the specialized training that is needed by suppliers to provide custom fitting services if they are not certified orthotists. Finally, this rule proposes a revision to the Change of Ownership (CHOW) policy in the current regulations to allow a product category to be severed from a competitive bidding contract and transferred to a new contract when a contract supplier sells a distinct line of business to a qualified successor entity. B. Summary of the Major Provisions 1. ESRD PPS • Update to the ESRD PPS base rate for CY 2015: For CY 2015, we are proposing an ESRD PPS base rate of $239.33. This amount reflects a 0.0 percent update to the payment rate as required by section 1881(b)(14)(F)(i) of the Act, as amended by section 217(b)(2) of PAMA, and the application of the proposed wage index budget-neutrality adjustment factor of 1.001306 to the CY 2014 ESRD PPS base rate of $239.02. • Rebasing and revision of the ESRD bundled (ESRDB) market basket: For CY 2015, we are proposing to rebase and revise the ESRDB market basket so the cost weights and price proxies would reflect the mix of goods and services that underlie ESRD bundled operating and capital costs for CY 2012. We note that if PAMA had not been enacted the proposed 2012-based ESRDB market basket update less productivity for CY E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40212 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 2015 would have been 1.6 percent, or (2.0 percent less 0.4 percentage point). • Update to the labor-related share: Because the cost distributions would change significantly as a result of the proposed ESRDB market basket revision, the proposed labor-related share would be 50.673 percent compared to the current labor-related share of 41.737 percent. The change to the labor-related share would have a significant impact on payments for certain ESRD facilities, specifically those ESRD facilities that have low wage index values. Therefore, for CY 2015 we are proposing a 2-year transition, in which the CY 2015 payment would be based on a 50/50 blended labor-related share that would apply to all ESRD facilities. ESRD facilities would receive 50 percent of their current labor-related share and 50 percent of their revised labor-related share. Specifically, we would apply a labor-related share of 46.205 ((41.737+50.673)/2 = 46.205). For CY 2016, the labor-related share would be based on 100 percent of the revised labor-related share. • Update to the wage index and wage index floor: We adjust wage indices on an annual basis using the most current hospital wage data to account for differing wage levels in areas in which ESRD facilities are located. In CY 2015, we are not proposing any changes to the application of the wage index budgetneutrality adjustment factor and will continue to apply the budget-neutrality adjustment to the base rate for the ESRD PPS. We will continue our policy for the gradual phase-out of the wage index floor and reduce the wage index floor values to 0.40, as finalized in the CY 2014 ESRD PPS final rule (78 FR 72173– 72174). • Update to the Core-Based Statistical Areas (CBSA): For CY 2015, we are proposing to implement the new CBSA delineations as described in the February 28, 2013 OMB Bulletin No. 13–01, beginning with the CY 2015 ESRD PPS wage index. In addition, we are proposing to implement a 2-year transition, under which a 50/50 blended wage index would apply to all ESRD facilities for CY 2015. Specifically, facilities would receive 50 percent of their CY 2015 wage index based on the CBSA delineations for CY 2014 and 50 percent of their CY 2015 wage index based on the proposed new CBSA delineations. In CY 2016, facilities’ wage index values would be based 100 percent on the new CBSA delineations. • Update to the outlier policy: We are updating the outlier services fixed dollar loss amounts for adult and pediatric patients and Medicare Allowable Payments (MAPs) for adult VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 patients for CY 2015 using 2013 claims data. Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries would increase from $54.01 to $56.30 and the MAP amount would increase from $37.29 to $40.05, as compared to CY 2014 values. For adult beneficiaries, the fixed-dollar loss amount would decrease from $98.67 to $85.24 and the MAP amount would increase from $51.97 to $52.61. The 1 percent target for outlier payments was not achieved in CY 2013. We believe using CY 2013 claims data to update the outlier MAP and fixed dollar loss amounts for CY 2015 will increase payments for ESRD beneficiaries requiring higher resource utilization in accordance with a 1 percent outlier percentage. • Clarification for the low-volume payment adjustment (LVPA): We are clarifying two policies regarding MAC verification and proposing conforming changes to the LVPA regulation. The first clarification explains that MACs can consider supporting data from hospital-based ESRD facilities to verify the facility’s total treatment count. The second clarification explains that MACs can add or prorate treatment counts from non-standard cost reporting periods (those that are not 12-month periods) where there is a change in ownership that does not result in a new Provider Transaction Access Number. • Continued use of ICD–9–CM codes and corrections to the ICD–10–CM codes eligible for the comorbidity payment adjustment: Section 212 of PAMA provides that the Secretary may not adopt ICD–10 prior to October 1, 2015. HHS has announced that it intends to issue an interim final rule that will require use of ICD–10 beginning October 1, 2015 and will require the continued use of ICD–9–CM through September 30, 2015. Therefore, the ESRD PPS will continue to use ICD–9 through September 30, 2015 and will require use of ICD–10 beginning October 1, 2015 for purposes of the comorbidity payment adjustment. For CY 2015, we are correcting several typographical errors and omissions in the Tables that appeared in the CY 2014 ESRD PPS final rule. 2. ESRD QIP This rule proposes to implement requirements for the ESRD QIP, including measure sets for PYs 2017 and 2018. • PY 2017 Measure Set: For PY 2017, we are proposing to remove one measure from the ESRD QIP, the Hemoglobin Greater than 12 g/dL clinical measure, on the grounds that it is ‘‘topped out’’. We are also proposing PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 to adopt the Standardized Readmission Ratio (SRR) clinical measure, which evaluates care coordination. • PY 2018 Measure Set: For PY 2018, we are proposing to adopt two new clinical measures—the Standardized Transfusion Ratio (STrR) and Pediatric Peritoneal Dialysis Adequacy—and three new reporting measures: (1) Pain Assessment and Follow-Up; (2) Clinical Depression Screening and Follow-Up; and (3) National Healthcare Safety Network (NHSN) Healthcare Personnel Influenza Vaccination. We are also proposing to transition the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) survey reporting measure to a clinical measure. • Revision to the ICH CAHPS Reporting Measure: Beginning with the PY 2017 program year, we are proposing to revise the ICH CAHPS reporting measure to determine facility eligibility for the measure based on the number of survey-eligible patients treated during the ‘‘eligibility period’’, which we propose to define as the Calendar Year (CY) that immediately precedes the performance period. Survey-eligible patients are defined in the ICH CAHPS measure specifications available at https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_ TechnicalSpecifications.html and https://ichcahps.org. • Revision to the NHSN Bloodstream Infection in Hemodialysis Outpatients Clinical Measure: Beginning with the PY 2016 program year, we are proposing to revise the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure to calculate facility performance using the Adjusted Ranking Metric (ARM). • Revision to the Mineral Metabolism Reporting Measure: Beginning with the PY 2018 program year, we are proposing to revise the Mineral Metabolism reporting measure to allow facilities to submit both serum phosphorus and plasma phosphorus measurements. • Extraordinary Circumstances Exemption: Beginning with the PY 2017 ESRD QIP, we are proposing to exempt dialysis facilities from all requirements of the ESRD QIP clinical and reporting measures during the months in which they are forced to close due to a natural disaster or other extraordinary circumstances. • New Scoring Methodology for PY 2018: For PY 2018, we are proposing to use a new scoring methodology for the ESRD QIP. This proposed scoring methodology would assign facility Total Performance Scores (TPS) on the basis of two domains, the Clinical Measure E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Domain and the Reporting Measure Domain. Facility scores on clinical measures in the Clinical Measure Domain would be divided into subdomains that align with National Quality Strategy (NQS) domains and weighted according to the number of measures in a subdomain, facility experience with the measure, and the measure’s alignment with CMS priorities for quality improvement. These weighted scores would be summed to produce a facility’s Clinical Measure Domain score. Facility scores on reporting measures in the Reporting Measure Domain would be summed and calculated to produce a facility’s Reporting Measure Adjuster, which would be subtracted from the facility’s Clinical Measure Domain score to produce a facility’s TPS. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 3. DMEPOS • The methodology for making national price adjustments based upon information gathered from the DMEPOS CBPs: As required by the MIPPA, this rule proposes methodologies for using information from the DMEPOS CBP to adjust the fee schedule amounts for DME in areas where CBPs are not implemented. The rule proposes to use the same methodologies to adjust the fee schedule amounts for enteral nutrition and off-the shelf (OTS) orthotics in areas where CBPs are not implemented. • Phase in of special payment rules in a limited number of CBAs under the CBP for certain, specified DME and enteral nutrition. This rule proposes to phase-in special payment rules for certain DME and enteral nutrition under the DMEPOS CBP in a limited number of CBAs. • Medicare hearing aid coverage exclusion under section 1862(a)(7) of the Act: This rule proposes to modify the regulation at § 411.15 to address the scope of the statutory hearing aid exclusion and note the types of devices that are not subject to the hearing aid exclusion. • Definition of minimal selfadjustment at § 414.402: This rule proposes to update the regulation to indicate what specialized training is needed to provide custom fitting services if suppliers are not certified orthotists. • Change of Ownership Rules to Allow Contract Suppliers to Sell Specific Lines of Business: This proposed rule proposes to establish an exception under the CHOW rules to allow CMS to sever a product category from a contract, incorporate the product category into a new contract, and transfer the new contract to a qualified VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 new owner under certain specific circumstances. • Termination of a Competitive Bidding Contract: This rule proposes to clarify the effective date for terminations of competitive bidding contracts, which impacts the deadline for which contract suppliers must notify its beneficiaries of the termination. C. Summary of Costs and Benefits In section XII.B 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 chart in section XII.B.1.a of this proposed rule displays the estimated change in payments to ESRD facilities in CY 2015 compared to estimated payments in CY 2014. The overall impact of the CY 2015 changes is projected to be a 0.3 percent increase in payments. Hospital-based ESRD facilities have an estimated 0.5 percent increase in payments compared with freestanding facilities with an estimated 0.3 percent increase. We estimate that the aggregate ESRD PPS expenditures would increase by approximately $30 million from CY 2014 to CY 2015. This reflects a $0 million change from the payment rate update and a $30 million increase due to the updates to the outlier threshold amounts. As a result of the projected 0.3 percent overall payment increase, we estimate that there will be an increase in beneficiary co-insurance payments of 0.3 percent in CY 2015, which translates to approximately $10 million. 2. Impacts for ESRD QIP The overall economic impact of the ESRD QIP is an estimated $11.9 million in PY 2017 and $7.2 million in PY 2018. In PY 2017, we expect the total payment reductions to be approximately $11.9 million, and the costs associated with the collection of information requirements for the validation of NHSN data feasibility study to be approximately $27 thousand for all ESRD facilities. In PY 2018, we expect the total payment reductions to be approximately $7 million, and the costs associated with the collection of information requirements for the NHSN Healthcare Personnel Influenza Vaccination reporting measure to be approximately $248 thousand for all ESRD facilities. The ESRD QIP will continue to incentivize facilities to provide highquality care to beneficiaries. PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 40213 3. Impacts for DMEPOS a. Proposed methodology for making national price adjustments to DMEPOS fee schedule amounts based upon information gathered from the DMEPOS competitive bidding programs The proposed regulation proposes to adjust Medicare fee schedule amounts for items subject to DMEPOS CBPs beginning January 1, 2016, using information from the DMEPOS CBPs to be applied to items in non-competitive bidding areas. It is estimated that these adjustments would save over $7 billion for the 5-year period beginning January 1, 2016, and ending December 30, 2020. The estimated savings are primarily derived from price reductions for items. It is expected that most of the economic impact would result from reduced payment amounts. The ability of suppliers to furnish items is not expected to be impacted. b. Proposed phase in of special payment rules under the competitive bidding program for certain DME and enteral nutrition We believe that the proposed special payment rules for certain DME and enteral nutrition under the DMEPOS CBPs would not have a significant impact on beneficiaries and suppliers. Contract suppliers are responsible for furnishing items and services needed by the beneficiary, and the cost to suppliers for furnishing these items and services does not change based on whether or not the equipment and related items and services are paid for separately under a capped rental payment method. Because the supplier’s bids would reflect the cost of furnishing items in accordance with the new payment rules, we expect the overall savings to generally be the same as they are under the current payment rules. Furthermore, the proposed special payment rules would be phased under a limited number of areas first to evaluate their impact on the program, beneficiaries, and suppliers, including costs, quality, and access. Expanded use of the special payment rules in other areas or for other items would be addressed in future rulemaking. c. Proposed clarification of the statutory Medicare hearing aid coverage exclusion stipulated at section 1862(a)(7) of the Act This proposed rule proposes to clarify the scope of the Medicare coverage exclusion for hearing aids and withdraw coverage of bone anchored hearing aids. This proposal would not have a significant fiscal impact on the Medicare program, because the E:\FR\FM\11JYP2.SGM 11JYP2 40214 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Medicare program expenditures for bone anchored hearing aids during the period CY2005 through CY 2013 are less than $9,000,000. This proposed rule, if finalized, would provide further guidance about coverage of DME with regard to the statutory hearing aid exclusion. The proposed rule, if finalized, would leave unchanged coverage of cochlear implants and brain stem implants, which are not considered hearing aids. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 d. Proposed update of the definition of minimal self-adjustment at 42 CFR 414.402 The proposed rule proposes to update the definition of minimal selfadjustment to make clear that minimal self-adjustment means an adjustment that the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification) or a physician as defined in section 1861(r) of the Act, a treating practitioner means a physician assistant, nurse practitioner, or clinical nurse specialist as defined in section 1861(aa)(5) of the Act, an occupational therapist as defined in 42 CFR 484.4, or physical therapist as defined in 42 CFR 484.4 in compliance with all applicable Federal and State licensure and regulatory requirements. If finalized, this revised definition would impact suppliers furnishing custom fitted orthotics that do not have this expertise. These suppliers would be required to hire an individual with expertise. For example, according to the Bureau of Labor Statistics Occupational Employment Statistics May 2013 the median pay for a certified orthotist is $30.27 an hour. The impact will vary according to the caseload of custom fitted orthotics provided by an individual supplier. e. Change of Ownership Rules to Allow Contract Suppliers to Sell Specific Lines of Business This rule proposes to clarify the CHOW rules in order to limit disruption to the normal course of business for DME suppliers. This rule proposes to establish an exception under the current CHOW rules to allow CMS to sever a product category from a contract, incorporate the product category into a new contract, and transfer the new contract to a qualified new owner under certain specific circumstances. This proposed clarification would impact businesses in a positive way by allowing VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 them to conduct everyday transactions with less disruption from our rules and regulations. II. Calendar Year (CY) 2015 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) On August 12, 2010, we published in the Federal Register a final rule (75 FR 49030 through 49214) in which we implemented a case-mix adjusted bundled PPS for Medicare outpatient ESRD dialysis services beginning January 1, 2011, in accordance with section 1881(b)(14) of the Act, as added by section 153(b) of MIPPA. On November 10, 2011, we published in the Federal Register a final rule (76 FR 70228 through 70316) in which we made a number of routine updates for CY 2012, implemented the second year of the transition to the ESRD PPS, made several policy changes and clarifications, and made technical changes. On November 9, 2012, we published in the Federal Register a final rule (77 FR 67450 through 67531) in which we made a number of routine updates for CY 2013, implemented the third year of the transition to the ESRD PPS, and made several policy changes and reiterations. On December 2, 2013, we published in the Federal Register a final rule (78 FR 72156 through 72253) titled, Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies’’ (hereinafter referred to as the CY 2014 ESRD PPS final rule). In that final rule, for the ESRD PPS, we made a number of routine updates for CY 2014, implemented the fourth and final year of the transition, implemented sections 632(a) and (b)(1) of ATRA, and made policy changes and clarifications. Specifically, in that rule, we finalized the following: • Update to the ESRD PPS base rate for CY 2015. An ESRD PPS base rate of $239.02 per treatment for renal dialysis services. This amount reflected the CY 2014 ESRD bundled (ESRDB) market basket update of 3.2 percent minus a multifactor productivity adjustment of 0.4 percent, that is, a 2.8 percent increase. This amount also reflected the application of the wage index budgetneutrality adjustment of 1.000454, the home dialysis training add-on budget neutrality adjustment factor of 0.999912, and the portion of the drug utilization PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 adjustment that was transitioned for CY 2014, or $8.16. • Update to the wage index floor. A 0.05 reduction to the CY 2014 and CY 2015 wage index floor values, which resulted in a wage index floor value of 0.45 for CY 2014 and a wage index floor value of 0.40 for CY 2015 under the ESRD PPS. • Update to the outlier policy. Using CY 2012 claims data to update the outlier Medicare Allowable Payments (MAPs) and fixed dollar loss amounts for CY 2014, which resulted in updated fixed dollar loss amounts for adult and pediatric patients and MAPs for adult patients. Specifically, for pediatric beneficiaries, we finalized a fixed-dollar loss amount of $54.01 and a MAP amount of $40.49. For adult beneficiaries, we finalized a fixed-dollar loss amount of $98.67 and a MAP amount of $50.25. • The application of ICD–10–CM diagnosis codes to the comorbidity payment adjustment. We discussed and provided a crosswalk from ICD–9–CM to ICD–10–CM for codes that are subject to the comorbidity payment adjustment. We finalized a policy under which all ICD–10–CM codes to which ICD–9–CM codes that are eligible for the comorbidity payment adjustment crosswalk are eligible for the comorbidity payment adjustment beginning on October 1, 2014 with two exceptions. As discussed further below, however, section 212 of the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113–93) provides that the Secretary may not adopt ICD–10 prior to October 1, 2015. HHS has announced that it intends to issue an interim final rule that will require use of ICD–10 beginning October 1, 2015 and will continue to require use of ICD–9–CM through September 30, 2015. Accordingly, we plan to continue to require facilities to utilize ICD–9–CM codes to identify comorbidities eligible for the comorbidity payment adjustment through September 30, 2015, and then to use ICD–10–CM codes beginning October 1, 2015. • The self-dialysis and home dialysis training add-on adjustment. An increase to the self-dialysis and home dialysis training add-on adjustment from $33.44 to $50.16. • The delay in payment for oral-only ESRD-related drugs and biologicals until January 1, 2016. We also delayed payment for oral-only ESRD-related drugs under the ESRD PPS until January 1, 2016. As discussed further below, section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA to provide that the Secretary may not include oralonly ESRD-related drugs for payment E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules under the ESRD PPS prior to January 1, 2024. B. Routine Updates and Proposed Policy Changes to the CY 2015 ESRD PPS 1. ESRD PPS Base Rate In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we discussed the development of the ESRD PPS per treatment base rate that is codified in the Medicare regulations at § 413.220 and § 413.230. The CY 2011 ESRD PPS final rule also provides a detailed discussion of the methodology used to calculate the ESRD PPS base rate and the computation of factors used to adjust the ESRD PPS base rate for projected outlier payments and budgetneutrality in accordance with sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, respectively. Specifically, the ESRD PPS base rate was developed from CY 2007 claims (that is, the lowest per patient utilization year as required by section 1881(b)(14)(A)(ii) of the Act), updated to CY 2011, and represented the average per treatment Medicare Allowable Payment (MAP) for composite rate and separately billable services. In accordance with section 1881(b)(14)(D) of the Act and regulations at § 413.230, the ESRD PPS base rate is adjusted for the patientspecific case-mix adjustments, applicable facility adjustments, geographic differences in area wage levels using an area wage index, as well as applicable outlier payments or training payments. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 a. Changes to the Drug Utilization Adjustment i. The Drug Utilization Adjustment Finalized in the CY 2014 ESRD PPS Final Rule Section 1881(b)(14)(I) of the Act, as added by section 632(a) of the American Taxpayer Relief Act of 2012 (ATRA), required that, for services furnished on or after January 1, 2014, the Secretary shall make reductions to the single payment for renal dialysis services to reflect the Secretary’s estimate of the change in the utilization of ESRDrelated drugs and biologicals (excluding oral-only ESRD-related drugs) by comparing per patient utilization data from 2007 with such data from 2012. Section 1881(b)(14)(I) further required that in making the reductions, the Secretary take into account the most recently available data on Average Sales Prices (ASP) and changes in prices for drugs and biologicals reflected in the ESRD market basket percentage increase factor under section 1881(b)(14)(F). Consistent with these requirements, in CY 2014, we finalized a payment VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 adjustment to the CY 2014 ESRD PPS base rate that reflected the change in utilization of ESRD-related drugs and biologicals from CY 2007 to CY 2012. Specifically, we finalized the drug utilization adjustment amount of $29.93 per treatment, and finalized a policy to implement this amount over a 3- to 4year transition period. For CYs 2014 and 2015, we stated that we would implement the transition by offsetting the payment update by a portion of the reduction amount necessary to create an overall impact of a zero percent for facilities from the previous year’s payments. For example, in CY 2014 we finalized a per treatment drug utilization adjustment amount for the first transition year of $8.16 or 3.3 percent, which represented the CY 2014 ESRDB market basket update minus productivity and other impacts to create an overall impact of zero percent. For a complete discussion of the methodology for computing the drug adjustment please see the CY 2014 ESRD PPS final rule (78 FR 72161 through 72170). ii. PAMA Changes to the Drug Utilization Adjustment On April 1, 2014, Congress enacted PAMA. Section 217(b), titled Mitigation of the Application of Adjustment to ESRD Bundled Payment Rate to Account for Changes in the Utilization of Certain Drugs and Biologicals, amends section 1881(b)(14)(I) of the Act by inserting ‘‘and before January 1, 2015’’ after January 1, 2014. This amendment effectively eliminates the remaining years of the drug utilization adjustment transition. In its place, the PAMA amendments to section 1881(b)(14)(F)(i) dictate what the market basket increase factor will be for 2015 and how it will be reduced in 2016 through 2018. In particular, PAMA section 217(b)(2)(C) amended section 1881(b)(14)(F)(i) by adding subclause (III), which provides that ‘‘[n]otwithstanding subclauses (I) and (II), in order to accomplish the purposes of subparagraph (I) with respect to 2015, the increase factor described in subclause (I) for 2015 shall be 0.0 percent.’’ We interpret subclause (III) to mean that the market basket increase factor less the productivity adjustment for 2015 is 0.0 percent. The PAMA amendments also provide for a payment reduction in lieu of the drug utilization adjustment in 2016 through 2018. In particular, PAMA section 217(b)(2)(ii) further amends section 1881(b)(14)(i)(I) by adding at the end the following new sentence, ‘‘ In order to accomplish the purpose of subparagraph (I) with respect to 2016, 2017, and 2018, after determining the increase factor PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 40215 described in the preceding sentence for each of 2016, 2017, and 2018, the Secretary shall reduce such increase factor by 1.25 percentage points for each of 2016 and 2017 and by 1 percentage point for 2018.’’ We interpret this provision as requiring us to reduce the market basket increase factor for 2016 through 2018 by the percentages prescribed in the statute. b. Payment Rate Update for CY 2015 As discussed in section II.B.2 of this proposed rule, section 1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, provides that, beginning in 2012, the ESRD PPS payment amounts are required to be annually increased by the rate of increase in the ESRD market basket, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. If PAMA had not stipulated a 0.0 percent payment update for CY 2015, we would have proposed a payment update of 1.6 percent, (a 2.0 percent ESRDB market basket update less a 0.4 percent productivity adjustment). In accordance with section 1881(b)(14)(F)(i)(III) of the Act, as added by PAMA section 217(b)(2)(C), however, we propose a 0.0 percent update to the CY 2014 ESRD PPS base rate of $239.02 for CY 2015. c. CY 2015 ESRD PPS Wage Index Budget Neutrality Adjustment For CY 2015 we propose to apply the wage index budget-neutrality adjustment factor of 1.001306 to the unadjusted CY 2014 and CY 2015 ESRD PPS base rate (that is, $239.02), yielding a proposed CY 2015 ESRD PPS wageindex budget-neutrality adjusted base rate of $239.33 ($239.02 × 1.001306 = $239.33). d. Labor-Related Share As discussed in section II.2.e, as part of the proposed ESRDB market basket rebasing and revision, we are proposing to update the labor-related share value from 41.737 percent to 50.673 percent. We note that some ESRD facilities are adversely affected by this proposal. For example, rural facilities and facilities located in CBSA areas with wage indexes below 1 will experience reduced payments due to an increase in the labor-related share, while other facilities located in CBSA area where wage indices are above 1 will experience increased payments. While we are proposing the new labor-related share under the ESRD PPS payment system computed at 50.673 percent, we propose to implement this value using a 2-year 50/50 blend transition. E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40216 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Therefore, for CY 2015 we propose to apply 50 percent of the value of the current labor-related share under the ESRD PPS (41.737) and 50 percent of the value of the new labor-related share, (50.673), add the values together and divide by two, for a CY 2015 laborrelated value of 46.205 ((41.737 + 50.673)/2 = 46.205). Beginning in CY 2016 we propose to apply 100 percent of the proposed labor-related share value of 50.673 percent. We propose to continue to apply a labor-related share value of 50.673 percent until such time in the future the ESRDB market basket is again rebased in computing a wage index-adjusted base rate for ESRD facilities. We believe that this approach is similar to the 50/50 blend transition proposed for the CY 2015 wage indexes and discussed in section II.3.c of this rule and that a 2- year transition is necessary to allow ESRD facilities time to adjust to the new labor related-share value. We note that we considered implementing the computed labor related share value of 50.673 for CY 2015, but that would have increased the CY 2015 proposed wage index budget neutrality factor to 1.002081. This increase would have resulted in a decrease in CY 2015 Medicare payments to rural facilities of 1.3 percent, and an increase to urban facilities 0.5 percent. When we apply the transition laborrelated share value of 46.205, the disparity in impacts for rural and urban facilities is reduced to less than 1.0 percent. Specifically, rural facilities would experience a decrease in payments of 0.5 percent and urban facilities would experience an increase in payments of 0.4 percent. (For more information of the CY 2015 Impact of Proposed Changes in Payments to ESRD Facilities for CY 2015 ESRD proposed rule, see section XV of this rule). Therefore, we believe a 2-year transition strikes an appropriate balance between ensuring that ESRD PPS payments are as accurate and stable as possible while giving facilities time to adjust to the new labor-related share factor. In summary, we propose a CY 2015 ESRD PPS base rate update of $239.33. This reflects a 0.0 percent payment update consistent with section 1881(b)(14)(F)(i)(III), as added by section 217(b)(2) of PAMA. This base rate reflects the CY 2015 proposed wage index budget neutrality factor of 1.001306, and a labor-related share value of 46.205. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 2. ESRD Bundled Market Basket and Labor-Related Share a. Background In accordance with section 1881(b)(14)(F)(i) of the Act, beginning in 2012, the ESRD payment amounts are required to be annually increased by an ESRD market basket increase factor that is reduced by the productivity adjustment in section 1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity adjustment may result in the increase factor being less than 0.0 for a year and may result in payment rates for a year being less than the payment rates for the preceding year. The statute also provides that the market basket increase factor should reflect the changes over time in the prices of an appropriate mix of goods and services used to furnish renal dialysis services. In the CY 2011 ESRD PPS final rule (75 FR 49151 through 49162), we established an ESRD Bundled market basket using CY 2008 as the base year. This market basket was used to annually update the ESRD base rate payments for CY 2012, CY 2013, and CY 2014. In this CY 2015 ESRD PPS proposed rule, we are proposing to revise and rebase the ESRDB market basket to a base year of CY 2012. We note that PAMA dictates a market basket update for CY 2015 of 0.0 percent and a reduction to the market basket updates in CYs 2016 through 2018 (by 1.25 percentage points for each of 2016 and 2017 and by 1 percentage point for 2018). The term ‘‘market basket’’ refers to the mix of goods and services needed to produce ESRD care, and is also commonly used to denote the input price index that includes both weights (mix of goods and services) and price factors. The term ‘‘ESRDB market basket’’ as used in this proposed rule refers to the ESRDB input price index. The proposed CY 2012-based ESRDB market basket represents the costs of operating and capital-related costs. The percentage change in the ESRDB market basket reflects the average change in the price of a fixed set of goods (both operating and capital) and services purchased by ESRD facilities in providing renal dialysis services. For further background information, see the CY 2011 final rule with comment period (75 FR 49151 through 49162). For purposes of the ESRDB PPS, the ESRDB market basket is a fixed-weight (Laspeyres-type) price index. A Laspeyres-type index compares the cost of purchasing a specified mix of goods and services in a selected base period to the cost of purchasing that same group of goods and services at current prices. PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 The effects on total expenditures resulting from changes in the quantity or mix of goods and services purchased subsequent or prior to the base period are, by design, not considered. We construct the market basket in three steps. The first step is to select a base period and estimate total base period expenditure shares for mutually exclusive and exhaustive spending categories. We use total costs for operating and capital expenses. These shares are called ‘‘cost’’ or ‘‘expenditure’’ weights. The second step is to match each expenditure category to a price/wage variable, called a price proxy. We draw these price proxy variables from publicly available statistical series published on a consistent schedule, preferably at least quarterly. The final step involves multiplying the price series for each spending category by the cost weight for that category. The sum of these products (that is, weights multiplied by proxy index levels) for all cost categories yields the composite index level of the market basket for a given quarter or year. Repeating the third step for other quarters and years produces a time series of market basket index levels, from which we can calculate rates of growth. The market basket represents a fixedweight index because it answers the question of how much more or less it would cost, at a later time, to purchase the same mix of goods and services that was purchased in the base period. We are proposing to use CY 2012 as the base year for the proposed rebased and revised 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 market basket as a CY market basket because the base period for all price proxies and weights are set to CY 2012 = 100. Source data included CY 2012 Medicare cost reports (Form CMS–265– 11), supplemented with 2012 data from the U.S. Census Bureau’s Services Annual Survey (SAS). Medicare cost reports from hospital-based ESRD providers were not used to construct the proposed ESRDB market basket because data from independent ESRD facilities tend to better reflect the actual cost structure faced by the ESRD facility itself, and are not influenced by the allocation of overhead over the entire institution, as can be the case with hospital-based providers. This approach is consistent with our standard methodology used in the development of other market baskets. Consistent with our discussion in the CY 2011 final rule with comment period E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (75 FR 49153), and as further discussed below, to implement section 1881(b)(14)(F)(i) of the Act we propose to revise and rebase the market basket so the cost weights and price proxies reflect the mix of goods and services that underlie ESRD bundled operating and capital costs for CY 2012. b. Rebasing and Revision of the ESRD Bundled Market Basket The terms ‘‘rebasing’’ and ‘‘revising’’, while often used interchangeably, actually denote different activities. Rebasing means shifting the base year for the structure of costs of the input price index (for example, for this proposed rule, we propose to shift the base year cost structure from CY 2008 to CY 2012). Revising means changing data sources, cost categories, price proxies, and/or methodology used in developing the input price index. We are proposing both to rebase and revise the ESRDB market basket to reflect CY 2012 total cost data. We selected CY 2012 as the new base year because 2012 is the most recent year for which relatively complete Medicare cost report (MCR) data are available. In developing the proposed market basket, we reviewed ESRD expenditure data from ESRD MCRs (CMS Form 265–11) for CY 2012 for each freestanding ESRD facility that reported expenses and payments. The CY 2012 cost reports are those with cost reporting periods beginning on or after January 1, 2012 and before December 31, 2012. We propose to maintain our policy of using data from freestanding ESRD facilities because freestanding ESRD data reflect the actual cost structure faced by the ESRD facility itself. In contrast, expense data for a hospital-based ESRD reflect the allocation of overhead over the entire institution. Due to this method of allocation, the expenses of each hospital-based component may be skewed. We developed cost category weights for the proposed CY 2012-based ESRDB market basket in two stages. First, we derived base weights for nine major categories (Wages and Salaries, Employee Benefits, Medical Supplies, Lab Services, Housekeeping & Operations, Pharmaceuticals, Administrative and General, CapitalRelated Building & Fixed Equipment, and Capital-Related Machinery) from the ESRD MCRs. Second, we are proposing to divide the Administrative & General cost category into further detail using 2012 U.S. Census Bureau Services Annual Survey (SAS) Data for the industry Kidney Dialysis Centers (NAICS 621492). We apply the 2012 distributions from the SAS data to the 2012 ‘‘Administrative & General’’ cost weight to yield the more detailed 2012 cost weights. This is similar to the methodology we used to break the 2008based Administrative & General Costs into more detail for the ESRDB market basket as detailed in the CY 2011 ESRD final rule (75 FR 49154 through 49159). The main difference is that in the 2008based market basket we relied on data from the U.S. Census Bureau Business Expenses Survey (BES). The BES data was the predecessor to the SAS. The Census Bureau SAS data are published annually, with the most recent data available being 2012. For more information on the SAS data, see https://www.census.gov/services/sas/ about_the_surveys.html. We are proposing to include a total of 20 detailed cost categories for the proposed CY 2012-based ESRDB market basket, which is four more cost categories than the CY 2008-based ESRDB market basket. In addition, we are proposing to further decompose both the Wages and Salaries and Employee Benefits cost categories into four more detailed cost categories reflecting the occupational mix of full time equivalents (FTEs) at ESRD facilities. The four detailed occupational categories that will underlie both Wages and Salaries and Employee Benefits are: (1) Health-related workers; (2) Management workers; (3) Administrative workers; and (4) Service workers. Having more detailed cost categories for these compensation costs enables them to be proxied more precisely. We are also proposing to 40217 collapse the Professional Fees and All Other Services cost categories into single categories rather than splitting those categories into Labor-Related and Non-Labor-Related Services. We will continue to assume that 87 percent of Professional Fees are labor-related costs and will be included in the proposed labor-related share. In addition, we are proposing to revise our labels for All Other Materials to Medical Materials and Supplies, Laboratories to Lab Services, and All Other Labor-Related/ Non Labor-Related to All Other Goods and Services. A more thorough discussion of our proposals is provided below. i. Cost Category Weights Using Worksheets A and B from the CY 2012 Medicare cost reports, we first computed cost shares for nine major expenditure categories: Wages and Salaries, Employee Benefits, Pharmaceuticals, Supplies, Lab Services, Administrative and General (A&G), Housekeeping and Operations, Capital-Related Building & Equipment, and Capital-Related Machinery. Edits were applied to include only cost reports that had total costs greater than zero. In order to reduce potential distortions from outliers in the calculation of the cost weights for the major expenditure categories, cost values for each category less than the 5th percentile or greater than the 95th percentile were excluded from the computations. The resulting data set included information from approximately 4,700 independent ESRD facilities’ cost reports from an available pool of 5,333 cost reports. Expenditures for the nine cost categories as a proportion of total expenditures are shown in Table 1. Table 1 presents the proposed CY 2012-based ESRDB and CY 2008-based ESRDB market basket major cost weights as derived directly from the MCR data. Following the table, we describe the sources of the major category weights and their subcategories in the proposed CY 2012-based ESRDB market basket. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 TABLE 1—PROPOSED CY 2012-BASED ESRDB MARKET BASKET MAJOR COST WEIGHTS Proposed CY 2012-based ESRDB market basket Cost category Wages and Salaries ............................................................................................ Employee Benefits ............................................................................................... Pharmaceuticals .................................................................................................. Supplies ............................................................................................................... Lab Services ........................................................................................................ Housekeeping & Operations ................................................................................ Administrative & General (residual) ..................................................................... Capital-related Building & Fixed Equipment ........................................................ VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 31.839% 6.570% 16.510% 10.097% 1.532% 3.785% 17.419% 8.378% E:\FR\FM\11JYP2.SGM 11JYP2 CY 2008-based ESRDB market basket 26.338% 5.163% 26.358% 9.726% 0.356% 3.604% 17.594% 7.910% 40218 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 1—PROPOSED CY 2012-BASED ESRDB MARKET BASKET MAJOR COST WEIGHTS—Continued Proposed CY 2012-based ESRDB market basket Cost category Capital-related Machinery .................................................................................... CY 2008-based ESRDB market basket 3.870% 2.951% Note: Totals may not sum to 100.000% due to rounding. Some costs are reported on the Medicare cost report but are not included in the ESRD bundled payment. For example, we removed the expenses related to vaccine costs from total expenditures since these are excluded from the ESRD bundled payment, but reported on the Medicare cost report. We are proposing to expand the expenditure categories developed from the Medicare cost reports to allow for more detailed expenditure decomposition. To expand these cost categories, SAS data were used because the Medicare cost reports do not collect detailed information on the items of interest. Those categories include: benefits for all employees, professional fees, telephone, utilities, and all other goods and services. We chose to separately break out these categories to more accurately reflect ESRD facility costs. We describe below how the initially computed categories and weights from the cost reports were modified to yield the final 2012 ESRDB market basket expenditure categories and weights presented in this proposed rule. Wages and Salaries The weight for wages and salaries for direct patient care for 2012 was initially derived from Worksheet B of the Medicare cost report. However, because the cost center for direct patient care salaries does not include all other wage and salary costs for non-health workers and physicians, it was necessary to derive a methodology to include all salaries, not just direct patient care salaries, in order to calculate the appropriate market basket cost weight. This was accomplished in the following steps. (1) From the trial balance of the cost report (Worksheet A), we computed the ratio of salaries to total costs in each of the following cost centers: housekeeping and operations, employee benefits for direct patient care, Administrative & General, Supplies, Laboratories, and Pharmaceuticals. (2) We then multiplied the ratios computed in step 1 by the total costs for each corresponding cost center from Worksheet B. This provided us with an estimate of salaries other than directpatient care for each cost center. (3) The estimated salaries for each of the cost centers on Worksheet B estimated in step 2 were subsequently summed and added to the direct patient care salary figure (resulting in a new total salaries figure). (4) The estimated non-direct patient care salaries (see step 2) were then subtracted from their respective cost categories to avoid double-counting their values in the total costs. As a result of this process, we moved from an estimated Wages and Salaries cost weight of 23.242 percent (as estimated using only direct patient care salaries as a percent of total costs) to a weight of 31.839 percent (capturing both direct patient care salaries and all other salary costs and, again, dividing that by total costs found on the Medicare cost report), as seen in Table 2. The final adjustment made to this category is to include contract labor costs. These costs appear on the Medicare cost report; however, they are embedded in the Administrative and General category and cannot be disentangled using the Medicare cost reports alone. To move the appropriate expenses from the A&G category to Wages and Salaries, we used data from the 2012 SAS, which reported 2.3 of total expenses were spent on contract labor costs. We allocated 80 percent of that figure to Wages and Salaries. At the same time, we subtracted that same amount from A&G, where the contract labor expenses would be reported on the cost report. The 80 percent figure that was used was determined by taking salaries as a percentage of total compensation (excluding contract labor) from the 2012 MCR data. The resulting cost weight for Wages and Salaries increases to 33.650 percent. TABLE 2—ESRD WAGES & SALARIES SHARE DETERMINATION Cost share (%) Components mstockstill on DSK4VPTVN1PROD with PROPOSALS2 08 08 08 08 08 12 12 12 12 MCR Salaries Direct Patient Care (DPC) ...................................................................................................................................... MCR Additional Salaries Weight (other than DPC) ....................................................................................................................... Wage & Salary Weight normalized after adding separately billable services into the bundle ...................................................... Contract Labor (wages) (80% of BES CL share) .......................................................................................................................... Final Wage & Salary Weight .......................................................................................................................................................... MCR Salaries Direct Patient Care (DPC) ...................................................................................................................................... MCR Additional Salaries Weight (other than DPC) ....................................................................................................................... Contract Labor (80% of SAS CL share) ........................................................................................................................................ Final Wage & Salary Weight .......................................................................................................................................................... Benefits The Benefits weight was derived from the MCR data for employee benefits for direct patient care and supplemented with data from the 2012 SAS to account for non-direct patient care benefits. The cost report only reflects health-related benefit costs associated with direct VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 patient care; that is, it does not reflect retirement benefits. In order to include the benefits related to non-direct patient care, we estimated this marginal increase from the SAS Benefits weight. Unlike the MCR, data the SAS benefits share includes expenses related to the retirement and pension benefits. In order to be consistent with the cost PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 22.297 4.041 ¥1.373 1.790 26.755 23.242 8.597 1.811 33.650 report definitions we do not want to include the costs associated with retirement and pension benefits in the cost share weights. These costs are relatively small compared to the costs for the health related benefits, accounting for only 2.7 percent of the total benefits costs as reported on the SAS. Our method produced a Benefits E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (both direct patient care and non-direct patient care) weight that was 1.824 percentage points larger (8.394 vs. 6.570) than the Benefits weight for direct patient care calculated directly from the cost reports. To avoid doublecounting and to ensure all of the market basket weights still totaled 100 percent, we removed this additional 1.824 percentage point for Benefits from the residual category. The final adjustment made to this category is to include contract labor costs. Once again, these costs appear on the Medicare cost report; however, they are embedded in the Administrative and General category and cannot be disentangled using the Medicare cost report alone. 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 resulting cost weight for Benefits increases to 8.847 percent. The Table 3 compares the 2008-based Benefits cost share derivation as detailed in the CY 2011 ESRD final rule (75 FR 49155–49156) to the proposed 2012-based Benefits cost share derivation as explained above. TABLE 3—ESRD BENEFIT SHARE DETERMINATION Components Cost share (percent) 08 MCR Benefits .................. 08 BES Additional Benefits Weight (Health only) ......... 08 Contract Labor (20% of BES benefits share) .......... 08 Final Benefit Weight ........ 12 MCR Benefits .................. 12 SAS Additional Benefits Weight (Health only) ......... 12 Contract Labor (20% of SAS benefits share) .......... 12 Final Benefit Weight ........ 5.163 1.143 0.448 6.754 6.570 1.824 0.453 8.847 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Utilities We developed a weight for Utility expenses using the 2012 SAS data, as utilities are not separately identified on the Medicare cost report. The SAS data reports the percentage of expenses for ‘purchased fuels (except motor fuels)’, ‘purchased electricity’, and ‘water, sewer, refuse, and other utilities.’ We applied these ratios to the administrative and general cost share (net of contract labor and additional benefits). The resulting Electricity, Fuel (Natural Gas), and Water and Sewerage weights in the proposed 2012 ESRDB market basket are 0.973, 0.101, and 0.765 percent, respectively; together these categories yield a combined Utilities cost weight of 1.838 percent. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Pharmaceuticals The proposed ESRDB market basket includes expenditures for all drugs, including formerly separately billable drugs and ESRD-related drugs that were covered under Medicare Part D before the ESRD PPS was implemented. We were able to calculate an expenditure weight for pharmaceuticals directly from the following cost centers on Worksheet B: columns 11 ‘Drugs Included in Composite Rate’; 12 ‘ESAs’; 13 ‘ESRD-Related Drugs; and drug expenses reported on line 5 column 10, ‘Non-ESRD related drugs.’ The NonESRD related drugs would include drugs and biologicals, administered during dialysis for non-ESRD related conditions as well as oral-only drugs. Since these are costs to the facility for providing ESRD treatment to the patient we propose to include them in the drug cost share weight. Vaccine expenditures, which are mandated as separately reimbursable, were excluded when calculating this cost weight. Section 1842(o)(1)(A)(iv) of the Act requires that influenza, pneumococcal, and hepatitis B vaccines described in subparagraph (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 drugs are excluded from other prospective payment systems, we exclude them from the proposed ESRDB market basket, as well. Finally, to avoid double-counting, the weight for the Pharmaceuticals category was reduced to exclude the estimated share of non-direct patient care salaries and benefits associated with the applicable drug cost centers referenced above. This resulted in a proposed ESRDB market basket weight for Pharmaceuticals of 16.510 percent. ESA expenditures accounted for 12.383 percentage points of the Pharmaceuticals weight, and all other drugs accounted for the remaining 4.127 percentage points (.438 percent for Drugs Included in Composite Rate, 3.534 percent for ESRD-Related Drugs, and 0.155 percent for Non-ESRD related drugs). The 9-percentage point decrease in the pharmaceutical share between 2008 and 2012 (25.052 percent to 16.510 percent) is due largely to the drop in drug utilization. The drug percentage of the base rate used in 2011 was about 31 percent; however, the analysis conducted for the drug utilization adjustment showed that the drug portion of the base rate in 2014 would have fallen to only be 22 percent of the base rate had it been fully implemented. The cost report data corroborate the PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 40219 drop in drug costs for facilities over the same time frame. Supplies We calculated the weight for Supplies included in the bundled rate using the costs reported in the Supplies cost center (column 7 on Worksheet B) of the Medicare cost report. This total was divided by total expenses to derive a weight for the Supplies component in the ESRDB market basket. Finally, to avoid double-counting, the weight for the Supplies category was reduced to exclude the estimated share of nondirect patient care salaries and benefits associated with this cost center. The resulting proposed 2012-based ESRDB market basket weight for Supplies is 10.097 percent. Lab Services We calculated the weight for Lab Services included in the bundled rate using the costs reported in the Laboratory cost center (column 8 on Worksheet B) of the Medicare cost report. This total was divided by total expenses to derive a weight for the Lab component in the ESRDB market basket. Finally, to avoid double-counting, the weight for the Lab services category was reduced to exclude the estimated share of non-direct patient care salaries and benefits associated with this cost center. The resulting proposed 2012-based ESRDB market basket weight for Lab Services is 1.532 percent. The cost weight for lab services is substantially lower than the 2008 ESRDB market basket lab weight of 5.497 percent. This is due to the change in the method used to determine lab costs. In 2008, we relied on MCR data for the cost share weight; however, the majority of lab services were performed by labs outside of the dialysis facility and those costs were not reported on the MCR. Therefore, in the 2008 ESRDB market basket we inflated the expenses reported for labs in ESRD facilities to reflect the use from other provider types. This adjustment factor was estimated based on the lab payment to dialysis facilities relative to the lab fee payment to other providers. For the rebased ESRDB market basket, the 2012 cost report data represents the expenses under the bundled payment system, and all of the expenses related to lab fees (whether in house or contracted through an outside lab) are reported in the MCR data. Housekeeping & Operations We calculated the weight for Housekeeping and Operations included in the bundled rate using the costs reported on worksheet A, column 8, E:\FR\FM\11JYP2.SGM 11JYP2 40220 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules lines 3 & 4 of the Medicare Cost Report. This total was divided by total expenses to derive a weight for the Housekeeping and Operations component in the ESRDB market basket. Finally, to avoid double-counting, the weight for the Housekeeping & Operations category was reduced to exclude the estimated share of non-direct patient care salaries and benefits associated with this cost center. The resulting proposed 2012based ESRDB market basket weight for Housekeeping and Operations is 3.785 percent. Administrative and General (A&G) We computed the proportion of total A&G expenditures using the A&G cost center data from Worksheet B (column 9) of the Medicare cost reports. As described above, we exclude contract labor from this cost category and apportion these costs to the salary and benefits cost weights. Similar to other expenditure category adjustments, we then reduced the computed weight to exclude salaries and benefits associated with the A&G cost center and the additional benefits for non-direct patient care. The resulting A&G cost weight is 13.331 percent. This A&G cost weight is then fully apportioned to derive detailed cost weights for Utilities, Telephone, Professional Fees, and All Other Goods and Services. Professional Fees A separate weight for Professional Fees was developed using the 2012 SAS data. Professional fees include fees associated with the following: purchased professional & technical services (such as accounting, bookkeeping, legal, management, consulting, and other professional services fees) and purchased advertising & promotional services. To estimate professional fees, we first calculated the ratio of SAS professional fees to SAS expenses that match the A&G expenses from the cost reports. We then applied this ratio to the A&G total cost weight to estimate the proportion of ESRD facility professional fees. The resulting weight for the proposed 2012-based ESRDB market basket is 0.617 percent. An estimated 87 percent of the expenses are considered labor-related and subsequently included in the proposed labor-related share, which is described in more detail below. Telephone Because telephone service expenses are not separately identified on the Medicare cost report, we developed a Telephone Services weight using the 2012 SAS expenses. We estimated a ratio of telephone services expenses to total administrative and general expenses from SAS. We applied this ratio to the total A&G cost weight from the cost reports to estimate the proportion of ESRD facility telephone expenses. The resulting proposed 2012based ESRDB market basket cost weight for Telephone Services is 0.468 percent. All Other Goods and Services A separate weight for All Other Goods and Services was developed using the 2012 SAS data. All other Goods and Services include expenses for purchased software, professional liability insurance, data processing and other purchased computer services, and all other operating expenses not otherwise captured. We estimated a ratio of All Other Goods and Services expenses to Total Administrative and General expenses from SAS. We then applied this ratio to the total A&G cost weight from the cost reports to estimate the cost weight for ESRD facility All Other Goods and Services. The resulting proposed 2012-based ESRDB market basket cost weight for All Other Goods and Services is 10.407 percent. Capital We developed a market basket weight for the Capital category using data from Worksheet B of the Medicare cost reports. Capital-related costs include depreciation and lease expense for buildings, fixtures, movable equipment, property taxes, insurance, the costs of capital improvements, and maintenance expense for buildings, fixtures, and machinery. Because housekeeping as well as operation & maintenance costs are included in the Worksheet B cost center for Capital-Related costs (Worksheet B, column 2), we excluded the costs for these two categories and developed a separate expenditure category for housekeeping & operations, as detailed above. Similar to the methodology used for other market basket cost categories with a salaries component, we computed a share for non-direct patient care salaries and benefits associated with the Capitalrelated Machinery cost center. We used Worksheet B to develop two capitalrelated cost categories, one for Buildings and Equipment (based on worksheet B column 2 less housekeeping & operations), and one for Machinery (based on worksheet B column 4). We reasoned this delineation was particularly important given the critical role played by dialysis machines. Likewise, because price changes associated with Buildings and Equipment could move differently than those associated with Machinery, we felt that separate price proxies would be more appropriate. The resulting proposed 2012-based ESRDB market basket weights for Capital-related Buildings and Equipment and Capitalrelated Machinery are 8.378 and 3.870 percent, respectively. Table 4 lists all of the cost categories and cost weights in the proposed CY 2012 ESRDB market basket compared to the cost categories and cost weights in the CY 2008 ESRDB market basket. TABLE 4—COMPARISON OF THE PROPOSED CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY 2008–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Total .................................................................................... Compensation .............................................................. Wages and Salaries ............................................. Employee Benefits ................................................ Utilities ......................................................................... Electricity .............................................................. Natural Gas .......................................................... Water and Sewerage ............................................ All Other Materials ....................................................... Pharmaceuticals ................................................... Supplies ................................................................ VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Proposed 2012 cost weight (percent) 2008 Cost weight (percent) 2008 Cost category PO 00000 Frm 00014 100.000 33.509 26.755 6.754 1.264 0.621 0.127 0.516 39.765 25.052 9.216 Fmt 4701 Sfmt 4702 100.000 42.497 33.650 8.847 1.839 0.973 0.101 0.765 28.139 16.510 10.097 Proposed 2012 cost category Total. Compensation. Wages and Salaries. Employee Benefits. Utilities. Electricity. Natural Gas. Water and Sewerage. Medical Materials and Supplies. Pharmaceuticals. Supplies. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40221 TABLE 4—COMPARISON OF THE PROPOSED CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY 2008–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS.—Continued Proposed 2012 cost weight (percent) 2008 Cost weight (percent) 2008 Cost category Lab Services ......................................................... All Other Services ........................................................ Telephone ............................................................. Housekeeping and Operations ............................. Labor-Related Services ........................................ Prof. Fees: Labor-related ..................................... 5.497 15.929 0.597 2.029 2.768 1.549 All Other Labor-related ......................................... NonLabor-Related Services ................................. Prof. Fees: Nonlabor-related ................................ All Other Nonlabor-related .................................... Capital Costs ............................................................... Capital Related-Building and Equipment ............. Capital Related-Machinery ................................... 1.219 10.535 0.224 10.311 9.533 7.459 2.074 1.532 15.277 0.468 3.785 0.617 Proposed 2012 cost category Lab Services. All Other Goods and Services. Telephone Service. Housekeeping and Operations. Professional Fees (Labor-related and NonLaborrelated services). 10.407 All Other Goods and Services. 12.248 8.378 3.870 Capital Costs. Capital Related-Building and Equipment. Capital Related-Machinery. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Note: Totals may not sum to 100.000 percent due to rounding. ii. Proposed Price Proxies for the CY 2012 ESRDB Market Basket After developing the cost weights for the proposed CY 2012-based ESRDB market basket, we selected the most appropriate wage and price proxies currently available to represent the rate of price change for each expenditure category. We base the price proxies on Bureau of Labor Statistics (BLS) data and group them into one of the following BLS categories: • Employment Cost Indexes. Employment Cost Indexes (ECIs) measure the rate of change in employment wage rates and employer costs for employee benefits per hour worked. These indexes are fixed-weight indexes and strictly measure the change in wage rates and employee benefits per hour. 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 North American Classification System (NAICS) and the occupational ECIs are based on the Standard Occupational Classification System (SOC). • Producer Price Indexes. Producer Price Indexes (PPIs) measure price changes for goods sold in other than retail markets. PPIs are used when the purchases of goods or services are made at the wholesale level. • Consumer Price Indexes. Consumer Price Indexes (CPIs) measure change in the prices of final goods and services bought by consumers. CPIs are only used when the purchases are similar to those of retail consumers rather than VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 purchases at the wholesale level, or if no appropriate PPIs were available. We evaluated the price proxies using the criteria of reliability, timeliness, availability, and relevance: • Reliability. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Widely accepted statistical methods ensure that the data were collected and aggregated in a way that can be replicated. Low sampling variability is desirable because it indicates that the sample reflects the typical members of the population. (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-todate, 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 will help ensure that our market basket updates 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. PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 • 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 regulation 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 price proxies for the proposed revised and rebased ESRDB market basket. Below is a detailed explanation of the price proxies used for each cost category weight. Wages and Salaries We will continue using an ECI blend for wages and salaries in the proposed 2012-based ESRDB market basket. However, we are proposing to expand the number of occupation categories and associated ECIs from two to four based on FTE data from ESRD Medicare Cost Reports and the availability of ECIs from BLS. We calculated weights for the Wages and Salaries sub-categories using 2012 FTE data and associated 2012 Average Mean Wage data from the Bureau of Labor Statistics’ Occupational Employment Statistics. Wages and Salaries—Health Related We are proposing to continue using the ECI for Wages & Salaries for Hospitals (All Civilian) (BLS series code #CIU1026220000000I). 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 E:\FR\FM\11JYP2.SGM 11JYP2 40222 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Health Care and Social Assistance NAICS sector (62). The Wages and Salaries—Health Related subcategory weight within the Wages and Salaries cost category is 80percent. The ESRD Medicare Cost Report FTE categories used to define the Wages and Salaries—Health Related subcategory include ‘‘Physicians,’’ ‘‘Registered Nurses,’’ ‘‘Licensed Practical Nurses,’’ ‘‘Nurses’ Aides,’’ ‘‘Technicians,’’ and ‘‘Dieticians.’’ The current 2008-based ESRD Market Basket uses the ECI for Wages & Salaries for Hospitals (All Civilian) for 50 percent of Wages and Salaries. Wages and Salaries—Management We propose using the ECI for Wages & Salaries for Management, Business, and Financial (Private Industry) (BLS series code #CIU2020000110000I). We feel this ECI is the most appropriate price proxy to measure the price growth of management functions at ESRD facilities. Furthermore, we regularly use this ECI-wages for management, business, and financial in our other market baskets, such as the MEI. The Wages and Salaries— Management subcategory weight within the Wages and Salaries cost category is 8 percent. The ESRD Medicare Cost Report FTE category used to define the Wages and Salaries—Management subcategory is ‘‘Management.’’ Wages and Salaries—Administrative We propose using the ECI for Wages & Salaries for Office and Administrative Support (Private Industry) (BLS series code #CIU2020000220000I). We feel this ECI is the most appropriate price proxy to measure the price growth of administrative support at ESRD facilities. Furthermore, we regularly use this ECI for administrative wages in our other market baskets, such as the MEI. The Wages and Salaries— Administrative subcategory weight within the Wages and Salaries cost category is 7 percent. The ESRD Medicare Cost Report FTE category used to define the Wages and Salaries— Administrative subcategory is ‘‘Administrative.’’ Wages and Salaries—Services We propose using the ECI for Wages & Salaries for Service Occupations (Private Industry) (BLS series code #CIU2020000300000I). We feel this ECI is the most appropriate price proxy to measure the price growth of all other non-health related, non-management, and non-administrative service support at ESRD facilities. Furthermore, we regularly use this ECI for all other service wages in our other market baskets, such as the MEI. The Wages and Salaries—Services subcategory weight within the Wages and Salaries cost category is 6 percent. The ESRD Medicare Cost Report 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. We feel this new ECI blend is the most appropriate price proxy to measure the growth of wages and salaries faced by ESRD facilities. TABLE 5—ECI BLEND FOR WAGES AND SALARIES IN THE PROPOSED 2012 BASED ESRDB MARKET BASKET Cost category ECI Series Wages and Salaries—Health Related ......... Wages and Salaries—Management ............ Wages and Salaries—Administrative .......... Wages and Salaries—Services ................... ECI—Wages ECI—Wages dustry). ECI—Wages ECI—Wages The current 2008-based ESRDB market basket uses a 50 percent/50 percent blend of the ‘‘ECI—Wages & Salaries—Hospital (All Civilian)’’ and the ‘‘ECI—Wages and Salaries— Healthcare and Social Assistance’’ for the wages and salaries ECI blend. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Benefits We will continue using an ECI blend for Benefits in the proposed 2012-based ESRDB market basket; however, we are proposing to expand the number of occupation categories and associated ECIs from two to four based on the components of the proposed Wage and Salaries ECI blend. Benefits—Health Related We are proposing to continue using the ECI for Benefits for Hospitals (All Civilian) to measure price growth of this subcategory. The ECI for Benefits for Hospitals is calculated using the ECI for Total Compensation for Hospitals (BLS series code # CIU1016220000000I) and the relative importance of wages and salaries within total compensation. We believe this constructed ECI series is VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 & Salaries—Hospital (All Civilian) ................................................. & Salaries—Management, Business, and Financial (Private In- 80 7 & Salaries—Office and Administrative Support (Private Industry) & Salaries—Service Occupations (Private Industry) .................... 7 6 technically appropriate for the reason stated above in the wages and salaries price proxy section. Benefits—Management We propose using the ECI for Benefits for Management, Business, and Financial (Private Industry) to measure price growth of this subcategory. The ECI for Benefits for Management, Business, and Financial is calculated using the ECI for Total Compensation for 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 above in the wages and salaries price proxy section. Benefits—Administrative We propose using the ECI for Benefits for Office and Administrative Support (Private Industry) to measure price growth of this subcategory. The ECI for Benefits for Office and Administrative Support is calculated using the ECI for PO 00000 Weight (%) Frm 00016 Fmt 4701 Sfmt 4702 Total Compensation for 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 above in the wages and salaries price proxy section. Benefits—Services We propose using the ECI for Benefits for Service Occupations (Private Industry) to measure price growth of this subcategory. The ECI for Benefits for Service Occupations is calculated using the ECI for Total Compensation for Service Occupations (BLS series code # CIU2030000300000I) and the relative importance of wages and salaries within total compensation. We believe this constructed ECI series is technically appropriate for the reason stated above in the wages and salaries price proxy section. We feel the new benefits ECI blend is the most appropriate price proxy to measure the growth of prices faced by E:\FR\FM\11JYP2.SGM 11JYP2 40223 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules ESRD facilities. Table 6 lists the four ECI series and the corresponding weights used to construct the proposed benefits ECI blend. TABLE 6—BENEFITES ECI BLEND IN THE PROPOSED 2012–BASED ESRDB MARKET BASKET Cost category ECI Series Benefits—Health Related ............................ Benefits—Management ............................... Benefits—Administrative .............................. Benefits—Services ....................................... ECI—Benefits—Hospital (All Civilian) ................................................................. ECI—Benefits—Management, Business, and Financial (Private Industry) ........ ECI—Benefits—Office and Administrative Support (Private Industry) ............... ECI—Benefits—Service Occupations (Private Industry) .................................... The current 2008-based ESRDB market basket uses a 50 percent/50 percent blend of the ‘‘ECI—Benefits— Hospital (All Civilian)’’ and the ‘‘ECI— Benefits—Healthcare and Social Assistance’’ for the benefits ECI blend. Electricity We propose to continue using the PPI for Commercial Electric Power (BLS series code #WPU0542) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. Natural Gas We propose to continue using the PPI for Commercial Natural Gas (BLS series code #WPU0552) to measure the price growth of this cost category. This is the same proxy used in the current 2008based ESRDB market basket. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Water and Sewerage We propose to continue using the CPI for Water and Sewerage Maintenance (BLS series code #CUUR0000SEHG01) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. Pharmaceuticals We propose to change the price proxy used for the pharmaceuticals cost category. A recent Health and Human Services Office of the Inspector General (OIG) report titled ‘‘Update: Medicare Payment for End Stage Renal Disease Drugs’’ recommended that CMS consider updating the ESRD payment bundle using a factor that takes into account drug acquisition costs. CMS had responded to this recommendation by stating that we would consider these findings in the continual evaluation of the ESRD market basket, particularly during the next rebasing and revising of the market basket index.1 Drug acquisition cost data is neither publicly available nor the methods used to determine it transparent, and, therefore, wouldn’t meet our price proxy criteria of relevance, reliability, 1 https://oig.hhs.gov/oei/reports/oei-03-12- 00550.asp. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 transparency, and public availability. However, after considering several viable options that do meet the criteria we are proposing to use the PPI: Vitamin, Nutrient, and Hematinic Preparations (BLS series code #WPU063807). This index includes drugs that are most similar to ESAs and other drugs used in the ESRD setting, such as iron supplements. The definition of a hematinic is a medicine that increases the hemoglobin content of the blood, and these types of drugs are used to treat iron-deficiency anemia essential for normal erythropoiesis. We believe the PPI: Vitamin, Nutrient, and Hematinic Preparations to be the most technically appropriate index available to measure the price growth of the pharmaceuticals cost category in the proposed 2012-based ESRDB market basket. The current 2008-based ESRDB market basket uses the PPI: Pharmaceuticals for Human Use. Supplies We propose using the PPI for Surgical and Medical Instruments (BLS series code #WPU1562) since it excludes orthopedic, prosthetic, ophthalmic, and dental type medical equipment and devices, which are not likely to be used extensively in the ESRD setting. The types of equipment under Surgical and Medical Instruments, particularly blood transfusion and IV equipment, seem most similar to the medical equipment and supplies that would be used in the ESRD setting. The current 2008-based ESRDB market basket uses the PPI for Medical, Surgical, and Personal Aid Devices. Lab Services We propose to continue using the PPI for Medical Laboratories (BLS series code #PCU621511621511) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. Telephone Service We propose to continue using the CPI for Telephone Services (BLS series code #CUUR0000SEED) to measure the price PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 Weight (%) 80 7 7 6 growth of this cost category. This is the same proxy used in the current 2008based ESRDB market basket. Housekeeping and Operations We propose to continue using the PPI for Cleaning and Building Maintenance Services (BLS series code #WPU49) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. Professional Fees We propose to continue using the ECI (Compensation) for Professional and Related Occupations (Private Industry) (BLS series code # CIU2010000120000I) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. All Other Goods and Services We propose using the PPI for Finished Goods less Foods and Energy (BLS series code #WPUFD4131) as the price proxy for the All Other Goods and Services cost category. This PPI series is used in most of CMS’ other market baskets to measure the expenses for the residual category of all other goods and services. It is more consistent with the purchase of items at a wholesale rather than a consumer level. The current 2008-based ESRDB market basket (specifically, the ‘‘All Other Non LaborRelated Services’’ cost category) uses the CPI–U, All Items less Foods and Energy. Capital-Related Building and Equipment We propose using the PPI for Lessors of Nonresidential Buildings (BLS series code #PCU531120531120) as it represents the types of fixed capital expenses most likely faced by ESRD facilities. We also use this proxy in the MEI as the fixed capital proxy for physicians. We believe the PPI for Lessors of Nonresidential Buildings is more appropriate as fixed capital expenses in both the ESRD and physician office setting should be more congruent with trends in business office space costs rather than residential costs. The current 2008-based ESRDB market E:\FR\FM\11JYP2.SGM 11JYP2 40224 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules basket uses the CPI for Owners’ Equivalent Rent of Residences. (BLS series code #WPU117) to measure the price growth of this cost category. This is the same proxy used in the current 2008-based ESRDB market basket. Capital Related Machinery We propose to continue using the PPI for Electrical Machinery and Equipment Table 7 shows all the proposed price proxies for the proposed CY 2012-based ESRDB Market Basket. TABLE 7—PROPOSED PRICE PROXIES FOR THE CY 2012-BASED ESRDB MARKET BASKET Cost category Price proxy Cost weight % Compensation Wages and Salaries ................................. Health-related Wages ....................... Management Wages ......................... Administrative Wages ....................... Service Wages .................................. Employee Benefits ................................... Health-related Benefits ..................... Management Benefits ....................... Administrative Benefits ..................... Service Benefits ................................ Utilities Electricity .................................................. Natural Gas .............................................. Water and Sewerage ............................... Medical Materials and Supplies Pharmaceuticals ....................................... Supplies .................................................... Lab Services ............................................ All Other Goods and Services Telephone Service ................................... Housekeeping and Operations ................ Professional Fees .................................... All Other Goods and Services ................. Capital Costs Capital Related Building and Equipment Capital Related Machinery ....................... Total .................................................. .......................................................................................................................... .......................................................................................................................... ECI—Wages & Salaries—Hospital (Civilian) .................................................. ECI—Wages & Salaries—Management, Business, and Financial (Private) .. ECI—Wages & Salaries—Office and Administrative Support (Private) .......... ECI—Wages & Salaries—Service Occupations (Private) ............................... .......................................................................................................................... ECI—Benefits—Hospital (Civilian) .................................................................. ECI—Benefits—Management, Business, and Financial (Private) .................. ECI—Benefits—Office and Administrative Support (Private) .......................... ECI—Benefits—Service Occupations (Private) ............................................... .......................................................................................................................... PPI—Commercial Electric Power .................................................................... PPI—Commercial Natural Gas ........................................................................ CPI—Water and Sewerage Maintenance ....................................................... .......................................................................................................................... PPI—Vitamin, Nutrient, and Hematinic Preparations ...................................... PPI—Surgical and Medical Instruments .......................................................... PPI—Medical Laboratories .............................................................................. .......................................................................................................................... CPI—Telephone Services ............................................................................... PPI—Cleaning and Building Maintenance Services ....................................... ECI—Compensation—Professional and Related Occupations (Private) ........ PPI—Finished Goods less Foods and Energy ............................................... .......................................................................................................................... PPI—Lessors of Nonresidential Buildings ....................................................... PPI—Electrical Machinery and Equipment ..................................................... .......................................................................................................................... 42.497 33.650 26.920 2.356 2.356 2.019 8.847 7.078 0.619 0.619 0.531 1.839 0.973 0.101 0.765 28.139 16.510 10.097 1.532 15.277 0.468 3.785 0.617 10.407 12.248 8.378 3.870 100.000 Note: Totals may not sum to 100.000% due to rounding. iii. Proposed Market Basket Estimate for the CY 2015 ESRDB PPS Update As discussed previously in this proposed rule, beginning with the CY 2015 ESRD PPS update, we are proposing to adopt the CY 2012-based ESRDB market basket as the appropriate market basket of goods and services for the ESRD PPS. Based on the IHS Global Insight, Inc. (IGI) first quarter 2014 forecast with history through the fourth quarter of 2013, the most recent estimate of the proposed CY 2012-based ESRDB market basket for CY 2015 is 2.0 percent. IGI is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of the CMS market baskets. Based on IGI’s first quarter 2014 forecast with history through the fourth quarter of 2013, the estimate of the current CY 2008-based ESRDB market basket for CY 2015 is 2.7 percent. Table 8 compares the proposed CY 2012-based ESRDB market basket and the CY 2008-based ESRDB market basket percent changes. For the historical period between CY 2011 and CY 2013, the average difference between the two market baskets is -1.8 percentage points. This is primarily the result of the lower pharmaceutical cost share combined with the proposed revised price proxy for the pharmaceutical cost category. For the CY 2014 and CY 2015 forecasts, the difference in the market basket forecasts are mainly driven by the same factors as in the historical period; however, it is important to note that the differences between the two market baskets are projected to be smaller as the growth in the price proxy for the pharmaceutical category are projected to grow at more similar growth rates in the projected period than the growth rates in the recent historical period. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 TABLE 8—PROPOSED CY 2012-BASED ESRDB MARKET BASKET AND CY 2008 BASED ESRDB MARKET BASKET, PERCENT CHANGES: 2011–2015 Proposed Rebased CY 2012based ESRDB Market Basket Calendar Year (CY) Historical data. CY 2011 ........................................................................................................ CY 2012 ........................................................................................................ CY 2013 ........................................................................................................ Average CY 2011–2013 ............................................................................... Forecast: CY 2014 ........................................................................................................ VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 CY 2008-Based ESRDB Market Basket 1.2 1.4 1.1 1.3 1.8 E:\FR\FM\11JYP2.SGM 2.8 3.4 3.0 3.1 2.3 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40225 TABLE 8—PROPOSED CY 2012-BASED ESRDB MARKET BASKET AND CY 2008 BASED ESRDB MARKET BASKET, PERCENT CHANGES: 2011–2015—Continued Proposed Rebased CY 2012based ESRDB Market Basket Calendar Year (CY) CY 2015 ........................................................................................................ CY 2008-Based ESRDB Market Basket 2.0 2.7 Source: IHS Global Insight, Inc. 1st quarter 2014 forecast with historical data through 4th quarter 2013. c. 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 as equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the ‘‘MFP adjustment’’). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm business MFP. Please see https://www.bls.gov/mfp to obtain the BLS historical published MFP data. We note that the proposed and final methodology for calculating and applying the MFP adjustment to the ESRD payment update is similar to the methodology used in other payment systems, as required by section 3401 of the Affordable Care Act. The projection of MFP is currently produced by IGI. The details regarding the methodology for forecasting MFP and how it is applied to the market basket were finalized in the CY 2012 ESRD PPS final rule (76 FR 70232 through 70234). Using this method and the IGI forecast for the first quarter of 2014 of the 10-year moving average of MFP, the CY 2015 MFP factor we would have proposed is 0.4 percent. As discussed further below, however, section 1881(b)(F)(i)(III) of the Act, as added by section 217(b)(2) of PAMA, requires the Secretary to implement a 0.0 percent payment update in CY 2015. d. Calculation of the Proposed ESRDB Market Basket Update, Adjusted for Multifactor Productivity for CY 2015 Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD PPS payment amounts shall be annually increased by an ESRD market basket percentage increase factor reduced by the productivity adjustment. For CY 2015, section 1881(b)(14)(F)(i)(III) of the Act, as added by section 217(b)(2) of PAMA, requires the Secretary to implement a 0.0 percent ESRDB market basket increase to the ESRD PPS base rate. In addition, we interpret the reference to ‘‘[n]otwithstanding subclause (III)’’ that was added to amended section 1881(b)(14)(F)(i)(III) as precluding the application of the multifactor productivity (MFP) adjustment in 2015. As a result of these provisions, the proposed CY 2015 ESRD market basket increase is 0.0 percent. We note that if PAMA had not been enacted the proposed 2012-based ESRDB market basket update less productivity for CY 2015 would have been 1.6 percent, or 2.0 percent less 0.4 percentage point. e. Labor-Related Share We define the labor-related share (LRS) as those expenses that are laborintensive and vary with, or are influenced by, the local labor market. The labor-related share of a market basket is determined by identifying the national average proportion of operating costs that are related to, influenced by, or vary with the local labor market. The labor-related share is typically the sum of Wages and Salaries, Benefits, Professional Fees, Labor-related Services, and a portion of the Capital share from a given market basket. We propose to use the proposed 2012based ESRDB market basket costs to determine the proposed labor-related share for ESRD facilities of 50.673 percent, as shown in Table 9 below. These figures represent the sum of Wages and Salaries, Benefits, Housekeeping and Operations, 87 percent of the weight for Professional Fees (details discussed below), and 46 percent of the weight for Capital-related Building and Equipment expenses (details discussed below). We note that this is a similar methodology used to compute the labor-related share used from CY 2011 through CY 2014. TABLE 9—PROPOSED CY 2015 LABOR-RELATED SHARE AND CY 2014 ESRDB LABOR-RELATED SHARE Proposed CY 2015 ESRDB labor-related share (percent) Cost category CY 2014 ESRDB labor-related share (percent) 33.650 8.847 3.785 0.537 3.854 26.755 6.754 2.029 2.768 3.431 Total .............................................................................................................. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Wages .................................................................................................................. Benefits ................................................................................................................ Housekeeping and operations ............................................................................. Professional fees (labor-related) ......................................................................... Capital labor-related ............................................................................................ 50.673 41.737 The labor-related share for Professional Fees (87 percent) reflects the proportion of ESRD facilities’ professional fees expenses that we believe vary with local labor market. We conducted a survey of ESRD facilities in 2008 to better understand the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 proportion of contracted professional services that ESRD facilities typically purchase outside of their local labor market. These purchased professional services include functions such as accounting and auditing, management consulting, engineering, and legal PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 services. Based on the survey results, we determined that, on average, 87 percent of professional services are purchased from local firms and 13 percent are purchased from businesses located outside of the ESRD facility’s local labor market. Thus, we are proposing to E:\FR\FM\11JYP2.SGM 11JYP2 40226 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules include 87 percent of the cost weight for Professional Fees in the labor-related share, the same percentage as used in prior years. The labor-related share for capitalrelated expenses (46 percent of ESRD facilities’ adjusted Capital-related Building and Equipment expenses) reflects the proportion of ESRD facilities’ capital-related expenses that we believe varies with local labor market wages. Capital-related expenses are affected in some proportion by variations in local labor market costs (such as construction worker wages) that are reflected in the price of the capital asset. However, many other inputs that determine capital costs are not related to local labor market costs, such as interest rates. The 46-percent figure is based on regressions run for the inpatient hospital capital PPS in 1991 (56 FR 43375). We use a similar methodology to calculate capital-related expenses for the labor-related shares for rehabilitation facilities (70 FR 30233), psychiatric facilities, long-term care facilities, and skilled nursing facilities (66 FR 39585). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 3. The Proposed CY 2015 ESRD PPS Wage Indices a. Background Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD PPS may include a geographic wage index payment adjustment, such as the index referred to in section 1881(b)(12)(D) of the Act. In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized for the ESRD PPS the use of the Office of Management and Budget’s (OMB) CoreBased Statistical Areas (CBSAs)-based geographic area designations described in OMB bulletin 03–04, issued June 6, 2003 as the basis for revising the urban and rural areas and their corresponding wage index values. This bulletin, as well as subsequent bulletins, is available online at https:// www.whitehouse.gov/omb/bulletins_ index2003-2005. We also finalized that we would use the urban and rural definitions used for the Medicare IPPS but without regard to geographic reclassification authorized under section 1886(d)(8) and (d)(10) of the Act. In the CY 2012 ESRD PPS final rule (76 FR 70239), we finalized that, under the ESRD PPS, we will continue to utilize the ESRD PPS wage index methodology, first established under the basic case-mix adjusted composite rate payment system, for updating the wage index values using the OMB’s CBSA- VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 based geographic area designations to define urban and rural areas. b. Proposed Implementation of New Labor Market Delineations OMB publishes bulletins regarding CBSA changes, including changes to CBSA numbers and titles. In accordance with our established methodology, we have historically adopted via rulemaking CBSA changes that are published in the latest OMB bulletin. On February 28, 2013, OMB issued OMB Bulletin No. 13–01, which established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. A copy of this bulletin may be obtained at https://www.whitehouse.gov/sites/ default/files/omb/bulletins/2013/b-1301.pdf. According to OMB, ‘‘[t]his bulletin provides the delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in the United States and Puerto Rico based on the standards published on June 28, 2010, in the Federal Register (75 FR 37246–37252) and Census Bureau data.’’ In this CY 2015 ESRD PPS proposed rule, when referencing the new OMB geographic boundaries of statistical areas, we are using the term ‘‘delineations’’ rather than the term ‘‘definitions’’ that we have used in the past, consistent with OMB’s use of the terms (75 FR 37249). Because the bulletin was not issued until February 28, 2013, with supporting data not available until later, and because the changes made by the bulletin and their ramifications needed to be extensively reviewed and verified, we were unable to undertake such a lengthy process before publication of the FY 2014 IPPS/ LTCH PPS proposed rule and, thus, did not implement changes to the hospital wage index for FY 2014 based on these new CBSA delineations. Likewise, for the same reasons, the CY 2014 ESRD PPS wage index (based upon the pre-floor, pre-reclassified hospital wage data, which is unadjusted for occupational mix) also did not reflect the new CBSA delineations. In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to implement the new CBSA delineations as described in the February 28, 2013 OMB Bulletin No. 13–01, beginning with the FY 2015 IPPS PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 wage index (79 FR 28054 through 28055). Similarly, in this CY 2015 ESRD PPS proposed rule, we are proposing to implement the new CBSA delineations as described in the February 28, 2013 OMB Bulletin No. 13–01, beginning with the CY 2015 ESRD PPS wage index. We believe that the most current CBSA delineations accurately reflect the local economies and wage levels of the areas where facilities are located, and we believe that it is important for the ESRD PPS to use the latest CBSA delineations available in order to maintain an up-to-date payment system that accurately reflects the reality of populations shifts and labor market conditions. We have reviewed our findings and impacts relating to the new CBSA delineations using the most recent data available at the time of this proposed rule, and have concluded that there is no compelling reason to further delay the implementation of the CBSA delineations as set forth in OMB Bulletin 13–01. In order to implement these changes for the ESRD PPS, it is necessary to identify the new labor market area delineation for each county and facility in the country. For example, if we adopt the new CBSA delineations, there would be new CBSAs, urban counties that would become rural, rural counties that would become urban, and existing CBSAs that would be split apart. Because the wage index of urban areas is typically higher than that of rural areas, ESRD facilities currently located in rural counties that would become urban if we adopt the new CBSA delineations would generally experience an increase in their wage index values. We have identified 105 counties and 113 facilities that would move from rural to urban status if we adopt the new CBSA delineations beginning in CY 2015. Table 10: (CY 2015 Proposed Rural to Urban CBSA Crosswalk) shows the CBSA delineations for CY 2014 and the rural wage index values proposed for CY 2015 based on those delineations, compared to the proposed CBSA delineations for CY 2015 and the proposed urban wage index values for CY 2015 based on the new delineations, and the percentage change in these values for those counties that would change from rural to urban if we adopt the new CBSA delineations. If we adopt the new OMB delineations illustrated in Table 10 below, approximately 100 facilities would experience an increase in their wage index values. E:\FR\FM\11JYP2.SGM 11JYP2 40227 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 10—CY 2015 PROPOSED RURAL TO URBAN CBSA CROSSWALK ESRD PPS CY 2014 CBSA delineations County name State mstockstill on DSK4VPTVN1PROD with PROPOSALS2 CBSA BALDWIN ........................................ PICKENS ......................................... COCHISE ........................................ LITTLE RIVER ................................. WINDHAM ....................................... SUSSEX .......................................... CITRUS ........................................... GULF ............................................... HIGHLANDS .................................... SUMTER ......................................... WALTON ......................................... LINCOLN ......................................... MORGAN ........................................ PEACH ............................................ PULASKI ......................................... KALAWAO ....................................... MAUI ................................................ BUTTE ............................................. DE WITT .......................................... JACKSON ........................................ WILLIAMSON .................................. SCOTT ............................................ UNION ............................................. PLYMOUTH ..................................... KINGMAN ........................................ ALLEN ............................................. BUTLER .......................................... ACADIA ........................................... IBERIA ............................................. ST. JAMES ...................................... TANGIPAHOA ................................. VERMILION ..................................... WEBSTER ....................................... ST. MARYS ..................................... WORCESTER ................................. MIDLAND ........................................ MONTCALM .................................... FILLMORE ....................................... LE SUEUR ...................................... MILLE LACS .................................... SIBLEY ............................................ BENTON .......................................... YAZOO ............................................ GOLDEN VALLEY ........................... HALL ................................................ HAMILTON ...................................... HOWARD ........................................ MERRICK ........................................ JEFFERSON ................................... YATES ............................................. CRAVEN .......................................... DAVIDSON ...................................... GATES ............................................ IREDELL .......................................... JONES ............................................. LINCOLN ......................................... PAMLICO ........................................ ROWAN ........................................... OLIVER ........................................... SIOUX ............................................. HOCKING ........................................ PERRY ............................................ COTTON ......................................... JOSEPHINE .................................... LINN ................................................ ADAMS ............................................ COLUMBIA ...................................... FRANKLIN ....................................... VerDate Mar<15>2010 20:52 Jul 10, 2014 AL AL AZ AR CT DE FL FL FL FL FL GA GA GA GA HI HI ID IL IL IL IN IN IA KS KY KY LA LA LA LA LA LA MD MD MI MI MN MN MN MN MS MS MT NE NE NE NE NY NY NC NC NC NC NC NC NC NC ND ND OH OH OK OR OR PA PA PA Jkt 232001 01 01 03 04 07 08 10 10 10 10 10 11 11 11 11 12 12 13 14 14 14 15 15 16 17 18 18 19 19 19 19 19 19 21 21 23 23 24 24 24 24 25 25 27 28 28 28 28 33 33 34 34 34 34 34 34 34 34 35 35 36 36 37 38 38 39 39 39 PO 00000 Urban/Rural RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL Frm 00021 ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... Fmt 4701 Sfmt 4702 Proposed ESRD PPS CY 2015 CBSA delineations Wage index value 0.6981 0.6981 0.9159 0.7265 1.1292 1.0248 0.8010 0.8010 0.8010 0.8010 0.8010 0.7425 0.7425 0.7425 0.7425 0.9953 0.9953 0.7425 0.8363 0.8363 0.8363 0.8454 0.8454 0.8483 0.7838 0.7770 0.7770 0.7608 0.7608 0.7608 0.7608 0.7608 0.7608 0.8586 0.8586 0.8232 0.8232 0.9057 0.9057 0.9057 0.9057 0.7603 0.7603 0.9055 0.8957 0.8957 0.8957 0.8957 0.8226 0.8226 0.7963 0.7963 0.7963 0.7963 0.7963 0.7963 0.7963 0.7963 0.7125 0.7125 0.8315 0.8315 0.7824 1.0120 1.0120 0.8730 0.8730 0.8730 CBSA 19300 46220 43420 45500 49340 41540 26140 37460 42700 45540 18880 12260 12060 47580 47580 27980 27980 26820 14010 16060 16060 31140 17140 43580 48620 14540 14540 29180 29180 35380 25220 29180 43340 15680 41540 33220 24340 40340 33460 33460 33460 32820 27140 13740 24260 24260 24260 24260 48060 40380 35100 49180 47260 16740 35100 16740 35100 16740 13900 13900 18140 18140 30020 24420 10540 23900 14100 16540 Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN E:\FR\FM\11JYP2.SGM 11JYP2 ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... Wage index value 0.7279 0.8288 0.8970 0.7390 1.1536 0.9296 0.7653 0.7861 0.8011 0.8125 0.8260 0.9213 0.9358 0.7570 0.7570 0.9510 0.9510 0.8966 0.8935 0.8354 0.8354 0.8319 0.8942 0.8948 0.8503 0.8403 0.8403 0.7896 0.7896 0.8778 0.9487 0.7896 0.8347 0.8625 0.9296 0.7964 0.8832 1.1384 1.1162 1.1162 1.1162 0.9069 0.7932 0.8718 0.9253 0.9253 0.9253 0.9253 0.8417 0.8783 0.8547 0.8660 0.9156 0.9123 0.8547 0.9123 0.8547 0.9123 0.7251 0.7251 0.9499 0.9499 0.7948 1.0123 1.0919 1.0142 0.9382 1.0997 Change in value (percent) 4.27 18.72 ¥2.06 1.72 2.16 ¥9.29 ¥4.46 ¥1.86 0.01 1.44 3.12 24.08 26.03 1.95 1.95 ¥4.45 ¥4.45 20.75 6.84 ¥0.11 ¥0.11 ¥1.60 5.77 5.48 8.48 8.15 8.15 3.79 3.79 15.38 24.70 3.79 9.71 0.45 8.27 ¥3.26 7.29 25.69 23.24 23.24 23.24 19.28 4.33 -3.72 3.30 3.30 3.30 3.30 2.32 6.77 7.33 8.75 14.98 14.57 7.33 14.57 7.33 14.57 1.77 1.77 14.24 14.24 1.58 0.03 7.90 16.17 7.47 25.97 40228 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 10—CY 2015 PROPOSED RURAL TO URBAN CBSA CROSSWALK—Continued ESRD PPS CY 2014 CBSA delineations County name State CBSA MONROE ........................................ MONTOUR ...................................... UTUADO ......................................... BEAUFORT ..................................... CHESTER ....................................... JASPER ........................................... LANCASTER ................................... UNION ............................................. CUSTER .......................................... CAMPBELL ..................................... CROCKETT ..................................... MAURY ............................................ MORGAN ........................................ ROANE ............................................ FALLS .............................................. HOOD .............................................. HUDSPETH ..................................... LYNN ............................................... MARTIN ........................................... NEWTON ......................................... OLDHAM ......................................... SOMERVELL ................................... BOX ELDER .................................... AUGUSTA ....................................... BUCKINGHAM ................................ CULPEPER ..................................... FLOYD ............................................. RAPPAHANNOCK .......................... STAUNTON CITY ........................... WAYNESBORO CITY ..................... COLUMBIA ...................................... PEND OREILLE .............................. STEVENS ........................................ WALLA WALLA ............................... FAYETTE ........................................ RALEIGH ......................................... GREEN ............................................ PA PA PR SC SC SC SC SC SD TN TN TN TN TN TX TX TX TX TX TX TX TX UT VA VA VA VA VA VA VA WA WA WA WA WV WV WI Urban/Rural 39 39 40 42 42 42 42 42 43 44 44 44 44 44 45 45 45 45 45 45 45 45 46 49 49 49 49 49 49 49 50 50 50 50 51 51 52 The wage index values of rural areas are typically lower than that of urban areas. Therefore, ESRD facilities located in a county that is currently designated as urban under the ESRD PPS wage index that would become rural if we adopt the new CBSA delineations may experience a decrease in their wage index values. We have identified 39 counties and 29 ESRD facilities that RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL Proposed ESRD PPS CY 2015 CBSA delineations Wage index value ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... CBSA 0.8730 0.8730 0.4000 0.8381 0.8381 0.8381 0.8381 0.8381 0.8343 0.7387 0.7387 0.7387 0.7387 0.7387 0.7917 0.7917 0.7917 0.7917 0.7917 0.7917 0.7917 0.7917 0.8877 0.7694 0.7694 0.7694 0.7694 0.7694 0.7694 0.7694 1.0932 1.0932 1.0932 1.0932 0.7391 0.7391 0.9074 20700 14100 10380 25940 16740 25940 16740 43900 39660 28940 27180 34980 28940 28940 47380 23104 21340 31180 33260 13140 11100 23104 36260 44420 16820 47894 13980 47894 44420 44420 47460 44060 44060 47460 13220 13220 31540 would move from urban to rural status if we adopt the new CBSA delineations beginning in CY 2015. Table 11: (CY 2015 Proposed Urban to Rural CBSA Crosswalk) shows the CBSA delineations for CY 2014 and the proposed urban wage index values for CY 2015 based on those delineations, compared with the proposed CBSA delineations and wage index values for Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... Wage index value 0.9406 0.9382 0.4000 0.8807 0.9123 0.8807 0.9123 0.8275 0.9075 0.7039 0.7775 0.9053 0.7039 0.7039 0.8202 0.9412 0.8356 0.8870 0.8973 0.8541 0.8308 0.9412 0.9259 0.8357 0.9087 1.0418 0.8504 1.0418 0.8357 0.8357 1.0974 1.1467 1.1467 1.0974 0.8037 0.8037 1.1190 Change in value (percent) 7.74 7.47 0.00 5.08 8.85 5.08 8.85 ¥1.26 8.77 ¥4.71 5.25 22.55 ¥4.71 ¥4.71 3.60 18.88 5.55 12.04 13.34 7.88 4.94 18.88 4.30 8.62 18.11 35.40 10.53 35.40 8.62 8.62 0.38 4.89 4.89 0.38 8.74 8.74 23.32 CY 2015 based on those delineations, and the percentage change in these values for those counties that would change from urban to rural if we adopt the new CBSA delineations. If we adopted the new CBSA delineations illustrated in Table 11 below, approximately 30 facilities would experience a decrease in their wage index values. TABLE 11—CY 2015 PROPOSED URBAN TO RURAL CBSA CROSSWALK ESRD PPS CY 2014 CBSA delineations mstockstill on DSK4VPTVN1PROD with PROPOSALS2 County name State CBSA GREENE .................................... FRANKLIN .................................. POWER ...................................... FRANKLIN .................................. GIBSON ...................................... GREENE .................................... TIPTON ...................................... VerDate Mar<15>2010 20:52 Jul 10, 2014 AL ..................... AR .................... ID ..................... IN ..................... IN ..................... IN ..................... IN ..................... Jkt 232001 PO 00000 46220 22900 38540 17140 21780 14020 29020 Frm 00022 Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN Fmt 4701 ............ ............ ............ ............ ............ ............ ............ Sfmt 4702 Wage index value 0.8336 0.7593 0.9707 0.8942 0.8524 0.9096 0.9023 Proposed ESRD PPS CY 2015 CBSA delineations CBSA 01 04 13 15 15 15 15 E:\FR\FM\11JYP2.SGM Urban/Rural RURAL RURAL RURAL RURAL RURAL RURAL RURAL 11JYP2 ............. ............. ............. ............. ............. ............. ............. Wage index value 0.6930 0.7265 0.7425 0.8454 0.8454 0.8454 0.8454 Change in value (%) ¥16.9 ¥4.3 ¥23.5 ¥5.5 ¥0.8 ¥7.1 ¥6.3 40229 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 11—CY 2015 PROPOSED URBAN TO RURAL CBSA CROSSWALK—Continued ESRD PPS CY 2014 CBSA Delineations County name State CBSA FRANKLIN .................................. GEARY ....................................... NELSON ..................................... WEBSTER .................................. FRANKLIN .................................. IONIA .......................................... NEWAYGO ................................. GEORGE .................................... STONE ....................................... CRAWFORD .............................. HOWARD ................................... WASHINGTON ........................... ANSON ....................................... GREENE .................................... ERIE ........................................... OTTAWA .................................... PREBLE ..................................... WASHINGTON ........................... STEWART .................................. CALHOUN .................................. DELTA ........................................ SAN JACINTO ............................ SUMMIT ..................................... CUMBERLAND .......................... DANVILLE CITY ......................... KING AND QUEEN .................... LOUISA ...................................... PITTSYLVANIA .......................... SURRY ....................................... MORGAN ................................... PLEASANTS .............................. KS .................... KS .................... KY .................... KY .................... MA .................... MI ..................... MI ..................... MS .................... MS .................... MO ................... MO ................... MO ................... NC .................... NC .................... OH .................... OH .................... OH .................... OH .................... TN .................... TX .................... TX .................... TX .................... UT .................... VA .................... VA .................... VA .................... VA .................... VA .................... VA .................... WV ................... WV ................... We note that facilities in some urban CBSAs could experience a change in their wage index values even though they remain urban because an urban CBSA’s boundaries and/or the counties included in that CBSA could change. Table 12 (CY 2015 Proposed Urban to a 28140 31740 31140 21780 44140 24340 24340 37700 25060 41180 17860 41180 16740 24780 41780 45780 19380 37620 17300 47020 19124 26420 41620 40060 19260 40060 40060 19260 47260 25180 37620 Wage index value Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN Proposed ESRD PPS CY 2015 CBSA delineations ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ CBSA 0.9454 0.7225 0.8313 0.8524 1.0309 0.8998 0.8998 0.7423 0.8209 0.9457 0.8349 0.9457 0.9283 0.9405 0.7792 0.9152 0.8918 0.8167 0.7554 0.8504 0.9751 0.9881 0.9548 0.9556 0.7985 0.9556 0.9556 0.7985 0.9156 0.9113 0.8167 Urban/Rural 17 17 18 18 22 23 23 25 25 26 26 26 34 34 36 36 36 36 44 45 45 45 46 49 49 49 49 49 49 51 51 Different Urban CBSA Crosswalk) shows the CBSA delineations for CY 2014 and urban wage index values for CY 2015 based on those delineations, compared with the proposed CBSA delineations and urban wage index values for CY 2015 based on those delineations, and RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. Wage index value 0.7811 0.7811 0.7774 0.7774 1.1596 0.8313 0.8313 0.7584 0.7584 0.7827 0.7827 0.7827 0.7880 0.7880 0.8338 0.8338 0.8338 0.8338 0.7297 0.7909 0.7909 0.7909 0.8993 0.7573 0.7573 0.7573 0.7573 0.7573 0.7573 0.7249 0.7249 Change in value (%) ¥17.4 8.1 ¥6.5 ¥8.8 12.5 ¥7.6 ¥7.6 2.2 ¥7.6 ¥17.2 ¥6.3 ¥17.2 ¥15.1 ¥16.2 7.0 ¥8.9 ¥6.5 2.1 ¥3.4 ¥7.0 ¥18.9 ¥20.0 ¥5.8 ¥20.8 ¥5.2 ¥20.8 ¥20.8 ¥5.2 ¥17.3 ¥20.5 ¥11.2 the percentage change in these values for counties that would remain urban even though the CBSA boundaries and/ or counties included in that CBSA would change. TABLE 12—CY 2015 PROPOSED URBAN TO A DIFFERENT URBAN CBSA CROSSWALK ESRD PPS CY 2014 CBSA delineations County name State mstockstill on DSK4VPTVN1PROD with PROPOSALS2 CBSA MARIN ................................................. FLAGLER ............................................ DE KALB ............................................. KANE ................................................... MADISON ............................................ MEADE ................................................ ESSEX ................................................. OTTAWA ............................................. JACKSON ............................................ BERGEN ............................................. HUDSON ............................................. MIDDLESEX ........................................ MONMOUTH ....................................... OCEAN ................................................ PASSAIC ............................................. SOMERSET ........................................ VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 CA FL IL IL IN KY MA MI MS NJ NJ NJ NJ NJ NJ NJ PO 00000 41884 37380 16974 16974 11300 31140 37764 26100 37700 35644 35644 20764 20764 20764 35644 20764 Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN Frm 00023 ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. Fmt 4701 Sfmt 4702 Proposed ESRD PPS CY 2015 CBSA delineations Wage index value 1.7049 0.8494 1.0368 1.0368 1.0115 0.8313 1.0808 0.8167 0.7423 1.3136 1.3136 1.1085 1.1085 1.1085 1.3136 1.1085 CBSA 42034 19660 20994 20994 26900 21060 15764 24340 25060 35614 35614 35614 35614 35614 35614 35084 E:\FR\FM\11JYP2.SGM Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN 11JYP2 ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. Wage index value 1.7317 0.8407 1.0347 1.0347 1.0170 0.7650 1.1196 0.8832 0.7927 1.2887 1.2887 1.2887 1.2887 1.2887 1.2887 1.1520 Change In value (%) 1.6 ¥1.0 ¥0.2 ¥0.2 0.5 ¥8.0 3.6 8.1 6.8 ¥1.9 ¥1.9 16.3 16.3 16.3 ¥1.9 3.9 40230 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 12—CY 2015 PROPOSED URBAN TO A DIFFERENT URBAN CBSA CROSSWALK—Continued ESRD PPS CY 2014 CBSA delineations County name State CBSA BRONX ................................................ DUTCHESS ......................................... KINGS ................................................. NEW YORK ......................................... ORANGE ............................................. PUTNAM ............................................. QUEENS ............................................. RICHMOND ......................................... ROCKLAND ......................................... WESTCHESTER ................................. BRUNSWICK ....................................... BUCKS ................................................ CHESTER ........................................... MONTGOMERY .................................. ARECIBO ............................................ CAMUY ................................................ CEIBA .................................................. FAJARDO ............................................ GUANICA ............................................ GUAYANILLA ...................................... HATILLO .............................................. LUQUILLO ........................................... PENUELAS ......................................... QUEBRADILLAS ................................. YAUCO ................................................ ANDERSON ........................................ GRAINGER ......................................... LINCOLN ............................................. PUTNAM ............................................. NY NY NY NY NY NY NY NY NY NY NC PA PA PA PR PR PR PR PR PR PR PR PR PR PR SC TN WV WV Likewise, ESRD facilities currently located in a rural area may remain rural under the new CBSA delineations but experience a change in their rural wage index value due to implementation of 35644 39100 35644 35644 39100 35644 35644 35644 35644 35644 48900 37964 37964 37964 41980 41980 21940 21940 49500 49500 41980 21940 49500 41980 49500 11340 34100 16620 16620 Wage index value Urban/Rural URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN Proposed ESRD PPS CY 2015 CBSA delineations ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. CBSA 1.3136 1.1576 1.3136 1.3136 1.1576 1.3136 1.3136 1.3136 1.3136 1.3136 0.8899 1.0934 1.0934 1.0934 0.4471 0.4471 0.4000 0.4000 0.4000 0.4000 0.4471 0.4000 0.4000 0.4471 0.4000 0.8775 0.7002 0.8017 0.8017 Urban/Rural 35614 20524 35614 35614 35614 20524 35614 35614 35614 35614 34820 33874 33874 33874 11640 11640 41980 41980 38660 38660 11640 41980 38660 11640 38660 24860 28940 26580 26580 the new CBSA delineations. Table 13 (CY 2015 Proposed Changes to the Statewide Rural Wage Index Crosswalk) shows the CBSA numbers for CY 2014 and the proposed rural statewide wage URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN URBAN ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. Wage index value 1.2887 1.1387 1.2887 1.2887 1.2887 1.1387 1.2887 1.2887 1.2887 1.2887 0.8641 1.0236 1.0236 1.0236 0.4229 0.4229 0.4460 0.4460 0.4169 0.4169 0.4229 0.4460 0.4169 0.4229 0.4169 0.9025 0.7039 0.8773 0.8773 Change In value (%) ¥1.9 ¥1.6 ¥1.9 ¥1.9 11.3 ¥13.3 ¥1.9 ¥1.9 ¥1.9 ¥1.9 ¥2.9 ¥6.4 ¥6.4 ¥6.4 ¥5.4 ¥5.4 11.5 11.5 4.2 4.2 ¥5.4 11.5 4.2 ¥5.4 4.2 2.8 0.5 9.4 9.4 index values for CY 2015, compared with the proposed statewide rural wage index values for CY 2015, and the percentage change in these values. TABLE 13—CY 2015 PROPOSED CHANGES TO THE STATEWIDE RURAL WAGE INDEX CROSSWALK ESRD PPS CY 2014 CBSA delineations State mstockstill on DSK4VPTVN1PROD with PROPOSALS2 CBSA AL .............................................................. AZ .............................................................. CT .............................................................. FL ............................................................... GA .............................................................. HI ............................................................... IL ................................................................ KS .............................................................. KY .............................................................. LA .............................................................. MD ............................................................. MA ............................................................. MI ............................................................... MS ............................................................. NE .............................................................. NY .............................................................. NC .............................................................. OH ............................................................. OR ............................................................. PA .............................................................. VerDate Mar<15>2010 20:52 Jul 10, 2014 Jkt 232001 PO 00000 Wage index value Urban/Rural 01 03 07 10 11 12 14 17 18 19 21 22 23 25 28 33 34 36 38 39 RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL Frm 00024 ..................... ..................... ..................... .................... .................... .................... .................... .................... .................... ..................... .................... .................... ..................... .................... .................... .................... .................... .................... .................... .................... Fmt 4701 Proposed ESRD PPS CY 2015 CBSA delineations 0.6981 0.9159 1.1292 0.8010 0.7425 0.9953 0.8363 0.7838 0.7770 0.7608 0.8586 1.3971 0.8232 0.7603 0.8957 0.8226 0.7963 0.8315 1.0120 0.8730 Sfmt 4702 CBSA 01 03 07 10 11 12 14 17 18 19 21 22 23 25 28 33 34 36 38 39 Urban/Rural RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL E:\FR\FM\11JYP2.SGM .................... .................... .................... ..................... .................... .................... ..................... ..................... ..................... .................... .................... .................... .................... .................... ..................... ..................... ..................... .................... .................... ..................... 11JYP2 Wage index value 0.6930 0.9253 1.1337 0.8394 0.7439 1.0276 0.8365 0.7811 0.7774 0.7135 0.8778 1.1596 0.8313 0.7584 0.8909 0.8208 0.7880 0.8338 0.9985 0.8079 Change in value (%) ¥0.73 1.03 0.40 4.79 0.19 3.25 0.02 ¥0.34 0.05 ¥6.22 2.24 ¥17.00 0.98 ¥0.25 ¥0.54 ¥0.22 ¥1.04 0.28 ¥1.33 ¥7.46 40231 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 13—CY 2015 PROPOSED CHANGES TO THE STATEWIDE RURAL WAGE INDEX CROSSWALK—Continued ESRD PPS CY 2014 CBSA delineations State CBSA SC .............................................................. TN .............................................................. TX .............................................................. UT .............................................................. VA .............................................................. WA ............................................................. WV ............................................................. WI .............................................................. While we believe that the new CBSA delineations would result in wage index values that are more representative of the actual costs of labor in a given area, we also recognize that use of the new CBSA delineations would result in reduced payments to some facilities. In particular, approximately 30 facilities would experience reduced payments if we adopt the new CBSA delineations. At the same time, use of the new CBSA delineations would result in increased payments for approximately 100 facilities, while the majority of facilities would experience no change in payments due to the implementation of the new CBSA delineations. We are proposing to implement the new CBSA delineations using a 2-year transition with a 50/50 blended wage index value for all facilities in CY 2015 and 100% of the wage index based on the new CBSA delineations in CY 2016. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 c. Transition Period We considered having no transition period and fully implementing the proposed new CBSA delineations beginning in CY 2015, which would mean that all facilities would have payments based on the new delineations starting on January 1, 2015. However, because more facilities would have increased rather than decreased payments beginning in CY 2015, and because the overall amount of ESRD payments would increase slightly due to the new CBSA delineations, the wage index budget neutrality factor would be higher. This higher factor would reduce the ESRD PPS per treatment base rate for all facilities paid under the ESRD PPS, despite the fact that the majority of ESRD facilities are unaffected by the new CBSA delineations. Thus, we believe that it would be appropriate to provide for a transition period to mitigate any resulting short-term instability of a lower ESRD PPS base rate as well as any negative impacts to facilities that experience reduced VerDate Mar<15>2010 20:52 Jul 10, 2014 Jkt 232001 Wage index value Urban/Rural 42 44 45 46 49 50 51 52 RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL Proposed ESRD PPS CY 2015 CBSA delineations .................... ..................... ..................... ..................... .................... ..................... ..................... .................... CBSA 0.8381 0.7387 0.7917 0.8877 0.7694 1.0932 0.7391 0.9074 payments. In addition, we note that for CY 2015, section 1881(b)(14)(F)(i)(III), as added by section 217 of PAMA, requires a 0.0 payment update (for further discussion on this update please see section II.B.1.a.ii of this rule), and thus, there is no possibility of offsetting any reduction, even a slight reduction, to the ESRD PPS base rate in CY 2015. Therefore, we are proposing a twoyear transition blended wage index for all facilities. Facilities would receive 50 percent of their CY 2015 wage index value based on the CBSA delineations for CY 2014 and 50 percent of their CY 2015 wage index value based on the proposed new CBSA delineations. This results in an average of the two values. We propose that facilities’ CY 2016 wage index values would be based 100 percent on the new CBSA delineations. We believe a two-year transition strikes an appropriate balance between ensuring that ESRD PPS payments are as accurate and stable as possible while giving facilities time to adjust to the new CBSA delineations. In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized a policy to use the labor-related share of 41.737 percent for the ESRD PPS. For the CY 2015 ESRD PPS, we propose to use a labor-related share of 50.673 percent, which we propose to transition over a 2-year period with the labor-related share in CY 2015 based 50 percent on the old labor-related share and 50 percent on the new labor-related share, and the labor-related share in CY 2016 based 100 percent on the new laborrelated share. For a complete discussion of the proposed changes in the CY 2015 ESRD PPS market basket and laborrelated share, as well as the transition of the labor-related share; please see sections II.B.2.e and XII.B.1.a of this proposed rule. PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 Urban/Rural 42 44 45 46 49 50 51 52 RURAL RURAL RURAL RURAL RURAL RURAL RURAL RURAL ..................... .................... .................... .................... ..................... .................... .................... ..................... Wage index value 0.8357 0.7297 0.7909 0.8993 0.7573 1.0917 0.7249 0.9120 Change in value (%) ¥0.29 ¥1.22 ¥0.10 1.31 ¥1.57 ¥0.14 ¥1.92 0.51 4. Proposed Revisions to the Outlier Policy Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS include a payment adjustment for high cost outliers due to unusual variations in the type or amount of medically necessary care, including variability in the amount of erythropoiesis stimulating agents (ESAs) necessary for anemia management. Our regulations at 42 CFR 413.237(a)(1) provide that ESRD outlier services are the following items and services that are included in the ESRD PPS bundle: (i) ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (ii) ESRD-related laboratory tests that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (iii) medical/ surgical supplies, including syringes, used to administer ESRD-related drugs, that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; and (iv) renal dialysis service drugs that were or would have been, prior to January 1, 2011, covered under Medicare Part D, excluding ESRD-related oral-only drugs. In the CY 2011 ESRD PPS final rule (75 FR 49142), we stated that for purposes of determining whether an ESRD facility would be eligible for an outlier payment, it would be necessary for the facility to identify the actual ESRD outlier services furnished to the patient by line item on the monthly claim. The ESRD-related drugs, laboratory tests, and medical/surgical supplies that we would recognize as outlier services were specified in Attachment 3 of Change Request 7064, Transmittal 2033 issued August 20, 2010, rescinded and replaced by Transmittal 2094, dated November 17, 2010. With respect to the outlier policy, Transmittal 2094 identified additional drugs and laboratory tests that may be eligible for ESRD outlier payment. E:\FR\FM\11JYP2.SGM 11JYP2 40232 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Transmittal 2094 was rescinded and replaced by Transmittal 2134, dated January 14, 2011, which was issued to correct the subject on the Transmittal page and made no other changes. In the CY 2012 ESRD PPS final rule (76 FR 70246), we eliminated the issuance of a specific list of eligible outlier service drugs which were or would have been separately billable under Medicare Part B prior to January 1, 2011. However, we use separate guidance to continue to identify renal dialysis service drugs which were or would have been covered under Part D for outlier eligibility purposes in order to provide unit prices for calculating imputed outlier services. We also can identify, through our monitoring efforts, items and services that are incorrectly being identified as eligible outlier services in the claims data. Information about these items and services and any updates to the list of renal dialysis items and services that qualify as outlier services are made through administrative issuances, if necessary. Our regulations at 42 CFR 413.237 specify the methodology used to calculate outlier payments. An ESRD facility is eligible for an outlier payment if its actual or imputed Medicare Allowable Payment (MAP) amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to January 1, 2011. The threshold is equal to the ESRD facility’s predicted ESRD outlier services MAP amount per treatment (which is case-mix adjusted) plus the fixed dollar loss amount. In accordance with § 413.237(c) of the regulations, facilities are paid 80 percent of the per treatment amount by which the imputed MAP amount for outlier services (that is, the actual incurred amount) exceeds this threshold. ESRD facilities are eligible to receive outlier payments for treating both adult and pediatric dialysis patients. In the CY 2011 ESRD PPS final rule, using 2007 data, we established the outlier percentage at 1.0 percent of total payments (75 FR 49142 through 49143). We also established the fixed dollar loss amounts that are added to the predicted outlier services MAP amounts. The outlier services MAP amounts and fixed dollar loss amounts are different for adult and pediatric patients due to differences in the utilization of separately billable services among adult and pediatric patients (75 FR 49140). As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 and 49139), the predicted outlier services MAP amounts for a patient are determined by multiplying the adjusted average outlier services MAP amount by the product of the patient-specific case-mix adjusters applicable using the outlier services payment multipliers developed from the regression analysis to compute the payment adjustments. For CY 2014, the outlier services MAP amounts and fixed dollar loss amounts were based on 2012 data (78FR 72180). Therefore, the outlier thresholds for CY 2014 were based on utilization of ESRD-related items and services furnished under the ESRD PPS. Because of the utilization of epoetin and other outlier services has continued to decline under the ESRD PPS, we lowered the MAP amounts and fixed dollar loss amounts for CYs 2013 and 2014 to allow for an increase in payments for ESRD beneficiaries requiring higher resources. a. Proposed Changes to the Outlier Services MAP Amounts and Fixed Dollar Loss Amounts For CY 2015, we are not proposing any changes to the methodology used to compute the MAP or fixed dollar loss amounts. Rather, in this proposed rule, we are updating the outlier services MAP amounts and fixed dollar loss amounts to reflect the utilization of outlier services reported on the 2013 claims using the December 2013 claims file. The impact of this update is shown in Table 14, which compares the outlier services MAP amounts and fixed dollar loss amounts used for the outlier policy in CY 2014 with the updated estimates for this proposed rule. The estimates for the proposed outlier CY 2015 outlier policy, which are included in Column II of Table 14, were inflation-adjusted to reflect projected 2015 prices for outlier services. TABLE 14—OUTLIERPOLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY Column I Final outlier policy for CY 2014 (based on 2012 data price inflated to 2014) * Age <18 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Average outlier services MAP amount per treatment 1 ................................... Adjustments. Standardization for outlier services 2 ........................................................ MIPPA reduction ....................................................................................... Adjusted average outlier services MAP amount 3 .................................... Fixed dollar loss amount that is added to the predicted MAP to determine the outlier threshold 4 ................................................................................... Patient months qualifying for outlier payment ................................................. Age >=18 Column II Proposed outlier policy for CY 2015 (based on 2013 data price inflated to 2015) * Age <18 Age >=18 $37.29 $51.97 $40.05 $52.61 1.1079 0.98 $40.49 0.9866 0.98 $50.25 1.1182 0.98 $43.89 0.9899 0.98 $51.04 $54.01 6.7% $98.67 5.3% $56.30 6.2% $85.24 6.3% * The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated prices for outlier services (that is, 2014 prices in Column I and projected 2015 prices in Column II). 1 Excludes patients for whom not all data were available to calculate projected payments. The outlier services MAP amounts are based on 2013 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg for Aranesp that are in place under the ESA claims monitoring policy were applied. 2 Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing case mix adjusters for adult and pediatric patient groups. 3 This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the predicted outlier services MAP for each patient. 4 The fixed dollar loss amounts were calculated using 2013 data to yield total outlier payments that represent 1% of total projected payments for the ESRD PPS. As seen in Table 14, the estimated fixed dollar loss amount that determines VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 the CY 2015 outlier threshold amount for adults (Column II) is lower than that PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 used for the CY 2014 outlier policy (Column I). The threshold is lower in E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules spite of the fact that the average outlier services MAP per treatment has increased. Between 2012 and 2013, the variation in outlier services across patients declined among adults. The net result is an increase in the percentage of patient-months qualifying for outlier payment (6.3 percent based on 2013 data versus 5.3 percent based on 2012 data) but a decrease in the average outlier payment per case. The estimated fixed dollar loss amount that determines the CY 2015 outlier threshold amount for pediatric patients (Column II) is higher than that used for the CY 2014 outlier policy (Column I). For pediatric patients, there was an increase in the overall average outlier service MAP amount between 2012 ($37.29 per treatment as shown in Column I) and 2013 ($40.05 per treatment, as shown in Column II). In addition, there was a continuing tendency in 2013 for a relatively small percentage of pediatric patients to account for a disproportionate share of the total outlier service MAP amounts. The one percent target for outlier payments is therefore expected to be achieved based on a smaller percentage of pediatric outlier cases using 2013 data compared to 2012 data (6.2 percent of pediatric patient months are expected to qualify for outlier payments rather than 6.7 percent). These patterns led to the estimated fixed dollar loss amount for pediatric patients being higher for the outlier policy for CY 2015 compared to the outlier policy for CY 2014. Generally, there is a relatively higher likelihood for pediatric patients that the outlier threshold may be adjusted to reflect changes in the distribution of outlier service MAP amounts. This is due to the much smaller overall number of pediatric patients compared to adult patients, and therefore to the fact that the outlier threshold for pediatric patients is calculated based on data for a much smaller number of pediatric patients compared to adult patients. We propose to update the fixed dollar loss amounts that are added to the predicted MAP amounts per treatment to determine the outlier thresholds for CY 2015 from $98.67 to $85.24 for adult patients and from $54.01 to $56.30 for pediatric patients compared with CY 2014 amounts. We estimate that the percentage of patient months qualifying for outlier payments under the current policy will be 6.3 percent and 6.2 percent for adult and pediatric patients, respectively, based on the 2013 data. The pediatric outlier MAP and fixed dollar loss amounts continue to be lower for pediatric patients than adults due to the continued lower use of outlier services (primarily reflecting VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 lower use of epoetin and other injectable drugs). b. Outlier Policy Percentage 42 CFR 413.220(b)(4) stipulates that the per treatment base rate is reduced by 1 percent to account for the proportion of the estimated total payments under the ESRD PPS that are outlier payments. Based on the 2013 claims, outlier payments represented approximately 0.5 percent of total payments, again falling short of the 1 percent target due to further declines in the use of outlier services. Use of 2013 data to recalibrate the thresholds, which reflect lower utilization of EPO and other outlier services and reduced variation in outlier services among adults, is expected to result in aggregate outlier payments close to the 1 percent target in CY 2015. We believe the proposed update to the outlier MAP and fixed dollar loss amounts for CY 2015 will increase payments for ESRD beneficiaries requiring higher resource utilization and come closer to meeting our 1 percent outlier policy. We note that recalibration of the fixed dollar loss amounts in this proposed rule for CY 2015 outlier payments results in no change in payments to ESRD facilities for beneficiaries with renal dialysis items and services that are not eligible for outlier payments, but increases payments to providers for beneficiaries with renal dialysis items and services that are eligible for outlier payments. Therefore, beneficiary coinsurance obligations would also increase for renal dialysis services eligible for outlier payments. C. Restatement of Policy Regarding Reporting and Payment for More Than Three Dialysis Treatments per Week 1. Reporting More Than Three Dialysis Treatments per Week on Claims Since the composite payment system was implemented in the 1980s, CMS has reimbursed ESRD facilities based upon three hemodialysis treatments per week and allowed for the payment of additional weekly dialysis treatments with medical justification. When a dialysis modality regimen requires more than three weekly dialysis treatments, such as with short, frequent hemodialysis (HD) and peritoneal dialysis (PD) modalities, we apply payment edits to ensure that Medicare payment on the monthly claim is consistent with the three times-weekly dialysis treatment payment limit, which translates to payment for 13 treatments for a 30-day month and 14 treatments for a 31-day month. PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 40233 Under section 1881(b)(14)(C) of the Act, the ESRD PPS may provide for payment on the basis of renal dialysis services furnished during a week, or month, or such other appropriate unit of payment as the Secretary specifies. In the CY 2011 ESRD PPS final rule (75 FR 49064), CMS finalized the per treatment basis of payment in which ESRD facilities are paid for up to three treatments per week, unless there is medical justification for more than three treatments per week. We codified the per-treatment unit of payment under the ESRD PPS at 42 CFR 413.215(a). Also in the CY 2011 ESRD PPS final rule (75 FR 49078), we explained how we converted patient weeks to HD-equivalent sessions for PD patients. Specifically, we noted that one week of PD was considered equivalent to three HD treatments. For example, a patient on PD for 21 days would have (21/7) x 3 or 9 HDequivalent sessions. Our policy is that ESRD facilities treating patients on PD or home HD will be paid for up to three HD-equivalent sessions for each week of dialysis, unless there is medical justification for furnishing additional treatments. Increasingly, some ESRD facilities have begun to offer dialysis modalities where the standard treatment regimen is more than three treatments per week. Also, we have observed a payment variance among Medicare Administrative Contractors (MACs) in processing claims for dialysis treatments for modalities that require more frequent dialysis, resulting in payment of more than 14 treatments per month without medical justification. Lastly, CMS has received several requests for clarification regarding Medicare payment and billing policies for dialysis treatments for modalities requiring more than three treatments per week that are furnished in-facility or in the patient’s home. Specifically, ESRD facilities, renal physician groups, and MACs have requested billing guidance regarding whether all of the dialysis treatments furnished to the patient during the billing month should be reported on the claim form, even though the Medicare benefit only provides for payment of three dialysis treatments per week. For these reasons, we are reiterating our policy with respect to payment for more than three dialysis treatments per week. We note that we are not changing our policy for reporting extra nonmedically necessary dialysis sessions. ESRD facility claims should continue to include all dialysis treatments furnished during the month on claims, but payment is limited to three dialysis treatments per week through the payment edits of 13 treatments for a 30- E:\FR\FM\11JYP2.SGM 11JYP2 40234 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 day month or 14 treatments for a 31-day month. For example, an ESRD facility that furnishes dialysis services to patients who dialyze using modalities requiring shorter, more frequent dialysis (for example, a dialysis regimen of 4, 5, 6 or 7 days a week in-facility or at home), should report all of the patient’s dialysis treatments on the monthly claim. However, payment for these services will reflect existing claims processing system edits, and the monthly Medicare payment would mirror the Medicare ESRD benefit of three dialysis treatments per week. 2. Medical Necessity for More Than Three Treatments per Week Under the ESRD benefit, we have always recognized that some patient conditions benefit from more than three dialysis sessions per week and as such, the Medicare policy for medically necessary additional dialysis treatments was developed. Under this policy, the MACs determine whether additional treatments furnished during a month are medically necessary. While Medicare does not define specific patient conditions that meet the requirements of medical necessity, we do furnish instructions to MACs to consider appropriate patient conditions that would result in a patient’s medical need for additional dialysis treatments (for example, excess fluid of five or more pounds). When such patient conditions are indicated with the claim requesting payment, we instruct MACs to consider medical justification and the appropriateness of payment for the additional sessions. In section 50.A of the Medicare Benefit Policy Manual (Pub. 100–02), we explained our policy regarding payment for hemodialysis-equivalent PD and payment for more than three dialysis treatments per week under the ESRD PPS. We restated that ESRD facilities are paid for a maximum of 13 treatments during a 30 day month and 14 treatments during a 31-day month unless there is medical justification for additional treatments. The only time facilities should seek payment for additional dialysis sessions, including payment for shorter, more frequent modalities, is when the patient has a medical need for additional dialysis and the facility has furnished supporting medical justification for the extra treatments. Modality choice does not constitute medical justification. D. Delay of Payment for Oral-Only Drugs Under the ESRD PPS As we discussed in the CY 2014 ESRD PPS final rule (78 FR 72185 through 72186), section 1881(b)(14)(A)(i) of the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Act, as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), requires the Secretary to implement a payment system under which a single payment is made to a provider of services or a renal dialysis facility for ‘‘renal dialysis services’’ in lieu of any other payment. Section 1881(b)(14)(B) of the Act defines renal dialysis services, and subclause (iii) of that section states that these services include ‘‘other drugs and biologicals that are furnished to individuals for the treatment of ESRD and for which payment was (before the application of this paragraph) made separately under this title, and any oral equivalent form of such drug or biological[.]’’ We interpreted this provision as including not only injectable drugs and biologicals used for the treatment of ESRD (other than ESAs, which are included under clause (ii) of section 1881(b)(14)(B)), but also all noninjectable oral drugs used for the treatment of ESRD furnished under title XVIII of the Act. We also concluded that, to the extent ESRD-related oralonly drugs do not fall within clause (iii) of the statutory definition of renal dialysis services, such drugs would fall under clause (iv), and constitute other items and services used for the treatment of ESRD that are not described in clause (i) of section 1881(b)(14)(B). As such, CMS finalized and promulgated the payment policies for oral-only drugs used for the treatment of ESRD in the CY 2011 ESRD PPS final rule (75 FR 49038 through 49053), and we defined ‘‘renal dialysis services’’ at 42 CFR 413.171(3) as including, among other things ‘‘other drugs and biologicals that are furnished to individuals for the treatment of ESRD and for which payment was (prior to January 1, 2011) made separately under Title XVIII of the Act (including drugs and biologicals with only an oral form).’’ Although ESRD-related oral-only drugs are included in the definition of renal dialysis services, in the CY 2011 ESRD PPS final rule (75 FR 49044), we also finalized a policy to delay payment for these drugs under the PPS until January 1, 2014. We stated that there were certain advantages to delaying the implementation of payment for oralonly drugs, including allowing ESRD facilities additional time to make operational changes and logistical arrangements in order to furnish oralonly ESRD-related drugs and biologicals to their patients. Accordingly, 42 CFR 413.174(f)(6) provides that payment to an ESRD facility for renal dialysis service drugs and biologicals with only PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 an oral form is incorporated into the PPS payment rates effective January 1, 2014. On January 3, 2013, the Congress enacted ATRA. Section 632(b) of ATRA states that the Secretary ‘‘may not implement the policy under section 413.176(f)(6) of title 42, Code of Federal Regulations (relating to oral-only ESRDrelated drugs in the ESRD prospective payment system), prior to January 1, 2016.’’ Accordingly, in the CY 2014 ESRD PPS final rule (78 FR 72185 through 72186), we delayed payment for ESRD-related oral-only drugs under the ESRD PPS until January 1, 2016, instead of on January 1, 2014, which is the original date we finalized for payment of ESRD-related oral-only drugs under the ESRD PPS. We implemented this delay by revising the effective date for providing payment for oral-only ESRDrelated drugs under the ESRD PPS at 42 CFR 413.174(f)(6) from January 1, 2014 to January 1, 2016. In addition, we also changed the date when oral-only drugs would be eligible outlier services under the outlier policy described in 42 CFR 413.237(a)(1)(iv) from January 1, 2014 to January 1, 2016. On April 1, 2014, PAMA was enacted. Section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA, which now provides that the Secretary ‘‘may not implement the policy under section 413.174(f)(6) of title 42, Code of Federal Regulations (relating to oral-only ESRD drugs in the ESRD prospective payment system), prior to January 1, 2024.’’ Accordingly, payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024 instead of on January 1, 2016, which is the date we finalized for payment of ESRD-related oral-only drugs under the ESRD PPS in the CY 2014 ESRD PPS final rule (78 FR 72186). We propose to implement this delay by modifying the effective date for providing payment for oral-only ESRDrelated drugs and biologicals under the ESRD PPS at 42 CFR 413.174(f)(6) from January 1, 2016 to January 1, 2024. We also propose to change the date in 42 CFR 413.237(a)(1)(iv) regarding outlier payments for oral-only ESRD-related drugs made under the ESRD PPS from January 1, 2016 to January 1, 2024. We continue to believe that oral-only drugs used for the treatment of ESRD are an essential part of the ESRD PPS payment bundle and should be paid for under the ESRD PPS as soon as possible, or beginning January 1, 2024. In addition to the delay of payment for oral-only ESRD-related drugs, section 217(a)(2) of PAMA further amends section 632(b)(1) of ATRA by adding a new sentence that provides, E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules ‘‘[n]otwithstanding section 1881(b)(14)(A)(ii) of the Social Security Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), implementation of the policy described in the previous sentence shall be based on data from the most recent year available.’’ We interpret this provision to mean that we are not to use per patient utilization data from 2007, 2008, or 2009 (whichever has the lowest per patient utilization) as we were required for the original ESRD PPS in implementing payment for oral-only ESRD drugs under the ESRD PPS. We will make proposals consistent with section 632(b)(1) of ATRA, as amended by section 217(a)(2) of PAMA, in future rulemaking. Section 217(c) of PAMA requires the Secretary, as part of the CY 2016 ESRD PPS rulemaking, to establish a process for ‘‘(1) determining when a product is no longer an oral-only drug; and (2) including new injectable and intravenous products into the bundled payment under such system.’’ Consistent with this statutory requirement, we plan to propose a drug designation process in our CY 2016 rulemaking cycle and we are seeking industry and stakeholder comments on the components and elements of such a process for our consideration next year. E. ESRD Drug Categories Included in the ESRD PPS Base Rate In the CY 2011 ESRD PPS final rule (75 FR 49050), we finalized Table 4, (Renal Dialysis Service ESRD Drug Categories Included in the Final ESRD PPS Base Rate), and have included Table 15 below for the purpose of this 40235 discussion. In that rule, we noted that the categories of drugs and biologicals used for access management, anemia management, anti-infectives, bone and mineral metabolism and cellular management would always be considered ESRD-related drugs when furnished to an ESRD patient, and that payment for such drugs would be included in the ESRD PPS payment bundle. As such, beginning January 1, 2011, Medicare no longer makes a separate payment when a drug or biological (except for oral-only ESRD– related drugs for which we are proposing to delay payment under the ESRD PPS until January 1, 2024) identified in the categories listed in the following table is furnished to a Medicare ESRD beneficiary. TABLE 15—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE FINAL ESRD PPS BASE RATE Drug category Rationale for inclusion Access Management ...................... Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication is given, and provide anesthetic for access placement. Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes ESAs as well as iron. Vancomycin and daptomycin used to treat access site infections. Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders and calcimimetics. Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine. Anemia Management ...................... Anti-infectives .................................. Bone and Mineral Metabolism ........ mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Cellular Management ...................... In the CY 2011 ESRD PPS final rule (75 FR 49050), we noted that we included the anti-infective drugs of vancomycin and daptomycin because these drugs were routinely furnished for the ESRD-related conditions of access site infections and peritonitis. However, in the CY 2012 ESRD PPS final rule (76 FR 70242 through 70243), we responded to public comments that noted that vancomycin is a common anti-infective drug appropriate for treating infections that are both ESRD- and non-ESRDrelated by modifying our policy to eliminate the payment restriction for vancomycin when it is furnished for non-ESRD related conditions. In addition, we finalized the use of CMS payment modifier AY (Item or service furnished to an End Stage Renal Disease (ESRD) patient that is not for the treatment of ESRD) and instructed facilities to append the modifier to the claim reporting vancomycin to indicate that the drug was furnished for reasons other than ESRD. The presence of the AY modifier on the claim allows the MAC to make a separate payment for the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 drug when it is furnished by the facility to a Medicare beneficiary for reasons other than ESRD. In the CY 2013 ESRD PPS final rule (77 FR 67461), we further amended this policy to allow ESRD facilities to bill separately for daptomycin when it is furnished to ESRD beneficiaries for reasons other than ESRD. Once again, we instructed facilities to append claims reporting daptomycin furnished for reasons other than ESRD with the AY modifier so that MACs would be able to make a separate payment. Because we have removed the payment limitation for both vancomycin and daptomycin, and because we believe that anti-infectives are a drug category that may be furnished for both ESRD- and non-ESRD-related reasons, we have updated the list of drug categories that are always considered ESRD-related under the ESRD PPS by removing the drug category for antiinfectives. We have included Table 16 (Renal Dialysis Service ESRD Drug Categories Included in the ESRD PPS Base Rate and Not Separately Payable) PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 below to appropriately recognize the drug categories that are always considered ESRD-related and we confirm that the revised table reflects policy changes made in the CY 2012 and CY 2013 ESRD PPS rulemaking cycles and does not constitute new policy. Over the past few years, we have received payment and billing inquiries requesting clarification for the payment for drugs represented by one of the drug categories included in the ESRD PPS, but not furnished for the treatment of ESRD. Therefore, we clarify that any drug included in the drug categories of access management, anemia management, bone and mineral metabolism and cellular management is not separately paid by Medicare regardless of why the drug is being furnished. In addition, the facility may not furnish a prescription for such drugs with the expectation that a Medicare Part D payment would be made, as the payment for the drug is included in the ESRD PPS payment bundle. E:\FR\FM\11JYP2.SGM 11JYP2 40236 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 16—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE ESRD PPS BASE RATE AND NOT SEPARATELY PAYABLE Drug category Rationale for inclusion Access Management ...................... Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication is given, and provide anesthetic for access placement. Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes ESAs as well as iron. Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders and calcimimetics. Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine. Anemia Management ...................... Bone and Mineral Metabolism ........ Cellular Management ...................... The drug categories that may be separately paid by Medicare when furnished for non-ESRD patient conditions are included in Table 5 (ESRD Drug Categories Included in the ESRD PPS Base Rate But May be Used for Dialysis and non-Dialysis Purposes) (75 FR 49051). This table is included below for the purpose of this discussion. When any drug identified in the drug categories listed in Table 17 (antiemetic, anti-infectives, antipruritic, anxiolytic, excess fluid management, fluid and electrolyte management or pain management), is furnished for the treatment of ESRD, payment for the drug is included in the ESRD PPS payment and may not be paid separately. If a drug represented by a drug category in Table 17 is furnished for reasons other than ESRD, a separate Medicare payment is permitted when the AY modifier is indicated on the claim line reporting the drug for payment. TABLE 17—ESRD DRUG CATEGORIES INCLUDED IN THE ESRD BASE RATE BUT MAY BE USED FOR DIALYSIS AND NON– DIALYSIS PURPOSES Antiemetic ....................................... Anti-infectives .................................. Antipruritic ....................................... Anxiolytic ......................................... Excess Fluid Management ............. Fluid and Electrolyte Management Including Volume Expanders. Pain Management ........................... Used to prevent or treat nausea and vomiting secondary to dialysis. Excludes antiemetics used in conjunction with chemotherapy as these are covered under a separate benefit category. Used to treat infections. May include antibacterial and antifungal drugs. Drugs in this classification have multiple clinical indications and are included for their action to treat itching secondary to dialysis. Drugs in this classification have multiple actions but are included for the treatment of restless leg syndrome secondary to dialysis. Drug/fluids used to treat fluid excess/overload. Intravenous drugs/fluids used to treat fluid and electrolyte needs. Drugs used to treat graft site pain and to treat pain medication overdose. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 F. Low-Volume Payment Adjustment 1. Background Section 1881(b)(14)(D)(iii) of the Act requires a payment adjustment that ‘‘reflects the extent to which costs incurred by low-volume facilities (as defined by the Secretary) in furnishing renal dialysis services exceed the costs incurred by other facilities in furnishing such services, and for payment for renal dialysis services furnished on or after January 1, 2011, and before January 1, 2014, such payment adjustment shall not be less than 10 percent.’’ As a result of this provision and the regression analysis conducted for the ESRD PPS, effective January 1, 2011, the ESRD PPS provides a facility-level payment adjustment of 18.9 percent to ESRD facilities that meet the definition of a low-volume facility. Under 42 CFR 413.232(b), a lowvolume facility is an ESRD facility that: (1) Furnished less than 4,000 treatments in each of the 3 cost reporting years (based on as-filed or final settled 12consecutive month cost reports, whichever is most recent) preceding the payment year; and (2) Has not opened, VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 closed, or received a new provider number due to a change in ownership in the 3 cost reporting years (based on as-filed or final settled 12-consecutive month cost reports, whichever is most recent) preceding the payment year. Under § 413.232(c), for purposes of determining the number of treatments furnished by the ESRD facility, the number of treatments equals the aggregate number of treatments furnished by other ESRD facilities that are both under common ownership and 25 road miles or less from the ESRD facility in question. This geographic proximity criterion is only applicable to ESRD facilities that were Medicare certified on or after January 1, 2011. For purposes of determining eligibility for the low-volume payment adjustment (LVPA), ‘‘treatments’’ means total hemodialysis (HD) equivalent treatments (Medicare and nonMedicare). For peritoneal dialysis (PD) patients, one week of PD is considered equivalent to 3 HD treatments. In the CY 2012 ESRD PPS final rule (76 FR 70236), we clarified that we base eligibility on the three years preceding the payment PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 year and those years are based on cost reporting periods. We further clarified that the ESRD facility’s cost reports for the cost reporting periods ending in the three years preceding the payment year must report costs for 12-consecutive months. In order to receive the LVPA under the ESRD PPS, an ESRD facility must submit a written attestation statement to its Medicare Administrative Contractor (MAC) that it qualifies as a low-volume ESRD facility and that it meets all of the requirements specified at 42 CFR 413.232. In the CY 2012 ESRD PPS final rule (76 FR 70236), we finalized a yearly November 1 deadline for attestation submission and we revised the regulation at § 413.232(f) to reflect this date. We noted that this timeframe provides 60 days for a MAC to verify that an ESRD facility meets the LVPA eligibility criteria. Further information regarding the administration of the LVPA is provided in CMS Pub. 100–02, Medicare Benefit Policy Manual, chapter 11, section 60.B.1. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 2. The United States Government Accountability Office Study on the LVPA The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required the United States Government Accountability Office (the GAO) to study the LVPA. The GAO examined (1) the extent to which the LVPA targeted low-volume, high-cost facilities that appeared necessary for ensuring access to care; and (2) CMS’s implementation of the LVPA, including the extent to which CMS paid the 2011 LVPA to facilities eligible to receive the adjustment. To do this work, the GAO reviewed Medicare claims, facilities’ annual cost reports, and data on dialysis facilities’ locations to identify and compare facilities that were eligible for the LVPA with those that received the adjustment. The GAO published a report 13–287 on March 1, 2013, entitled, ‘‘End-Stage Renal Disease: CMS Should Improve Design and Strengthen Monitoring of Low-Volume Adjustment’’. The report found multiple discrepancies in the identification of low-volume facilities which are summarized below. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 a. The GAO’s Main Findings The GAO found that many of the facilities eligible for the LVPA were located near other facilities, indicating that they might not have been necessary for ensuring access to care. They also identified certain facilities with relatively low volume that were not eligible for the LVPA but had aboveaverage costs and appeared to be necessary for ensuring access to care. Lastly, they stated the design of the LVPA provides facilities with an adverse incentive to restrict their service provision to avoid reaching the 4,000 treatment threshold. The GAO calculated that Medicare overpaid an estimated $5.3 million for the LVPA to dialysis facilities that did not meet the eligibility requirements established by CMS. They indicated in their report that the guidance that CMS issued for implementation of the regulatory requirements was sometimes unclear and not always available when needed, and the misunderstanding of LVPA eligibility likely was exacerbated because CMS conducted limited monitoring of the Medicare contractors’ administration of LVPA payments. b. The GAO’s Recommendations In the conclusion of their study, the GAO provided Congress with the following recommendations: (1) To more effectively target facilities necessary for ensuring access to care, VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 the Administrator of CMS should consider restricting the LVPA to lowvolume facilities that are isolated; (2) To reduce the incentive for facilities to restrict their service provision to avoid reaching the LVPA treatment threshold, the Administrator of CMS should consider revisions such as changing the LVPA to a tiered adjustment; (3) To ensure that future LVPA payments are made only to eligible facilities and to rectify past overpayments, the Administrator of CMS should take the following four actions: Require Medicare contractors to promptly recoup 2011 LVPA payments that were made in error; investigate any errors that contributed to eligible facilities not consistently receiving the 2011 LVPA and ensure that such errors are corrected; take steps to ensure that CMS regulations and guidance regarding the LVPA are clear, timely, and effectively disseminated to both dialysis facilities and Medicare contractors; and improve the timeliness and efficacy of CMS’s monitoring regarding the extent to which Medicare contractors are determining LVPA eligibility correctly and promptly redetermining eligibility when all necessary data become available. In response to the GAO’s recommendations, we concurred with the need to ensure that the LVPA is targeted effectively at low-volume highcost facilities in areas where beneficiaries may lack other dialysis care options. We also agreed to take action to ensure appropriate payment is made in the following ways: (1) Evaluating our policy guidance and contractor instructions to ensure appropriate application of the LVPA; (2) using multiple methods of communication to MACs and ESRD facilities to deliver clear and timely guidance; and (3) improving our monitoring of MACs and considering measures that provide specific expectations. 3. Clarification of the LVPA Policy For CY 2015, we are not proposing to make changes to the eligibility criteria for the adjustment or to the magnitude of the adjustment value. In accordance with section 632(c) of ATRA, for CY 2016 we will assess and address other necessary LVPA policy changes when we use updated data and reevaluate all of the patient- and facility-level adjustments together in a regression analysis similar to the analysis that is discussed in the CY 2011 ESRD PPS final rule (75 FR 49083). At this time, we are not proposing to change the criteria in such a way that the number of low-volume facilities would deviate PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 40237 substantially from the number of facilities originally modeled to receive the adjustment in the first year of implementation. This is because of the interaction of the LVPA with other payment adjustments under the ESRD PPS. As discussed in the CY 2011 ESRD PPS final rule (75 FR 49081), we standardized the ESRD PPS base rate to account for the payment variables and it would not be appropriate to make changes to one variable in the regression when it could potentially affect the other adjustments or the standardization factor. However, there are two clarifications under the LVPA policy (discussed below) that we can address in this year’s rulemaking that we believe are responsive to stakeholder’s concerns and GAO’s concern that the LVPA should effectively target low-volume, high cost-facilities. a. Hospital-Based ESRD Facilities As stated above, for purposes of determining eligibility for the LVPA, ‘‘treatments’’ means total hemodialysis (HD) equivalent treatments (Medicare and non-Medicare) and for peritoneal dialysis (PD) patients, one week of PD is considered equivalent to 3 HD treatments. Once a MAC receives an attestation from an ESRD facility, it reviews the ESRD facility’s cost reports to verify that the facility meets the lowvolume criteria specified at 42 CFR 413.232(b). Specifically, the ESRD facility cost report is used to verify the total treatment count that an ESRD facility furnishes in its fiscal year, which includes Medicare and nonMedicare treatments. For independent ESRD facilities, this information is provided on Worksheet C of the Form CMS–265–11 form (previously Form CMS–265–94) and for hospital-based ESRD facilities, this information is on Worksheet I–4 of the Form CMS–2552– 10. After the LVPA was implemented, we began hearing concerns from multiple stakeholders, including members of Congress and rural hospital-based ESRD facilities, about the MACs’ LVPA eligibility determinations. The stakeholders indicated that because hospital-based ESRD facilities are financially integrated with a hospital, their costs and treatment data are aggregated in the I-series of the hospital’s cost report. This means that if there is more than one ESRD facility that is affiliated with a hospital, the cost and treatment data for all facilities are aggregated on Worksheet I–4, typically causing the facilities’ treatment counts to exceed the 4,000-treatment criterion. We have learned that some MACs accepted treatment counts from E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40238 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules hospital-based ESRD facilities other than those provided on the hospital’s cost report and, as a result, certain hospital-based ESRD facilities received the LVPA. Other MACs solely used the aggregated treatment counts from the hospital’s cost report to verify LVPA eligibility, which resulted in denials for many hospital-based facilities that would have qualified for the adjustment if the MACs had considered other supporting documentation. We agree with stakeholders that limiting the MAC review to the hospital cost reports for verification of LVPA eligibility for hospital-based ESRD facilities places these facilities at a disadvantage and does not comport with the intent of our policy. We believe it can be necessary for MACs to use other supporting data to verify the treatment counts for individual hospital-based facilities that would meet the eligibility criteria for the LVPA if their treatment counts had not been aggregated with one or more other facilities on their hospitals’ cost reports. Because LVPA eligibility is based on cost report information and the individual hospitalbased facility treatment counts is the source of the aggregated treatment counts reported in the cost report, however, we continue to believe that cost report data is an integral part of the process of verifying whether a hospitalbased facility meets the LVPA eligibility criteria. For these reasons, we are clarifying that MACs may consider other supporting data, such as a hospitalbased facility’s total treatment count, along with the facility’s cost reports and attestation, to verify it meets the lowvolume eligibility criteria provided at 42 CFR 413.232(b). The attestation should continue to be configured around the parent hospital’s cost reports, that is, it should be for the same fiscal periods. The MAC can consider other supporting data in addition to the total treatments reported in each of the 12-consecutive month cost reports, such as the individual facility’s total treatment counts, rather than the hospital’s cost report alone, to verify the number of treatments that were furnished by the individual hospital-based facility that is seeking the adjustment. Consistent with this policy clarification, hospital-based ESRD facilities’ eligibility for the LVPA should be determined at an individual facility level and their total treatment counts should not be aggregated with other ESRD facilities that are affiliated with the hospital unless the affiliated facilities are commonly owned and within 25 miles. MACs have discretion as to the format of the attestation and any supporting VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 data, however, the facility must provide the total number of Medicare and nonMedicare treatments for the three cost reporting years preceding the payment year for all of the hospital-based facilities for which treatment counts appear on the hospital’s cost report. This will allow MACs to determine which treatments on the cost report were furnished by the individual hospital-based facility that is seeking the LVPA and which treatments were furnished by other affiliated facilities. Finally, we propose to amend the regulation text by adding a new paragraph (h)(1) to § 413.232 to reflect this clarification of current policy under which MACs can verify hospital-based ESRD facilities’ eligibility for the LVPA using supporting data in addition to hospital cost reports. We are soliciting comment on the proposed changes at § 413.232(h)(1). b. Cost Reporting Periods Used for Eligibility In the CY 2012 ESRD PPS final rule (76 FR 70236), we clarified that for purposes of eligibility under 42 CFR 413.232(b), we base eligibility on the three years preceding the payment year and those years are based on cost reporting periods. We further clarified that the ESRD facility’s cost reports for the cost reporting periods ending in the three years preceding the payment year must report costs for 12 consecutive months. After the LVPA was implemented, we began hearing concerns from the industry that there is a conflict within our policy. Currently, our policy allows an ESRD facility to remain eligible for the LVPA when they have a change of ownership (CHOW) that does not result in a new Provider Transaction Access Number (PTAN). However, our regulations at 42 CFR 413.232(b) suggest that MACs must verify treatment counts using cost reports for 12-consecutive month cost periods even though CHOWs often result in costs reports that are nonstandard, that is, longer or shorter than 12 months. In particular, the previous owner’s final cost report may not coincide with the ESRD facility’s cost report fiscal year end under its new ownership, resulting in two costs reports that are not 12consecutive month cost reports. For example, where a CHOW occurs in the middle of the cost reporting period and the new owner wishes to retain the established cost report fiscal year end, the previous owner submits a final cost report covering their period of ownership and the new owner submits a cost report covering the remainder of the cost reporting period. Alternatively, PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 a new owner could also choose not to retain the previous owner’s established cost reporting fiscal year end, in which case the CHOW could result in a cost reports that exceed twelve months when combined. Further details regarding the policies for filing cost reports during a CHOW are available in the Provider Reimbursement Manual—Part 1, chapter 15, ‘‘Change of Ownership.’’ We agree with the industry that there is a conflict in the policies governing LVPA that may prevent an otherwise qualified ESRD facility from receiving the adjustment. We have always intended that if an ESRD facility has a CHOW where the new owner accepts the previous owner’s assets and liabilities by retaining the facility’s PTAN, they should continue to be eligible for the LVPA. However, some MACs used a strict reading of the regulatory language and denied these providers the LVPA. Other MACs added short cost reports together or prorated treatment counts for cost reporting periods spanning greater than 12 months. In order to ensure consistent verification of LVPA eligibility, we are restating our intention that when there is a CHOW that does not result in a new PTAN but creates two non-standard cost reporting periods (that is, periods that are shorter or longer than 12 months) the MAC is either to add the two nonstandard cost reporting periods together where combined they would equal 12 consecutive months or prorate the data when they would exceed 12 consecutive months to determine the total treatments furnished for a full cost reporting period as if there had not been a CHOW. For example, prior to a CHOW, Facility A had a cost reporting period that spanned January 1 through December 31. Facility A had a CHOW mid-year that did not result in a new PTAN but caused a break in the cost reporting period. Consistent with the clarification of our policy, the MAC would add Facility A’s cost report that spanned January 1 through May 31 to its cost report that spanned June 1 through December 31 to verify the total treatment count. The other situation that could occur is when a CHOW results in a change of the original fiscal period. For example, prior to a CHOW, Facility B had a cost reporting period that spanned January 1 through December 31 and, based on its cost reports for 2012 and 2013, it met the LVPA eligibility criteria. Then, Facility B had a CHOW in the beginning of 2014 that did not result in a new PTAN, but changed its cost reporting period to that of its new owner, October E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 1, 2014 through September 30, 2015. This scenario would create a short and a long cost report that would not total 12 months that the MAC would need to review for verification. That is, Facility B would have a cost report that spanned January 1, 2014 through July 31, 2014 (7 months) and a cost report that spanned August 1, 2014 through September 30, 2015 (14 months). In this situation, the MAC should combine the two non-standard cost reporting periods that in combination may exceed 12-consecutive months and prorate the data to equal a full 12consecutive month period. Finally, we propose to amend the regulation text by adding a new paragraph (h)(2) to § 413.232 to clarify the verification process for ESRD facilities that experience a CHOW with no change in the PTAN. We are soliciting comments on the proposed changes at § 413.232(h)(2). Section 413.232(f) requires ESRD facilities to submit LVPA attestations by November 1 of each year. However, the changes we are proposing to the LVPA regulation text would not be finalized in enough time to give the ESRD facilities the opportunity to learn about the policy clarifications and provide an attestation to their MAC by November 1, 2014. For these reasons, we are proposing to amend § 413.232(f) to extend the deadline for CY 2015 LVPA attestations until December 31, 2014. This timeframe would allow ESRD facilities to reassess their eligibility and apply for the LVPA for CY 2015. It would also give MACs an opportunity to verify any new attestations and reassess LVPA eligibility verifications made since 2011. We will issue guidance with additional detail regarding this policy clarification, which will include details about the process ESRD facilities should follow to seek the LVPA for past years. G. Continued Use of ICD–9–CM Codes and Corrections to the ICD–10–CM Codes Eligible for the Comorbidity Payment Adjustment Section 1881(b)(14)(D)(i) of the Act requires that the ESRD PPS include a payment adjustment based upon case mix that may take into account, among other things, patient comorbidities. Comorbidities are specific patient conditions that coexist with the patient’s principal diagnosis that necessitates dialysis. The comorbidity payment adjustments recognize the increased costs associated with comorbidities and provide additional payment for certain conditions that occur concurrently with the need for dialysis. For a detailed discussion of our approach to developing the comorbidity VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 payment adjustment, see the CY 2011 ESRD PPS final rule (75 FR 49094 through 49108). In the CY 2011 ESRD PPS final rule, we finalized six comorbidity categories that are eligible for a comorbidity payment adjustment, each with associated International Classification of Diseases, 9th Revision, Clinical Modification (ICD–9–CM) diagnosis codes (75 FR 49100). These categories include three acute, short-term diagnostic categories (pericarditis, bacterial pneumonia, and gastrointestinal tract bleeding with hemorrhage) and three chronic diagnostic categories (hereditary hemolytic sickle cell anemia, myelodysplastic syndrome, and monoclonal gammopathy). The comorbidity categories eligible for an adjustment and their associated ICD–9– CM codes were published in the Appendix of the CY 2011 ESRD PPS final rule as Table E: ICD–9–CM—Codes Recognized for the Comorbidity Payment Adjustment (75 FR 49211). In the CY 2012 ESRD PPS final rule (76 FR 70252), we clarified that the ICD–9–CM codes eligible for the comorbidity payment adjustment are subject to the annual ICD–9–CM coding updates that occur in the hospital IPPS final rule and are effective October 1st every year. We explained that any updates to the ICD–9–CM codes that affect the categories of comorbidities and the diagnoses within the comorbidity categories that are eligible for a comorbidity payment adjustment would be communicated to ESRD facilities through sub-regulatory guidance. Together with the rest of the healthcare industry, CMS was scheduled to implement the 10th revision of the ICD coding scheme— ICD–10—on October 1, 2014. Hence, in the CY 2014 ESRD PPS (78 FR 72175 through 72179), we finalized a policy that ICD–10–CM codes will be eligible for a comorbidity payment adjustment where they crosswalk from ICD–9–CM codes that are eligible for a comorbidity payment adjustment with two exceptions. On April 1, 2014, PAMA was enacted. Section 212 of PAMA, titled ‘‘Delay in Transition from ICD–9 to ICD–10 Code Sets,’’ provides that ‘‘[t]he Secretary of Health and Human Services may not, prior to October 1, 2015, adopt ICD–10 code sets as the standard for code sets under section 1173(c) of the Social Security Act (42 U.S.C. 1320d–2(c)) and section 162.1002 of title 45, Code of Federal Regulations.’’ On May 1, 2014, the Secretary announced that HHS expects to issue an interim final rule PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 40239 that will require use of ICD–10 beginning October 1, 2015 and continue to require use of ICD–9–CM through September 30, 2015. This announcement is available on the CMS Web site at https://cms.gov/Medicare/ Coding/ICD10/. Before the passage of PAMA, our policy required facilities to utilize ICD–10–CM codes to identify comorbidities eligible for the comorbidity payment adjustment beginning October 1, 2014. However, in light of section 212 of PAMA and the Secretary’s announcement of the new compliance date for ICD–10, we are proposing to require use of ICD–10–CM to identify comorbidities beginning on October 1, 2015. Until that time, we will continue to require use of the ICD–9– CM codes to identify comorbidities eligible for the comorbidity payment adjustment. The ICD–9–CM codes that are eligible for the comorbidity payment adjustment are listed in the crosswalk tables below. Because facilities will begin using ICD–10 during the calendar year to which this rule applies, we are correcting several typographical errors and omissions in the Tables that appeared in the CY 2015 ESRD PPS final rule. First, we are correcting one ICD–9–CM diagnosis code that was incorrectly identified due to a typographical error in Table 1—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE (78 FR 72176). In Table 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10– CM CODES (78 FR 72177), we are correcting two ICD–10–CM codes because of typographical errors and proposing two additional ICD–10–CM codes that were inadvertently omitted from the crosswalk. Lastly, in Table 3— MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE (78 FR 72178), we are proposing to include 9 additional ICD–10–CM crosswalk codes for eligibility for the comorbidity payment adjustment. These codes were omitted in error from the CY 2014 ESRD PPS final rule, and we have furnished an updated Table 20 below reflecting the additional codes. We note that the ICD–10–CM codes that facilities will be required to use to identify eligible comorbidities when ICD–10 becomes the required medical data code set on October 1, 2015 are those that were finalized in the CY 2014 ESRD PPS final rule at 78 FR 72175 to 78 FR 72179 with the corrections and proposed additions included below. Table 18— ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE (78 FR 72175 through 78 FR 72176). E:\FR\FM\11JYP2.SGM 11JYP2 40240 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Table 18 lists all the instances in which one ICD–9–CM code crosswalks to one ICD–10–CM code. We finalized a policy in last year’s rule that all identified ICD–10–CM codes would receive a comorbidity adjustment with the exception of K52.81 Eosinophilic gastritis or gastroenteritis. We have since discovered that under the section titled Myelodysplastic Syndrome, ICD– 9–CM code 238.7 Essential thrombocythemia was inaccurately identified. The table below has been amended to accurately identify ICD–9– CM diagnostic code 238.71 Essential thrombocythemia. TABLE 18—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE ICD–9 Descriptor ICD–10 Descriptor Gastrointestinal Bleeding 530.21 535.71 537.83 569.85 Ulcer of esophagus with bleeding ............................................. Eosinophilic gastritis, with hemorrhage ..................................... Angiodysplasia of stomach and duodenum with hemorrhage .. Angiodysplasia of intestine with hemorrhage ............................ K22.11 Ulcer of esophagus with bleeding. K52.81 Eosinophilic gastritis or gastroenteritis. K31.811 Angiodysplasia of stomach and duodenum with bleeding. K55.21 Angiodysplasia of colon with hemorrhage. Bacterial Pneumonia 003.22 Salmonella pneumonia .............................................................. 482.0 Pneumonia due to Klebsiella pneumonia .................................... 482.1 Pneumonia due to Pseudomonas ............................................... 482.2 Pneumonia due to Hemophilus influenzae [H. influenzae] ......... 482.32 Pneumonia due to Streptococcus, group B ............................... 482.40 Pneumonia due to Staphylococcus, unspecified ....................... 482.41 Methicillin susceptible pneumonia due to Staphylococcus aureus. 482.42 Methicillin resistant pneumonia due to Staphylococcus aureus 482.49 482.82 482.83 482.84 507.0 507.8 510.0 510.9 Other Staphylococcus pneumonia ............................................. Pneumonia due to escherichia coli [E. coli] .............................. Pneumonia due to other gram-negative bacteria ...................... Pneumonia due to Legionnaires’ disease ................................. Pneumonitis due to inhalation of food or vomitus ....................... Pneumonitis due to other solids and liquids ................................ Empyema with fistula ................................................................... Empyema without mention of fistula ............................................ A02.22 Salmonella pneumonia. J15.0 Pneumonia due to Klebsiella pneumoniae. J15.1 Pneumonia due to Pseudomonas. J14 Pneumonia due to Hemophilus influenzae. J15.3 Pneumonia due to streptococcus, group B. J15.20 Pneumonia due to staphylococcus, unspecified. J15.211 Pneumonia due to Methicillin susceptible Staphylococcus aureus. J15.212 Pneumonia due to Methicillin resistant Staphylococcus aureus. J15.29 Pneumonia due to other staphylococcus. J15.5 Pneumonia due to Escherichia coli. J15.6 Pneumonia due to other aerobic Gram-negative bacteria. A48.1 Legionnaires’ disease. J69.0 Pneumonitis due to inhalation of food and vomit. J69.8 Pneumonitis due to inhalation of other solids and liquids. J86.0 Pyothorax with fistula. J86.9 Pyothorax without fistula. Pericarditis 420.91 Acute idiopathic pericarditis ....................................................... I30.0 Acute nonspecific idiopathic pericarditis. Hereditary Hemolytic and Sickle Cell Anemia 282.0 Hereditary spherocytosis ............................................................. 282.1 Hereditary elliptocytosis ............................................................... 282.41 Sickle-cell thalassemia without crisis ......................................... 282.43 Alpha thalassemia ...................................................................... 282.44 Beta thalassemia ....................................................................... 282.45 Delta-beta thalassemia .............................................................. 282.46 Thalassemia minor ..................................................................... 282.47 Hemoglobin E-beta thalassemia ................................................ 282.49 Other thalassemia ...................................................................... 282.61 Hb-SS disease without crisis ..................................................... 282.63 Sickle-cell/Hb-C disease without crisis ...................................... 282.68 Other sickle-cell disease without crisis ...................................... D58.0 D58.1 D57.40 D56.0 D56.1 D56.2 D56.3 D56.5 D56.8 D57.1 D57.20 D57.80 Hereditary spherocytosis. Hereditary elliptocytosis. Sickle-cell thalassemia without crisis. Alpha thalassemia. Beta thalassemia. Delta-beta thalassemia. Thalassemia minor. Hemoglobin E-beta thalassemia. Other thalassemias. Sickle-cell disease without crisis. Sickle-cell/Hb-C disease without crisis. Other sickle-cell disorders without crisis. Myelodysplastic Syndrome Essential thrombocythemia ........................................................ High grade myelodysplastic syndrome lesions ......................... Myelodysplastic syndrome with 5q deletion .............................. 238.76 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 238.71 238.73 238.74 Myelofibrosis with myeloid metaplasia ...................................... Table 19—ONE ICD–9–CM CODE CROSSWALKS TO MULIPLE ICD–10– CM CODES (78 FR 72177 through 78 FR 72178). Table 19 lists all of the instances in which one ICD–9–CM code crosswalks to multiple ICD–10–CM codes. We VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 D47.3 Essential (hemorrhagic) thrombocythemia. D46.22 Refractory anemia with excess of blasts 2. D46.C Myelodysplastic syndrome with isolated del(5q) chromosomal abnormality. D47.1 Chronic myeloproliferative disease. finalized a policy in last year’s rule that all identified ICD–10–CM codes would receive a comorbidity adjustment with the exception of D89.2 Hypergammaglobulinemia, unspecified. Under the section titled Gastrointestinal Bleeding, ICD–9–CM code 562 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 Diverticulosis of small intestine with hemorrhage was inaccurately identified, as the complete code number is 562.02. The table below has been amended to accurately identify ICD–9–CM diagnostic code 562.02 Diverticulosis of small intestine with hemorrhage. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Also under the section titled Gastrointestinal Bleeding, ICD–9–CM diagnostic code 562.13 Diverticulitis of colon with hemorrhage did not include a complete crosswalk to ICD–10–CM diagnostic codes. Therefore, we propose to include ICD–10–CM diagnostic codes K57.81 Diverticulitis of intestine, part unspecified, with perforation and abscess with bleeding and K57.93 Diverticulitis of intestine, part unspecified, without perforation or abscess with bleeding, in addition to the ICD–10–CM diagnostic codes K57.21, K57.33, K57.41, and K57.53, as eligible for the comorbidity payment adjustment when the use of ICD–10–CM is required, on October 1, 2015. Under the section titled Pericarditis, ICD–10–CM code 130.1 Infective 40241 pericarditis was inaccurately identified. The table below has been amended to accurately identify the ICD–10–CM diagnostic code I30.1 Infective pericarditis as eligible for a comorbidity payment adjustment when the use of ICD–10–CM is required, on October 1, 2015. TABLE 19—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES ICD–9 Descriptor ICD–10 Descriptor Gastrointestinal Bleeding 562.02 Diverticulosis of small intestine with hemorrhage ..................... 562.03 Diverticulitis of small intestine with hemorrhage ....................... 562.12 Diverticulosis of colon with hemorrhage .................................... 562.13 Diverticulitis of colon with hemorrhage ...................................... K57.11 Diverticulosis of small intestine without perforation or abscess with bleeding. K57.51 Diverticulosis of both small and large intestine without perforation or abscess with bleeding. K57.01 Diverticulitis of small intestine with perforation and abscess with bleeding. K57.13 Diverticulitis of small intestine without perforation or abscess with bleeding. K57.41 Diverticulitis of both small and large intestine with perforation and abscess with bleeding. K57.53 Diverticulitis of both small and large intestine without perforation or abscess with bleeding. K57.31 Diverticulosis of large intestine without perforation or abscess with bleeding. K57.91 Diverticulosis of intestine, part unspecified, without perforation or abscess with bleeding. K57.51 Diverticulosis of both small and large intestine without perforation or abscess with bleeding. K57.21 Diverticulitis of large intestine with perforation and abscess with bleeding. K57.33 Diverticulitis of large intestine without perforation or abscess with bleeding. K57.41 Diverticulitis of both small and large intestine with perforation and abscess with bleeding. K57.53 Diverticulitis of both small and large intestine without perforation or abscess with bleeding. K57.81 Diverticulitis of intestine, part unspecified, with perforation and abscess with bleeding. K57.93 Diverticulitis of intestine, part unspecified, without perforation or abscess with bleeding. Bacterial Pneumonia 513.0 Abscess of lung ........................................................................... J85.0 Gangrene and necrosis of lung. J85.1 Abscess of lung with pneumonia. J85.2 Abscess of lung without pneumonia. Pericarditis 420.0 Acute pericarditis in diseases classified elsewhere .................... 420.90 Acute pericarditis, unspecified ................................................... 420.99 Other acute pericarditis. ............................................................. A18.84 Tuberculosis of heart. I32 Pericarditis in diseases classified elsewhere. M32.12 Pericarditis in systemic lupus erythematosus. I30.1 Infective pericarditis. I30.9 Acute pericarditis, unspecified. I30.8 Other forms of acute pericarditis. I30.9 Acute pericarditis, unspecified. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Hereditary Hemolytic and sickle cell anemia 282.2 Anemias due to disorders of glutathione metabolism ................. 282.3 Other hemolytic anemias due to enzyme deficiency ................... 282.42 Sickle-cell thalassemia with crisis .............................................. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00035 Fmt 4701 D55.0 Anemia due to glucose-6-phosphate dehydrogenase [G6PD] deficiency. D55.1 Anemia due to other disorders of glutathione metabolism. D55.2 Anemia due to disorders of glycolytic enzymes. D55.3 Anemia due to disorders of nucleotide metabolism. D55.8 Other anemias due to enzyme disorders. D55.9 Anemia due to enzyme disorder, unspecified. D57.411 Sickle-cell thalassemia with acute chest syndrome. D57.412 Sickle-cell thalassemia with splenic sequestration. Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40242 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 19—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued ICD–9 Descriptor ICD–10 282.62 Hb-SS disease with crisis .......................................................... 282.64 Sickle-cell/Hb-C disease with crisis ........................................... 282.69 Other sickle-cell disease with crisis ........................................... D57.419 D57.00 D57.01 D57.02 D57.211 D57.212 D57.219 D57.811 D57.812 D57.819 Descriptor Sickle-cell thalassemia with crisis, unspecified. Hb-SS disease with crisis, unspecified. Hb-SS disease with acute chest syndrome. Hb-SS disease with splenic sequestration. Sickle-cell/Hb-C disease with acute chest syndrome. Sickle-cell/Hb-C disease with splenic sequestration. Sickle-cell/Hb-C disease with crisis, unspecified. Other sickle-cell disorders with acute chest syndrome. Other sickle-cell disorders with splenic sequestration. Other sickle-cell disorders with crisis, unspecified. Monoclonal Gammopathy 273.1 Monoclonal paraproteinemia ........................................................ D47.2 Monoclonal gammopathy. D89.2 Hypergammaglobulinemia, unspecified. Myelodysplastic Syndrome 238.72 Low grade myelodysplastic syndrome lesions .......................... 238.75 Myelodysplastic syndrome, unspecified .................................... Table 20—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10– CM CODE (78 FR 72178). Table 20 displays the crosswalk where multiple ICD–9–CM codes crosswalk to one ICD–10–CM code. We finalized a policy in last year’s rule that all of the ICD–10–CM codes listed in Table 3 would be eligible for the comorbidity payment adjustment. Under the section titled Gastrointestinal Bleeding, nine ICD–10–CM codes (K25.0 Acute gastric ulcer with hemorrhage, K25.2 Acute gastric ulcer with both D46.0 Refractory anemia without ring sideroblasts, so stated. D46.1 Refractory anemia with ring sideroblasts. D46.20 Refractory anemia with excess of blasts, unspecified. D46.21 Refractory anemia with excess of blasts 1. D46.4 Refractory anemia, unspecified. D46.A Refractory cytopenia with multilineage dysplasia. D46.B Refractory cytopenia with multilineage dysplasia and ring sideroblasts. D46.9 Myelodysplastic syndrome, unspecified. D46.Z Other myelodysplastic syndromes. hemorrhage and perforation, K25.4 Chronic or unspecified gastric ulcer with hemorrhage, K25.6 Chronic or unspecified gastric ulcer with both hemorrhage and perforation, K26.0 Acute duodenal ulcer with hemorrhage, K26.2 Acute duodenal ulcer with both hemorrhage and perforation, K26.4 Chronic or unspecified duodenal ulcer with hemorrhage, K26.6 Chronic or unspecified duodenal ulcer with both hemorrhage and perforation, and K27.0 Acute peptic ulcer, site unspecified, with hemorrhage) and the corresponding ICD–9–CM codes were inadvertently omitted from the crosswalk. We propose that these ICD– 10–CM diagnostic codes—K25.0, K25.2 K25.4, K25.6, K26.0, K26.2, K26.4, K26.6, K27.0—will be eligible for the comorbidity payment adjustment beginning October 1, 2015. We also propose that the corresponding ICD–9– CM codes will be eligible for the comorbidity adjustment through September 30, 2015. TABLE 20—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Gastrointestinal Bleeding 531.00 Acute gastric ulcer with hemorrhage, without mention of obstruction. 531.01 Acute gastric ulcer with hemorrhage, with obstruction. 531.20 Acute gastric ulcer with hemorrhage and perforation, without mention of obstruction. 531.21 Acute gastric ulcer with hemorrhage and perforation, with obstruction. 531.40 Chronic or unspecified gastric ulcer with hemorrhage, without mention of obstruction. 531.41 Chronic or unspecified gastric ulcer with hemorrhage, with obstruction. 531.60 Chronic or unspecified gastric ulcer with hemorrhage and perforation, without mention of obstruction. 531.61 Chronic or unspecified gastric ulcer with hemorrhage and perforation, with obstruction. 532.00 Acute duodenal ulcer with hemorrhage, without mention of obstruction. 532.01 Acute duodenal ulcer with hemorrhage, with obstruction. 532.20 Acute duodenal ulcer with hemorrhage and perforation, without mention of obstruction. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00036 Fmt 4701 K25.0 Acute gastric ulcer with hemorrhage. K25.2 Acute gastric ulcer with both hemorrhage and perforation. K25.4 Chronic or unspecified gastric ulcer with hemorrhage. K25.6 Chronic or unspecified gastric ulcer with both hemorrhage and perforation. K26.0 Acute duodenal ulcer with hemorrhage. K26.2 Acute duodenal ulcer with both hemorrhage and perforation. Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40243 TABLE 20—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE—Continued 532.21 Acute duodenal ulcer with hemorrhage and perforation, with obstruction. 532.40 Chronic or unspecified duodenal ulcer with hemorrhage, without mention of obstruction. 532.41 Chronic or unspecified duodenal ulcer with hemorrhage, with obstruction. 532.60 Chronic or unspecified duodenal ulcer with hemorrhage and perforation, without mention of obstruction. 532.61 Chronic or unspecified duodenal ulcer with hemorrhage and perforation, with obstruction. 533.00 Acute peptic ulcer of unspecified site with hemorrhage, without mention of obstruction. 533.01 Acute peptic ulcer of unspecified site with hemorrhage, with obstruction. 533.20 Acute peptic ulcer of unspecified site with hemorrhage and perforation, without mention of obstruction. 533.21 Acute peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction. 533.40 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage, without mention of obstruction. 533.41 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage, with obstruction. 533.60 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage and perforation, without mention of obstruction. 533.61 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction. 534.00 Acute gastrojejunal ulcer with hemorrhage, without mention of obstruction. 534.01 Acute gastrojejunal ulcer, with hemorrhage, with obstruction. 534.20 Acute gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction. 534.21 Acute gastrojejunal ulcer with hemorrhage and perforation, with obstruction. 534.40 Chronic or unspecified gastrojejunal ulcer with hemorrhage, without mention of obstruction. 534.41 Chronic or unspecified gastrojejunal ulcer, with hemorrhage, with obstruction. 534.60 Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction. 534.61 Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, with obstruction. K26.4 Chronic or unspecified duodenal ulcer with hemorrhage. K26.6 Chronic or unspecified duodenal ulcer with both hemorrhage and perforation. K27.0 Acute peptic ulcer, site unspecified, with hemorrhage. K27.2 Acute peptic ulcer, site unspecified, with both hemorrhage and perforation. K27.4 Chronic or unspecified peptic ulcer, site unspecified, with hemorrhage. K27.6 Chronic or unspecified peptic ulcer, site unspecified, with both hemorrhage and perforation. K28.0 Acute gastrojejunal ulcer with hemorrhage. K28.2 Acute gastrojejunal ulcer with both hemorrhage and perforation. K28.4 Chronic or unspecified gastrojejunal ulcer with hemorrhage. K28.6 Chronic or unspecified gastrojejunal ulcer with both hemorrhage and perforation. Bacterial Pneumonia 482.30 482.31 482.39 482.81 482.89 Pneumonia Pneumonia Pneumonia Pneumonia Pneumonia due due due due due to to to to to Streptococcus, unspecified ......................... Streptococcus, group A. other Streptococcus. anaerobes ................................................... other specified bacteria. III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) mstockstill on DSK4VPTVN1PROD with PROPOSALS2 A. Background For more than 30 years, monitoring the quality of care provided by dialysis facilities to patients with end-stage renal disease (ESRD) has been an important component of the Medicare ESRD payment system. The ESRD Quality Incentive Program (QIP) is the most recent step in fostering improved patient outcomes by establishing incentives for dialysis facilities to meet or exceed performance standards established by CMS. The ESRD QIP is authorized by section 1881(h) of the Social Security Act (the Act), which was added by section 153(c) of the Medicare VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 J15.4 Pneumonia due to other streptococci. J15.8 Pneumonia due to other specified bacteria. Improvements for Patients and Providers Act (MIPPA). Specifically, section 1881(h) requires the Secretary to establish an ESRD QIP by (i) selecting measures; (ii) establishing the performance standards that apply to the individual measures; (iii) specifying a performance period with respect to a year; (iv) developing a methodology for assessing the total performance of each facility based on the performance standards with respect to the measures for a performance period; and (v) applying an appropriate payment reduction to facilities that do not meet or exceed the established Total Performance Score (TPS). This proposed rule discusses each of these elements and our proposals for their application PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 to the ESRD QIP, including for PYs 2017 and 2018. B. Considerations in Updating and Expanding Quality Measures Under the ESRD QIP Throughout the past decade, Medicare has been transitioning from a program that pays for healthcare based on particular services furnished to a beneficiary to a program that bases payments to providers and suppliers on the quality of services they furnish. By paying for the quality of care rather than simply the quantity of care, and by focusing on better care and lower costs through improvement, prevention and population health, expanded healthcare coverage, and enterprise excellence, we are strengthening the healthcare system E:\FR\FM\11JYP2.SGM 11JYP2 40244 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules while also advancing the National Strategy for Quality Improvement in Health Care (that is, the National Quality Strategy (NQS)). We are also working to update a set of domains and specific quality measures for our VBP programs, and to link the aims of the NQS with our payment policies on a national scale. We are working in partnership with beneficiaries, providers, advocacy groups, the National Quality Forum (NQF), the Measures Application Partnership, operating divisions within the Department of Health and Human Services (HHS), and other stakeholders to develop new measures where gaps exist, refine measures where necessary, and remove measures when appropriate. We are also collaborating with stakeholders to ensure that the ESRD QIP serves the needs of our beneficiaries and also advances the goals of the NQS to improve the overall quality of care, improve the health of the U.S. population, and reduce the cost of quality healthcare.2 We believe that the development of an ESRD QIP that is successful in supporting the delivery of high-quality healthcare services in dialysis facilities is paramount. We seek to adopt measures for the ESRD QIP that promote better, safer, and more coordinated care. Our measure development and selection activities for the ESRD QIP take into account national priorities such as those established by the HHS Strategic Plan (https://www.hhs.gov/strategic-plan/ priorities.html), the NQS (https:// www.ahrq.gov/workingforquality/nqs/ nqs2013annlrpt.htm), and the HHS National Action Plan to Prevent Healthcare Associated Infections (HAIs) (https://www.hhs.gov/ash/initiatives/hai/ esrd.html). To the extent feasible and practicable, we have sought to adopt measures that have been endorsed by a national consensus organization; recommended by multi-stakeholder organizations; and developed with the input of providers, beneficiaries, health advocacy organizations, and other stakeholders. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 C. Web Sites for Measure Specifications In an effort to ensure that facilities and the general public are able to continue accessing the specifications for the measures that are being proposed for and have been adopted in the ESRD QIP, we are now posting these measure specifications on a CMS Web site, instead of posting them on 2 2013 Annual Progress Report to Congress: National Strategy for Quality Improvement in Health Care, https://www.ahrq.gov/ workingforquality/nqs/nqs2013annlrpt.htm. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 www.dialysisreports.org as we have in the past. Measure specifications from previous years, as well as those proposed for the PY 2017 and PY 2018 programs, can be found at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_ TechnicalSpecifications.html. D. Updating the NHSN Bloodstream Infection in Hemodialysis Outpatients Clinical Measure for the PY 2016 ESRD QIP and Future Payment Years The NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure (that is, NHSN Bloodstream Infection clinical measure) that we adopted beginning with the PY 2016 ESRD QIP is based on NQF #1460. At the time we adopted it, the measure included a risk adjustment for patients’ vascular access type but did not include any reliability adjustments to account for differences in the amount of exposure or opportunity for healthcare associated infections (HAIs) among patients. On April 4, 2014, in response to a measure update proposal submitted by CDC, NQF endorsed a reliability adjustment for volume of exposure and unmeasured variation across facilities to NQF #1460. This reliability adjustment is called the Reliability-Adjusted Standardized Infection Ratio or Adjusted Ranking Metric (ARM). As a result of this change to the NQFendorsed measure specifications, a facility’s performance on NQF #1460 will be adjusted towards the mean (that is, facilities with low exposure volume will be adjusted more than facilities with high exposure volume, and the performance rate will be adjusted up or down depending on the facility estimate and mean) to account for the differences in the reliability of the infection estimates based on the number of patient-months at a facility and any unmeasured variation across facilities. Because the adjustment is based on the volume of exposure, facility scores will be adjusted more if there are fewer patient-months in the denominator, and facility scores will be adjusted less if there are many patient-months in the denominator. We propose to adopt the same reliability adjustment for purposes of calculating facility performance on the NHSN Bloodstream Infection clinical measure, beginning with the PY 2016 ESRD QIP. We believe that the inclusion of this reliability adjustment, in addition to the risk factor adjustment, will enable us to better differentiate among facility performance on this measure, because it accounts not only for the variation in patient risk by PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 vascular access type, but also for variation in the number of patients a facility treats in a given month. The ARM will be incorporated into the existing risk-adjustment methodology, which will also continue to include a risk adjustment for patient vascular access type. Further information about the reliability adjustment, and the NHSN Bloodstream Infection measure specifications can be found at https:// www.cdc.gov/nhsn/PDFs/dialysis/ NHSN–ARM.pdf, https://www.cdc.gov/ nhsn/dialysis/dialysis-event.html, and https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_ TechnicalSpecifications.html. E. Oral-Only Drugs Measures in the ESRD QIP Section 217(d) of the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93), enacted on April 1, 2014, amends section 1881(h)(2) of the Act to require the Secretary, for PY 2016 and subsequent years, to adopt measures (outcome-based, to the extent feasible) in the ESRD QIP that are specific to the conditions treated with oral-only drugs. We believe that the Hypercalcemia clinical measure adopted beginning with the PY 2016 program (78 FR 72200 through 72203) meets this new statutory requirement because hypercalcemia is a condition that is treated with oral-only drugs. The Hypercalcemia clinical measure is not an outcome-based measure, and we have considered the possibility of adopting outcomes-based measures that pertain to conditions treated with oral-only drugs. However, we have determined that it is not feasible to propose to adopt an outcomebased measure on this topic at this time because we are not aware of any outcome measures developed on this topic. F. Proposed Requirements for the PY 2017 ESRD QIP 1. Proposed Revision to the Expanded ICH CAHPS Reporting Measure For the ICH CAHPS reporting measure, we are proposing one change to the reporting requirements finalized in the CY 2014 ESRD PPS Final Rule for PY 2017. In the CY 2014 ESRD PPS final rule, we finalized that facilities would be eligible to receive a score on the measure if they treated 30 or more survey-eligible patients during the performance period (78 FR 72220 through 72221). Subsequently, we were made aware that facilities may not know whether they will have enough surveyeligible patients during the performance period to be eligible for the ICH CAHPS E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules measure when they are making decisions about whether or not they will contract with a vendor to administer the survey. We agree that it would be preferable if facilities knew at the beginning of the performance period if they will be eligible to receive a score on the ICH CAHPS measure, because this would allow facilities to make informed decisions about whether they should contract with a vendor to administer the survey. For this reason, we propose that beginning with the PY 2017 program, facilities will be eligible to receive a score on the ICH CAHPS measure if they treat 30 or more surveyeligible patients during the ‘‘eligibility period,’’ which we define as the CY before the performance period. However, even if a facility is eligible to receive a score on the measure because it has treated at least 30 survey-eligible patients according to the ICH CAHPS Survey measure specifications during the calendar year prior to the performance period, we are proposing that the facility will still not receive a score for performance during the performance period if it cannot collect 30 survey completes during the performance period. We believe that facilities should be able to determine quickly the number of survey-eligible patients that they treated during the eligibility period, and that reaching this determination should not impact facilities’ ability to contract with a vender in time to meet the semiannual survey administration requirements. Technical specifications for the ICH CAHPS reporting measure can be found at: https://www.cms.gov/Medicare/ Quality-Initiatives-Patient-Assessment- 40245 Instruments/ESRDQIP/061_ TechnicalSpecifications.html. We seek comments on this proposal. 2. Proposed Measures for the PY 2017 ESRD QIP a. PY 2016 Measures Continuing in PY 2017 and Future Payment Years We previously finalized 11 measures in the CY 2014 ESRD PPS Final Rule for the PY 2016 ESRD QIP, and these measures are summarized in Table 21 below. In accordance with our policy to continue using measures unless we propose to remove or replace them (77 FR 67477), we will continue to use 10 of these 11 measures in the PY 2017 ESRD QIP. As we discuss in more detail below, we are proposing to remove one measure, Hemoglobin Greater than 12 g/ dL, beginning with the PY 2017 measure set (see Table 22 below). TABLE 21—PY 2016 ESRD QIP MEASURES BEING CONTINUED IN PY 2017 NQF # Measure title and description 0249 ..................... Hemodialysis Adequacy: Minimum delivered hemodialysis dose. Percent of hemodialysis patient-months with spKt/V greater than or equal to 1.2. Peritoneal Dialysis Adequacy: Delivered dose above minimum. Percent of peritoneal dialysis patient-months with spKt/V greater than or equal to 1.7 (dialytic + residual) during the four month study period. Pediatric Hemodialysis Adequacy: Minimum spKt/V. Percent of pediatric in-center hemodialysis patient-months with spKt/V greater than or equal to 1.2. Vascular Access Type: AV Fistula. Percentage of patient-months on hemodialysis during the last hemodialysis treatment of the month using an autogenous AV fistula with two needles. Vascular Access Type: Catheter > 90 days. Percentage of patient-months for patients on hemodialysis during the last hemodialysis treatment of month with a catheter continuously for 90 days or longer prior to the last hemodialysis session. National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Patients. Number of hemodialysis outpatients with positive blood cultures per 100 hemodialysis patient-months.2 Hypercalcemia. Proportion of patient-months with 3-month rolling average of total uncorrected serum calcium greater than 10.2 mg/dL. In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Administration. Facility administers, using a third-party CMS-approved vendor, the ICH CAHPS survey in accordance with survey specifications and submits survey results to CMS. Mineral Metabolism Reporting. Number of months for which facility reports serum phosphorus for each Medicare patient. Anemia Management Reporting. Number of months for which facility reports ESA dosage (as applicable) and hemoglobin/hematocrit for each Medicare patient. 0318 ..................... 1423 ..................... 0257 ..................... 0256 ..................... N/A 1 ..................... 1454 ..................... N/A 3 ..................... N/A 4 ..................... N/A ....................... 1 We note that this measure is based on a current NQF-endorsed bloodstream infection measure (NQF#1460). are proposing a new method of calculating performance on this measure using the ARM methodology. If we decide to finalize this proposal based on public comments, the NHSN Bloodstream Infection clinical measure description will be updated to read: ‘‘ARM of Bloodstream Infection will be calculated among inpatients receiving hemodialysis at outpatient hemodialysis centers.’’ 3 We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258). We are proposing to adopt NQF #0258 in the PY 2018 program. 4 We note that this measure is based upon a current NQF-endorsed serum phosphorus measure (NQF #0255). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 2 We VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40246 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules In the CY 2014 ESRD PPS final rule TABLE 22—MEASURE PROPOSED FOR REMOVAL BEGINNING WITH THE PY (78 FR 72192), we stated that we were in the process of evaluating all of the 2017 ESRD QIP NQF# Measure title N/A ................. Anemia Management: Hgb >12. Percentage of Medicare patients with a mean hemoglobin value greater than 12 g/dL. b. Proposal To Determine When a Measure is ‘‘Topped-Out’’ in the ESRD QIP, and Proposal To Remove a ToppedOut Measure From the ESRD QIP, Beginning With PY 2017 In the CY 2013 ESRD PPS final rule (77 FR 67475), we finalized a list of seven criteria we would consider when making determinations about whether to remove or replace a measure: ‘‘(1) Measure performance among the majority of ESRD facilities is so high and unvarying that meaningful distinctions in improvements or performance can no longer be made; (2) performance or improvement on a measure does not result in better or the intended patient outcomes; (3) a measure no longer aligns with current clinical guidelines or practice; (4) a more broadly applicable (across settings, populations, or conditions) measure for the topic becomes available; (5) a measure that is more proximal in time to desired patient outcomes for the particular topic becomes available; (6) a measure that is more strongly associated with desired patient outcomes for the particular topic becomes available; or (7) collection or public reporting of a measure leads to negative unintended consequences.’’ ESRD QIP measures against the criteria. Subsequent to the publication of the CY 2014 ESRD PPS final rule, we completed our evaluation and determined that none of the measures finalized in the PY 2016 ESRD QIP met criteria 2 through 7, as listed above. With respect to the first criterion, we are proposing to more specifically define when performance on a clinical measure is so high and unvarying that the measure no longer reflects meaningful distinctions in improvements or performance. The statistical definitions that we are proposing to adopt will align our methodology with that used by the Hospital VBP program to determine when a measure is topped out (76 FR 26496 through 26497). Under this methodology, a clinical measure is considered to be topped out if national measure data show (1) statistically indistinguishable performance levels at the 75th and 90th percentiles; and (2) a truncated coefficient of variation (CV) of less than or equal to 0.1. To determine whether a clinical measure is topped out, we initially focused on the top distribution of facility performance on each measure and noted if their 75th and 90th percentiles were statistically indistinguishable. Then, to ensure that we properly accounted for the entire distribution of scores, we analyzed the truncated coefficient of variation (CV) for each of the clinical measures. The CV is a common statistic that expresses the standard deviation as a percentage of the sample mean in a way that is independent of the units of observation. Applied to this analysis, a large CV would indicate a broad distribution of individual facility scores, with large and presumably meaningful differences between hospitals in relative performance. A small CV would indicate that the distribution of individual facility scores is clustered tightly around the mean value, suggesting that it is not useful to draw distinctions between individual facility performance scores. We used a modified version of the CV, namely a truncated CV, for each clinical measure, in which the 5 percent of facilities with the lowest scores, and the 5 percent of facilities with the highest scores were first truncated (set aside) before calculating the CV. This was done to avoid undue effects of the highest and lowest outlier facilities; if included, they would tend to greatly widen the dispersion of the distribution and make the clinical measure appear to be more reliable or discerning. For example, a clinical measure for which most facility scores are tightly clustered around the mean value (a small CV) might actually reflect a more robust dispersion if there were also a number of facilities with extreme outlier values, which would greatly increase the perceived variance in the measure. Accordingly, the truncated CV of less than or equal to 0.10 was added as a criterion for determining whether a clinical measure is topped out. We seek comments on this proposal. We evaluated each of the clinical measures finalized in the PY 2016 ESRD QIP against these proposed statistical conditions. The full analysis is available at: https://www.cms.gov/Medicare/ Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. The results of that analysis appear below in Table 23. TABLE 23—PY 2016 CLINICAL MEASURES USING CROWNWEB AND MEDICARE CLAIMS DATA FROM JANUARY 2013– DECEMBER 2013 Measure Adult HD Kt/V .............................. Adult PD Kt/V ............................... Pediatric HD Kt/V ......................... Hgb > 12 ...................................... Fistula Use ................................... Catheter Use ................................ Hypercalcemia ............................. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 75th percentile N 5665 1176 10 5521 5561 5586 5685 As the information presented in Table 23 suggests, the Hemoglobin Greater than 12 g/dL measure meets the proposed criteria for determining when a clinical measure is topped-out in the ESRD QIP. Accordingly, we propose to remove the Hemoglobin Greater than 12 VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 90th percentile 96.1 92.9 94.5 0.0 72.3 5.9 0.3 97.4 94.8 97.1 0.0 77.0 2.8 0.0 Std. error 0.13 0.55 2.71 0.02 0.16 0.10 0.04 g/dL measure from the ESRD QIP, beginning with the PY 2017 program. We recognize that the Pediatric Hemodialysis Adequacy measure also meets the conditions for being a toppedout clinical measure in the ESRD QIP. However, we are not proposing to PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 Statistically indistin-guishable No ........................ No ........................ Yes ....................... Yes ....................... No ........................ No ........................ No ........................ Truncated CV 0.04 0.15 0.08 < 0.01 0.14 ≤ 0.01 ≤ 0.01 TCV <0.10 Yes. No. Yes. Yes. No. Yes. Yes. remove the Pediatric Hemodialysis Adequacy measure from the ESRD QIP because we have determined that removing the measure will not be useful for dialysis facilities. There are currently very few measures available that focus on the care furnished to E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules pediatric patients with ESRD, and we are reticent to remove a measure that addresses the unique needs of this population. In addition, although only 10 facilities were eligible to receive a score on the Pediatric Hemodialysis Adequacy measure (based on CY 2013 data), we believe that the publicly reported performance of these facilities can influence the standard of care furnished by other facilities that treat pediatric patients, even if a facility does not treat a sufficient number of pediatric patients to be eligible to be scored on the measure. For these reasons, we believe that the drawbacks of removing a topped out clinical measure could be outweighed by the other benefits to retaining the measure. Accordingly, we propose that even if we determine that a clinical measure is topped out according to the statistical criteria we apply, we will not remove or replace it if we determine that its continued inclusion in the ESRD QIP measure set will continue to set a high standard of care for dialysis facilities. We seek comments on these proposals. c. New Measures Proposed for PY 2017 and Future Payment Years As the program evolves, we believe it is important to continue to evaluate and expand the measures selected for the ESRD QIP. Therefore, for the PY 2017 ESRD QIP and future payment years, we are proposing to adopt one new clinical measure that addresses care coordination (see Table 24). TABLE 24—NEW MEASURE PROPOSED FOR THE PY 2017 ESRD QIP NQF# N/A 1 .............. Measure title Standardized Readmission Ratio, a clinical measure. Risk-adjusted standardized hospital readmissions ratio. 1 We note that this measure is currently under review at NQF. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 i. Proposed Standardized Readmission Ratio (SRR) Clinical Measure Background At the end of 2011, 615,899 patients were being dialyzed, 115,643 of whom were new (incident) patients with ESRD.3 The SRR measure assesses the rate of unplanned readmissions of ESRD 3 United States Renal Data System, USRDS 2013 Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States, National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2013. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 patients to an acute care hospital within 30 days of an index discharge from an acute care hospital, thereby identifying potentially poor or incomplete quality of care in the dialysis facility. In addition, the SRR reflects an aspect of ESRD care that is especially resourceintensive. In 2011, the total amount paid by Medicare for the ESRD program was approximately $34.3 billion, a 5.4 percent increase from 2010.2 In particular, Medicare paid more than $10.5 billion for costs associated with hospitalized ESRD patients in 2011. In 2011, ESRD dialysis patients were admitted to the hospital twice on average, and spent an average of 12 total days in the hospital over the year, accounting for approximately 38 percent of Medicare expenditures for patients with ESRD.2 Furthermore, a substantial percentage (30 percent) of ESRD patients discharged from the hospital have an unplanned readmission within 30 days.2 In the non-ESRD population, clinical studies have demonstrated that improved care coordination and discharge planning may reduce readmission rates. The literature also reports a wide range of estimates of the percentage of readmissions that may be preventable. One literature review of more than 30 studies found the median proportion of readmissions that may be preventable was 27%, with a range of 5% to 79%.4 Preventability varied widely across diagnoses. Readmissions were more likely to be preventable in patients with more severe conditions. Therefore, a systematic measure on unplanned readmissions is essential for controlling escalating medical costs; it can identify where readmission rates are unusually high, and help facilities to provide cost-effective healthcare. Overview of Measure The SRR is a one-year riskstandardized measure of a facility’s 30day, all-cause rate of unplanned hospital readmissions among Medicarecovered ESRD dialysis patients. The number of expected readmissions is determined by a risk-adjustment model that accounts for the hospital where the index discharge took place, certain patient characteristics (including age, sex, and comorbidities), and the national median expected performance for all dialysis facilities, given the same patient case mix. We are proposing to adopt the SRR measure currently under review by NQF (NQF #2496). Section 1881(h)(2)(B)(i) of 4 van Walraven C, Bennett C, Jennings A, Austin PC, Forster AJ. Proportion of hospital readmissions deemed avoidable: a systematic review. CMAJ. 2011;183(7):E391–E402. PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 40247 the Act requires that, unless the exception set forth in section 1881(h)(2)(B)(ii) of the Act applies, the measures specified for the ESRD QIP under section 1881(h)(2)(A)(iv) of the Act must have been endorsed by the entity with a contract under section 1890(a) of the Act (that entity currently is NQF). Under the exception set forth in section 1881(h)(2)(B)(ii) of the Act, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed, so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary. We have given due consideration to endorsed measures, as well as those adopted by a consensus organization, and we are proposing this measure under the authority of 1881(h)(2)(B)(ii) of the Act. Although the NQF has endorsed an all-cause hospital readmission measure (NQF #1789), we do not believe it is feasible to adopt this measure in the ESRD QIP because NQF #1789 is specified for use in hospitals, not dialysis facilities. In addition, NQF #1789 is intended to evaluate readmissions across all patient types, whereas the proposed SRR measure is specified for the unique population of ESRD dialysis patients, which have a different risk profile than the general population captured in NQF #1789. Because the proposed SRR measure has been developed specifically for the dialysis-facility setting, and because the measure has the potential to improve clinical practice and decrease healthcare costs, we believe it is appropriate to adopt the SRR in the ESRD QIP at this time. We have analyzed the measure’s reliability, the results of which are provided below and in greater detail in the SRR Measure Methodology report, available at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. The InterUnit Reliability (IUR) was calculated for the proposed SRR using data from 2012 and a ‘‘bootstrap’’ approach, which uses a resampling scheme to estimate the within-facility variation that cannot be directly estimated by the analysis of variance (ANOVA). The SRRs that we calculated for purposes of this analysis were for dialysis facilities that had at least 11 patients who had been discharged from a hospital during 2012. A small IUR (near 0) reveals that most of the variation of the measures between E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40248 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules facilities is driven by ‘‘random noise,’’ indicating the measure would not be a reliable characterization of the differences among facilities, whereas a large IUR (near 1) indicates that most of the variation between facilities is due to the real differences between facilities. The IUR for the proposed SRR measure was found to be 0.49, indicating that about one-half of the variation in the SRR can be attributed to betweenfacility differences, and about half to within-facility variation. This value of IUR indicates that an average-size facility would achieve a moderate degree of reliability for this measure. This level of reliability is consistent with the reliability of other outcome measures in CMS quality-reporting and VBP programs, such as the 30-day RiskStandardized All-Cause Acute Myocardial Infarction, Heart Failure, and Pneumonia Readmission and Mortality measures used in the Hospital IQR and VBP Programs. We therefore believe that facilities can be reliably scored on the proposed SRR measure. We convened a technical expert panel (TEP) in May 2012 for the purpose of evaluating this measure, but the TEP did not reach a final consensus and declined to support the measure. Some members of the TEP were concerned that we did not risk-adjust for the nephrologist treating the patients, because actions taken by nephrologists can impact readmission rates. After reviewing the TEP’s arguments, we determined that the suggested risk adjustment for nephrologist care would constitute a reversal of CMS policy not to risk adjust for factors related to care for which the provider is responsible. We do not think that it is appropriate to risk-adjust the measure for the nephrologist because the nephrologist is part of the facility’s multi-disciplinary team, and medical directors, as employees of the dialysis facilities, are responsible for ensuring that appropriate care is provided by a multidisciplinary team. The Measures Application Partnership reviewed this measure in February 2013 and supported the direction of the measure, advising CMS that the measure would require additional development prior to implementation. Subsequently, we released draft specifications for the measure to the public for a 30-day comment period and, based on comments received, finalized measure specifications in September 2013. We also, on a voluntary basis, provided individual dialysis facilities with a facility-specific report that calculated their SRR measure results and compared those results to SRR measure results at VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 the state and national level, as well as discharge-level data upon request. Facilities also had an opportunity to submit questions to CMS regarding the measure and their reports. We therefore believe that the proposed SRR measure risk-adjusts appropriately for patient condition and comorbidities at the start of care for which the facility is not responsible. We also believe that the measure is ready for adoption because, as explained above, it achieves a moderate degree of reliability. Data Sources The data we will use to calculate the proposed SRR measure come from various CMS-maintained data sources for ESRD patients including the CROWNWeb database, the CMS Annual Facility Survey (Form CMS–2744), Medicare claims, the CMS Medical Evidence Form (Form CMS–2728), transplant data from the Organ Procurement and Transplant Network (OPTN), the Death Notification Form (Form CMS–2746), the Nursing Home Minimum Dataset, and the Social Security Death Master File. These data sources include all Medicare-covered patients with ESRD. Information on hospitalizations is obtained from Medicare Inpatient Claims Standard Analysis Files (SAFs) and past-year comorbidity is obtained from Medicare Claims SAFs (inpatient, outpatient, physician/supplier, home health, hospice, and skilled nursing facility claims). Outcome The outcome for this measure is 30day all-cause, unplanned readmission defined as a hospital readmission for any cause beginning within 30 days of the discharge date of an index discharge, with the exclusion of planned readmissions. This 30-day readmission period is consistent with other publicly reported readmission measures endorsed by NQF and currently implemented in the Hospital Inpatient Quality Reporting Program and Hospital Readmission Reduction Program, and reflects an industry standard. Cohort All discharges of Medicare ESRD dialysis patients from an acute care hospital in a calendar year are considered eligible for this measure, with the exception of the exclusions listed in the next section. Inclusion and Exclusion Criteria The proposed SRR measure excludes from the measure cohort PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 hospitalizations: (1) Where the patient died during the index hospitalization; (2) where the patient dies within 30 days of the index discharge with no readmission; (3) where the patient is discharged against medical advice; (4) where the patient was admitted with a primary diagnosis of certain conditions related to cancers, mental health conditions, or rehabilitation procedures (because these patients possess radically different risk profiles, and therefore cannot reasonably be compared to other patients discharged from hospitals); (5) where the patient is discharged from a PPS-exempt cancer hospital (because these hospitals care for a unique population of patients that cannot reasonably be compared to the patients admitted to other hospitals); (6) where the patient is transferred to another acute care hospital; and (7) where the patient has already been discharged 12 times during the same calendar year (to respond to concerns raised by the TEP that patients who are hospitalized this frequently during a calendar year could unduly skew the measure rates for small facilities). Risk Adjustment The measure adjusts for differences across facilities with regard to their patient case mix. Consistent with NQF guidelines, the model does not adjust for socioeconomic status or race, because risk adjusting for these characteristics would hold facilities with a large proportion of patients who are minorities and/or who have low socioeconomic status to a different standard of care than other facilities. One goal of this measure is to illuminate quality differences that such risk adjustment would obscure. As with the Hospital-Wide Readmission measure employed by the Hospital Readmissions Reduction program, the SRR employs a hierarchical logistic regression model to estimate the expected number of readmissions to an acute care hospital, taking into account the performance of all dialysis facilities, the discharging hospital, and the facility’s patient casemix. Although the SRR risk-adjustment model is generally aligned with the Hospital-Wide Readmission measure risk-adjustment methodology, we are proposing to modify it to account for comorbidities and patient characteristics relevant to the ESRD population. The proposed SRR measure includes the following patient characteristics as risk adjustors, which are obtained from the following data sources: E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40249 Data source Sex ............................................................................................................ Age ........................................................................................................... Years on ESRD ........................................................................................ Diabetes as cause of ESRD .................................................................... BMI at incidence of ESRD ....................................................................... Days hospitalized during index admission ............................................... 23 past-year comorbidities (e.g., cardiorespiratory failure/shock; drug and alcohol disorders). Discharged with any of 11 high-risk conditions (for example, cystic fibrosis, and hepatitis). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Risk adjustor CMS Form 2728. REMIS database. CMS Form 2728. CMS Form 2728. CMS Form 2728. Part A Medicare Inpatient Claims SAFs. Medicare Claims SAFs: Part A Inpatient, home health, hospice, and skilled nursing facility; and Part B Outpatient. Part A Medicare Inpatient Claims SAFs. More details on the risk-adjustment calculations, and the rationale for selecting these risk adjustors and not others, can be found at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. We are proposing to risk adjust the proposed SRR measure based on sex, because we have determined that patients’ sex affects the measure in ways that are beyond the control of dialysis facilities. We reached this determination by examining the effects of the risk adjusters, both independently and in combination, on rates of unplanned readmissions. This analysis yielded two conclusions. First, the analysis indicated that females are generally more likely than males to experience an unplanned readmission, even when accounting for the other risk adjustors. Second, the disparate effects of gender were substantially impacted by the effects of age: Females aged 15 to 45 were much more likely to experience an unplanned readmission than males of the same age, but this disparity was significantly reduced for men and women younger than 15 and older than 45. Based on these two conclusions, we believe that women in the 15–45 age range face a greater risk of experiencing an unplanned readmission, as compared to men of the same age with similar risk profiles. This does not appear to be a consequence of facility performance, however, because the disparity is not generally applicable to women, but only to a limited age group. We therefore believe it is essential to risk-adjust for sex to ensure that facilities with larger numbers of women aged 15 to 45 are not inappropriately disadvantaged, because not risk-adjusting for sex would potentially incentivize facilities to deny access to these individuals. As indicated in the table above, the measure is risk-adjusted, in part, based on 23 comorbidities that develop in the year prior to the index hospitalization, as well as 11 high-risk conditions that are present at the time of the index discharge. These data are taken from Medicare claims submitted by hospitals, VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 dialysis facilities, and other types of long-term and post-acute care facilities. We believe that this proposed approach to risk-adjusting the SRR measure is consistent with NQF guidelines for measure developers. NQF evaluates measures on the basis of four criteria: Importance, scientific acceptability, feasibility, and usability. The validity and reliability of a measure’s risk-adjustment calculations fall under the ‘‘scientific acceptability’’ criterion, and Measure Evaluation Criterion 2b4 specifies NQF’s preferred approach for risk-adjusting outcome measures (https://www.qualityforum.org/ docs/measure_evaluation_ criteria.aspx#scientific). This criterion states that patient comorbidities should only be included in risk-adjustment calculations if they are (1) present at the start of care and (2) not indicative of disparities or deficiencies in the quality of care provided. As indicated in the ‘‘Inclusion and Exclusion Criteria’’ subsection above, as well as the measure specifications that are currently under review at NQF, the start of care is defined as the index hospitalization. Accordingly, we believe that NQF Measure Evaluation Criterion 2b4 supports risk adjusting the proposed SRR measure on the basis of patient comorbidity data collected in the year prior to the index hospitalization, because these comorbidities are likely present at the start of care (that is, the date(s) that the patient spends in the hospital during the index hospitalization). For these reasons, we believe that the risk-adjustment methodology for the proposed SRR measure is consistent with NQF guidelines for measure developers and is appropriate for this measure. Full documentation of the SRR riskadjustment methodology is available at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. Calculating the SRR Measure The SRR measure is calculated as the ratio of the number of observed PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 unplanned readmissions to the number of expected unplanned readmissions. Facilities that have more unplanned readmissions than would be expected for an average facility with a similar case-mix would have a ratio greater than one. Facilities having fewer unplanned readmissions than would be expected for an average facility with a similar case-mix would have a ratio less than one. This ratio calculation is consistent with that employed by one NQFendorsed outcome measure for ESRD, the Standardized Hospitalization Ratio (NQF #1463). Hospitalizations are counted as events in the numerator if they meet the definition of unplanned readmission— which is that they (a) occurred within 30 days of the index discharge and (b) are not preceded by a ‘‘planned’’ readmission that also occurred within 30 days of the index discharge. Planned readmissions are defined as readmissions that do not bear on the quality of care furnished by the dialysis facility, that occur as a part of ongoing appropriate care of patients, or that involve elective care. Building on the algorithm developed for the HospitalWide Readmission measure (NQF #1789), the proposed planned readmission list incorporates minor changes appropriate to the ESRD population as suggested by technical experts. The full planned readmission list and algorithm are available at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. In general, a readmission is considered ‘‘planned’’ under two scenarios. 1. The patient undergoes a procedure that is always considered planned (example, bone marrow transplant) or has a primary diagnosis that always indicates the hospitalization is planned (for example, maintenance chemotherapy). 2. The patient undergoes a procedure that may be considered planned if it is not accompanied by an acute diagnosis. For example, a hospitalization involving a heart-valve procedure accompanied by E:\FR\FM\11JYP2.SGM 11JYP2 40250 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules programs by CMS, such as the Heart Failure and Pneumonia Mortality measures in the Hospital IQR and Hospital VBP Programs. The proposed SRR measure is a point estimate—the best estimate of a facility’s readmission rate based on the facility’s case mix. For more information on the proposed calculation methodology, please refer to our Web site at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. Medicare beneficiaries. CY 2015 is the latest period of time during which we can collect a full 12 months of data and still implement the PY 2017 payment reductions. Therefore, we propose to establish CY 2015 as the performance period for PY 2017 ESRD QIP. We seek comments on this proposal. shall establish performance standards with respect to measures selected . . . for a performance period with respect to a year.’’ Section 1881(h)(4)(B) of the Act further provides that the ‘‘performance standards . . . shall include levels of achievement and improvement, as determined appropriate by the Secretary.’’ We use the performance standards to establish the minimum score a facility must achieve to avoid a Medicare payment reduction. We use achievement thresholds and benchmarks to calculate scores on the clinical measures. Section 1881(h)(4)(D) of the Act requires the Secretary to establish the performance period with respect to a payment year, and that the performance period occur prior to the beginning of such year. In the CY 2013 ESRD PPS Final Rule (77 FR 67500), we stated our belief that, for most measures, a 12month performance period is the most appropriate for the program because this period accounts for any potential seasonal variations that might affect a facility’s score on some of these measures, and also provides adequate incentive and feedback for facilities and VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 4. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the PY 2017 ESRD QIP We are proposing to adopt performance standards for the PY 2017 ESRD QIP measures similar to those we finalized for PY 2016 (78 FR 72211 through 72213). Section 1881(h)(4)(A) of the Act provides that ‘‘the Secretary PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.000</GPH> age, sex, and patient comorbidities), as well as the national median performance of all dialysis facilities. The HLM is an appropriate statistical approach to measuring quality based on patient outcomes when patients are clustered within facilities (and therefore the patients’ outcomes are not statistically independent), and when the number of qualifying patients for the measure varies from facility to facility. The HLM approach is also currently used to calculate readmission and mortality measures that are used in several quality-reporting and VBP 3. Proposed Performance Period for the PY 2017 ESRD QIP mstockstill on DSK4VPTVN1PROD with PROPOSALS2 a primary diagnosis of acute myocardial infarction would be considered unplanned, whereas a hospitalization involving a heart-valve procedure accompanied by a primary diagnosis of diabetes would be considered planned (because acute myocardial infarction is a plausible alternative acute indication for hospitalization). The expected number of readmissions is calculated using hierarchical logistic modeling (HLM). This approach accounts for the hospital from which the patient was discharged and the patient case mix (as defined by factors such as 40251 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules a. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures in the PY 2017 ESRD QIP With the exception of the NHSN Bloodstream Infection clinical measure, we propose to set the performance standards, achievement thresholds, and benchmarks for the PY 2017 clinical measures at the 50th, 15th, and 90th percentile, respectively, of national performance in CY 2013, because this will give us enough time to calculate and assign numerical values to the proposed performance standards for the PY 2017 program prior to the beginning of the performance period. We continue to believe that these standards will provide an incentive for facilities to continuously improve their performance, while not reducing incentives to facilities that score at or above the national performance rate for the clinical measures. As stated in the CY 2014 ESRD PPS Final Rule (78 FR 72213 through 72215), CY 2014 is the first year for which we will have data for the NHSN Bloodstream Infection clinical measure. Accordingly, we propose to set the performance standard, achievement threshold, and benchmark for the NHSN Bloodstream Infection clinical measure based on the 50th, 15th, and 90th percentiles, respectively, of national performance in CY 2014. We seek comments on these proposals. b. Estimated Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures Proposed for the PY 2017 ESRD QIP At this time, we do not have the necessary data to assign numerical values to the proposed performance standards, achievement thresholds, and benchmarks for the clinical measures, because we do not yet have complete data from CY 2013. Nevertheless, we are able to estimate these numerical values based on the most recent data available. For all of the proposed clinical measures except the proposed SRR measure, this partial data comes from the period of January through December 2013. For the proposed SRR measure, this partial data comes from the period of January through December 2012. In Table 25, we have provided the estimated numerical values for all of the proposed PY 2017 ESRD QIP clinical measures except the NHSN Bloodstream Infection clinical measure. We will publish updated values for the clinical measures, using data from the first part of CY 2014, in the CY 2015 ESRD PPS final rule. TABLE 25—ESTIMATED NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2017 ESRD QIP CLINICAL MEASURES USING THE MOST RECENTLY AVAILABLE DATA Measure Performance standard Vascular Access Type: %Fistula .................................. %Catheter ............................... Kt/V: Adult Hemodialysis ................. Adult Peritoneal Dialysis ......... Pediatric Hemodialysis ........... Hypercalcemia ............................... NHSN Bloodstream Infection ......... Standardized Readmission Ratio .. Achievement threshold 64.49% .......................................... 9.9% .............................................. 52.43% .......................................... 18.36% .......................................... 78.64% 3.21% 93.65% .......................................... 87.50% .......................................... 92.48% .......................................... 1.32% ............................................ 50th percentile of eligible facilities’ performance during CY 2014. 0.996 ............................................. 86.97% .......................................... 70.42% .......................................... 79.55% .......................................... 4.78% ............................................ 15th percentile of eligible facilities’ performance during CY 2014. 1.242 ............................................. 97.55% 95.74% 97.98% 0.00% 90th percentile of eligible facilities’ performance during CY 2014. 0.658 We believe that the ESRD QIP should not have lower performance standards than in previous years. In accordance with our statements in the CY 2012 ESRD PPS final rule (76 FR 70273), if the final numerical value for a performance standard, achievement threshold, and/or benchmark is worse than it was for that measure in the PY 2016 ESRD QIP, then we propose to substitute the PY 2016 performance standard, achievement threshold, and/or benchmark for that measure. We seek comments on this proposal. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 c. Proposed Performance Standards for the PY 2017 Reporting Measures In the CY 2014 ESRD PPS Final Rule, we finalized performance standards for the Anemia Management, Mineral Metabolism, and ICH CAHPS reporting measures (78 FR 72213). We are proposing to continue to use these performance standards for these measures in the PY 2017 ESRD QIP. We seek comments on this proposal. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 5. Proposal for Scoring the PY 2017 ESRD QIP Measures a. Scoring Facility Performance on Clinical Measures Based on Achievement In the CY 2014 ESRD PPS Final Rule, we finalized a policy for scoring performance on clinical measures based on achievement (78 FR 72215). In determining a facility’s achievement score for each measure under the PY 2017 ESRD QIP, we propose to continue using this methodology for all clinical measures. Under this methodology, facilities receive points along an achievement range based on their performance during the proposed performance period for each measure, which we define as a scale between the achievement threshold and the benchmark. b. Scoring Facility Performance on Clinical Measures Based on Improvement In the CY 2014 ESRD PPS Final Rule, we finalized a policy for scoring PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 Benchmark performance on clinical measures based on improvement (78 FR 72215 through 72216). In determining a facility’s improvement score for each measure under the PY 2017 ESRD QIP, we propose to continue using this methodology for all clinical measures. Under this methodology, facilities receive points along an improvement range, defined as a scale running between the improvement threshold and the benchmark. We propose to define the improvement threshold as the facility’s performance on the measure during CY 2014. The facility’s improvement score would be calculated by comparing its performance on the measure during CY 2015 (the proposed performance period) to its performance rate on the measure during CY 2014. 6. Weighting the Total Performance Score We continue to believe that while the reporting measures are valuable, the clinical measures evaluate actual patient care and therefore justify a higher E:\FR\FM\11JYP2.SGM 11JYP2 40252 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules combined weight (78 FR 72217). We are therefore not proposing to change our policy, finalized most recently in the CY 2014 ESRD PPS (78 FR 72217), to weight clinical measures as 75 percent and reporting measures as 25 percent of the TPS. We are also not proposing any changes to the policy that facilities must be eligible to receive a score on at least one reporting measure and at least one clinical measure to be eligible to receive a TPS, or the policy that a facility’s TPS will be rounded to the nearest integer, with half of an integer being rounded up. 7. Proposed Minimum Data for Scoring Measures for the PY 2017 ESRD QIP and Proposal for Changing Attestation Process for Patient Minimums For the same reasons described in the CY 2013 ESRD PPS final rule (77 FR 67510 through 67512), for PY 2017 we propose to only score facilities on clinical and reporting measures for which they have a minimum number of qualifying patients during the performance period. Our current policy is that a facility must treat at least 11 qualifying patients during the performance period in order to be scored on a clinical measure (77 FR 67510 through 67511). We are not proposing any changes to this policy. However, with respect to the proposed SRR measure, we propose that facilities with fewer than 11 index discharges will not be eligible to receive a score on that measure. We considered proposing to adopt the 11 qualifying patient minimum that we use for the other clinical measures. We decided, however, to base facility eligibility for the measure on the number of index discharges attributed to a facility, because the measure calculations are determined by the number of index discharges, adjusted for patient casemix. We decided to set the minimum number of index discharges at 11 because this is consistent with reporting for the proposed SRR measure during the dry run conducted earlier this year, as well as with the implementation of outcome measures in the Hospital Readmission Reduction Program, which base case minimums on the number of index discharges attributable to the facility. Additionally, for the proposed SRR measure, we propose to apply the smallfacility adjuster to facilities that treat 41 or fewer index discharges because we determined that this was the minimum number of index discharges needed to achieve an IUR of 0.4 (that is, moderate reliability) for the proposed SRR measure. Because the small-facility adjuster gives facilities the benefit of the doubt when measure scores can be unduly influenced by a few outlier patients, we believe that setting the threshold at 41 index discharges will not unduly penalize facilities that treat small numbers of patients. In the CY 2014 ESRD PPS Final Rule, we finalized that the case minimum for the Mineral Metabolism and Anemia Management reporting measures is one, and that facilities that treat one qualifying patient could attest to this in CROWNWeb in order to avoid being scored on the measures (78 FR 72197 through 72199 and 72220 through 72221). In the process of responding to questions from facilities about the attestation requirements for the PY 2015 program, however, we found that facilities were confused by this requirement. For this reason, we propose to remove the option for facilities to attest that they did not meet the case minimum for these measures. Accordingly, facilities that meet the case minimum of one qualifying patient would be scored on these measures, facilities with between 2 and 11 qualifying patients would be required to report data for all but one qualifying patient, and facilities with 11 or more qualifying patients would be required to report data for all patients. Due to facility confusion with the attestation process, we also propose to remove the option for facilities to attest that they did not meet the case minimum for the ICH CAHPS survey reporting measure. As we stated above, we are not proposing any further changes to the 30 survey-eligible case minimum for this measure. We are proposing that the ESRD QIP program will determine facility eligibility for these measures based on available data submitted to CROWNWeb, in Medicare claims, and to other CMS administrative data sources. We seek comments on this proposal. We are proposing to continue our policies that govern when a newly opened facility would be eligible to be scored on measures as follows. • Facilities with a CCN open date on or after July 1 of the performance period (for PY 2017, this would be July 1, 2015) are not eligible to be scored on any reporting measures except the ICH CAHPS reporting measure. • Facilities with a CCN open date on or after January 1 of the performance period (for PY 2017, this would be January 1, 2015) are not eligible to receive a score on the ICH CAHPS reporting measure in the PY 2017 program, due to the time it takes to contract with a CMS-approved thirdparty vendor to administer the survey. • Facilities are eligible to receive a score on all of the clinical measures except the NHSN Bloodstream Infection clinical measure if they have a CCN open date at any time before the end of the performance period. • Facilities with a CCN open date after January 1 of the performance period (for PY 2017, this would be January 1, 2015) are not eligible to receive a score on the NHSN Bloodstream Infection clinical measure, due to the need to collect 12 months of data to accurately score the measure. We are also proposing to continue our policy that a facility will not receive a TPS unless it receives a score on at least one clinical measure and at least one reporting measure. We note that as a result, facilities will not be eligible for a payment reduction under the PY 2017 ESRD QIP if they have a CCN open date on or after July 1, 2015. We seek comments on these proposals. Table 26 displays the proposed patient minimum requirements for each of the reporting measures, as well as the CCN open dates after which a facility will not be eligible to receive a score on a reporting measure. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 TABLE 26—PROPOSED MINIMUM DATA REQUIREMENTS FOR THE PY 2017 ESRD QIP Small facility adjuster Measure Minimum data requirements CCN Open date Adult Hemodialysis Adequacy (Clinical). Adult Peritoneal Dialysis Adequacy (Clinical). Pediatric Hemodialysis Adequacy (Clinical). 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40253 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 26—PROPOSED MINIMUM DATA REQUIREMENTS FOR THE PY 2017 ESRD QIP—Continued Small facility adjuster Measure Minimum data requirements CCN Open date Vascular Access Type: Catheter (Clinical). Vascular Access Type: Fistula (Clinical). Hypercalcemia (Clinical) ...... NHSN Bloodstream Infection (Clinical). SRR (Clinical) ...................... ICH CAHPS (Reporting) ...... 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... 11 qualifying patients .................................................... N/A ..................................... On or before January 1, 2015. N/A ..................................... Before January 1, 2015 ..... 11–25 patients. 11–25 patients. Before July 1, 2015 ........... N/A. Before July 1, 2015 ........... N/A. Anemia Management (Reporting). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Mineral Metabolism (Reporting). 11 index discharges ...................................................... Facilities with 30 or more survey-eligible patients during the calendar year preceding the performance period must submit survey results. Facilities will not receive a score if they do not obtain a total of at least 30 completed surveys during the performance period. Facilities with 11 or more qualifying patients must report data for all patients. Facilities with between 2 and 11 qualifying patients must report data on all but 1 qualifying patient. Facilities with 1 qualifying patient must report for that patient. Facilities with 11 or more qualifying patients must report data for all patients. Facilities with between 2 and 11 qualifying patients must report data on all but 1 qualifying patient. Facilities with 1 qualifying patient must report for that patient. 8. Proposed Payment Reductions for the PY 2017 ESRD QIP Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to ensure that the application of the scoring methodology results in an appropriate distribution of payment reductions across facilities, such that facilities achieving the lowest TPSs receive the largest payment reductions. For PY 2017, we are proposing that a facility will not receive a payment reduction if it achieves a minimum TPS that is equal to or greater than the total of the points it would have received if: • It performed at the performance standard for each clinical measure; • It received zero points for each clinical measure that does not have a numerical value for the performance standard established through the rulemaking process before the beginning of the PY 2017 performance period; and • It received 10 points (which is the 50th percentile of facility performance on the PY 2015 reporting measures) for each reporting measure. We recognize that these conditions are more stringent than the conditions used to establish the minimum TPS in the PY 2016 ESRD QIP, because this proposal increases the number of points a facility would have to receive on each reporting measure from 5 to 10. The PY 2015 program is the most recent year for which we will have calculated final measure scores before the beginning of the proposed performance period for PY 2017 (i.e., CY 2015). We note that facility performance on the Anemia VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Management, Mineral Metabolism, NHSN Dialysis Event, and ICH CAHPS reporting measures in the PY 2015 program is so high that the median score on each of the measures was 10 points. We are proposing to increase the number of points a facility would have to achieve for each reporting measure to the 50th percentile of facility performance on the PY 2015 reporting measures (i.e., the average of the median scores for each reporting measure), because a score of 5 on each of these reporting measures is indicative of a below-average performance, and we want to incentivize facilities to provide above-average care. We seek comments on this proposal. Section 1881(h)(3)(A)(ii) of the Act requires that facilities achieving the lowest TPSs receive the largest payment reductions. In the CY 2014 ESRD PPS Final Rule (78 FR 72223 through 72224), we finalized a payment reduction scale for PY 2016 and future payment years, such that for every 10 points a facility falls below the minimum TPS, the facility would receive an additional 0.5 percent reduction on its ESRD PPS payments, with a maximum reduction of 2.0 percent. We are not proposing any changes to this policy at this time. Because we are not yet able to calculate the performance standards for each of the clinical measures, we are likewise not able to calculate the minimum TPS at this time. Based on the estimated performance standards listed above, we estimate that a facility must meet or exceed a minimum TPS of 58 PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 11–41 index discharges. N/A. for PY 2017. For all of the clinical measures except the NHSN Bloodstream Infection clinical measure, these data come from CY 2013. For the NHSN Bloodstream Infection clinical measure, we set the performance standard to zero for purposes of this estimate, because we are not able to establish a numerical value for the performance standard through the rulemaking process before the beginning of the PY 2017 performance period. We are proposing that facilities failing to meet the minimum TPS, as established in the CY 2015 ESRD PPS Final Rule, will receive payment reductions based on the estimated TPS ranges indicated in Table 27 below. TABLE 27—ESTIMATED PAYMENT REDUCTION SCALE FOR PY 2017 BASED ON THE MOST RECENTLY AVAILABLE DATA FROM CY 2013 Total performance score 100—58 .................................... 57—48 ...................................... 47—38 ...................................... 37—28 ...................................... 27—0 ........................................ Reduction (%) 0 0.5 1.0 1.5 2.0 9. Proposal for Data Validation One of the critical elements of the ESRD QIP’s success is ensuring that the data submitted to calculate measure scores and TPSs are accurate. We began a pilot data-validation program in CY 2013 for the ESRD QIP, and we have E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40254 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules procured the services of a datavalidation contractor that is tasked with validating a national sample of facilities’ records as they report CY 2014 data to CROWNWeb. Our first priority was to develop a methodology for validating data submitted to CROWNWeb under the pilot data-validation program, and this continues to be our goal. Once this methodology has been fully developed, we will propose to adopt it through the rulemaking process. For the PY 2016 ESRD QIP (78 FR 72223 through 72224), we finalized a requirement to sample approximately 10 records from 300 randomly selected facilities; these facilities will have 60 days to comply once they receive requests for records. We are proposing to continue this pilot for the PY 2017 ESRD QIP. Under this continued validation study, we will sample the same number of records (approximately 10 per facility) from the same number of facilities (that is, 300) during CY 2015. If a facility is randomly selected to participate in the pilot validation study but does not provide CMS with the requisite medical records within 60 days of receiving a request, then we propose to deduct 10 points from the facility’s TPS. Once we have developed and adopted a methodology for validating the CROWNWeb data, we intend to consider whether payment reductions under the ESRD QIP should be based, in part, on whether a facility has met our standards for data validation. We seek comments on this proposal. We are also proposing a feasibility study for validating data reported to CDC’s NHSN Dialysis Event Module for the NHSN Bloodstream Infection clinical measure. HAIs are relatively rare, and we are proposing that the feasibility study would target records with a higher probability of including a dialysis event, because this would enrich the validation sample while reducing the burden on facilities. The methodology for this proposed feasibility study would resemble the methodology used by the Hospital Inpatient Quality Reporting Program to validate the central line-associated bloodstream infection measure, the catheter-associated urinary tract infection measure, and the surgical site infection measure (77 FR 53539 through 535553). Specifically, we propose to randomly select nine facilities to participate in the feasibility study. A CMS contractor will send these facilities quarterly requests for lists of all positive blood cultures drawn from its patients during the quarter, including any positive blood cultures that were collected from the facility’s patients on the day of, or the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 day following, their admission to a hospital. Facilities will have 60 days to respond to quarterly requests for lists of positive blood cultures. A CMS contractor will then develop a methodology for determining when a positive blood culture qualifies as a ‘‘candidate dialysis event,’’ and is therefore appropriate for further validation. Once the contractor determines a methodology for identifying candidate dialysis events, the contractor will analyze the records of patients who had a positive blood culture in order to determine if the facility reported dialysis events for those patients in accordance with the NHSN Dialysis Event Protocol. If the contractor determines that additional medical records are needed from a facility to validate whether the facility accurately reported the dialysis events, then the contractor will send a request for additional information to the facility, and the facility will have 60 days from the date of the letter to respond to the request. Overall, we estimate that, on average, quarterly lists will include two positive blood cultures per facility, but we recognize these estimates may vary considerably from facility to facility. If a facility is randomly selected to participate in the feasibility study but does not provide CMS with the requisite lists of positive blood cultures or the requisite medical records within 60 days of receiving a request, then we propose to deduct 10 points from the facility’s TPS. The goals of the proposed feasibility study will be five-fold: (1) To estimate the burden and associated costs to facilities of validating the NHSN Bloodstream Infection clinical measure; (2) to assess the costs to CMS to validate this measure; (3) to develop a methodology for identifying candidate dialysis events from lists of positive blood cultures; (4) to develop a methodology for determining whether a facility accurately reported dialysis events under the NHSN Bloodstream Infection clinical measure; and (5) to reach some preliminary conclusions about whether facilities are accurately reporting data under the NHSN Bloodstream Infection clinical measure. Based on the results of this study, we will consider the feasibility of proposing in future rulemaking to validate the NHSN Bloodstream Infection clinical measure for all facilities. We seek comments on this proposal. 10. Proposal To Monitor Access to Dialysis Facilities Public comments on the proposal to adopt the Standardized Hospitalization Ratio measure in the PY 2014 ESRD QIP PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 (76 FR 70267) expressed concerns that ‘‘the measure may lead to ‘cherrypicking’ of patients based on their risk of hospitalizations, causing access to care issues for patients with more severe illness.’’ We share commenters’ concerns about the SHR measure, and we believe that these concerns equally apply to other outcome measures proposed for the ESRD QIP. We recognize that, in general, inadequate risk adjustment in outcome measure calculations can create an incentive for facilities to deny services to sicker patients, because these patients’ illnesses would not be properly accounted for in the risk-adjustment calculations. We believe that outcome measures proposed and adopted for the ESRD QIP properly risk adjust for patients with severe illnesses, but we remain concerned that misperceptions to the contrary might negatively impact access to dialysis therapy. Since we are proposing to adopt the SRR clinical measure for the PY 2017 program, and below we are proposing to adopt the STrR clinical measure for the PY 2018 program, we propose to initiate a monitoring program focused on access to dialysis therapy. This program would compare dialysis data before and after the adoption of an outcome measure, looking for changes in admission and discharge practices, as well as changes in rates and patterns of involuntary discharges. Specifically, this program would assess and analyze the characteristics of beneficiaries admitted to dialysis centers (stratified by location, size, and setting) in order to determine when and if selective admission and discharge practices are coupled with negative patient attributes and trends over time. We believe this program will enable us to identify patterns that are indicative of diminished access to dialysis therapy. We seek comments on this proposal. 11. Proposed Extraordinary Circumstances Exception Many comments on the CY 2014 ESRD PPS proposed rule included the recommendation to exempt a facility from all the requirements of the ESRD QIP clinical and reporting measures during the time the facility was forced to close temporarily due to a natural disaster or other extraordinary circumstances. In response to these comments, we agreed that ‘‘there are times when facilities are unable to submit required quality data due to extraordinary circumstances that are not within their control, and we do not wish to penalize facilities for such circumstances or unduly increase their E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules burden during these times’’ (78 FR 72209). Section 1881(h)(3)(A)(i) of the Act states, ‘‘[T]he Secretary shall develop a methodology for assessing the total performance of each provider of services and renal dialysis facility based on performance standards with respect to the measures selected under paragraph (2) for a performance period established under paragraph (4)(D).’’ Given the possibility that facilities could be unfairly penalized for circumstances that are beyond their control, we believe the best way to implement an extraordinary circumstances exception is under the authority of this section. We are therefore proposing to interpret section 1881(h)(3)(A)(i) of the Act to enable us to configure the methodology for assessing facilities’ total performance such that we will not require a facility to submit, nor penalize a facility for failing to submit, data on any ESRD QIP quality measure data from any month in which a facility is granted an extraordinary circumstances exception. Under this policy, we propose that, in the event of extraordinary circumstances not within the control of the facility (such as a natural disaster), for the facility to receive consideration for an exception from all ESRD QIP requirements during the period in which the facility was closed, the facility would need to submit a CMS Disaster Extension/Exception Request Form through www.qualitynet.org within 90 calendar days of the date of the disaster or extraordinary circumstance. We are proposing that the facility would need to provide the following information on the form: • Facility CCN; • Facility name; • CEO name and contact information; • Additional contact name and contact information; • Reason for requesting an exception; • Dates affected; • Date facility will start submitting data again, with justification for this date; and • Evidence of the impact of the extraordinary circumstances, including but not limited to photographs, newspaper, and other media articles. Incomplete forms will be returned to the facility without further review of their content. We will evaluate the request and provide the facility with a response. If we determine that the facility was, in fact, closed for a period of time due to extraordinary circumstances, then we will exempt the facility from the ESRD QIP requirements for any month during which the facility was closed due to the extraordinary circumstances. As such, a facility VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 granted a temporary exception will be scored on each measure only for the months during a performance period not covered by the exception. For example, if a facility is granted an extraordinary circumstances exception for the time period between January 15 and February 15, 2015, then the facility will not be required to report, and will not be penalized for not reporting, data on any ESRD QIP measure data for January and February of CY 2015. The effect of this proposal is that if a facility, because it has been granted an exception, cannot meet the reporting requirements that apply to a measure, the facility will not receive a score on the measure. For example, if a facility is granted an extraordinary circumstances exception for February 2015, then that facility would not be scored on the NHSN Bloodstream Infection clinical measure for the applicable payment year, because this measure requires facilities to submit 12 months of data in order to avoid receiving zero points on the measure. This policy does not preclude us from granting exceptions to facilities that have not requested them when we determine that an extraordinary circumstance (for example, a hurricane or other act of nature) affects an entire region or locale. If we make the determination to grant an exception to facilities in a region or locale, then we propose to communicate this decision through routine communication channels to facilities, vendors, and Networks, including but not limited to issuing memoranda, emails, and notices on a CMS-approved Web site. We seek comments on this proposal. G. Proposed Requirements for the PY 2018 ESRD QIP 1. Proposal To Modify the Mineral Metabolism Reporting Measure Beginning in PY 2018 In the CY 2013 ESRD QIP, we adopted a reporting measure focused on mineral metabolism, which was based in part on NQF #0255 (77 FR 67487 through 67487). In the CY 2014 ESRD PPS, we finalized two revisions to the Mineral Metabolism reporting measure: (1) To include home peritoneal dialysis patients in the measure; and (2) to remove serum calcium reporting from the measure because of its reporting under the Hypercalcemia clinical measure (78 FR 72197 through 72198). Accordingly, in order to meet the requirements for the Mineral Metabolism reporting measure, facilities currently must report serum phosphorus values for each qualifying patient PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 40255 treated at the facility on a monthly basis. Since the publication of the CY 2014 ESRD PPS final rule, members of the renal community requested an ad hoc NQF review of measure #0255, focusing in particular on whether the measure should be updated to allow for the reporting of plasma phosphorus data. The NQF Consensus Standards Approval Committee (CSAC) reviewed the measure and recommended that the phosphorus reporting measure (NQF #0255) be modified to allow for the reporting of plasma phosphorus data as an alternative to serum phosphorus data. Although our TEP reviewed this issue and concluded that measure #0255 should remain unchanged, we concur with the CSAC’s recommendation due to the CSAC’s ad hoc review of lab data demonstrating the equivalency of plasma and serum measurements of phosphorus, as well as an additional concurrent internal review of the data by CMS and our measure development contractor. We are in agreement with the CSAC that readings of phosphorus using either plasma or serum are appropriate for the measure. As the measure developer for NQF #255, we are also in the process of revising the specifications for that measure and plan to submit the revised measure specifications to the NQF for endorsement. We believe the change to these specifications is non-substantive because plasma readings are an alternative method of reporting on phosphorus data and, as we state above, are roughly equivalent to serum phosphorus readings. We considered proposing to allow facilities to report plasma phosphorus data for the Mineral Metabolism reporting measure in the PY 2017 program, but we have determined that it is not operationally feasible to configure the relevant data fields in CROWNWeb to accept plasma phosphorus readings prior to January 1, 2015, the beginning of the performance period for that program year. For this reason, we propose to modify the measure specifications for the Mineral Metabolism reporting measure to allow facilities to report either serum phosphorus data or plasma phosphorus data, beginning with the PY 2018 program. We further clarify that we are not proposing any other changes to the measure specifications for the Mineral Metabolism reporting measure. 2. Proposed New Measures for the PY 2018 ESRD QIP and Future Payment Years For the PY 2018 ESRD QIP, we are proposing to continue to use all of the E:\FR\FM\11JYP2.SGM 11JYP2 40256 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules measures proposed for the PY 2017 ESRD QIP, with the exception of the ICH CAHPS reporting measure, which we are proposing to convert to a clinical measure. We are also proposing to adopt five new measures. The proposed new measures include one new outcome measure evaluating transfusions in the ESRD population, one measure on pediatric peritoneal dialysis adequacy, one measure on pain assessment, one measure on clinical depression screening, and one measure on healthcare personnel influenza vaccination (see Table 28). TABLE 28—NEW MEASURES PROPOSED FOR THE PY 2018 ESRD QIP NQF# Measure title N/A ............................. Pediatric Peritoneal Dialysis Adequacy, a clinical measure. Percentage of pediatric peritoneal dialysis patient-months with spKt/V greater than or equal to 1.8 (dialytic + residual). In-Center Hemodialysis Consumer Assessment of Providers and Systems Survey,1 a clinical measure. Proportion of responses to rating items grouped into three composite measures and three global ratings. Standardized Transfusion Ratio, a clinical measure. Risk-adjusted standardized transfusion ratio for dialysis facility patients. Pain Assessment and Follow-Up, a reporting measure. Percentage of adult patients with documentation of pain assessment through discussion with the patient including the use of a standardized tool(s) on each visit and documentation of a follow-up place when pain is present. Depression Screening and Follow-Up, a reporting measure. Percentage of adult patients screened for clinical depression using a standardized tool and follow-up plan is documented. NHSN Healthcare Personnel Influenza Vaccination, a reporting measure. 0258 ........................... N/A ............................. N/A2 ........................... N/A3 ........................... N/A4 ........................... 1 The proposed dimensions of the ICH CAHPS survey for use in the PY 2018 ESRD QIP are: Nephrologists’ Communication and Caring, Quality of Dialysis Center Care and Operations, Providing Information to Patients, Overall Rating of the Nephrologists, Overall Rating of the Dialysis Center Staff, and Overall Rating of the Dialysis Facility. 2 We note that the NQF has previously endorsed a pain measure (NQF #0420) upon which this measure is based. 3 We note that the NQF has previously endorsed a depression measure (NQF #0418) upon which this measure is based. 4 We note that the NQF has previously endorsed a vaccination measure (NQF #0431) upon which this measure is based. a. Proposed Standardized Transfusion Ratio (STrR) Clinical Measure Background We are concerned that the inclusion of erythropoiesis-stimulating agents (ESAs) in the ESRD PPS and the removal of the Hemoglobin Less than 10 g/dL clinical measure from the ESRD QIP measure set could result in the underutilization of ESAs to manage anemia in ESRD patients, with the result that these patients have lower achieved hemoglobin levels and more frequently need red-blood-cell transfusions. In addition, patients with ESRD who are eligible to receive a kidney transplant and are transfused risk becoming sensitized to the donor pool, thereby making it less likely that a transplant will be successful. Blood transfusions also carry a small risk of transmitting blood-borne infections to the patient, and the patient could additionally develop a transfusion reaction. Furthermore, using infusion centers or hospitals to transfuse patients is expensive, inconvenient, and could compromise future vascular access. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Overview of Measure The Standardized Transfusion Ratio (STrR) for all adult Medicare ESRD patients is a ratio of the number of observed eligible blood transfusion events occurring in patients dialyzing at a facility to the number of eligible transfusions that would be expected from a predictive model that accounts for patient characteristics within each VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 facility. Eligible transfusions are those that do not have any claims pertaining to the comorbidities identified for exclusion in the 12 months immediately prior to the transfusion date. We plan to submit the STrR measure to NQF for review at the next available call for measures. Section 1881(h)(2)(B)(i) of the Act requires that, unless the exception set forth in section 1881(h)(2)(B)(ii) of the Act applies, the measures specified for the ESRD QIP under section 1881(h)(2)(A)(iv) of the Act must have been endorsed by the entity with a contract under section 1890(a) of the Act (which is currently NQF). Under the exception set forth in section 1881(h)(2)(B)(ii) of the Act, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed, so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary. We have given due consideration to endorsed measures, as well as those adopted by a consensus organization, and we are proposing this measure under the authority of 1881(h)(2)(B)(ii) of the Act. NQF has not endorsed and a consensus organization has not adopted a measure on transfusions. Because the proposed STrR measure has the potential to decrease transfusions resulting from underutilization of PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 anemia medications, we believe it is appropriate to adopt the STrR in the PY 2018 ESRD QIP. We considered proposing to adopt the measure for the PY 2017, but we recognized that this is a new measure, and wanted to give facilities more time to familiarize themselves with it. The Measure Application Partnership, in its February 1, 2013 Pre-Rulemaking Report, supported the direction of the measure, stating that it ‘‘addresses an important concept, but the establishment of guidelines for hemoglobin range is needed.’’ We have received public comments and input from a TEP that we convened on a prototype STrR measure, and finalized development of the proposed STrR measure in September 2013. The resulting measure specifications did not include hemoglobin thresholds, as no input from the TEP or public comments supported moving forward with thresholds included in the measure. We therefore believe these efforts meet the requirements for further development of the STrR prior to implementation in the ESRD QIP. In the process of preparing to submit the measure for NQF review, we conducted analyses on the reliability of the STrR measure. The full analysis is available at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. The STrR is not a simple average; instead, we estimate the IUR using a bootstrap approach, which uses a resampling E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules scheme to estimate the within facility variation that cannot be directly estimated by ANOVA. A small IUR (near 0) reveals that most of the variation of the measures between facilities is driven by ‘‘random noise,’’ indicating the measure would not be a reliable characterization of the differences among facilities, whereas a large IUR (near 1) indicates that most of the variation between facilities is due to the real difference between facilities. We have determined that the average IUR for the STrR measure is 0.54, meaning that about half of the variation in the measure can be attributed to between-facility differences, and about half to within-facility variation. This value of IUR indicates a moderate degree of reliability and is consistent with the reliability of other outcome measures in CMS quality reporting and VBP programs. We therefore believe that facilities can be reliably scored on the proposed STrR measure. Data Sources Data for the measure come from various CMS-maintained data sources for ESRD patients including Program Medical Management and Information System (PMMIS/REMIS), Medicare claims, the CROWNWeb database, the CMS Annual Facility Survey (Form CMS–2744), Medicare dialysis and hospital payment records, the CMS Medical Evidence Form (Form CMS– 2728), transplant data from the OPTN, the Death Notification Form (Form CMS–2746), the Nursing Home Minimum Dataset, and the Social Security Death Master File. These data sources include all Medicare patients. Information on transfusions is obtained from Medicare Inpatient and Outpatient Claims SAFs. Outcome mstockstill on DSK4VPTVN1PROD with PROPOSALS2 The outcome of interest for the STrR is blood transfusion events (defined as the transfer of one or more units of blood or blood products into the recipient’s blood stream) among Medicare ESRD patients dialyzing at the facility during the inclusion time periods. Cohort The cohort for the STrR includes all adult Medicare ESRD dialysis patients who have been documented as having had ESRD for at least 90 days. Inclusion and Exclusion Criteria Patients will not be included in the STrR during the first 90 days of ESRD dialysis treatment. Starting with day 91 after onset of ESRD, a patient is attributed to a facility once he or she has been receiving dialysis there for 60 days. When a patient transfers from one facility to another, we are proposing that the patient would continue to be attributed to the original facility for 60 days from the date of the transfer. Starting on day 61, the patient would be attributed to the transferee facility. Patients would be excluded from the measure for three days prior to the date they receive a transplant to avoid including transfusions associated with the transplant hospitalization. We are also proposing to require that patients reach a certain level of Medicare-paid dialysis bills to be included in the STrR, or that patients have Medicare-paid inpatient claims during the period. This requirement is intended to assure completeness of transfusion information for all patients included in the measure calculation by excluding non-Medicare patients and patients for whom Medicare is a secondary payer, because they are not expected to have complete information on transfusion available in the claims data. For each patient, a month is included as a month at risk for transfusion if that month in the period is considered ‘‘eligible.’’ A month is considered eligible if it is within two months of a month in which a patient has $900 of Medicare-paid claims or at least one Medicare-paid inpatient claim. The $900 amount represents approximately the tenth percentile of monthly dialysis claims per patient. In addition, a transfusion event is eligible for inclusion in the STrR measure if the patient did not present with certain comorbid conditions during the 12 month period immediately prior to the date of the transfusion event. We are proposing to exclude these transfusion events because the identified comorbid conditions are associated with a higher risk of transfusion and require different anemia management practices that the measure is not intended to address. Specifically, we are proposing that a transfusion event will be excluded from the measure if the patient, during the 12 month look back period, had a Medicare claim for: hemolytic and aplastic anemia; solid organ cancer (breast, prostate, lung, digestive tract and others); lymphoma; carcinoma in situ; coagulation disorders; multiple myeloma; myelodysplastic syndrome and myelofibrosis; leukemia; head and neck cancer; other cancers (connective tissue, skin, and others); metastatic cancer; or sickle cell anemia. The specific diagnoses used to identify each of these conditions are listed in the proposed measure specifications, which are available at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. Risk Adjustment The denominator of the STrR uses expected transfusions calculated from a Cox model that is extended to handle repeated events. For computational purposes, the proposed STrR measure adopts a model with piecewise-constant baseline rates. A stage 1 model is fitted to the national data with piecewiseconstant baseline rates across facilities. Transfusion rates are adjusted for: patient age; diabetes as a cause of ESRD; duration of ESRD; nursing home status; BMI at incidence; comorbidity index at incidence; and calendar year. This model allows baseline transfusion rates to vary between facilities, and applies the regression coefficients for the riskadjustment model to each facility identically. This approach is robust to possible differences between facilities in the patient mix being treated. The second stage uses the risk-adjustment factor from the first stage as an offset. The stage 2 model then calculates the national baseline transfusion rate. The STrR measure includes the following risk adjustors, which are obtained from the following data sources: Risk adjustor Data source Age ................................................................................................................................................................ Diabetes as cause of ESRD ......................................................................................................................... BMI at incidence of ESRD ............................................................................................................................ Comorbidity index ......................................................................................................................................... Nursing home status ..................................................................................................................................... Duration of ESRD ......................................................................................................................................... VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00051 40257 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM REMIS database. CMS Form 2728. CMS Form 2728. CMS Form 2728. Nursing Home Minimum Dataset. CMS Form 2728. 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40258 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules More details on the risk-adjustment calculations, and the rationale for selecting these risk adjustors and not others, can be found at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. As indicated in the table above, the proposed STrR measure risk adjusts predominantly on the basis of patient characteristics collected on CMS Form 2728, and we believe that this riskadjustment methodology is reliable and valid. NQF evaluates measures on the basis of four criteria: importance, scientific acceptability, feasibility, and usability. The validity and reliability of a measure’s risk-adjustment calculations fall under the ‘‘scientific acceptability’’ criterion, and Measure Evaluation Criterion 2b4 specifies NQF’s preferred approach for risk adjusting outcome measures (https://www.qualityforum.org/ docs/measure_evaluation_ criteria.aspx#scientific). This criterion states that patient comorbidities should only be included in risk-adjustment calculations if they are (1) present at the start of care and (2) not indicative of disparities or deficiencies in the quality of care provided. As indicated in the ‘‘Inclusion and Exclusion Criteria’’ subsection above, the proposed STrR clinical measure includes Medicare patients who have been documented as having had ESRD for at least 90 days and are not excluded for other reasons. Accordingly, we believe that NQF Measure Evaluation Criterion 2b4 supports risk-adjusting the proposed STrR measure on the basis of incident patient comorbidity data collected on CMS Form 2728, because these comorbidities are likely present at the start of care. Moreover, comorbidities that develop after the 90th day of chronic dialysis treatment, and are statistically associated with transfusions, can be reflective of the quality of care provided by the facility. Therefore, we do not believe that NQF Measure Evaluation Criterion 2b4 supports risk adjusting the proposed STrR measure on the basis of updated comorbidity data, because doing so may mask disparities or deficiencies in the quality of care provided, thereby obscuring assessments of facility performance. For these reasons, we believe that the risk-adjustment methodology for the proposed STrR measure is consistent with NQF guidelines for measure developers. Testing that we have undertaken has confirmed the validity and reliability of the proposed STrR measure using these data. We anticipate submitting the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 measure to the NQF for endorsement in CY 2015. Full documentation of the STrR riskadjustment methodology is available at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. Calculating the STrR Measure The STrR measure is calculated as the ratio of the number of observed transfusions to the number of expected transfusions. The ratio is greater than one for facilities that have more transfusions than would be expected for an average facility with similar cases, and less than one if the facility has fewer transfusions than would be expected for an average facility with similar cases. This ratio is calculated in terms of patient-years at risk. ‘‘Patientyear at risk’’ means that the denominator of the rate calculation is obtained by adding exposure times of all patients until a censoring event (that is, death, transplant, or end of the time period) because each patient’s time at risk varies based on these censoring events. Time at risk is the time period in which each patient is eligible to have the transfusion event occur for the purposes of the measure calculation, exclusive of all days that have claims pertaining to the exclusionary comorbidities identified within the previous 12 months. The predicted value from stage 1 of the model and the baseline rate from stage 2 of the model, as described above, are then used to calculate the expected number of transfusion events for each patient over the period during which the patient is seen to be at risk for a transfusion event. The STrR is a point estimate—the best estimate of a facility’s transfusion rate based on the facility’s case mix. For more detailed information on the calculation methodology, please refer to our Web site at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. We seek comments on this proposal to adopt the proposed STrR clinical measure. b. Proposal To Adopt the Pediatric Peritoneal Dialysis Adequacy Clinical Measure and Add the Proposed Measure to the Dialysis Adequacy Measure Topic Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate facilities based on measures of dialysis adequacy. Beginning with the PY 2018 ESRD QIP, we propose to add a new measure of pediatric peritoneal dialysis adequacy to the Dialysis Adequacy measure topic. If PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 this proposal is finalized, then the modified Dialysis Adequacy measure topic would include four clinical measures on dialysis adequacy—(1) Adult Hemodialysis Adequacy; (2) Adult Peritoneal Dialysis Adequacy; and (3) Pediatric Hemodialysis Adequacy; and (4) Pediatric Peritoneal Dialysis Adequacy. Approximately 900 pediatric patients in the United States receive peritoneal dialysis.5 Although recent studies suggest improvement in mortality rates among pediatric patients receiving maintenance dialysis over time, mortality in this patient population remains high.6 Despite a lack of longterm outcome studies on pediatric peritoneal dialysis patients, outcome studies performed in the adult ESRD population have shown an association between the dose of peritoneal dialysis and clinical outcomes,7 which could suggest that improved quality of dialysis care in the fragile pediatric patient population may further improve survival in those patients. Section 1881(h)(2)(A)(iv) gives the Secretary authority to adopt measures for the ESRD QIP that cover a wide variety of topics. Section 1881(h)(2)(B)(ii) of the Act states that ‘‘In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of Act [in this case NQF], the Secretary may specify a measure that is not so endorsed so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.’’ We have given due consideration to endorsed measures, as well as those adopted by a consensus organization. Because no NQF-endorsed measures or measures adopted by a consensus organization on 5 U.S. Renal Data System, USRDS 2012 Annual Data report: Atlas of Chronic Kidney Disease and End-stage Renal Disease in the United States, National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2012. 6 U.S. Renal Data System, USRDS 2012 Annual Data report: Atlas of Chronic Kidney Disease and End-stage Renal Disease in the United States, National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2012. 7 Paniagua R, Amato D, Vonesh E, et al. ‘‘Effects of increased peritoneal clearance on mortality rates in peritoneal dialysis: ADEMEX, a prospective, randomized, controlled trial.’’ Journal of the American Society of Nephrology: JASN (2002) 13:1307–1320. PMID: 11961019; See also Lo WK, Lui SL, Chan TM, et al. ‘‘Minimal and optimal peritoneal Kt/V targets: Results of anuric peritoneal dialysis patient’s survival analysis.’’ Kidney international (2005) 67:2032–2038. PMID: 15840054. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 pediatric peritoneal dialysis adequacy currently exist, we are proposing to adopt the Pediatric Peritoneal Dialysis Adequacy clinical measure under the authority of section 1881(h)(2)(B)(ii) of the Act. The Measure Application Partnership expressed conditional support for measure XCBMM, ‘‘Pediatric Peritoneal Dialysis Adequacy: Achievement of Target Kt/V’’ in its January 2014 PreRulemaking Report, noting it would ‘‘consider this measure for inclusion in the program once it has been reviewed for endorsement.’’ However, we believe the measure is ready for adoption in the ESRD QIP because it has been fully tested for reliability and has received consensus support from the TEP that was tasked with developing it. We intend to submit this measure to the NQF for endorsement in late 2014 or early 2015. For PY 2018 and future payment years, we propose to adopt the Pediatric Peritoneal Dialysis Adequacy clinical measure, which assesses the percentage of eligible pediatric peritoneal dialysis patient-months in which a Kt/V of greater than or equal to 1.8 was achieved during the performance period. Qualifying patient-months are defined as months in which a peritoneal dialysis patient is under the age of 18 and has been receiving peritoneal dialysis treatment for 90 days or longer. Performance on this measure will be expressed as a proportion of patientmonths meeting the measure threshold of 1.8, and the measure will be scored based on Kt/V data entered on Medicare 72x claims. The measure is a complement to the existing Kt/V dialysis adequacy measures previously adopted in the ESRD QIP. Technical specifications for the proposed pediatric peritoneal dialysis adequacy clinical measure can be found at: https://www. cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/ ESRDQIP/061_Technical Specifications.html. We seek comments on this proposal to adopt the Pediatric Peritoneal Dialysis Adequacy measure. c. Proposed ICH CAHPS Clinical Measure Section 1881(h)(2)(A)(ii) of the Act states that the Secretary shall specify, to the extent feasible, measures of patient satisfaction. Patients with ESRD are an extremely vulnerable population: They are completely reliant on ESRD providers for life-saving care, and they are often reluctant to express concerns about the care they receive from an array of staff, both professional and nonprofessional. Patient-centered VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 experience is an important measure of the quality of patient care, and it is a component of the 2013 NQS, which emphasizes patient-centered care by rating patient experience as a means for empowering patients and improving the quality of their care. Following a rigorous process, the ICH CAHPS Survey was developed to capture the experience of in-center hemodialysis patients. The NQF endorsed and the Measures Application Partnership supported this quality measure (NQF #0258: CAHPS In-Center Hemodialysis Survey). The ICH CAHPS Survey captures the experience of incenter hemodialysis patients on three dimensions: ‘‘nephrologists’ communication and caring;’’ ‘‘quality of dialysis center care and operations;’’ and ‘‘providing information to patients.’’ Three global ratings are also part of the standardized ICH CAHPS Survey: Rating of the nephrologist; rating of the staff; and rating of the facility. We believe that this measure enables patients to rate their experience of incenter dialysis treatment without fear of retribution. Public reporting of results from the ICH CAHPS survey, once enough data are available, will satisfy requests to provide consumers (patients and family members alike) with desired information on viewpoints from patients. In addition, collecting and reporting ICH CAHPS survey results assists facilities with their internal quality improvement efforts and external benchmarking with other facilities, and it provides CMS with information that can be used to monitor the experience of patients with ESRD. Starting with the PY 2014 program, we have taken steps to develop the baseline data necessary to propose and implement NQF #0258 as a clinical measure in PY 2018. In the PY 2014 and PY 2015 programs, we adopted a reporting measure related to the ICH CAHPS survey, which required that facilities attest they had administered the survey according to the specifications set by the Agency for Healthcare Research and Quality (AHRQ). In the CY 2014 ESRD PPS final rule, we: (1) Expanded the ICH CAHPS reporting measure to require facilities to submit (via CMS-approved vendors) their survey results to CMS; (2) increased the patient minimum for the measure from 11 to 30 survey-eligible patients; (3) required that facilities (via CMS-approved vendors) administer the survey according to specifications set by CMS; and (4) required facilities (via CMS-approved vendors) to administer the survey twice during each performance period, and to report both PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 40259 sets of survey results by the date specified on https://ichcahps.org, starting in PY 2017 (78 FR 72193 through 72196). By CY 2016 (the proposed performance period for the PY 2018 ESRD QIP), we will have worked with dialysis facilities for four years to help them become familiar with the ICH CAHPS survey. By that time, we believe that facilities will be sufficiently versed in the survey administration process to be reliably evaluated on the NQFendorsed ICH CAHPS measure (NQF #0258). Because facilities (and CMSapproved vendors) will be familiar enough with the ICH CAHPS survey instrument to be reliably scored on the basis of their survey results, we believe it is reasonable to expand the ICH CAHPS reporting measure into a clinical measure for the PY 2018 ESRD QIP. For these reasons, and because a clinical measure would have a greater impact on clinical practice by holding facilities accountable for their actual performance, we propose to replace the ICH CAHPS reporting measure that we adopted in the CY 2014 ESRD PPS Final Rule with a new clinical measure for PY 2018 and future payment years. This proposed ICH CAHPS clinical measure is NQF #0258: CAHPS In-Center Hemodialysis Survey. We are not proposing to change the semiannual survey administration and reporting requirements. The proposed scoring methodology for the ICH CAHPS clinical measure is discussed below in section III.G.4.c. Technical specifications for the ICH CAHPS clinical measure can be found at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. We seek comments on this proposal. d. Proposed Screening for Clinical Depression and Follow-Up Reporting Measure Depression is the most common psychological disorder in patients with ESRD. Depression causes suffering, a decrease in quality of life, and impairment in social and occupational functions; it is also associated with increased health care costs. Current estimates put the depression prevalence rate as high as 20 percent to 25 percent in patients with ESRD.8 Studies have also shown that depression and anxiety are the most common comorbid 8 Kimmel PL, Cuckor D, Cohen SD, Peterson RA. Depression in end-stage renal disease patients: a critical review. Advances in Chronic Kidney Disease. 2007:14(4):328–34. E:\FR\FM\11JYP2.SGM 11JYP2 40260 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 illnesses in patients with ESRD.9 Moreover, depressive affect and decreased perception of social support have been associated with higher rates of mortality in the ESRD population, and some studies suggest that this association is as strong as that between medical risk factors and mortality.10 Nevertheless, depression and anxiety remain under-recognized and undertreated, despite the availability of reliable screening instruments.11 Therefore, a measure that assesses whether facilities screen patients for depression, and develop follow-up plans when appropriate, offers an opportunity to improve the health of patients with ESRD. We are proposing to adopt a depression measure that is based on an NQF-endorsed measure (NQF #0418: Screening for Clinical Depression). NQF #0418 assesses the percentage of patients screened for clinical depression using an age-appropriate standardized tool and documentation of a follow-up plan where necessary. The Measures Application Partnership supported the use of NQF #0418 in the ESRD QIP in its January 2014 Pre-Rulemaking Report, because the measure ‘‘addresses a National Quality Strategy [NQS] aim not adequately addressed in the program measure set’’ and promotes person- and family-centered care. We are proposing to adopt a reporting measure based on this NQF-endorsed measure so that we can collect data that we can use in the future to calculate both achievement and improvement scores, should we propose to adopt the clinical version of this measure in future rulemaking. Although we recognize that we recently adopted the NHSN Bloodstream Infection clinical measure despite a lack of baseline data to calculate achievement and improvement scores, we believe that measure warranted special treatment in light of the fact that it addresses patient safety. Because the 9 Feroze, U., Martin, D., Reina-Patton, A., Kalantar-Zadeh, K., & Kopple, J. D. (2010). Mental health, depression, and anxiety in patients on maintenance dialysis. Iranian Journal of Kidney Diseases, 4(3), 173–80. 10 Cukor, D., Cohen, S. D., Peterson, R. A., & Kimmel, P. L. (2007). Psychosocial aspects of chronic disease: ESRD as a paradigmatic illness. Journal of the American Society of Nephrology, 18(12), 3042–3055; and Kimmel, P. L., Peterson, R. A., Weihs, K. L., Simmens, S. J., Alleyne, S., Cruz, I., & Veis, J. H. (2000). Multiple measurements of depression predict mortality in a longitudinal study of chronic hemodialysis outpatients. Kidney International, 57(5), 2093–2098. 11 Preljevic, V. T., ;sthus, T. B. H., Sandvik, L., Opjordsmoen, S., Nordhus, I. H., Os, I., & Dammen, T. (2012). Screening for anxiety and depression in dialysis patients: Comparison of the Hospital Anxiety and Depression Scale and the Beck Depression Inventory. Journal of Psychosomatic Research, 73(2), 139–144. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 proposed screening for clinical depression measure addresses quality of life and patient well-being, and not patient safety, we think it is appropriate to adopt it as a reporting measure until such time that we can collect the baseline data needed to score it as a clinical measure. Section 1881(h)(2)(B)(ii) of the Act states that ‘‘In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) [in this case NQF], the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.’’ Because we have given due consideration to endorsed measures as well as those adopted by a consensus organization and determined it is not practical or feasible to adopt NQF #0418 as a clinical measure in the ESRD QIP at this time, we are proposing to adopt the Screening for Clinical Depression and Follow-Up Plan reporting measure under the authority of section 1881(h)(2)(B)(ii) of the Act. For PY 2018 and future payment years, we propose that facilities must report one of the following conditions in CROWNWeb, at least once per performance period, for each qualifying patient (defined below): 1. Screening for clinical depression is documented as being positive, and a follow-up plan is documented. 2. Screening for clinical depression documented as positive, and a followup plan not documented, and the facility possess documentation stating the patient is not eligible. 3. Screening for clinical depression documented as positive, the facility possesses no documentation of a followup plan, and no reason is given. 4. Screening for clinical depression is documented as negative, and a followup plan is not required. 5. Screening for clinical depression not documented, but the facility possesses documentation stating the patient is not eligible. 6. Clinical depression screening not documented, and no reason is given. For this proposed measure, qualifying patients are defined as patients 12 years or older who have been treated at the facility for 90 days or longer. This proposed measure will collect the same data described in NQF #0418, but we are proposing to score facilities based on whether they successfully report the data, and not the measure results. More specifically, facilities will be scored on PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 whether they report one of the above conditions for each qualifying patient once before February 1 of the year directly following the performance period. Technical specifications for the Screening for Clinical Depression and Follow-Up reporting measure can be found at: https://www.cms.gov/Medicare/ Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical Specifications.html. We seek comments on these proposals. e. Proposed Pain Assessment and Follow-Up Reporting Measure Pain is one of the most common symptoms in patients with ESRD.12 Studies have shown that pain is a significant problem for more than 50 percent of patients with ESRD, and up to 82 percent of those patients report moderate to severe chronic pain.13 Pain is commonly associated with quality of life in early- and late-stage chronic kidney disease patients, but it is not effectively managed in the ESRD patient population and chronic pain often goes untreated.14 Observational studies suggest that under-managed pain has the potential to induce or exacerbate comorbid conditions in ESRD, which may in turn adversely affect dialysis treatment.15 Patients with ESRD frequently experience pain that has a debilitating impact on their daily lives, and research has shown a lack of effective pain management strategies currently in place in dialysis facilities.16 Therefore, a measure that assesses whether facilities regularly assess their patients’ pain, and develop follow-up plans as necessary, offers the possibility 12 Cohen, S. D., Patel, S. S., Khetpal, P., Peterson, R. A., & Kimmel, P. L. (2007). Pain, sleep disturbance, and quality of life in patients with chronic kidney disease. Clinical Journal of the American Society of Nephrology, 2(5), 919–925. 13 Davison SN. Pain in hemodialysis patients: prevalence, cause, severity, and management. American Journal of Kidney Disease. 2003; 42:1239–1247 14 Davison, S. N. (2007). The prevalence and management of chronic pain in end-stage renal disease. Journal of Palliative Medicine, 10(6), 1277– 1287. 15 De Castro C. (2013). Pain assessment and management in hemodialysis patients. CANNT Journal; 23(3):29–32; Weisbord SD, Fried LF, Arnold RM, Fine MJ, Levenson DJ, et al. Prevalence, severity, and importance of physical and emotional symptoms in chronic hemodialysis patients. (2005) Journal of the American Society of Nephrology; 16(8):2487–2494. 16 De Castro C. (2013). Pain assessment and management in hemodialysis patients. CANNT Journal; 23(3):29–32; Wyne A, Rai R, Cuerden M, Clark WF, Suri RS. (2011). Opioid and benzodiazepine use in end-stage renal disease: a systematic review. Clinical Journal of the American Society of Nephrology. 6(2):326–333. E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules of improving the health and well-being of patients with ESRD. We are proposing to adopt a pain measure that is based on an NQFendorsed measure (NQF #0420: Pain Assessment and Follow-Up). NQF #0420 assesses the percentage of patients with documentation of a pain assessment using a standardized tool, and documentation of a follow-up plan when pain is present. The Measures Application Partnership supported the use of NQF #0420 in the ESRD QIP in its January 2014 Pre-Rulemaking Report, because the measure ‘‘addresses a National Quality Strategy [NQS] aim not adequately addressed in the program measure set’’ and promotes person- and family-centered care. We are proposing to adopt a reporting measure based on this NQF-endorsed measure so that we can collect data that we can use in the future to calculate both achievement and improvement scores, should we propose to adopt the clinical version of this measure in future rulemaking. Although we recognize that we recently adopted the NHSN Bloodstream Infection clinical measure despite a lack of baseline data to calculate achievement and improvement scores, we believe that measure warranted special treatment in light of the fact that it addresses patient safety. Because the proposed screening for pain measure addresses quality of life and patient well-being, and not patient safety, we think it is appropriate to adopt it as a reporting measure until such time that we can collect the baseline data needed to score it as a clinical measure. Section 1881(h)(2)(B)(ii) of the Act states that ‘‘In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act [in this case NQF], the Secretary may specify a measure that is not so endorsed so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.’’ Because we have given due consideration to endorsed measures, as well as those adopted by a consensus organization, and determined it is not practical or feasible to adopt those measures in the ESRD QIP, we are proposing to adopt the Pain Assessment and Follow-Up reporting measure under the authority of section1881(h)(2)(B)(ii) of the Act. For PY 2018 and future payment years, we propose that facilities must report one of the following conditions in CROWNWeb, once every six months per VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 performance period, for each qualifying patient (defined below): 1. Pain assessment using a standardized tool is documented as positive, and a follow-up plan is documented. 2. Pain assessment documented as positive, a follow-up plan is not documented, and the facility possesses documentation that the patient is not eligible. 3. Pain assessment documented as positive using a standardized tool, a follow-up plan is not documented, and no reason is given. 4. Pain assessment using a standardized tool is documented as negative, and no follow-up plan required. 5. No documentation of pain assessment, and the facility possesses documentation the patient is not eligible for a pain assessment using a standardized tool. 6. No documentation of pain assessment, and no reason is given. For this measure, a qualifying patient is defined as a patient aged 18 years or older who has been treated at the facility for 90 days or longer. This proposed measure will collect the same data described in NQF #0420, but we are proposing a few modifications to the NQF-endorsed version. First, we are proposing that facilities must report data for each patient once every six months, whereas NQF #0420 requires facilities to report the data based on each visit. We are proposing this modification because we agree with public comments reflected on the Measures Application Partnership’s January 2014 Pre-Rulemaking Report, which stated that conducting a pain assessment every time a patient receives dialysis would be unduly burdensome for facilities. Second, we are proposing that conditions covering the first six months of the performance period must be reported in CROWNWeb before August 1 of the performance period, and that conditions covering the second six months of the performance period must be reported in CROWNWeb before February 1 of the year directly following the performance period. We believe this reporting schedule will ensure regular monitoring and follow-up of patients’ pain without imposing an undue burden on facilities. Third, we are proposing to score facilities based on whether they successfully report the data, and not based on the measure results. Technical specifications for the Pain Assessment and Follow-Up reporting measure can be found at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 40261 We seek comments on this proposal. f. Proposed NHSN Healthcare Personnel Influenza Vaccination Reporting Measure Infection is the second most common cause of death in patients with ESRD, following cardiovascular causes,17 and influenza accounts for significant morbidity and mortality in patients receiving hemodialysis.18 Healthcare personnel (HCP) can acquire influenza from patients and transmit influenza to patients and other HCP; decreasing transmission of influenza from HCP to persons at high risk likely reduces influenza-related deaths among persons at high risk for complications from influenza, including patients with ESRD.19 Vaccination is an effective preventive measure against influenza that can prevent many illnesses, deaths, and losses in productivity.20 In addition, HCP are considered high priorities for vaccine use. Achieving and sustaining high influenza vaccination coverage among HCP is intended to help protect HCP and their patients, and to reduce disease burden and healthcare costs. Results of studies in post-acute care settings similar to the ESRD facility setting indicate that higher vaccination coverage among HCP is associated with lower all-cause mortality.21 We therefore propose to adopt an NHSN HCP Influenza Vaccination reporting measure for PY 2018 and future payment years. We are proposing to use a measure that is based on an NQF-endorsed measure (NQF #0431: Influenza Vaccination Coverage Among Healthcare Personnel) of the percentage of qualifying HCP who (a) received an influenza vaccination; (b) were determined to have a medical 17 Soni R, Horowitz B, Unruh M. Immunization in end-stage renal disease: Opportunity to improve outcomes. Semin, Dial. 2013 Jul–Aug;26(4):416–26. 18 Fiore AE, Shay DK, Haber P, et al. Prevention and control of influenza. Recommendations of the Advisory Committee on Immunization Practices (ACIP). MMWR Recomm Rep. 2007;56:1–54. 19 Pearson ML, Bridges CM, Harper SA. Influenza vaccination of health-care personnel: Recommendations of the Healthcare Infection Control Practices Advisory Committee (HICPAC) and the Advisory Committee on Immunization Practices (ACIP). MMWR. 2006:55:1–16. 20 Talbot TR, Bradley SE., Cosgrove SE., et al. Influenza vaccination of healthcare workers and vaccine allocation for healthcare workers during vaccine shortages. Infect Control Hosp Epidemiol. 2005;26(11):882–90. 21 Carman WF, Elder AG, Wallace LA, et al. Effects of influenza vaccination of health-care workers on mortality of elderly people in long-term care: a randomized controlled trial. Lancet. 2000;355(9198):93–7; see also Potter J, Stott DJ, Roberts MA, et al. Influenza vaccination of health care workers in long-term-care hospitals reduces the mortality of elderly patients. J infect Dis. 1997;175(1):1–6. E:\FR\FM\11JYP2.SGM 11JYP2 40262 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 contraindication; (c) declined influenza vaccination; or (d) were of an unknown vaccination status. A ‘‘qualifying HCP’’ is defined as an employee, licensed independent practitioner, or adult student/trainee/volunteer who works in a facility for at least one day between October 1 and March 31. The Measures Application Partnership supported the use of NQF #0431 in the ESRD QIP in its January 2014 Pre-Rulemaking Report because the measure is NQF-endorsed for use in the dialysis facility care setting. We are proposing to adopt a reporting measure based on this NQFendorsed measure so that we can collect data that we can use in the future to calculate both achievement and improvement scores, should we propose to adopt the clinical version of this measure in future rulemaking. Although we recognize that we recently adopted the NHSN Bloodstream Infection clinical measure despite a lack of baseline data to calculate achievement and improvement scores, we believe that measure warranted special treatment in light of the fact that it addresses patient safety. Because the proposed NHSN HCP Influenza Vaccination reporting measure addresses population health, and not patient safety, we think it is appropriate to adopt it as a reporting measure until such time that we can collect the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 baseline data needed to score it as a clinical measure. Section 1881(h)(2)(B)(ii) of the Act states that ‘‘In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) [in this case, NQF], the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.’’ Because we have given due consideration to endorsed measures as well as those adopted by a consensus organization, and determined it is not practical or feasible to adopt this measure in the ESRD QIP, we are proposing to adopt the NHSN Healthcare Personnel Influenza Vaccination reporting measure under the authority of section 1881(h)(2)(B)(ii) of the Act. For PY 2018 and future payment years, we propose that facilities must submit, on an annual basis, an HCP Influenza Vaccination Summary Form to CDC’s NHSN system, according to the specifications available in the NHSN Healthcare Personnel Safety Component Protocol (https://www.cdc.gov/nhsn/ PDFs/HPS-manual/vaccination/HPSflu-vaccine-protocol.pdf). This proposed PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 measure differs from NQF #0431 in that we are proposing to collect the same data but will score facilities on the basis of whether they submit this data, rather than on the percentage of HCP vaccinated. We propose that the deadline for reporting this information to NHSN be May 15th of each year. This date is consistent with the reporting deadline established by CMS for other provider types reporting HCP vaccination data to NHSN. Because the flu season typically spans from October to April, NHSN protocols submitted by May 15 would document vaccinations received during the preceding flu season. For example, NHSN HCP Influenza Vaccination Summary Forms submitted by May 15, 2016, would contain data from October 1, 2015 to March 31, 2016, and would be used for the PY 2018 ESRD QIP; NHSN protocols submitted by May 15, 2017, would contain data from October 1, 2016 to March 31, 2017, and would be used for the PY 2019 ESRD QIP, and so on. Technical specifications for this measure can be found at: https://www. cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/ ESRDQIP/061_Technical Specifications.html. We request comments on this proposal. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 3. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the PY 2018 ESRD QIP a. Proposed Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures in the PY 2018 ESRD QIP For the same reasons stated in the CY 2013 ESRD PPS final rule (77 FR 67500 through 76502), we are proposing for PY VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 2018 to set the performance standards, achievement thresholds, and benchmarks based on the 50th, 15th, and 90th percentile, respectively, of national performance in CY 2014 for all the clinical measures except for the proposed ICH CAHPS clinical measure. As finalized in the CY 2014 ESRD PPS Final Rule (78 FR 72213), facilities are not required to administer the ICH CAHPS survey (via a CMS-approved third-party vendor) on a semiannual basis until CY 2015, the proposed performance period for the PY 2017 ESRD QIP. We believe that ICH CAHPS data collected during CY 2014 will not be reliable enough to use for the purposes of establishing performance standards, achievement thresholds, and benchmarks, because facilities are only required to administer the survey once in CY 2014. Therefore, we propose to set the performance standards, achievement thresholds, and benchmarks based on the 50th, 15th, and 90th percentile, respectively, of national performance in CY 2015 for the proposed ICH CAHPS clinical measure. We seek comments on these proposals. PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 b. Estimated Performance Standards, Achievement Thresholds, and Benchmarks for the Clinical Measures Proposed for the PY 2018 ESRD QIP At this time, we do not have the necessary data to assign numerical values to the proposed performance standards for the clinical measures, because we do not yet have data from CY 2014 or the first portion of CY 2015. We will publish values for the clinical measures, using data from CY 2014 and the first portion of CY 2015, in the CY 2016 ESRD PPS Final Rule. c. Proposed Performance Standards for the PY 2018 Reporting Measures In the CY 2014 ESRD PPS Final Rule, we finalized performance standards for the Anemia Management and Mineral Metabolism reporting measures (78 FR 72213). We are not proposing any changes to this policy beyond the proposal to modify the reporting requirements for the Mineral Metabolism reporting measure, which appears above in Section III.G.1. For the Screening for Clinical Depression and Follow-Up reporting measure, we propose to set the performance standard as successfully reporting one of the above-listed clinical depression and follow-up screening conditions for each qualifying patient in CROWNWeb before the February 1st E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.001</GPH> mstockstill on DSK4VPTVN1PROD with PROPOSALS2 2. Proposed Performance Period for the PY 2018 ESRD QIP Section 1881(h)(4)(D) of the Act requires the Secretary to establish the performance period with respect to a year, and that the performance period occur prior to the beginning of such year. In accordance with our proposal to adopt CY 2015 as the performance period for the PY 2017 ESRD QIP, as well as our policy goal to collect 12 months of data on each measure when feasible, we are proposing to adopt CY 2016 as the performance period for the PY 2018 ESRD QIP. With respect to the NHSN Healthcare Personnel Influenza Vaccination Reporting measure, we are proposing that the performance period will be from October 1, 2015 through March 31, 2016, which is consistent with the length of the 2015–2016 influenza season. We seek comments on these proposals. 40263 40264 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules directly following the performance period. For the Pain Assessment and FollowUp reporting measure, we propose to set the performance standard as successfully reporting one of the abovelisted pain assessment and follow-up conditions for each qualifying patient in CROWNWeb twice annually: once before August 1st for the first 6 months of the performance period, and once before the February 1st directly following the performance period for the last six months of the performance period. For the NHSN Healthcare Provider Influenza Vaccination reporting measure, we propose to set the performance standard as successfully submitting the HCP Influenza Vaccination Summary Form to CDC’s NHSN system by May 15, 2017. We seek comments on these proposals. 4. Proposal for Scoring the PY 2018 ESRD QIP Measures a. Scoring Facility Performance on Clinical Measures Based on Achievement In the CY 2014 ESRD PPS Final Rule, we finalized a policy for scoring performance on clinical measures based on achievement (78 FR 72215). In determining a facility’s achievement score for each measure under the PY 2018 ESRD QIP, we propose to continue using this methodology for all clinical measures except the ICH CAHPS clinical measure. Under this methodology, facilities receive points along an achievement range based on their performance during the proposed performance period for each measure, which we define as a scale between the achievement threshold and the benchmark. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 b. Scoring Facility Performance on Clinical Measures Based on Improvement In the CY 2014 ESRD PPS Final Rule, we finalized a policy for scoring performance on clinical measures based on improvement (78 FR 72215 through 72216). In determining a facility’s improvement score for each measure under the PY 2018 ESRD QIP, we propose to continue using this methodology for all clinical measures except the ICH CAHPS clinical measure. Under this methodology, facilities receive points along an improvement range, defined as a scale running between the improvement threshold and the benchmark. We propose to define the improvement threshold as the facility’s performance on the measure VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 during CY 2015. The facility’s improvement score would be calculated by comparing its performance on the measure during CY 2016 (the proposed performance period) to its performance rate on the measure during CY 2015. c. Proposal for Scoring the ICH CAHPS Clinical Measure For PY 2018 and future payment years, we propose the following scoring methodology for the ICH CAHPS clinical measure. We propose to score the measure on the basis of three composite measures and three global ratings. Composite Measures: • Nephrologists’ Communication and Caring; • Quality of Dialysis Center Care and Operations; and • Providing Information to Patients. Global Ratings: • Overall rating of the nephrologists (Question 8) • Overall rating of the dialysis center staff (Question 32) • Overall rating of the dialysis facility (Question 35) The composite measures are groupings of questions that measure the same dimension of healthcare. (Groupings of questions and composite measures can be found at https://ichcahps.org/ Portals/0/ICH_Composites_English.pdf.) Global ratings questions employ a scale of 0 to 10, worst to best; each of the questions within a composite measure use either ‘‘Yes’’ or ‘‘No’’ responses, or response categories ranging from ‘‘Never’’ to ‘‘Always,’’ to assess the patient’s experience of care at a facility. Facility performance on each composite measure will be determined by the percent of patients who choose ‘‘topbox’’ responses (i.e., most positive or ‘‘Always’’) to the ICH CAHPS survey questions in each domain. Examples of questions and top-box responses are displayed below: Q11: In the last 3 months, how often did the dialysis center staff explain things in a way that was easy for you to understand? Top-box response: ‘‘Always’’ Q19: The dialysis center staff can connect you to the dialysis machine through a graft, fistula, or catheter. Do you know how to take care of your graft, fistula or catheter? Top-box response: ‘‘Yes’’ We propose that a facility will receive an achievement score and an improvement score for each of the composite measures and global ratings in the ICH CAHPS survey instrument. For purposes of calculating achievement scores for the ICH CAHPS clinical measure, we propose to base the score on where a facility’s performance rate falls relative to the achievement PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 threshold and the benchmark for that measure. We propose that facilities will earn between 0 to 10 points for achievement based on where its performance for the measure falls relative to the achievement threshold. If a facility’s performance rate during the performance period is: • Equal to or greater than the benchmark, then the facility would receive 10 points for achievement; • Less than the achievement threshold, then the facility would receive 0 points for achievement; or • Equal to or greater than the achievement threshold, but below the benchmark, then the following formula would be used to derive the achievement score: [9 * ((Facility’s performance period rate ¥ achievement threshold)/(benchmark ¥ achievement threshold))] + .5, with all scores rounded to the nearest integer, with half rounded up. For the purposes of calculating improvement scores for the ICH CAHPS clinical measure, we propose that the improvement threshold will be defined as facility performance in CY 2015, and further propose to base the score on where a facility’s performance rate falls relative to the improvement threshold and the benchmark for that measure. We propose that a facility can earn between 0 to 9 points based on how much its performance on the measure during the performance period improves from its performance on the measure during the baseline period. If a facility’s performance rate during the performance period is: • Less than the improvement threshold, then the facility would receive 0 points for improvement; or • Equal to or greater than the improvement threshold, but below the benchmark, then the following formula would be used to derive the improvement score: [10 * ((Facility performance period rate ¥ Improvement threshold)/(Benchmark ¥ Improvement threshold))] ¥ .5, with all scores rounded to the nearest integer, with half rounded up. We further propose that a facility’s ICH CAHPS score will be based on the higher of the facility’s achievement or improvement score for each of the composite measures and global ratings. Additionally, we propose that achievement and/or improvement scores on the three composite measures and the three global ratings will be averaged together to yield an overall score on the ICH CAHPS clinical measure. The timing and frequency of administering the ICH CAHPS survey is critical to obtaining reliable results. For E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules example, if a facility did not conduct two semiannual surveys during a given performance period, then patient experiences during the 6-month period(s) covered by the missed survey(s) would not be captured. Additionally, if facilities (via CMSapproved vendors) do not report their ICH CAHPS survey results to CMS, then these results cannot be taken into account when establishing national performance standards for the measure, thereby diminishing the measure’s reliability. Because timely survey administration and data reporting is critical to reliably scoring ICH CAHPS as a clinical measure in the ESRD QIP, we propose that a facility will receive a score of 0 on the measure if it does not meet the survey administration and reporting requirements finalized in the CY 2014 ESRD PPS Final Rule (78 FR 72193 through 72196). We seek comments on these proposals to score the ICH CAHPS clinical measure. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 d. Proposals for Calculating Facility Performance on Reporting Measures In the CY 2014 ESRD PPS Final Rule, we finalized policies for scoring performance on the Anemia Management and Mineral Metabolism reporting measures in the ESRD QIP (78 FR 72216). We are not proposing any changes to these policies beyond the proposals that were made beginning with the PY 2017 program, which appear in section III.F.7 above. With respect to the Screening for Clinical Depression and Follow-up, Pain Assessment and Follow-Up, and NHSN Healthcare Provider Influenza Vaccination reporting measures, we propose that facilities will receive a score of 10 on the measures if they meet the proposed performance standards for the measures, and a score of 0 on the measure if they do not. We are proposing to score these reporting measures differently than the Anemia Management and Mineral Metabolism reporting measures because they require annual or semiannual reporting, and therefore scoring based on monthly reporting rates is not feasible. We seek comments on these proposals. 5. Proposed Minimum Data for Scoring Measures for the PY 2018 ESRD QIP With the following exceptions discussed below, we are not proposing to change the minimum data policies for the PY 2018 ESRD QIP from that proposed above for the PY 2017 ESRD QIP. We are also proposing that the 30 survey-eligible patient minimum during the eligibility period and 30 survey VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 complete minimum during the performance period that we proposed to adopt for the ICH CAHPS reporting measure will also apply to the ICH CAHPS clinical measure. We have determined that the ICH CAHPS survey is satisfactorily reliable when a facility obtains a total of at least 30 completed surveys during the performance period. Therefore, even if a facility meets the 30 survey-eligible patient minimum during the eligibility period and the survey administration and reporting requirements, if the facility is only able to obtain 29 or fewer survey completes during the performance period, the facility will not be eligible to receive a score on the ICH CAHPS clinical measure. We further propose the facilities with fewer than 10 patient-years at risk will not be eligible to receive a score on the proposed STrR clinical measure. We considered adopting the 11-patient minimum requirement that we use for the other clinical measures. We decided, however, to base facilities’ eligibility for the measure in terms of the number of patient-years at risk, because facility performance rates are based on the number of patient-years at risk, not the number of patients. Additionally, we decided to set the minimum data requirements at 10 patient-years at risk because, based on national average event rates, this is the time required to achieve an average of 5 transfusion events. The 5 expected transfusion events requirement translates to a standard deviation of approximately 0.45 if the facility has rates exactly corresponding to the national average. In addition, 10 patient-years at risk is the threshold used in the Dialysis Facility Compare program, and we believe that public-reporting and VBP programs for ESRD should adopt consistent measure specifications where feasible. For the proposed STrR measure, we propose to apply the small-facility adjuster to facilities with 21 or fewer patient-years at risk. We decided to base the threshold for applying the smallfacility adjuster on the number of patient-years at risk, because facility performance rates are based on the number of patient-years at risk, not the number of patients. We are proposing to set the threshold at 21 patient-years at risk, because we determined that this was the minimum number of patientyears at risk needed to achieve an IUR of 0.4 (that is, moderate reliability) for the proposed STrR measure. Because the small-facility adjuster gives facilities the benefit of the doubt when measure scores can be unduly influenced by a few outlier patients, we believe that PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 40265 setting the threshold at 21 qualifying patient-years at risk will not unduly penalize facilities that treat small numbers of patients on the proposed STrR clinical measure. With these exceptions, we are not proposing to change the policy, finalized most recently in the CY 2014 ESRD PPS Final Rule (78 FR 72220 through 72221), that facilities must have at least 11 qualifying patients for the entire performance period in order to be scored on a clinical measure. We currently have a policy, most recently finalized in the CY 2014 ESRD PPS final rule (78 FR 72197 through 72198 and 72220 through 72221), to score facilities on reporting measures only if they have a minimum number of qualifying patients during the performance period. As discussed in Section III.F.7 above, we are proposing to modify the case minimum requirements for the Anemia Management and Mineral Metabolism reporting measures beginning with the PY 2017 ESRD QIP. We are not proposing any additional changes in the patient minimum requirements for the Anemia Management and Mineral Metabolism reporting measures in the PY 2018 program. For the Screening for Clinical Depression and Follow-Up and the Pain Assessment and Follow-Up reporting measures, we propose a case minimum of one qualifying patient. We believe this patient minimum requirement will enable us to gather a sufficient amount of data to calculate future performance standards, benchmarks, and achievement thresholds, should we propose to adopt clinical versions of these measures in the future. As discussed in Section III.G.2.f, we are not proposing that a facility will have to meet a patient minimum in order to receive a score on the NHSN Healthcare Provider Influenza Vaccination reporting measure. We believe it is standard practice for all HCP to receive influenza vaccinations and, as discussed above, HCP vaccination is likely to reduce influenza-related deaths and complications among the ESRD population. Accordingly, we are proposing that all facilities, regardless of patient population size, will be scored on the influenza vaccination measure. Under our current policy, we begin counting the number of months for which a facility is open on the first day of the month after the facility’s CCN open date. Only facilities with a CCN open date before July 1, 2016, are eligible to be scored on the Anemia Management and Mineral Metabolism reporting measures in the PY 2018 E:\FR\FM\11JYP2.SGM 11JYP2 40266 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules program. We are proposing to apply this finalized policy to the proposed Screening for Depression and FollowUp and the Pain Assessment and Follow-Up reporting measures. We further propose that facilities with a CCN open date after January 1, 2016, will not be eligible to receive a score on the NHSN Healthcare Personnel Influenza Vaccination reporting measure in the PY 2018 program. Due to the time it takes for facilities to register with NHSN and become familiar with the NHSN Healthcare Personnel Safety Component Protocol, we do not believe it is reasonable to expect facilities with CCN open dates after January 1, 2016, to submit an HCP Influenza Vaccination Summary Form to CDC’s NHSN system before the May 15, 2016, deadline. As finalized in the CY 2014 ESRD PPS Final Rule (78 FR 72220), facilities are generally eligible to receive a score on the clinical measures if their CCN open date occurs before the end of the performance period. However, facilities with a CCN open date after January 1 of the performance period are not eligible to receive a score on the NHSN Bloodstream Infection clinical measure, due to the need to collect 12 months of data to accurately score the measure. We are now proposing that facilities with a CCN open date after January 1, 2016, will also not be eligible to receive a score on the ICH CAHPS clinical measure in the PY 2018 program. Due to the additional time needed to arrange to contract with CMS-approved thirdparty vendors, and for vendors to administer the survey twice and report the results to CMS, we do not believe facilities with CCN open dates after January 1, 2016, can reasonably be expected to meet the requirements associated with the proposed ICH CAHPS clinical measure for that performance period. As discussed in the Section III.G.7 below, we are continuing our policy that a facility will not receive a TPS unless it receives a score on at least one clinical measure and at least one reporting measure. We note that finalizing the above proposals would result in facilities not being eligible for a payment reduction for the PY 2018 ESRD QIP if they have a CCN open date on or after July 1, 2016. We seek comments on these proposals. Table 29 displays the proposed patient minimum requirements for each of the measures, as well as the proposed CCN open dates after which a facility will not be eligible to receive a score on a reporting measure. TABLE 29—PROPOSED MINIMUM DATA REQUIREMENTS FOR THE PY 2018 ESRD QIP Measure Minimum data requirements CCN Open date Adult Hemodialysis Adequacy (Clinical). Adult Peritoneal Dialysis Adequacy (Clinical). Pediatric Hemodialysis Adequacy (Clinical). Pediatric Peritoneal Dialysis Adequacy (Clinical). Vascular Access Type: Catheter (Clinical). Vascular Access Type: Fistula (Clinical). Hypercalcemia (Clinical) ...... NHSN Bloodstream Infection (Clinical). SRR (Clinical) ...................... STrR (Clinical) ..................... ICH CAHPS (Clinical) .......... 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... N/A ..................................... 11–25 patients. 11 qualifying patients .................................................... 11 qualifying patients .................................................... N/A ..................................... Before January 1, 2016 ..... 11–25 patients. 11–25 patients. 11 index discharges ...................................................... 10 patient-years at risk .................................................. Facilities with 30 or more survey-eligible patients during the calendar year preceding the performance period must submit survey results. Facilities will not receive a score if they do not obtain a total of at least 30 completed surveys during the performance period. Facilities with 11 or more qualifying patients must report data for all patients. Facilities with between 2 and 11 qualifying patients must report data on all but 1 qualifying patient. Facilities with 1 qualifying patient must report for that patient. Facilities with 11 or more qualifying patients must report data for all patients. Facilities with between 2 and 11 qualifying patients must report data on all but 1 qualifying patient. Facilities with 1 qualifying patient must report for that patient. One qualifying patient ................................................... N/A ..................................... N/A ..................................... Before January 1, 2016 ..... 11–41 index discharges. 10–21 patient-years at risk. N/A. Before July 1, 2016 ........... N/A. Before July 1, 2016 ........... N/A. Before July 1, 2016 ........... N/A. One qualifying patient. .................................................. Before July 1, 2016 ........... N/A. N/A ................................................................................. Before January 1, 2016 ..... N/A. Anemia Management (Reporting). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Mineral Metabolism (Reporting). Depression Screening and Follow-Up (Reporting). Pain Assessment and Follow-Up (Reporting). NHSN HCP Influenza Vaccination (Reporting). VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 Small facility adjuster Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 6. Proposal for Calculating the Clinical Measure Domain Score As the ESRD QIP evolves and we continue to adopt new clinical measures that track the goals of the NQS, we do not believe that the current scoring methodology provides the program with enough flexibility to strengthen incentives for quality improvement in areas where quality gaps continue to exist. Therefore, under the authority of Section 1881(h)(3)(A)(i) of the Act, we are proposing to revise the scoring methodology beginning with the PY 2018 ESRD QIP so that we assign measure scores on the basis of two domains: a Clinical Measure Domain and a Reporting Measure Domain. First, we propose to establish a Clinical Measure Domain, which we define as an aggregated metric of facility performance on the clinical measures and measure topics in the ESRD QIP. Under this proposed approach, we would score individual clinical measures and measure topics using the methodology we finalize for that measure or measure topic. Clinical measures and measure topics would then be grouped into subdomains within the Clinical Measure Domain, according to quality categories. Within these subdomains, measure scores would be multiplied by a weighting coefficient, weighted measure scores would be summed together to determine subdomain scores, and then subdomain scores would be summed together to determine a facility’s Clinical Measure Domain score. This scoring methodology provides more flexibility to focus on quality improvement efforts, because it makes it possible to group measures according to quality categories and to weight each category according to opportunities for quality improvement. We further propose to divide the clinical measure domain into three subdomains for the purposes of calculating the Clinical Measure Domain score: • Safety • Patient and Family Engagement/Care Coordination • Clinical Care We took several considerations into account when selecting these particular subdomains. First, safety, patient engagement, care coordination, and clinical care are all NQS goals for which the ESRD QIP has proposed and/or finalized measures. We are attempting to align all CMS quality improvement efforts with the NQS because its patientcentered approach prioritizes measures across our quality reporting and pay-forperformance programs to ensure that the measurement approaches in these programs, as a whole, can make meaningful improvements in the quality of care furnished in a variety of settings. 40267 We also believe that adopting an NQSbased subdomain structure for the clinical measures in the ESRD QIP is responsive to stakeholder requests that we align our measurement approaches across HHS programs. Second, we are proposing to combine the NQS goals of Care Coordination and Patient- and Caregiver-Centered Experience of Care into one subdomain because we believe the two goals complement each other. ‘‘Care Coordination’’ refers to the NQS goal of promoting effective communication and coordination of care. ‘‘Patient- and Caregiver-Centered Experience of Care’’ refers to the NQS goal of ensuring that each patient and family is engaged as a partner in care. In order to engage patients and families as partners, we believe that effective communication and coordination of care must coexist, and that patient and family engagement cannot occur independently of effective communication and care coordination. We therefore believe that it is appropriate to combine measures of care coordination with those of patient and family engagement for the purposes of calculating a facility’s clinical measure domain score. For PY 2018 and future payment years, we propose to include the following measures in the following subdomains of the proposed clinical measure domain (see Table 30): TABLE 30—PROPOSED SUBDOMAINS IN THE CLINICAL MEASURE DOMAIN Subdomain Measures and measure topics Safety Subdomain ............................................................................................................................. Patient and Family Engagement/Care Coordination Subdomain ..................................................... mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Clinical Care Subdomain ................................................................................................................... We seek comments on these proposals to adopt a Clinical Measure Domain that includes three subdomains (safety, patient and family engagement/care coordination, and clinical care) for the purpose of calculating a facility’s clinical measure domain score for PY 2018. In deciding how to weight the proposed subdomains that comprise the clinical measure domain score, we took the following considerations into account: (1) the number of measures and measure topics in a proposed subdomain; (2) how much experience facilities have had with the measures and measure topics in a proposed subdomain; and (3) how well the measures align with CMS’s highest VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 priorities for quality improvement for patients with ESRD. Because the proposed Clinical Care subdomain contains the largest number of measures, and facilities have the most experience with the measures in this subdomain, we are proposing to weight the Clinical Care subdomain significantly higher than the other subdomains. Facilities have more experience with the NHSN Bloodstream Infection measure in the proposed Safety subdomain than they do with the SRR measure in the proposed Patient and Family Engagement/Care Coordination subdomain, but we are proposing to include a larger number of measures in the Patient and Family PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 NHSN Bloodstream Infection measure. ICH CAHPS measure. SRR measure. STrR measure. Dialysis Adequacy measure topic. Vascular Access Type measure topic. Hypercalcemia measure. Engagement/Care Coordination subdomain. We are proposing to give the Patient and Family Engagement/ Care Coordination subdomain slightly more weight than the Safety subdomain, because it includes two measures, whereas only one measure appears in the proposed Safety subdomain. In future rulemaking, we will consider revising these weights based on facility experience with the measures contained within these proposed subdomains. For these reasons, we propose the following weights for the three subdomains in the clinical measure domain score for PY 2018: E:\FR\FM\11JYP2.SGM 11JYP2 40268 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules infections in patients with ESRD is one of our highest priorities for quality Subdomain improvement, so we believe it is appropriate to weight the NHSN Bloodstream Infection clinical measure Safety .................................... 20 at 20 percent of a facility’s Clinical Patient and Family EngageMeasure Domain Score. Because ment/Care Coordination .... 30 facilities have substantially more Clinical Care ......................... 50 experience with the ICH CAHPS clinical measure, as compared with the SRR We seek comments on this proposal. clinical measure, we are proposing to In deciding how to weight measures give the proposed ICH CAHPS measure and measure topics within a proposed twice as much weight as the proposed subdomain, we took into account the SRR measure. Additionally, we note same considerations we considered that improving patients’ experience of when deciding how to weight the care is as high a priority for CMS quality proposed subdomains. Because the improvement efforts as improving NHSN Bloodstream Infection clinical patient safety, so we believe it is measure is the only measure in the appropriate to assign the ICH CAHPS proposed Safety subdomain, we are clinical measure the same weight as the proposing to assign the entire NHSN Bloodstream Infection clinical subdomain weight to that measure. We additionally note that improving patient measure. We are proposing to give the safety and reducing bloodstream Dialysis Adequacy and Vascular Access Weight in the clinical measure domain score (%) Type measure topics the most weight in the Clinical Care subdomain because facilities have substantially more experience with these measure topics, as compared to the other measures in the Clinical Care subdomain. We are proposing to assign equal weights to the STrR and Hypercalcemia measures because PY 2018 would be the first program year in which facilities are measured on the STrR measure, and because the clinical significance of the Hypercalcemia measure is diminished in the absence of other information about mineral metabolism (for example, a patient’s phosphorus and plasma parathyroid hormone levels), which would provide a more comprehensive assessment of mineral metabolism (78 FR 72217). For these reasons, we propose to use the following weighting system for calculating a facility’s Clinical Measure domain score: Measure weight in the clinical measure domain score (%) Measures/measure topics by subdomain Safety Subdomain ......................................................................................................................................................................... NHSN Bloodstream Infection measure .................................................................................................................................. Patient and Family Engagement/Care Coordination Subdomain ................................................................................................. ICH CAHPS measure ............................................................................................................................................................. SRR measure ......................................................................................................................................................................... Clinical Care Subdomain ........................................................................................................................................................ STrR measure ........................................................................................................................................................................ Dialysis Adequacy measure topic .......................................................................................................................................... Vascular Access Type measure topic .................................................................................................................................... Hypercalcemia measure ......................................................................................................................................................... We seek comments on this proposal for weighting individual measures within the Clinical Measure Domain. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 7. Proposal for Calculating the Reporting Measure Domain Score, the Reporting Measure Adjuster, and the TPS for the PY 2018 ESRD QIP Starting with the PY 2014 program, the ESRD QIP has used a scoring methodology in which the clinical measures receive substantially more weight than the reporting measures in the TPS, and the weighting coefficients for the two types of measures total 100 percent of the TPS. We continue to believe it is appropriate to incorporate reporting measure scores in the TPS calculations because ‘‘reporting is an important component in quality improvement’’ (76 FR 70274); we also continue to believe that clinical measures should carry substantially more weight than reporting measures because clinical measures ‘‘score providers/facilities based upon actual outcomes’’ (76 FR 70275). These VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 statements reflect the fact that clinical and reporting measures serve different functions in the ESRD QIP. Clinical measures provide a direct assessment of the quality of care a facility provides, relative to either the facility’s past performance or standards of care nationwide. Reporting measures create an incentive for facilities to monitor significant indicators of health and illness, and they help facilities become familiar with CMS data systems. In addition, they allow the ESRD QIP to collect the robust clinical data needed to establish performance standards for clinical measures. As we continue to add reporting measures to the ESRD QIP measure set, it becomes increasingly challenging to not weight them so heavily that they dilute the significance of the clinical measures, while still ensuring that we do not weight the reporting measures so lightly that facilities are not incentivized to meet the reporting measure requirements. PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 20 20 30 20 10 50 7 18 18 7 Although we considered the possibility of abandoning the use of reporting measures, we determined that this is not feasible because doing so would make it impossible to calculate performance standards for many clinical measures that promise to promote highquality care. We also considered the possibility of weighting the reporting measures such that each reporting measure comprised a smaller percentage of the TPS. We believe, however, that doing so would result in the reporting measures not carrying enough weight to provide facilities with an incentive to meet the reporting requirements, particularly if additional reporting measures were added to the program. For example, if 5 reporting measures were adopted in the ESRD QIP, and the reporting measures collectively were weighted at 5 percent of a facility’s TPS (in order to preserve the significance of the clinical measures), then each reporting measure would only comprise 1 percent of a facility’s TPS. Under such conditions, we believe that facilities E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40269 eligible. This result is then multiplied by ‘‘C,’’ which is a coefficient used to translate reporting measure points into TPS points. As C increases, so too does the TPS ‘‘value’’ of a reporting measure point. For example, if C is set to 2, then 1 reporting measure point is worth 2 TPS points. If C is set to 0.5, then 1 reporting measure point is worth onehalf of a TPS point. The value of C is in not tied to the number of reporting measures in the ESRD QIP; rather, it represents how much value we place on the reporting measures’ contribution to the quality goals of the ESRD QIP. We will use the rulemaking process to set the value for C for each program year. For the PY 2018 ESRD QIP, we propose to use the following formula to determine a facility’s RMA: We set coefficient C at five-sixths for the PY 2018 program because each reporting measure point in the PY 2016 program, and the proposed PY 2017 program, is equivalent to five-sixths of a TPS point (that is, 30 points for three reporting measures comprised 25 TPS points). We believe it is important to maintain as much consistency as possible in the transition to the proposed scoring methodology. Therefore, we are proposing that the ‘‘value’’ of a reporting measure point in the TPS, as finalized in the PY 2016 program and proposed for the PY 2017 program, will remain constant in PY 2018. For the reasons described above, we continue to believe that the clinical measures are considerably more important than the reporting measures in the ESRD QIP. We therefore believe that a facility’s TPS should be predominantly determined by its Clinical Measure Domain score, and that a facility’s TPS should be downwardly adjusted in the case of noncompliance with the reporting measure requirements. The RMA, as described above, is constructed such that a high RMA value indicates low reporting measure scores and a low RMA value indicate high reporting measure scores. As a result, a facility’s TPS would be entirely determined by its Clinical Measure Domain score if it receives full credit on the reporting measures; the TPS would be slightly decreased if the facility received high (but not perfect) scores on the reporting measures; and the TPS would be significantly decreased if it performed poorly on the reporting measures. For these reasons, we propose to calculate a facility’s TPS by subtracting the facility’s RMA from its Clinical Measure Domain score. Additionally, we propose to continue our policy to require a facility to be eligible for a score on at least one reporting and one clinical measure in order to receive a TPS (78 FR 72217). In an effort to estimate the impact of this proposed change for the ESRD QIP’s scoring methodology, we conducted an analysis of how the proposed scoring methodology affected payment reduction distributions, based on data from CY 2012 and CY 2013. This analysis compared the scoring methodology proposed in this section and the previous section to the scoring methodology finalized for the PY 2016 program. In order to ensure that the analysis reliably estimated the impact on facilities’ payment reductions, the proposed scoring methodology and the methodology finalized for the PY 2016 program were each applied to the PY 2016 measure set. The full analysis is available at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_ TechnicalSpecifications.html. The results of this analysis are presented below in Table 31. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.003</GPH> would be unnecessarily opaque and confusing to group reporting measures into subdomains, as we are proposing for the clinical measures in the Clinical Measure Domain. Additionally, we propose to establish a Reporting Measure Adjuster (RMA), which will provide the ESRD QIP with an index of facility performance on reporting measures within the Reporting Measure Domain. We propose to use the following general formula to determine a facility’s RMA, based on its reporting measure domain score: EP11JY14.002</GPH> Reporting Measure Domain. We further propose that a facility’s reporting measure domain score will be the sum of all the reporting measure scores that the facility receives. We strive to expand reporting measures into clinical measures in the ESRD QIP as quickly as measure development and administrative processes permit. Therefore, unlike the case with clinical measures in the Clinical Domain Score, we do not intend to continue to use any particular reporting measure in the ESRD QIP for an indefinite period of time. For this reason, we believe that it This formula is constructed such that a high RMA is indicative of low performance on the reporting measures, and a low RMA is indicative of high performance. A facility’s Reporting Measure Domain score (that is, the sum of its scores on the reporting measures) is subtracted from the total number of points a facility could earn on the reporting measures for which it was mstockstill on DSK4VPTVN1PROD with PROPOSALS2 may choose not to meet the reporting measure requirements, because not doing so would have a negligible impact on their overall TPS. If enough facilities reached this determination, then we would not be able to establish reliable baselines, should we propose to adopt clinical measure versions of the reporting measures. For these reasons, we are proposing the following scoring methodology for determining the impact of reporting measure scores on a facility’s payment reductions. For PY 2018 and future payment years, we propose to establish a new 40270 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 31—EXPECTED IMPACT OF PROPOSED SCORING METHODOLOGY ON THE DISTRIBUTION OF PAYMENT REDUCTIONS, USING MEASURES AND MEASURE WEIGHTS FINALIZED FOR THE PY 2016 ESRD QIP AND DATA FROM CY 2012 AND CY 2013 Finalized scoring methodology for PY 2016, applied to measures and measure weights finalized in the PY 2016 program Payment reduction (%) Number of facilities 0 ....................................................................................................................... 0.5 .................................................................................................................... 1.0 .................................................................................................................... 1.5 .................................................................................................................... 2.0 .................................................................................................................... mstockstill on DSK4VPTVN1PROD with PROPOSALS2 As illustrated in Table 31, we expect that 4.3 percent more facilities (222 overall) would receive a payment reduction under the proposed methodology for PY 2018, as compared with the scoring methodology that we will use for the PY 2016 program. We therefore believe that adopting the scoring methodology proposed in this section and the previous section will not appreciably change the distribution of facility payment reductions, as is our intention. We seek comments on these proposals for calculating a facility’s reporting measure domain score, to calculate the RMA, and to determine the TPS. Although we believe advantages are afforded by adopting the scoring VerDate Mar<15>2010 21:03 Jul 10, 2014 Jkt 232001 4,828 884 242 69 59 methodology proposed in this section and the previous section, we also recognize that there may be advantages associated with maintaining consistency with previous years’ scoring methodology. Accordingly, as an alternative to the scoring methodology proposed in this section and the previous section, we are also seeking public comments on whether we should continue to use the same methodology we currently use to weight measures in the ESRD QIP and calculate a facility’s TPS, with the exception that the clinical and reporting measures would be weighted at 90 percent and 10 percent, respectively, of a facility’s TPS. PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 Percent 79.4 14.5 4.0 1.1 1.0 Proposed scoring methodology for PY 2018, applied to measures and measure weights finalized in the PY 2016 program Number of facilities Percent 4,606 739 306 108 323 75.7 12.2 5.0 1.8 5.3 8. Example of the Proposed PY 2018 ESRD QIP Scoring Methodology In this section, we provide an example to illustrate the proposed scoring methodology for PY 2018 and future payment years. Figures 3–7 illustrate how to calculate the clinical measure domain score, the reporting measure domain score, the RMA, and the TPS. Note that for this example, Facility A, a hypothetical facility, has performed very well. Figure 1 illustrates the general methodology used to calculate domain scores for the clinical measure domain, as well as the example calculations for Facility A. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 as the example calculations for Facility A’s clinical measure domain score. PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.004</GPH> mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Figure 2 illustrates the general methodology for weighting subdomains in the clinical measure domain, as well 40271 40272 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Figure 4 illustrates the general methodology for calculating a facility’s RMA, as well as the example calculations for Facility A. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 EP11JY14.006</GPH> as the example calculations for Facility A. E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.005</GPH> mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Figure 3 illustrates the general methodology for calculating a facility’s reporting measure domain score, as well Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to ensure that the application of the scoring methodology results in an appropriate distribution of payment reductions across facilities, such that facilities achieving the lowest TPSs receive the largest payment reductions. For the same reasons described in Section III.F.8 above, we propose that a facility would not receive a payment reduction for PY 2018 if it achieves a minimum TPS that is equal to or greater than the total of the points it would have received if: • It performed at the performance standard for each clinical measure; • It received the number of points for each reporting measure that corresponds VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 lowest TPSs receive the largest payment reductions. In the CY 2014 ESRD PPS Final Rule (78 FR 72223 through 72224), we finalized a payment reduction scale for PY 2016 and future payment years: For every 10 points a facility falls below the minimum TPS, the facility would receive an additional 0.5 percent reduction on its ESRD PPS payments for PY 2016 and future payment years, with a maximum reduction of 2.0 percent. We are not proposing any changes to this policy at this point. Because we are not yet able to calculate the performance standards for each of the clinical measures, we are also not able to calculate a proposed minimum TPS at this time. We will publish the minimum TPS, based on data from CY 2014 and the first part of E:\FR\FM\11JYP2.SGM 11JYP2 EP11JY14.007</GPH> to the 50th percentile of facility performance on each of the PY 2016 reporting measures. The PY 2016 program is the most recent year for which we will have calculated final measure scores before the beginning of the proposed performance period for PY 2018 (i.e., CY 2016). Because we have not yet calculated final measure scores, we are unable to determine the 50th percentile of facility performance on the PY 2016 reporting measures. We will publish that value in the CY 2016 ESRD PPS final rule once we have calculated final measure scores for the PY 2016 program. We seek comments on this proposal. Section 1881(h)(3)(A)(ii) of the Act requires that facilities achieving the EP11JY14.008</GPH> TPS, as well as the example calculations for Facility A. 9. Proposed Payment Reductions for the PY 2018 ESRD QIP mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Figure 5 illustrates the general methodology for calculating a facility’s 40273 40274 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules CY 2015, in the CY 2016 ESRD PPS Final Rule. We seek comments on this proposal. H. Future Considerations for Stratifying ESRD QIP Measures for Dual-Eligible Beneficiaries CMS recognizes that individuals with both Medicare and Medicaid (also known as ‘‘dual-eligible beneficiaries’’), comprise a relatively large proportion of Medicare enrollees with ESRD. Because ESRD programs have a long history of performance measurement linked with public reporting, and because there are a large number of dual-eligible beneficiaries receiving ESRD care, we are considering stratifying ESRD QIP measures for Medicare-Medicaid enrollees. Measure reporting under the ESRD QIP does not currently allow us to separately review results for dualeligible beneficiaries or compare those results with results achieved by other patients with ESRD, so it is not currently known if their experiences are better, worse, or the same as other patients. Even the basic demographics of dual-eligible beneficiaries receiving ESRD care are not well understood. After discussion of the pros and cons that included input from the ESRD provider community, the Measures Application Partnership’s dual-eligible workgroup recommended that CMS take the first step in exploring the feasibility of requiring facilities to separately report ESRD QIP measures for MedicareMedicaid enrollees by analyzing the composition of the dual-eligible beneficiary population receiving ESRD care and determining potential ways in which stratified reporting may further quality improvement efforts. Furthermore, the Measures Application Partnership recommended, in the context of measure development, that CMS explore whether other risk factors unique to the dual-eligible population receiving ESRD care would present significant hurdles to measure stratification along these lines. We are therefore seeking comments on whether it would be feasible to stratify ESRD QIP measures based on whether the beneficiary is a dual eligible. We are interested in whether stakeholders recommend stratification and, if so, for what specific measures stakeholders would find stratification most compelling. We are particularly interested in public comments on whether MedicareMedicaid stratified quality measures under the ESRD QIP should be reported publicly, and how we should factor those measures into our scoring methodology. We seek comments on the meaningfulness of stratifying measures, and the feasibility and burden associated with reporting stratified measures. IV. Technical Corrections for 42 Part 405 In the April 15, 2008, final rule ‘‘Conditions for Coverage for End-Stage Renal Disease Facilities,’’ (73 FR 20370) we revised the health and safety standards for Medicare-participating End-Stage Renal Disease (ESRD) facilities. This rule made the first comprehensive revisions to the ESRD Conditions for Coverage (CfCs) since they were adopted in 1976. The original ESRD CfCs at 42 CFR Part 405 Subpart U were deleted and new conditions were issued at 42 CFR Part 494. Subpart U now only addresses certain requirements for ESRD networks. As a part of these revisions, we intended to delete most of the terms and definitions set out in Part 405 Subpart U, and create new definitions in Part 494. This is discussed in the 2008 final rule and in the corresponding proposed rule (70 FR 6184), and is laid out in the final rule crosswalk (comparing the old CfCs with the new ones) at 73 FR 20451. While we intended to delete most of the definitions at Part 405 Subpart U, we inadvertently omitted the regulations text that would have made those changes. Subpart U, at § 405.2102, still has 32 definitions, most of them unnecessary and several of them obsolete. This creates confusion for ESRD stakeholders, patients, and suppliers. We propose to make a technical correction that deletes the outdated terms and definitions at § 405.2102. Specifically, we propose to delete these terms and definitions: agreement, arrangement, dialysis, end-stage renal disease (ESRD), ESRD facility, renal dialysis center, renal dialysis facility, self-dialysis unit, special purpose renal dialysis facility, ESRD service, dialysis service, inpatient dialysis, outpatient dialysis, staff-assisted dialysis, selfdialysis, home dialysis, self-dialysis and home dialysis training, furnishes directly, furnishes on the premises, medical care criteria, medical care norms, medical care standards, medical care evaluation study (MCE), qualified personnel, chief executive officer, dietitian, medical record practitioner, nurse responsible for nursing service, physician-director, and social worker. We also propose to delete the term and definition for ‘‘ESRD network organization,’’ as it is duplicated within § 405.2102 as ‘‘network organization.’’ We would retain the terms and definitions for ‘‘network, ESRD,’’ and ‘‘network organization.’’ These changes are also outlined in Table 32 below.’’ TABLE 32—TECHNICAL CORRECTIONS TO § 405.2102 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Term Proposed action Agreement ........................................................................................................................ Arrangement .................................................................................................................... Dialysis ............................................................................................................................. End-Stage Renal Disease (ESRD) .................................................................................. ESRD facility introductory text ......................................................................................... Renal dialysis center ................................................................................................ Renal dialysis facility ................................................................................................. Self-dialysis unit ........................................................................................................ Special purpose renal dialysis facility ....................................................................... ESRD Network organization ............................................................................................ ESRD service introductory text ........................................................................................ Dialysis service ......................................................................................................... Inpatient dialysis ....................................................................................................... Outpatient dialysis .................................................................................................... Staff-assisted dialysis ............................................................................................... Self-dialysis ............................................................................................................... Home dialysis ........................................................................................................... Self-dialysis and home dialysis training .................................................................... VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Delete Other FR location ......................................................... 406.13(b). ......................................................... 494.10. ......................................................... 494.120. ......................................................... ......................................................... 494.10. 494.10. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40275 TABLE 32—TECHNICAL CORRECTIONS TO § 405.2102—Continued Term Proposed action Furnishes directly ............................................................................................................. Furnishes on the premises .............................................................................................. Medical care criteria ......................................................................................................... Medical care norms .......................................................................................................... Medical care standards .................................................................................................... Medical care evaluation study (MCE) .............................................................................. Network, ESRD ................................................................................................................ Network organization ....................................................................................................... Qualified personnel .......................................................................................................... Chief executive officer .............................................................................................. Dietitian ..................................................................................................................... Medical record practitioner ....................................................................................... Nurse responsible for nursing service ...................................................................... Physician-director ..................................................................................................... Social worker ............................................................................................................ V. Methodology for Adjusting DMEPOS Payment Amounts Using Information From Competitive Bidding Programs mstockstill on DSK4VPTVN1PROD with PROPOSALS2 A. Background 1. Payment Basis for Certain DMEPOS Section 1834(a) of the Act governs payment for durable medical equipment (DME) covered under Part B and under Part A for a home health agency and provides for the implementation of a fee schedule payment methodology for DME furnished on or after January 1, 1989. Sections 1834(a)(2) through (a)(7) of the Act set forth separate payment categories of DME and describe how the fee schedule for each of the following categories is established: • Inexpensive or other routinely purchased items, • Items requiring frequent and substantial servicing, • Customized items, • Oxygen and oxygen equipment, • Other covered items (other than DME), and • Other items of DME (capped rental items). Section 1834(h) of the Act governs payment for prosthetic devices, prosthetics, and orthotics (P&O) and sets forth fee schedule payment rules for P&O. Effective for items furnished on or after January 1, 2002, payment is also made on a national fee schedule basis for parenteral and enteral nutrition (PEN) in accordance with the authority under section 1842(s) of the Act. The term ‘‘enteral nutrition’’ will be used throughout this document to describe enteral nutrients supplies and equipment covered as prosthetic devices in accordance with section 1861(s)(8) of the Act and paid for on a fee schedule basis and enteral nutrients under DMEPOS Competitive Bidding Program (CBP), as authorized under section 1847(a)(2)(B) of the Act. Section VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Delete Delete Delete Delete Delete Delete Retain Retain Delete Delete Delete Delete Delete Delete Delete ......................................................... ......................................................... 494.10. 494.180(d) ......................................................... ......................................................... N/A. N/A. ......................................................... 494.140(c). ......................................................... ......................................................... ......................................................... 494.140(b). 494.140(a). 494.140(d). 1842(o)(1)(D) of the Act mandates that payment for infusion drugs furnished through a covered item of DME on or after January 1, 2004, is equal to 95 percent of the average wholesale price for such drug in effect on October 1, 2003. For DMEPOS items subject to payment under 1834 of the Act (not subject to the CBP), the Medicare’s allowed payment amount is equal to the lesser of the actual charge for the item or the fee schedule amount for the item. The fee schedule amounts are based on average payments made under the previous payment methodology of reasonable charges, which utilized supplier charges for furnishing items and services in local areas throughout the nation to establish the Medicare allowed payment amounts for the items and services. The reasonable charge data used is from a specific period of time that varies slightly by payment class (for example, July 1986 through June 1987 for inexpensive DME). The fee schedule amounts for most items are updated on an annual basis by covered item update factors provided in the statute for DME under section 1834(a)(14) of the Act, for P&O under section 1834(h)(4)(A) of the Act, and for enteral nutrition under section 1842(s)(1)(B) of the Act. The rules pertaining to the calculation of reasonable charges are located at 42 CFR Part 405, Subpart E of our regulations. Under this general methodology, several factors were taken into consideration in determining the reasonable charge for an item. Each supplier’s ‘‘customary charge’’ for an item, or the 50th percentile of charges for an item over a 12-month period, was one factor used in determining the reasonable charge. The ‘‘prevailing charge’’ in a local area, or the 75th percentile of suppliers’ customary charges for the item in the locality, was PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 Other FR location also used in determining the reasonable charge. For PEN items and services only, the ‘‘lowest charge level (LCL)’’ was also taken into consideration and was based on the 25th percentile of all charges for an item. For the purpose of calculating prevailing charges, a ‘‘locality’’ is defined at 42 CFR 405.505 and ‘‘may be a State (including the District of Columbia, a territory, or a Commonwealth), a political or economic subdivision of a state, or a group of states.’’ The regulation further specifies that the locality ‘‘should include a cross section of the population with respect to economic and other characteristics.’’ For PEN items and services only, the entire nation was used as the locality for the purpose of calculating the LCL and prevailing charges. Effective for items furnished on or after October 1, 1985, an additional factor, the inflation-indexed charge (IIC) as cited at 42 CFR 405.509, was added to the factors taken into consideration in determining the reasonable charge for an item. The IIC is equal to the lowest of the customary charge, prevailing charge, LCL (if applicable), and IIC from the previous year updated by an inflation adjustment factor. To summarize, the reasonable charges for each item that were used to calculate the fee schedule amounts are equal to the lower of: • the supplier’s actual charge on the claim; • the supplier’s customary charge for the item; • the prevailing charge in the locality for the item; • the LCL in the locality for the item, if applicable; or • the IIC. Under the reasonable charge payment methodology, it is assumed that suppliers took all of their costs of E:\FR\FM\11JYP2.SGM 11JYP2 40276 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 furnishing various items and services in various localities throughout the nation into account in setting the prices they charge for covered items and services. We implemented the fee schedule payment methodologies for PENs at 42 CFR Part 414, Subparts C, and for DME prosthetic devices, prosthetics, orthotics, and surgical dressings at 42 CFR Part 414, Subpart D of our regulations. In accordance with section 1834(a)(10) of the Act, the Secretary may adjust DMEPOS fee schedule amounts in situations where it is determined that the amounts are not inherently reasonable. This ‘‘inherent reasonableness’’ authority for adjusting fee schedule payment amounts is governed by paragraphs (8) and (9) of section 1842(b) of the Act and implemented at 42 CFR Part 405, Subpart E of our regulations. Finally, in the case of DMEPOS furnished on or after January 1, 2011, under section 1834(a)(1)(F)(ii) of the Act, the Secretary may (in beginning January 1, 2016, must) use information on the payment determined under the CBP in accordance with section 1847 of the Act to adjust the fee schedule payment amounts for DME that are not in a competitive bidding area (CBA), and the inherent reasonableness authority does not apply. Adjustment of fee schedule amounts based on CBP payment information (and the limitation on using inherent reasonableness) is also authorized under section 1834(h)(1)(H)(ii) of the Act for certain orthotics and section 1842(s)(3)(B) of the Act for enteral nutrition in noncompetitive bid areas. 2. Fee Schedule Payment Methodologies Section 4062(b) of the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), Public Law 100–203, added section 1834(a) of the Act and mandated the implementation of local fee schedule amounts in 1989 for DME and P&O based on the average of reasonable charges for items and services furnished in carrier service areas throughout the United States. The carriers were (now Medicare administrative contractors) responsible for processing claims for Part B items and services in accordance with section 1842(a) of the Act. The carrier service areas used in establishing the fee schedule amounts could not exceed an entire state. A few states were made up of two carrier service areas and the State of New York had three carrier service areas. A carrier service area is not to be confused with a locality established for the purpose of calculating reasonable charges as described above. For example, although claims for items furnished in the State VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 of Texas were processed by a single carrier, for reasonable charge calculation purposes, Texas was divided into more than 50 different localities. In 1993, the local fee schedule amounts for states with more than one carrier service areas were transitioned to statewide fee schedule amounts. The reasonable charge data used to calculate the statewide fee schedule amounts therefore reflected the average payment made under the supplier charge based reasonable charge payment methodology for items and services furnished throughout the state, including both rural and urban areas of the state. Section 4062(b) of OBRA 87 mandated that local fee schedule amounts for both DME and P&O be transitioned to regional fee schedule amounts as part of a multi-year phase in ending in 1993. Section 4152(b) of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90), Public Law 101–508, eliminated the regional fee schedule transition for DME and amended section 1834(a) of the Act to mandate that the local (statewide) fee schedule amounts be limited by a national ceiling (upper) limit, based on the median of the statewide fee schedule amounts, and a national floor (lower limit), based on 85 percent of the median of the statewide fee schedule amounts. The fee schedule ceiling and floor limits for DME were phased in from 1991 through 1993. The conversion to regional fee schedule amounts therefore never took place for DME and instead the statewide fee schedule amounts were limited so that they could not vary by more than 15 percent from the national ceiling to the national floor. The fee schedule amounts for areas outside the contiguous United States are not subject to the national ceiling and floor limits. The transition to regional fee schedule amounts was retained for P&O, although OBRA 90 changed the phase in schedule so that the regional fee schedule amounts were not fully phased in until January 1, 1994, rather than January 1, 1993. As explained in more detail below, the regional fee schedule methodology allows for regional geographic variation in fee schedule payment amounts and a wider range in fees across the nation than the fee schedule methodology used for DME which caps the local, statewide fee schedule amounts at the national median. That being said, we have not seen any problems associated with access to either P&O or DME in rural areas or any areas of the country since payments have been made based on these fee schedule methodologies. This PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 has been the case even though the average reasonable charges used to compute the statewide fee schedule amounts include a comingling of reasonable charge data for items and services furnished in both urban and rural areas. In addition, we have not seen any problems with access to PEN in rural areas or any areas of the country since payments have been made based on national fee schedule amounts. 3. Regional Fee Schedule Payment Methodology for P&O The regional fee schedules for P&O are mandated by section 1834(h)(2)(B) of the Act. The regional fee schedule amounts only apply to areas within the contiguous United States. The regional fee schedule amounts are calculated based on the weighted average (weighted by total Part B claims volume) of statewide fee schedule amounts for states in each of the ten CMS Regional Office boundaries identified below. The statewide fee schedule amounts are based on average reasonable charges (statewide fees) for items furnished from July 1, 1986 through June 30, 1987. The ten CMS Regional Office boundaries are: • Boston (Region One), including the six states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont; • New York (Region Two), including the two states of New Jersey and New York; • Philadelphia (Region Three), including the five states of Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia; • Atlanta (Region Four), including the eight states of Alabama, North Carolina, South Carolina, Florida, Georgia, Kentucky, Mississippi, and Tennessee; • Chicago (Region Five), including the six states of Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin; • Dallas (Region Six), including the five states of Arkansas, Louisiana, New Mexico, Oklahoma and Texas; • Kansas City (Region Seven), including the four states of Iowa, Kansas, Missouri and Nebraska; • Denver (Region Eight), including the six states of Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming; • San Francisco (Region Nine), including the three states of Arizona, California and Nevada; and • Seattle (Region Ten), including the three states of Idaho, Oregon and Washington. As an example, the regional fee schedule amounts for Region Nine are based on the weighted average of the E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules statewide fees for Arizona, California, and Nevada. Since California accounts for the largest volume of Part B claims in the region, the California statewide fees are weighted more heavily in determining the regional fee schedule amounts than the statewide fees for Arizona or Nevada. Once all of the regional fee schedule amounts are established, the regional fee schedule amounts are further limited by a national ceiling equal to 120 percent of the average of the regional fee schedule amounts for all the states and a national floor equal to 90 percent of the average of the regional fee schedule amounts for all the states. The national ceiling and floor limits for DME and P&O set national parameters on how much the statewide or regional fee schedule amounts can vary. For DME, the upper payment limit or ceiling is based on the national median of the statewide fees, essentially bringing half of the state fees down to the national median. The lower limit or floor is based on 85 percent of the national median and brings those state fees below the floor amount up to the floor amount. In contrast, the national ceiling and floor parameters for P&O are based on 120 percent and 90 percent, respectively, of the average of the various regional fee schedule amounts. Differences in reasonable charge based fees in various geographic regions of the country are maintained within the parameters of the national ceilings and floors for P&O. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 4. DMEPOS Competitive Bidding Programs Payment Rules Section 1847(a) of the Act, as amended by section 302(b)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), requires the Secretary to establish and implement CBPs in CBAs throughout the United States for contract award purposes for the furnishing of certain competitively priced DMEPOS items and services. The programs mandated by section 1847(a) of the Act are collectively referred to as the ‘‘Medicare DMEPOS Competitive Bidding Program.’’ Section 1847(a)(2) of the Act provides that the items and services to which competitive bidding applies are: • Off-the-shelf (OTS) orthotics for which payment would otherwise be made under section 1834(h) of the Act; • Enteral nutrients, equipment and supplies described in section 1842(s)(2)(D) of the Act; and • Certain DME and medical supplies, which are covered items (as defined in section 1834(a)(13) of the Act) for which VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 payment would otherwise be made under section 1834(a) of the Act. The DME and medical supplies category includes items used in infusion and drugs (other than inhalation drugs) and supplies used in conjunction with DME, but excludes class III devices under the Federal Food, Drug, and Cosmetics Act and Group 3 or higher complex rehabilitative power wheelchairs and related accessories when furnished with such wheelchairs. Sections 1847(a) and (b) of the Act specify certain requirements and conditions for implementation of the Medicare DMEPOS CBP. On July 15, 2008, the Medicare Improvements for Patients and Providers Act (MIPPA) was enacted. Section 154 of the MIPPA amended section 1847 of the Act to make certain limited changes to the Medicare DMEPOS CBP, including a revised timeframe for phasing in the programs. On March 23, 2010, the Affordable Care Act was enacted. Section 6410(a) of the Affordable Care Act amended section 1847(a)(1) of the Act, mandating the phase in of 21 additional Metropolitan Statistical Areas (MSAs). Section 1847(a) of the Act requires that the DMEPOS CBP be phased in so that competition under the programs occurs in 9 of the largest Metropolitan Statistical Areas (MSAs) in 2009, 91 additional large MSAs in 2011, and additional areas after 2011 (or, in the case of national mail order for items and services, after 2010). Section 1847(a)(1)(D)(ii) of the Act provides discretion to subdivide MSAs and through notice and comment rulemaking we subdivided the New York-Northern New Jersey-Long Island, NY-NJ-PA; Los Angeles-Long BeachSanta Ana, CA; and Chicago-NapervilleJoliet, IL-IN-WI MSAs. The final rule was published in the Federal Register on November 29, 2010 (75 FR 73454) and divided the New York-Northern New Jersey-Long Island, NY-NJ-PA MSA into six CBAs. In addition, the Los Angeles-Long Beach-Santa Ana, CA MSA was divided into two CBAs and the Chicago-Naperville-Joliet, IL-IN-WI MSA was divided into four CBAs (75 FR 73460). Altogether this created a total of 100 CBAs for the competitions occurring in the 91 MSAs in 2011, or a total of 109 CBAs for the competitions occurring in 100 MSAs in 2009 and 2011. Finally, section 1847(a)(1)(D)(iii) of the Act specifies that competitions occurring before 2015 for items and services other than national mail order, may not include rural areas or MSAs with a population of less than 250,000. PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 40277 In addition to the national mail order program for diabetic supplies, the product categories (PCs) that have been phased in thus far in 100 Round 2 CBAs and 9 Round 1 CBAs include the following: Round 2 CBAs (Contract Period July 1, 2013, Thru June 30, 2016) • Oxygen, oxygen equipment, and supplies • Standard (Power and Manual) wheelchairs, scooters, and related accessories • Enteral nutrients, equipment, and supplies • Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs) and related supplies and accessories • Hospital beds and related accessories • Walkers and related accessories • Negative Pressure Wound Therapy pumps and related supplies and accessories • Support surfaces (Group 2 mattresses and overlays) Round 1 CBAs (Contract Period January 1, 2014, Thru December 31, 2016) • Respiratory Equipment and Related Supplies and Accessories Æ includes oxygen, oxygen equipment, and supplies; CPAP devices and RADs and related supplies and accessories; and standard nebulizers • Standard Mobility Equipment and Related Accessories Æ includes walkers, standard power and manual wheelchairs, scooters, and related accessories • General Home Equipment and Related Supplies and Accessories Æ includes hospital beds and related accessories, group 1 and 2 support surfaces, transcutaneous electrical nerve stimulation (TENS) devices, commode chairs, patient lifts, and seat lifts • Enteral Nutrients, Equipment and Supplies • Negative Pressure Wound Therapy Pumps and Related Supplies and Accessories • External Infusion Pumps and Supplies In addition, contracts and SPAs were in effect in the 9 Round 1 CBAs from January, 1 2011 thru December 31, 2013, for the items listed below which are not included in current Round 1 or 2 PCs: • Complex Rehabilitative Power Wheelchairs and Related Accessories (Group 2) • Adjustable Wheelchair Seat Cushions E:\FR\FM\11JYP2.SGM 11JYP2 40278 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 5. Adjusting Payment Amounts Using Information From the DMEPOS Competitive Bidding Program Section 1834(a)(1)(F)(ii) of the Act provides authority for using information from the DMEPOS CBPs to adjust the DME payment amounts for covered items furnished on or after January 1, 2011, in areas where competitive bidding is not implemented for the items. Similar authority exists at section 1834(h)(1)(H)(ii) of the Act for OTS orthotics, and at section 1842(s)(3)(B) of the Act for enteral nutrition. Section 1834(a)(1)(F) also requires adjustments to the payment amounts for all DME items subject to competitive bidding furnished in areas where CBPs have not been implemented on or after January 1, 2016. For items furnished on or after January 1, 2016, section 1834(a)(1)(F)(iii) requires us to continue to make such adjustments to DME payment amounts where CBPs have not been implemented, as additional covered items are phased in or information is updated as contracts are recompeted. Section 1834(a)(1)(G) of the Act requires that the methodology used to adjust payment amounts for DME and OTS orthotics using information from the CBPs be promulgated through notice and comment rulemaking, which is the purpose of this proposed rule. Section 1834(a)(1)(G) of the Act also requires that we consider the ‘‘costs of items and services in areas in which such provisions [sections 1834(a)(1)(F)(ii) and 1834(h)(1)(H)(ii)] would be applied compared to the payment rates for such items and services in competitive acquisition [competitive bidding] areas.’’ We are proposing to apply the same methodology for making adjustments to the payment amounts for enteral nutrition as authorized by section 1842(s)(3)(B) of the Act. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 6. Diversity of Costs As mentioned above, under section 1834(a)(1)(G) of the Act we must consider the costs of furnishing items and services in areas where prices will be adjusted compared to the payment rates for the items and services furnished in CBAs. We believe that the methodology for using the single payment amounts (SPAs) as a basis for adjusting payment rates in other areas needs to ensure that adjusted payment amounts in an area are adequate to cover the unique costs of furnishing the items and services in those areas. The SPAs are based on the median of successful bids for furnishing items and services in MSAs, which are mainly VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 urban areas, from suppliers with costs and characteristics that may or may not be similar to suppliers in other areas. In addition, under the DMEPOS CBP, many low population density areas within MSAs were excluded from the CBAs as authorized by statute, making the geographic bidding areas smaller and more densely populated than they would have been if the initial MSA boundaries had been retained for bidding purposes. Regarding the size of suppliers submitting the bids used to generate the SPAs compared to the size of suppliers in areas where price adjustments based on the SPAs would occur, it is important to note that small suppliers are given special considerations under the CBP and that a majority of contracts are offered to small suppliers. Section 1847(b)(6)(D) of the Act requires that, in developing procedures relating to bidding and the awarding of contracts, CMS ‘‘take appropriate steps to ensure that small suppliers of items and services have an opportunity to be considered for participation in the program.’’ We have established a number of provisions to ensure that small suppliers are given an opportunity to participate in the DMEPOS CBP. For example, under 42 CFR 414.414(g)(1)(i), we have established a 30 percent target for small supplier participation; thereby, ensuring efforts are made to award at least 30 percent of contracts to small suppliers. Also, CMS worked in coordination with the Small Business Administration (SBA) to develop an appropriate definition of a ‘‘small supplier’’ for this program. Under 42 CFR 414.402, a small supplier is one that generates gross revenues of $3.5 million or less in annual receipts, including Medicare and non-Medicare revenue. Under 42 CFR 414.418, small suppliers may join together in ‘‘networks’’ in order to submit bids that meet the various program requirements. For contracts taking effect on July 1, 2013 in Round 2, in 100 CBAs throughout the country, 63 percent of all contract suppliers are small suppliers, with only 10 percent of contract suppliers being new to the areas. In addition, for contracts taking effect on January 1, 2014 in the Round 1 Recompete, in the 9 initial CBAs, 58 percent of all contract suppliers are small suppliers, with only 3 percent of contract suppliers being new to the areas. Therefore, the majority of bids used in establishing the SPAs come from small suppliers with a history of furnishing the items in the CBAs. Prior to awarding contracts, each supplier is carefully screened to ensure that it is accredited under applicable PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 Medicare quality standards and meets rigid financial standards, specific Medicare supplier enrollment requirements, and applicable state licensing standards. Each bid is screened to ensure that it is a bona fide bid, and those that fail are excluded from the competition. Approximately 94 percent of bids screened as part of the Round 2 and Round 1 Recompete competitions were determined to be bona fide. The invoices and purchase orders submitted by bidding suppliers to support their bids reflected prices already paid by the supplier (that is, prior to becoming a contract supplier) and for the most part did not reflect large volume purchasing discounts. Once non-bona fide bids are excluded, suppliers are ranked in order based on bid amounts, and the median of bids from the number of suppliers determined to be necessary to meet projected demand are used to establish the SPAs. The projected demand for items and services in a CBA is intentionally overstated for the purpose of ensuring that contracts are awarded to more than a sufficient number of suppliers to serve the beneficiaries in the area. The establishment of the demand level is explained in detail in the competitive bidding final rule (Medicare Program; Competitive Acquisition for Certain DMEPOS and Other issue) published April 10, 2007 (72 FR 18039). Thus, the SPAs are higher than they would otherwise be if demand was not overstated because the high demand generally results in an increase in the number of contract suppliers which in most cases increases the median bid amount. CMS also conducts its review of supplier capacity and expansion plans during the bid evaluation process. If a supplier is new to an area, new to a PC, or submits estimated capacity that represents substantial growth over current levels, CMS may conduct a more detailed evaluation of that supplier’s expansion plan to verify the supplier’s ability to provide items and services in the CBA on day one of the contract period. If a bidder’s financial data and expansion plan do not support the supplier’s estimated capacity, CMS will adjust the capacity to the supplier’s historic level, which would be zero for a new supplier. CMS uses the estimated capacity information and the bid amounts to determine the array of winning suppliers in a CBA. Under Round 2 and the Round 1 Recompete competitions, 92 percent of suppliers accepted contract offers at the SPAs set through the competitions. In addition, CMS reviewed all contract E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules suppliers based on financial standards when evaluating their bids. This process includes review of tax records, credit reports, and other financial data, which leads to the calculation of a score, similar to processes used by lenders when evaluating the viability of a company. All contract suppliers met the financial standards established for the program. From January 1, 2011, when the initial Round 1 contracts and SPAs took effect, to present, we have seen no indication that beneficiaries have been denied access to necessary items and services subject to the programs in CBAs as a result of the SPAs. In addition, we have been closely monitoring inquiries as well as real time claims and health outcomes data and have seen no negative impacts on access to items and services under the program. Therefore, the SPAs appear to be sufficient to cover the costs of the suppliers furnishing items in the 109 CBAs. In previous legislation, which we will discuss below, the Congress mandated that the costs of furnishing DME in different geographic regions of the country be studied. Section 135 of the Social Security Act Amendments of 1994, Public Law 103–432, required an examination of the geographic variations in DME supplier costs in order to determine whether the fee schedules are reasonably adjusted to account for any geographic differences. Jing Xing Health and Safety Resources, Inc. provided assistance to the Health Care Financing Administration, now CMS, in conducting this study. The project entitled ‘‘Durable Medical Equipment Supplier Product and Service Cost Study’’, was completed under Contract Number HCFA 500–95– 0044 and submitted to the agency in June 1996. As part of the study, a Federal Advisory Panel was convened, a formal meeting with representatives of the DME industry was held, and a literature review was conducted. The general consensus among industry representatives and government agencies that participated in the study 40279 was that there is no conclusive evidence that urban and rural costs differed significantly or that the costs of furnishing DME items and services were higher in urban areas versus rural areas or vice versa. The 109 CBAs where competitive bidding has been phased in include a wide range of different size urban areas with surrounding counties, and suppliers take the costs of furnishing items and services in these different areas into account when submitting bids under the programs. They include one CBA (Honolulu, HI) that is not within the contiguous Unites States and CBAs that range in population size from approximately 300 thousand to 10 million (See Table 33). There are 7 CBAs with a population of less than 500,000, 42 CBAs with a population of more than 500,000, but less than 1 million, 27 CBAs with a population of more than 1 million, but less than 2 million, 19 CBAs with a population of 2 to 4 million, and 14 CBAs with a population of over 4 million. TABLE 33—CBA POPULATION SIZE mstockstill on DSK4VPTVN1PROD with PROPOSALS2 CBA Population Los Angeles County CBA .................................................................................................................................................................... Nassau-Brooklyn-Queens-Richmond County Metro CBA ................................................................................................................... Dallas-Fort Worth-Arlington, TX .......................................................................................................................................................... Central-Chicago Metro CBA ................................................................................................................................................................ Houston-Sugar Land-Baytown, TX ...................................................................................................................................................... Philadelphia-Camden-Wilmington, PA-NJ-DE-MD .............................................................................................................................. Washington-Arlington-Alexandria, DC-VA-MD-WV ............................................................................................................................. Miami-Fort Lauderdale-Pompano Beach, FL ...................................................................................................................................... Atlanta-Sandy Springs-Marietta, GA ................................................................................................................................................... Boston-Cambridge-Quincy, MA-NH ..................................................................................................................................................... San Francisco-Oakland-Fremont, CA ................................................................................................................................................. Detroit-Warren-Livonia, MI ................................................................................................................................................................... Phoenix-Mesa-Glendale, AZ ................................................................................................................................................................ Riverside-San Bernardino-Ontario, CA ............................................................................................................................................... Seattle-Tacoma-Bellevue, WA ............................................................................................................................................................. Northern NJ Metro CBA ...................................................................................................................................................................... Minneapolis-St. Paul-Bloomington, MN-WI ......................................................................................................................................... San Diego-Carlsbad-San Marcos, CA ................................................................................................................................................. Orange County CBA ............................................................................................................................................................................ Southern NY Metro CBA ..................................................................................................................................................................... Bronx-Manhattan NY CBA ................................................................................................................................................................... St. Louis, MO-IL ................................................................................................................................................................................... Tampa-St. Petersburg-Clearwater, FL ................................................................................................................................................ Baltimore-Towson, MD ........................................................................................................................................................................ Denver-Aurora-Broomfield, CO ........................................................................................................................................................... Pittsburgh, PA ...................................................................................................................................................................................... Portland-Vancouver-Hillsboro, OR-WA ............................................................................................................................................... San Antonio-New Braunfels, TX .......................................................................................................................................................... Orlando-Kissimmee-Sanford, FL ......................................................................................................................................................... Sacramento-Arden-Arcade-Roseville, CA ........................................................................................................................................... Cincinnati-Middletown, OH-KY-IN ....................................................................................................................................................... Cleveland-Elyria-Mentor, OH ............................................................................................................................................................... Kansas City, MO-KS ............................................................................................................................................................................ Las Vegas-Paradise, NV ..................................................................................................................................................................... San Jose-Sunnyvale-Santa Clara, CA ................................................................................................................................................ Columbus, OH ..................................................................................................................................................................................... Charlotte-Gastonia-Rock Hill, NC-SC .................................................................................................................................................. Austin-Round Rock-San Marcos, TX .................................................................................................................................................. Indianapolis-Carmel, IN ....................................................................................................................................................................... Virginia Beach-Norfolk-Newport News, VA-NC ................................................................................................................................... Nashville-Davidson-Murfreesboro-Franklin, TN ................................................................................................................................... VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 9,453,357 6,630,278 6,554,334 6,179,455 6,152,650 5,995,992 5,662,358 5,604,979 5,293,136 4,595,431 4,407,286 4,256,579 4,251,146 4,157,332 3,522,509 3,473,815 3,326,864 3,118,844 3,067,829 3,015,460 2,983,009 2,844,160 2,810,479 2,751,529 2,568,221 2,361,317 2,259,089 2,223,779 2,176,846 2,174,556 2,121,660 2,074,790 2,050,306 1,967,341 1,898,173 1,844,571 1,832,391 1,813,495 1,764,136 1,673,547 1,607,708 40280 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 33—CBA POPULATION SIZE—Continued mstockstill on DSK4VPTVN1PROD with PROPOSALS2 CBA Population Providence-New Bedford-Fall River, RI-MA ........................................................................................................................................ Milwaukee-Waukesha-West Allis, WI .................................................................................................................................................. Suffolk County CBA ............................................................................................................................................................................. South-West-Chicago-Metro CBA ......................................................................................................................................................... Jacksonville, FL ................................................................................................................................................................................... North East NY CBA Metro ................................................................................................................................................................... Memphis, TN-MS-AR ........................................................................................................................................................................... Louisville/Jefferson County, KY-IN ...................................................................................................................................................... Oklahoma City, OK .............................................................................................................................................................................. Richmond, VA ...................................................................................................................................................................................... Hartford-West Hartford-East Hartford, CT ........................................................................................................................................... Raleigh-Cary, NC ................................................................................................................................................................................. Northern-Chicago Metro CBA .............................................................................................................................................................. New Orleans-Metairie-Kenner, LA ....................................................................................................................................................... Salt Lake City, UT ............................................................................................................................................................................... Buffalo-Niagara Falls, NY .................................................................................................................................................................... Birmingham-Hoover, AL ...................................................................................................................................................................... Rochester, NY ..................................................................................................................................................................................... Tucson, AZ .......................................................................................................................................................................................... Honolulu, HI ......................................................................................................................................................................................... Fresno, CA ........................................................................................................................................................................................... Tulsa, OK ............................................................................................................................................................................................. Bridgeport-Stamford-Norwalk, CT ....................................................................................................................................................... Albuquerque, NM ................................................................................................................................................................................. Omaha-Council Bluffs, NE-IA .............................................................................................................................................................. Albany-Schenectady-Troy, NY ............................................................................................................................................................ New Haven-Milford, CT ....................................................................................................................................................................... Dayton, OH .......................................................................................................................................................................................... Oxnard-Thousand Oaks-Ventura, CA ................................................................................................................................................. Allentown-Bethlehem-Easton, PA-NJ .................................................................................................................................................. El Paso, TX .......................................................................................................................................................................................... Baton Rouge, LA ................................................................................................................................................................................. Bakersfield-Delano, CA ....................................................................................................................................................................... Worcester, MA ..................................................................................................................................................................................... McAllen-Edinburg-Mission, TX ............................................................................................................................................................ Grand Rapids-Wyoming, MI ................................................................................................................................................................ Columbia, SC ....................................................................................................................................................................................... Greensboro-High Point, NC ................................................................................................................................................................. Little Rock-North Little Rock-Conway, AR .......................................................................................................................................... North Port-Bradenton-Sarasota, FL ..................................................................................................................................................... Indiana-Chicago Metro CBA ................................................................................................................................................................ Knoxville, TN ........................................................................................................................................................................................ Springfield, MA .................................................................................................................................................................................... Akron, OH ............................................................................................................................................................................................ Stockton, CA ........................................................................................................................................................................................ Greenville-Mauldin-Easley, SC ............................................................................................................................................................ Charleston-North Charleston-Summerville, SC ................................................................................................................................... Syracuse, NY ....................................................................................................................................................................................... Poughkeepsie-Newburgh-Middletown, NY .......................................................................................................................................... Colorado Springs, CO ......................................................................................................................................................................... Toledo, OH .......................................................................................................................................................................................... Wichita, KS .......................................................................................................................................................................................... Boise City-Nampa, ID .......................................................................................................................................................................... Cape Coral-Fort Myers, FL .................................................................................................................................................................. Lakeland-Winter Haven, FL ................................................................................................................................................................. Augusta-Richmond County, GA-SC .................................................................................................................................................... Scranton-Wilkes-Barre, PA .................................................................................................................................................................. Youngstown-Warren-Boardman, OH-PA ............................................................................................................................................. Palm Bay-Melbourne-Titusville, FL ...................................................................................................................................................... Jackson, MS ........................................................................................................................................................................................ Chattanooga, TN-GA ........................................................................................................................................................................... Deltona-Daytona Beach-Ormond Beach, FL ....................................................................................................................................... Visalia-Porterville, CA .......................................................................................................................................................................... Flint, MI ................................................................................................................................................................................................ Asheville, NC ....................................................................................................................................................................................... Beaumont-Port Arthur, TX ................................................................................................................................................................... Ocala, FL ............................................................................................................................................................................................. Huntington-Ashland, WV-KY-OH ......................................................................................................................................................... 1,603,029 1,570,548 1,488,017 1,464,818 1,371,407 1,363,882 1,309,806 1,277,282 1,276,642 1,262,088 1,214,313 1,190,534 1,187,661 1,182,382 1,158,617 1,133,325 1,121,219 1,062,561 1,004,374 962,112 949,093 945,366 922,063 896,202 883,233 866,077 862,551 839,984 830,680 826,740 826,163 811,243 810,348 800,404 799,023 783,733 767,793 746,685 710,371 708,687 706,110 705,446 698,926 687,788 685,542 683,793 682,539 671,076 665,524 665,484 649,956 634,116 634,037 631,611 602,671 570,656 556,282 553,382 550,416 544,285 533,309 501,906 439,968 435,877 434,665 397,872 323,229 289,474 Source: U.S. Census Bureau, Population Division, 2012 Population Estimates. Population estimates for MSAs and counties were adjusted to reflect CBA boundaries. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 7. Advanced Notice of Proposed Rulemaking CMS issued an Advance Notice of Proposed Rulemaking (ANPRM): Medicare Program; Methodology for Adjusting Payment Amounts for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) using Information From Competitive Bidding Programs. The ANPRM was published in the Federal Register on February 26, 2014 (79 FR 10754) and solicited comments on several aspects to consider in developing the proposed methodology to adjust DMEPOS fee schedule amounts or other payment amounts in non-competitive areas based on DMEPOS competitive bidding payment information. Specific questions related to this topic were presented in the notice, including: • Do the costs of furnishing various DMEPOS items and services vary based on the geographic area in which they are furnished? • Do the costs of furnishing various DMEPOS items and services vary based on the size of the market served in terms of population and/or distance covered or other logistical or demographic reasons? • Should an interim or different methodology be used to adjust payment amounts for items that have not yet been included in all CBPs (for example, items such as TENS devices that have only been phased into the nine Round 1 areas thus far)? The comment period for the ANPRM ended on March 28, 2014, and CMS received approximately 185 comments from suppliers, manufacturers, professional, state and national trade associations, physicians, physical therapists, beneficiaries and their caregivers, and one state government office. Commenters generally agreed that costs do vary by geographic region and that costs in rural and non-contiguous areas are higher than costs in urban areas. However, few commenters offered specific proposals or suggestions for addressing these costs differences and the suggestions that were provided were vague (for example, use the 75th percentile of SPAs rather than the national median SPA). Several commenters stated that the costs of furnishing DMEPOS items and services in different regions of the country do vary. One commenter representing many suppliers said that there exists no reliable cost data. Another commenter representing many manufacturers and suppliers listed several key variables or factors that influence the cost of VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 furnishing items and services in different areas that should be considered, but the commenter did not provide information on how valid and reliable information related to these factors could be obtained. This commenter stated that information of all bids submitted under the programs should also be considered and not just the bids of winning suppliers. Some commenters expressed concern that the SPAs assume a significant increase in volume to offset lower payment amounts. Some commenters suggested that the price adjustments be phased in rather than making full, one-time adjustments. B. Proposed Provisions We propose establishing three methodologies for adjusting DMEPOS fee schedule amounts in areas where CBPs have not been established for these items and services based on SPAs established in accordance with the payment rules at § 414.408. Use of SPAs that may be established in accordance with the special payment rules proposed in section V to adjust DMEPOS fee schedule amounts in areas where CBPs have not been established for these items and services would be addressed in future notice and comment rulemaking. One proposed methodology is described in subsection 1 below and would utilize regional adjustments limited by national parameters for items bid in more than 10 CBAs throughout the country. A second proposed methodology is described in subsection 2 below and would be used for lower volume items or other items that were bid in no more than 10 CBAs for various reasons. A third proposed methodology is described in subsection 5 and would be used for mail order items furnished in the Northern Mariana Islands. We are also proposing rules that would apply to all of these proposed methodologies. 1. Proposed Regional Adjustments Limited by National Parameters CBPs are currently in place in 100 of the largest MSAs in the country for items and services that make up over 80 percent of the total allowed charges for items subject to the DMEPOS CBP. SPAs are currently used in 109 CBAs that include areas in every state throughout the country except for Alaska, Maine, Montana, North Dakota, South Dakota, Vermont, and Wyoming. The number of CBAs, as listed in Table 33 that are fully or partially located within a given state range from one to twelve. The Honolulu CBA was phased in under Round 2 of the program. Suppliers submitting bids for furnishing items and services in these areas have received extensive PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 40281 education that they should factor all costs of furnishing items and services in an area as well as overhead and profit into their bids. For items and services that are subject to competitive bidding and have been included in more than 10 CBAs throughout the country, we propose to adjust the fee schedule payment amounts for these items and services using a methodology that is modeled closely after the regional fee schedule payment methodology in effect for P&O to allow for variations in payment based on bids for furnishing items and services in different parts of the country. Under the proposed methodology, adjusted fee schedule amounts for areas within the contiguous United States would be determined based on regional SPAs or RSPAs limited by a national floor and ceiling. The RSPA would be established using the average of the SPAs for an item from all CBAs that are fully or partially located in the region. The adjusted payment amount for the item would be equal to its RSPA but not less than 90 percent and not more than 110 percent of the national average, which is the average of the RSPAs weighted by the number of states in the region. We believe modeling the proposed methodology on the regional fee schedule payment methodology for P&O is appropriate because the regional fee schedule payment methodology for P&O allows for variations in Medicare fee schedule amounts based on supplier charges for furnishing items and services in different regions of the country. The regional fee schedule payment methodology for P&O adjusts the Medicare allowed payments for entire regions of the country, including low population density or rural areas, based primarily on supplier information for furnishing items and services in urban areas. The regional fee schedule payment methodology for P&O has been fully phased in since 1994 in the contiguous United States and has not resulted in any barriers to access since then in any specific region of the country in which it has been applied. The DME and P&O fee schedule amounts are based in a part on statewide average reasonable charges calculated using supplier charges for furnishing items and services in localities throughout each state. Supplier charges for furnishing items in rural areas of the state are combined with charges for furnishing items in urban areas of the state, which represents the bulk of the charges since the vast majority of beneficiaries in each state reside in urban areas rather than rural areas. Although the fee schedule E:\FR\FM\11JYP2.SGM 11JYP2 40282 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules payments are based heavily on charges for furnishing items and services in urban areas, this has not affected access to items and services in rural areas that are paid based on these fee schedule amounts. We considered modeling the proposed methodology on the fee schedule payment methodology for DME which establishes an upper limit on all fee schedule amounts based on the median of the state fee schedule amounts; however, this methodology does not allow for regional variations in fee schedule amounts, allows for 0 percent variations in state fee schedule amounts above the national median amount, and only allows for up to 15 percent variation in state fee schedule amounts below the national median amount. The statewide average reasonable charges for DME are updated by an annual covered item update factor and are then limited by a national ceiling and floor based on the median of the statewide amounts and 85 percent of the median of the statewide amounts. The DME fee schedule methodology allows for no variation in payment whatsoever above the national median statewide amount. The maximum variation in fee schedule amounts that is allowed is 15 percent below the national median statewide amount. By contrast, the regional fee schedule methodology for P&O allows for regional variation in fee schedule payment amounts by as much as 10 percent below the national average amount and 20 percent above the national average amount. Similarly, the fee schedules for enteral nutrition are based on national average reasonable charges, and therefore, do not allow for any regional variation in fee schedule amounts. We believe that the model whereby regional fee schedule amounts for P&O are based on supplier charges for furnishing items and services within each region should be adopted when using SPAs to adjust fee schedule payment amounts in a way that reflects bidding in different regions of the country. The regional adjusted amounts are based on supplier bids for furnishing items and services within each region, as explained below. a. Regional Payment Adjustments Rather than adjusting state, regional, or national fee schedule amounts or infusion drug payment amounts based on all bids for an item in all CBAs across the country or based on all bids for an item in all CBAs within each state, we propose to adjust the payment amounts based on the average of bids for an item in CBAs that are fully or partially located in different regions of the country. In the first step of the proposed methodology we propose to calculate RSPAs or the average of the SPAs for an item and service in different regions of the country. In keeping with the example established by the P&O regional fee schedule payment methodology, this would allow variation in payment amounts for different regions of the country. For the purpose of establishing the boundaries for the regions, we propose using 8 regions developed for economic analysis purposes by the Bureau of Economic Analysis (BEA) within the Department of Commerce. These regions are proposed based on research and analysis conducted by the BEA indicating that the states in each region share economic ties. Further information can be obtained at https:// www.bea.gov/regional/definitions/ nextpage.cfm?key=Regions. The information provided at this link states that: BEA Regions are a set of Geographic Areas that are aggregations of the states. The following eight regions are defined: Far West, Great Lakes, Mideast, New England, Plains, Rocky Mountain, Southeast, and Southwest. The regional classifications, which were developed in the mid-1950s, are based on the homogeneity of the states in terms of economic characteristics, such as the industrial composition of the labor force, and in terms of demographic, social, and cultural characteristics. For a brief description of the regional classification of states used by BEA, see U.S. Department of Commerce, Census Bureau, Geographic Areas Reference Manual, Washington, DC, U.S. Government Printing Office, November 1994, pp. 6–18;6–19. Therefore, we propose to revise the definition of region in § 414.202 to mean a region developed for economic analysis purposes by the Bureau of Economic Analysis (BEA) within the Department of Commerce for the purpose of calculating regional single payment amounts (RSPAs); the definition of region for the purposes of the P&O regional fee schedule would also continue to apply for those items and services not adjusted based on prices in competitively bid areas. According to the BEA, the regional classifications are based on the homogeneity of the states in terms of economic characteristics, such as the industrial composition of the labor force, and in terms of demographic, social, and cultural characteristics. The contiguous areas of the United States that fall under the 8 BEA regions under our proposal are listed in Table 34 below. Further information can be obtained at https://www.bea.gov/. TABLE 34—BUREAU OF ECONOMIC ANALYSIS REGIONS Region Name States/Areas (count) ............. ............. ............. ............. ............. New England ........ Mideast ................. Great Lakes .......... Plains .................... Southeast .............. 6 ............. 7 ............. 8 ............. Southwest ............. Rocky Mountain .... Far West ............... Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (6). Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania (6). Illinois, Indiana, Michigan, Ohio, and Wisconsin (5). Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota (7). Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia (12). Arizona, New Mexico, Oklahoma, and Texas (4). Colorado, Idaho, Montana, Utah, and Wyoming (5). California, Nevada, Oregon, and Washington (4). mstockstill on DSK4VPTVN1PROD with PROPOSALS2 1 2 3 4 5 We are soliciting public comments on whether different regional boundaries (e.g. CMS regions or Census Divisions) should be considered that would better reflect potential regional differences in the costs of furnishing items and services subject to the DMEPOS CBP. In addition to the CMS regions listed in VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 section A.3 above, other established regional boundaries include those defined by the United States Census Bureau in the Department of Commerce for the purpose of reporting and analyzing census data. The Census Bureau uses 4 regions that are further PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 divided into 9 divisions. The Census divisions are as follows: • New England (Division 1); including the 6 states Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. E:\FR\FM\11JYP2.SGM 11JYP2 40283 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules • Middle Atlantic (Division 2); including the 3 states New Jersey, New York and Pennsylvania. • East North Central (Division 3); including the 5 states Illinois, Indiana, Michigan, Ohio and Wisconsin. • West North Central (Division 4); including the 7 states Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. • South Atlantic (Division 5); including the 9 states Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia. • East South Central (Division 6); including the 4 states Alabama, Kentucky, Mississippi and Tennessee. • West South Central (Division 7); including the 4 states Arkansas, Louisiana, Oklahoma, and Texas. • Mountain (Division 8); including the 8 states Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming. • Pacific (Division 9); including the 5 states Alaska, California, Hawaii, Oregon and Washington. Table 35 below lists the states and number of CBAs located in each of the CMS regions, BEA regions, and census divisions. TABLE 35—STATES AND NUMBER OF CURRENT CBAS PER CMS REGION, BEA REGION, AND CENSUS DIVISION 10 CMS Regions 9 Census Divisions Region States Boston ................ CT, ME, MA, NH, RI, VT. NJ, NY ................ New York ............ Phila ................... Atlanta ................ CBAs DE, DC, MD, PA, VA, WV. AL, FL, GA, KY, MS, NC, SC, TN. Division States 7 New England ...... 13 Middle Atlantic .... CT, ME, MA, NH, RI, VT. NJ, NY, PA ......... 28 IL, IN, MI, MN, OH, WI. AR, LA, NM, OK, TX. IA, KS, MO, NE .. 19 Denver ................ CO, MT, ND, SD, UT, WY. 3 San Fran ............ Seattle ................ AZ, CA, NV ........ ID, OR, WA ........ 16 3 Dallas ................. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Kansas City ........ 14 4 The regional fee schedule amounts for P&O are based on the average of the statewide fees for P&O, weighted by total Part B claims for paid claims with dates of service from July 1, 1991, thru June 30, 1992, which results in fees for states with a greater volume of Part B claims having more influence on the regional fee schedule amounts than states with a smaller volume of Part B claims. We believe this aspect of the regional fee schedule payment methodology for P&O tends to favor more heavily populated states. The statewide fees for larger, more urban states where the most Medicare claims are processed, for example, Massachusetts for Region 1, play a larger role in determining the regional price than the statewide fees for smaller, more rural states in the region, for example, Vermont. Table 36 below shows the relative weighs applied to the statewide fees used in calculating the regional P&O fees for the CMS Boston Region or Region 1. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 CBAs Region States CBAs 7 New England ...... 15 Mideast ............... CT, ME, MA, NH, RI, VT. DE, DC, MD, NJ, NY, PA. Southeast ........... AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, VA, WV. 34 IL, IN, MI, OH, WI. AZ, NM, OK, TX 19 7 17 9 ............................. Chicago .............. 8 BEA Regions South Atlantic ..... DE, DC, FL, GA, MD, NC, SC, VA, WV. 30 East South Central. East North Central. West South Central. West North Central. Mountain ............ AL, KY, MS, TN 7 Pacific ................. IN, IL, MI, OH, WI. AR, LA, OK, TX .. 19 Great Lakes ........ 13 Southwest .......... IA, KS, MN, MO, NE, ND, SD. AZ, CO, ID, NM, MT, UT, NV, WY. CA, OR, WA ....... 5 Plains ................. 8 15 11 5 Rocky Mountain IA, KS, MN, MO, NE, ND, SD. CO, ID, MT, UT, WY. Far West ............ CA, NV, OR, WA 16 4 States like Vermont and Maine have a very minor impact in determining the regional fees. In contrast, we are proposing that the RSPAs be calculated based on a simple average of the SPAs for CBAs in each region, without weighting in favor of larger, more heavily populated CBAs. Using the New Percent of Total part B England BEA Region that is comprised State total for claims of the same 6 states that make up the Region CMS Boston Region as an example, the MA ............ 11,710,121 48% proposed RSPA for this region would be CT ............. 6,288,638 26% based on the average of the SPAs for the RI .............. 2,251,892 9% following 7 CBAs, with estimated 2012 ME ............ 2,012,385 8% population in parentheses: NH ............. 1,571,936 6% • Boston-Cambridge-Quincy, MA–NH VT ............. 759,242 3% (4,640,802) Region ...... 24,594,214 ........................ • Providence-New Bedford-Fall River, RI–MA (1,601,374) As can be seen in this table, the • Hartford-West Hartford-East regional P&O fees for the Boston Region Hartford, CT (1,214,400) are weighted heavily in favor of the • Bridgeport-Stamford-Norwalk, CT statewide fees and average reasonable (933,835) charges from 1986/87 for the more • Worcester, MA (923,762) heavily populated urban states of • New Haven-Milford, CT (862,813) Massachusetts and Connecticut with a • Springfield, MA (625,718) greater utilization of Part B items and Therefore, rather than weighting the services, whereas the fees for more rural average of the SPAs in favor of more PO 00000 TABLE 36—P&O REGIONAL FEE WEIGHTS—CMS REGION 1 (BOSTON) (WEIGHTED BY TOTAL PAID CLAIMS FOR DATES OF SERVICE FROM JULY 1, 1991, THRU JUNE 30, 1992) Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40284 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 heavily populated CBAs, we propose that the RSPA be based on the simple average of the SPAs for the CBAs in the region, with the SPA for the much smaller Springfield, MA CBA and the SPA for the much larger BostonCambridge-Quincy, MA–NH Springfield, MA CBA contributing equally toward calculation of the RSPA. We believe this approach would result in adjustments that factor in the regional costs associated with furnishing items and services in the New England region of the country, while not giving undue weight to the costs of furnishing items and services in larger markets. b. National Parameters As explained above, the regional fee schedule amounts for P&O are limited by a national ceiling equal to 120 percent of the average of the regional fee schedule amounts for all the states and a national floor equal to 90 percent of the average of the regional fee schedule amounts for all the states. This limits the range in the regional fee schedule amounts from highest to lowest to no more than 30 percent, 20 percent above the national average and 10 percent below the national average. By contrast, the fee schedule payment methodology for DME only allows for a variation in statewide fees of 15 percent below the median of statewide fees for all the states. The national limits to the fee schedule amounts for P&O and DME have not resulted in a barrier to access to items and services in any part of the country. We believe this reflects the fact that the costs of furnishing DMEPOS items and services do not vary significantly from one part of the country to another and that national limits on regional prices is warranted. We therefore propose to limit the variation in the RSPAs using a national ceiling and floor in order to prevent unnecessarily high or low regional amounts that vary significantly from the national average prices for the items and services. The national ceiling and floor limits would be based on 110 percent and 90 percent, respectively, of the average of the RSPAs applicable to each of the 48 contiguous states and the District of Columbia (that is, the average of RSPAs is weighted by the number of contiguous states including the District of Columbia per region). We propose that any RSPA above the national ceiling would be brought down to the ceiling and any RSPA below the national floor would be brought up to the floor. We propose that the national ceiling would exceed the average of the RSPAs by the same percentage that the national floor would be under the average of the RSPAs. This allows for a VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 maximum variation of 20 percent from the lowest RSPA to the highest RSPA. We believe that a variation in payment amounts both above and below the national average price should be allowed, and we believe that allowing for the same degree of variation (10 percent) above and below the national average price is more equitable and less arbitrary than allowing a higher degree of variation (20 percent) above the national average price than below (10 percent), as in the case of the national ceiling and floor for the P&O fee schedule, or allowing for only 15 percent variation below the national average price, as in the case of the national ceiling and floor for the DME fee schedule. c. Rural and Frontier State Adjustments Under the DMEPOS CBP, the statute prohibits competitions before 2015 in new CBAs that are rural areas or MSAs with a population of less than 250,000. Even if competitions were to begin in these areas in 2015, it is very unlikely that the SPAs from these areas would be computed and finalized by January 1, 2016. Therefore, we propose that the proposed RSPAs initially be based solely on information from existing programs implemented in 100 MSAs, which are generally comprised of more densely populated, urban areas than areas outside MSAs. We therefore believe that the initial RSPAs would not directly account for unique costs that may be associated with furnishing DMEPOS in states that have few MSAs and are predominantly rural or cover large geographic areas and are sparsely populated. However, in keeping with the discussion above, we do not believe that the cost of furnishing DMEPOS in these areas should deviate significantly from the national average price established based on supplier bids for furnishing items and services in different areas throughout the country. As explained above, the DMEPOS fee schedule amounts are based primarily on supplier charges for furnishing items and services in urban areas and this has not resulted in problems associated with access to these items and services in rural areas or large, sparsely populated areas. Nonetheless, for the purpose of ensuring access to necessary items and services in states that are more rural or sparsely populated than others, we propose that the adjusted fee schedule amounts for states that are more rural than urban and defined as ‘‘rural states’’ or states where a majority of the counties are sparsely populated and defined as ‘‘frontier states’’ would be no lower than the national ceiling amount discussed in section b above. PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 We propose in § 414.202 that a rural state be defined as a state where more than 50 percent of the population lives in rural areas within the state as determined through census data, since a majority of the general population of the state lives in rural areas, it is likely that a majority of DMEPOS items and services are furnished in rural settings in the state. This is in contrast to other states where the majority of the general population of the state lives in urban areas, making it more likely that a majority of DMEPOS items and services are furnished in urban settings or in MSAs. We believe that for states where a majority of the general population lives in rural areas, adjustments to the fee schedule amounts should be based on the national ceiling amount if the RSPA is lower than the national ceiling amount. This higher level of payment would provide more assurance that access to items and services in states within a region that are more rural than urban is preserved in the event that costs of furnishing DMEPOS items and services in rural areas is higher than the costs of furnishing DMEPOS items and services in urban areas. We propose in § 414.202 that a frontier state, would be defined as a state where at least 50 percent of counties in the state have a population density of 6 people or less per square mile. In such states, the majority of counties where DMEPOS items and services may be needed are very sparsely populated and suppliers may therefore have to drive considerably longer distances in furnishing these items and services as opposed to other states where the beneficiaries live closer to one another. The designation of states as frontier states or frontier areas is currently used under Medicare Part A to make adjustments to the wage index for hospitals in these remote areas in order to ensure access to services in these areas. The definition of frontier state that is proposed above for the purpose of implementing section 1834(a)(1)(F) and (G) of the Act is consistent with the current definition in section 1886(d)(3)(E)(iii)(II) and (III) of the Act and 42 CFR 412.64(m) of the regulations related to implementation of the hospital wage index adjustments and prospective payment system for hospitals under Part A. We believe that states designated as frontier states have a significant amount of area that is sparsely populated and are more likely to be geographically removed from (that is, a considerable driving distance from) areas where population is more concentrated. However, we solicit E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules comments on alternative definitions of frontier states. Based on the 2010 Census data, states designated as rural would include Vermont, Maine, West Virginia, and Mississippi. Other than one CBA that is fully located in Mississippi, one CBA that is partially located in Mississippi, and two CBAs that are partially located in West Virginia, the RSPAs would not include SPAs that reflect the costs of furnishing items and services in these states based on where the CBAs are currently located. Current frontier states include North Dakota, South Dakota, Montana, and Wyoming, and the RSPAs would not include SPAs that reflect the costs of furnishing items and services in any of these states based on where the CBAs are currently located. We propose that the designation of rural and frontier states could change as the U.S. Census information changes. We propose that when a state that is not designated as a rural state or frontier becomes a rural state or frontier state based on new, updated information from the U.S. Census Bureau, that adjustments to the fee schedule amounts in accordance with the proposed provision of this section would take effect as soon as such changes can be implemented. Likewise, we propose that at any time a state that is designated as a rural state or frontier no longer meets the proposed definition in this section for rural state or frontier state based on new, updated information from the U.S. Census Bureau, that adjustments to the fee schedule amounts in accordance with the proposed provision of this section would take effect as soon as such changes can be implemented. We propose that the changes to the state designation would occur based on the decennial Census. The decennial Census uses total population of the state to determine whether the state is predominately rural or frontier. The U.S. Census Bureau also uses current population estimates every 1, 3, and 5 years through the American Community Survey but only samples a small percentage of the population every year, not the total population. Therefore, we propose that the designation of a rural or frontier state occur approximately every 10 years when the total population data is available. For the current proposed fee schedule adjustments, we propose to use the 2010 Census Data. The next update would reflect the 2020 Census Data and any changes in the designation of a rural or frontier state and corresponding fee schedule changes would be implemented after the 2020 Census Data becomes available. For this and VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 subsequent updates, we propose to include a listing of the qualifying rural and frontier States in program guidance that is issued quarterly and to provide at least 6 months advance notice of any adjustments. Some of the comments received on the ANPRM indicated that the costs of furnishing DMEPOS items and services in rural areas is significantly higher than the costs of furnishing DMEPOS items and services in urban areas. Other commenters suggested that the adjustments to the payment amounts based on information from CBPs be phased in to give suppliers time to adjust to the new payment levels. Although we believe that the costs of furnishing items and services in rural areas are different than the costs of furnishing items and services in urban areas, there is no evidence to support a statement that the difference in costs is significant. However, in order to proceed cautiously on this matter in the interest of ensuring access to covered DMEPOS items and services, we are proposing to phase in the price adjustments, as explained below, so that we can monitor the impact of the adjustments as they are gradually phased in. In summary, we propose that adjustments to payment amounts for areas within different regions of the contiguous United States would be based on the un-weighted average of SPAs from CBAs that are fully or partially located within these regions. The regional amounts would be limited by a national ceiling and floor and the adjusted payment amounts for all states designated as rural or frontier states would be equal to the national ceiling. In addition, we are soliciting public comments on whether payment in rural areas of states that are not designated as rural or frontier states should be set differently. d. Areas Outside the Contiguous United States Given the unique costs of furnishing DMEPOS items and services in remote, isolated areas outside the contiguous United States such as Alaska, Guam, Hawaii, Puerto Rico, the United States Virgin Islands and other areas, we propose that any SPAs from programs in these areas be excluded from the calculation of the RSPAs in section a. In addition, we propose that the adjustments to the fee schedule amounts for areas outside the contiguous United States would not be based on the RSPAs. Rather, we propose that the adjustments to the fee schedule amounts for these areas be based on the higher of the average of SPAs for CBAs in areas PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 40285 outside the contiguous United States (for example, Honolulu) or the national ceiling limit applied to the payment adjustments for areas within the contiguous United States. We believe that, to the extent that SPAs from noncontiguous areas are available, these amounts should be used in making adjustments to the payment amounts for other areas outside the contiguous United States since the challenges and costs of furnishing DMEPOS items and services in all remote, isolated areas is similar. We also believe that the payment adjustments for these areas, like those for the proposed rural and frontier states, should not be lower than the national ceiling established for items and services furnished in the contiguous United States. Areas outside the contiguous United States generally have higher shipping fees and other costs. We believe the SPAs in Honolulu and other areas outside the contiguous United States reflect these costs and could be used to adjust the fee schedule amounts for these areas without limiting access to DMEPOS items and services. However, in the event that the national ceiling limit described in section b above is greater than the average of the SPAs for CBPs in areas outside the contiguous United States, we propose that the higher national ceiling amount be used in adjusting the fee schedule amounts for areas outside the contiguous United States in order to better ensure access to DMEPOS items and services. We are soliciting comments on these proposals. 2. Methodology for Items and Services Included in Limited Number of Competitive Bidding Programs In some cases, there may not be a sufficient number of CBAs and SPAs available for use in computing RSPAs, and therefore, a different methodology for implementing section 1834(a)(1)(F)(ii) of the Act would be necessary. For items and services that are subject to competitive bidding and have been included in CBP in no more than 10 CBAs, we propose that payment amounts for these items in all noncompetitive bidding areas be adjusted based on 110 percent of the average of the SPAs for the areas where CBPs are implemented. Using a straight average of the SPAs rather than a weighted average of the SPAs gives SPAs for the various CBAs equal weight regardless of the size of the CBA. We believe this avoids giving undo weight to SPAs for more heavily populated areas. We are proposing the additional 10 percent adjustment to the average of the SPAs to account for unique costs such as E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40286 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules delivering items in remote, isolated locations, but would make this a uniform adjustment for program simplification purposes. This issue is discussed in more detail below. Under the DMEPOS CBP, there may be items and services for which implementation of CBPs could generate significant savings for the beneficiary and/or program, but which are furnished infrequently in most MSAs. In some cases, such items and services could be combined with other items and services under larger PCs or included in mail order competitions, to the extent that these are feasible options. For example, combining infrequently used traction equipment and frequently used hospital beds in the same product for bidding purposes would ensure that any beneficiary that needs traction equipment in the CBA would have access to the item from the suppliers also contracted to furnish hospital beds in the area. This would make it feasible to include traction equipment in numerous MSAs throughout the country and would allow use of the RSPA methodology described above. However, if a PC was established just for traction equipment for bidding purposes, the volume of items furnished in certain MSAs may not be sufficient to generate viable competitions under the program because there may be a limited number of suppliers interested in competing to furnish the items in local areas. Nonetheless, if significant savings for the beneficiary and/or program are possible for the equipment, we are mandated to phase the items in under the DMEPOS CBP. In addition, for lower volume items within large PCs, such as wheelchair accessories, we propose to include these items in a limited number of local competitions rather than in all CBAs to reduce the burden for suppliers submitting bids under the programs as a whole. In these cases, for the purposes of implementing section 1834(a)(1)(G) of the Act, we propose that payment amounts for these items in all areas where CBPs are not implemented be adjusted based on 110 percent of the average of the SPAs for the areas where CBPs are implemented. We are proposing the additional 10 percent adjustment to the national average price to account for unique costs in certain areas of the country such as delivering items in remote, isolated locations. For example, the PC for standard mobility in the 9Round 1 CBAs includes 25 HCPCS codes for low volume wheelchair accessories that are not included in the PC for standard wheelchairs, scooters, and related accessories in the 100 Round 2 CBAs. We propose that VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 payment amounts for these items in areas where CBPs are not implemented be adjusted based on 110 percent of the average of the SPAs for the 9Round 1 areas where CBPs are implemented. Alternatively, we could include these low volume items in all PCs in all 109 CBAs and suppliers would need to develop bid amounts and enter bids for these 25 codes for low volume items such as toe loop holders, shock absorbers and IV hangers. Including these 25 Healthcare Common Procedure Coding System (HCPCS) codes for low volume wheelchair accessories in the PCs under the 9 Round 1CBAs means that suppliers submitting bids for wheelchairs have 25 bid amounts to develop and enter per CBA for these items, or a total of 225 bid amounts to develop and enter for these low volume items if bidding for wheelchairs in all 9 Round 1 CBAs. In contrast, including these codes in the PCs under all 109CBAs means that suppliers submitting bids for wheelchairs have 2,725 bid amounts to develop and enter for these low volume items, if bidding for wheelchairs in all 109 CBAs. We believe that adjusting fee schedule amounts based on SPAs from 10 or fewer CBAs achieve the savings mandated by the statute for these items while greatly reducing the burden on suppliers and the program in holding competitions for these items in all 109 CBAs across the country. Finally, if contracts and SPAs for low volume items included in a limited number of CBAs expire and the items are not included in future CBPs, we propose to use the information from the past competitions to adjust the payment amounts for these items nationally based on 110 percent of the average of the SPAs for the areas where CBPs were implemented. Even though the SPAs may no longer be in effect, we believe it is reasonable to use the information to reduce excessive payment amounts for items and services as long as the SPAs did not result in a negative impact on access to quality items and services while they were in effect and as long as the amounts are adjusted to account for increases in costs over time. For example, 4 codes for adjustable wheelchair seat cushions were included in the Round 1 Rebid, with SPAs that were approximately 25 percent below the fee schedule amounts being in effect in 9 CBAs from January 2011 thru December 2013. These items were not bid in future rounds due to the low volume of use relative to other wheelchair seat cushions. During the course of the 3-year contract period when the SPAs were in effect in the 9 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 areas, there were no reports of access problems and there were no negative health outcomes as a result of including these items under CBPs. For the future, savings for these items could be achieved by including them in future competitions or by using the previous SPAs, updated by an economic update factor to account for increases in costs. If the decision is made not to include these items in future competitions, we believe savings can and should still be obtained based on information from the previous competitions. We are soliciting comments on these proposals. 3. Adjusted Payment Amounts for Accessories Used With Different Types of Base Equipment There may be situations where the same accessory or supply identified by a HCPCS code is used with different types of base equipment, and the item (HCPCS code) is included in one or more PCs under competitive bidding for use with some, but not all of the different types of base equipment it is used with. For these situations, we propose to use the weighted average of the SPAs from CBPs and PCs where the item is included for use in adjusting the payment amounts for the item (HCPCS code). We believe that it would be unnecessarily burdensome to have different fee schedule amounts for the same item (HCPCS code) when it is used with similar, but different types of base equipment. We believe that the costs of furnishing the accessory or supply should not vary significantly based on the type of base equipment it is used with. Therefore, we seek public comments on addressing situations where an accessory or supply identified by a HCPCS code is included in one or more PCs under competitive bidding for use with more than one type of base equipment. In these situations, we propose to calculate the SPA for each CBA by weighting the SPAs from each PC in that CBA by national allowed services. This would result in the calculation of a single SPA for the item for each CBA. The single SPA per code per CBA would then be used in applying the payment adjustment methodologies proposed above. For example, HCPCS code Exxx1 describes a tray used on a wheelchair. Exxx1 was included in a PC for manual wheelchairs in all CBAs and in a separate, second PC for power wheelchairs in all CBAs. SPAs for Exxx1 under the manual wheelchair PC are different than the SPAs for Exxx1 under the power wheelchair PC. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Under the proposal, national allowed services would be used to compute a weighted average of the SPAs for Exxx1 in each of the CBAs. So, rather than having 2 different SPAs for the same code in the same CBA, we would have 1 SPA for the code for the CBA. If the item is included in only one PC, we propose to use the SPAs for the item from that PC in applying the payment adjustment methodologies proposed above. We are soliciting comments on these proposals. 4. Adjustments to Single Payment Amounts That Result From Unbalanced Bidding Within the HCPCS there are instances where there are multiple codes for an item that are distinguished by the addition of a hierarchal feature(s). For example, one code may describe an enteral nutrition infusion pump with an alarm and another code may describe a less sophisticated pump without an alarm. Under competitive bidding, the code with the higher utilization would receive a higher weight and the bid for this item would have a greater impact on the composite bid and competitiveness of the supplier’s overall bid for the PC within the CBP than the bid for the less frequently used alternative. This can result in unbalanced bidding where the bids and SPAs for the item without the additional features is higher than the bids and SPAs for the item with the additional features due to the fact that the item with the features is utilized more than the item without the features and therefore receives a higher weight. We believe that it is not inherently reasonable for payment amounts for equipment with fewer features or functionality to be higher than payment amounts for equipment with additional features or functionality. For example, HCPCS code B9000 describes an enteral nutrition infusion pump without alarm, whereas code B9002 describes an enteral nutrition infusion pump with alarm. Both codes have identical fee schedule amounts. Based on paid claims data, only 176 Medicare beneficiaries received the pump without the alarm in 2012, whereas 52,531 Medicare beneficiaries received the pump with the alarm in 2012. Both pumps are included in the PC for enteral nutrients, supplies, and equipment. As a result of the significantly higher utilization of code B9002, this code received a much higher item weight under the CBP than code B9000, and, as a result, a supplier could submit a much higher bid for B9000 than for B9002 with virtually no impact VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 on their composite bid. Under Round 2, unbalanced bidding resulted in SPAs for code B9000 without the alarm being 6 percent higher on average than the SPAs for code B9002 with alarm. Unbalanced bidding also occurred under Round 2 in the case of standard power wheelchairs, with SPAs for infrequently used Group 1, standard weight power wheelchairs (codes K0815 and K0816) being 16 percent higher on average than the SPAs for the much more frequently used Group 2 versions (codes K0822 and K0823). Based on paid claims data, only 474 Medicare beneficiaries received Group 1 power wheelchairs described by codes K0815 and K0816 in 2012, whereas 196,968 Medicare beneficiaries received higher performing Group 2 power wheelchairs described by codes K0822 and K0823 in 2012. The long term solution for avoiding cases of unbalanced bidding is to eliminate duplicate codes in the HCPCS. For the purpose of implementing section 1834(a)(1)(G) of the Act, and in making adjustments to payment amounts under sections 1834(a)(1)(F)(ii), 1834(h)(1)(H)(ii), and 1842(s)(3)(B) of the Act, we propose that the payment amounts for infrequently used codes that describe items and services with fewer features than codes with more features be adjusted so that they are no higher than the payment amounts for the more frequently used codes with more features. For example, the adjusted fee schedule amounts for code B9000 would be set so that they are no higher than the adjusted fee schedule amounts for code B9002. We believe that without this provision, unbalanced bidding could result in fee schedule amounts for items that essentially represent lower levels of service being higher than fee schedule amounts for items representing higher levels of service, based on bids being higher for infrequently used items with lower weights and less features than bids for frequently used items with higher weights and more features. This could result in beneficiaries receiving the item with fewer features and functionality simply because the supplier has a financial incentive to furnish that item. This is especially important in light of the fact that use of the inherent reasonableness authority provided by section 1842(b)(8) and (9) of the Act cannot be used to further adjust payment amounts that are adjusted based on the mandate of section 1834(a)(1)(F)(ii) and the authority provided by sections 1834(h)(1)(H)(ii) and 1842(s)(3)(B) of the Act. PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 40287 We seek public comments on this issue and our proposed provision to address this issue. 5. National Mail Order Program— Northern Mariana Islands While Section 1847(a)(1)(A) of the Act provides that CPBs be established throughout the United States, the definition of United States at section 210(i) of the Act does not include the Northern Mariana Islands. We therefore previously determined that the Northern Mariana Islands are not considered an area eligible for inclusion under a national mail order CBP. For the purpose of implementing the requirements of section 1834(a)(1)(F)(ii) of the Act, we are proposing that the payment amounts established under a national mail order CBP would be used to adjust the fee schedule amounts for mail order items furnished to beneficiaries in the Northern Mariana Islands. We propose that the adjusted fee schedule amounts would be equal to 100 percent of the amounts established under the national mail order CBP. We are soliciting comments on these proposals. 6. Updating Adjusted Payment Amounts In accordance with section 1834(a)(1)(F)(iii) of the Act, the adjusted payment amounts for DME must be updated as additional items are phased in or information is updated. We propose to add regulation text indicating that we would revise the adjusted payment amounts for DME, enteral nutrients, supplies, and equipment, and OTS orthotics each time a SPA is updated following one or more new competitions, which may occur at the end of a contract period, as additional items are phased in, or as new programs in new areas are phased in. This is required by section 1834(a)(1)(F)(iii) for DME. Since we believe it is reasonable to assume that updated information from CBPs would better reflect current costs for furnishing items and services, we are proposing regulations to require similar updates for enteral nutrients, supplies, and equipment, and OTS orthotics. As we indicated above, if the only SPAs available for an item are those that were established under CBP that are no longer in effect, we propose to use these SPAs to adjust payment amounts using the methodologies described above and we propose to do so following application of inflation adjustment factors. We propose that the inflation adjustment factor would be based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI–U) from the mid-point of the last E:\FR\FM\11JYP2.SGM 11JYP2 40288 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules year the SPAs were in effect to the month ending 6 months prior to the date the initial payment adjustments would go into effect. The adjusted payment amounts would continue to be updated every 12 months using the percentage change in the CPI–U for the 12-month period ending 6 months prior to the date the updated payment adjustments would go into effect. Use of the CPI–U as the update factor is consistent with how pricing amounts for DMEPOS have been updated since October 1, 1985, when the CPI–U was used in calculating the IIC for use in calculating reasonable charges. The CPI–U was used in updating reasonable charge data for use in calculating the initial fee schedule amounts and is used in determining the covered item update factors at sections 1834(a)(14), 1834(h)(4)(A), 1834(i)(1)(B), 1842(s)(1)(B) of the Act. If CBPs are subsequently established for the item, we propose that the SPAs established under these programs would be used in applying the payment adjustment methodologies described above. If finalized, the payment amounts that would be adjusted in accordance with sections 1834(a)(1)(F)(ii) and (iii) of the Act for DME, section 1834(h)(2)(H)(ii) of the Act for orthotics, and section 1842(s)(2)(B) of the Act for enteral nutrients, supplies, and equipment shall be used to limit bids submitted under future competitions of the DMEPOS CBP in accordance with regulations at § 414.414(f). Section 1847(b)(2)(A)(iii) prohibits the awarding of contracts under a CBP unless we are sure that total payments made to contract suppliers in the CBA are less than the payment amounts that would otherwise be made. In order to assure savings under a CBP, the fee schedule amount that would otherwise be paid is used to limit the amount a supplier may submit as their bid for furnishing the item in the CBA. If finalized, the payment amounts that would be adjusted in accordance with sections 1834(a)(1)(F)(ii) and (iii) of the Act for DME, section 1834(h)(2)(H)(ii) of the Act for orthotics, and section 1842(s)(2)(B) of the Act for enteral nutrients, supplies, and equipment would be the payment amounts that would otherwise be made if payments for the items and services were not made through implementation of a CBP. Therefore, the adjusted fee schedule amounts would become the new bid limits. We are soliciting comments on these proposals. 7. Summary of Proposed Methodologies To summarize, under the proposed methodology in subsection 1 above which applies to items and services included in more than 10 CBAs, adjusted fee schedule amounts would be determined based on RSPAs limited by a national floor and ceiling. The RSPA would be established using the average of the SPAs for an item from all CBAs that are fully or partially located in the region. The payment amount for the item, with limited exceptions for areas outside the contiguous United States, would be equal to its RSPA but not less than 90 percent and not more than 110 percent of the national average, which is the average of the RSPAs weighted by the number of states in the region. The proposed methodology is modeled closely after the regional fee schedule payment methodology in effect today for P&O. For the purpose of establishing the regional boundaries, we propose to use 8 regions developed by the Bureau of Economic Analysis (BEA) within the Department of Commerce: New England, Mideast, Great Lakes, Plains, Southeast, Southwest, Rocky Mountain, and Far West. For rural and frontier states, we propose that the payment amount would be 110 percent of the national average. For areas outside the contiguous United States, the payment amount would be the greater of the average of the SPAs in the noncontiguous areas or 110 percent of the national average. As described in subsection 2 above, we propose a different methodology for low volume items with a limited number of SPAs. In addition, we propose to apply update factors to SPAs no longer in effect to adjust fee schedule amounts if no other data is available. Finally, we propose that adjustments would be made to account for SPAs for lower levels of service that are higher than SPAs for higher levels of service. A summary of the proposed methodologies is provided in Table 37 below. TABLE 37—SUMMARY OF PROPOSED METHODOLOGIES FOR ADJUSTING PAYMENT IN NON-BID AREAS Proposed methodology Calculations 1) Adjustments for Items Included in More than 10 CBAs* Regional Adjustments Limited by National Parameters for Items Furnished Within the Contiguous United States. Adjustments for Rural and Frontier States .. Adjustments for Items Furnished Outside the Contiguous United States. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 2) Adjustments for Lower Volume or Other Items Included in 10 or Fewer CBAs*. 3) Adjustments for Items Where the Only Available SPA is from a CBP No Longer in Effect. 4) Adjustments for Accessories Used with Different Types of Base Equipment Adjustments for Accessories Included in One CBP Product Category. Adjustments for Accessories Included in One or More CBP Product Category. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Adjusted payment equal to the RSPA (calculated using the un-weighted average of SPAs from CBAs that are fully or partially located with a BEA region) limited by a national floor and ceiling. The national ceiling and floor would be set at 110 percent and 90 percent, respectively, of the national weighted RSPA average (average of the RSPAs applicable to each of the 48 contiguous states and DC). Adjusted payment for designated States based on 110 percent of the national weighted RSPA average. Adjusted payment for non-contiguous areas (e.g., Alaska, Guam, Hawaii) based on the higher of the average of SPAs for CBAs in areas outside the contiguous U.S. or 110 percent of the national weighted RSPA average applied to adjustments within the contiguous U.S. Adjusted payment based on 110 percent of the un-weighted average of the SPAs for the areas where CBPs are implemented for contiguous and non-contiguous areas of the United States. Payment based on adjusted payment determined under 1) or 2) above and adjusted on an annual basis based on the CPI–U update factors from the mid-point of the last year the SPAs were in effect to the month ending 6 months prior to the date the initial payment adjustments would go into effect. SPAs for the item from that one Product Category would be used in determining the adjusted payment amounts under methodologies 1) or 2). A weighted average of the SPAs for the item in each CBA where the item is included in more than one Product Category would be used to determine the adjusted payment amounts under methodologies 1) or 2). PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules 40289 TABLE 37—SUMMARY OF PROPOSED METHODOLOGIES FOR ADJUSTING PAYMENT IN NON-BID AREAS—Continued Proposed methodology Calculations 5) Payment Adjustments to Northern Mariana Islands Using the National Mail Order SPAs. Fee schedule amounts adjusted to equal the SPAs under the national mail order CBP. * Note: We are also proposing to adjust the SPAs for a lower level of service item to not exceed the SPAs of a higher level of service item prior to applying the methodologies in 1) and 2) above in instances where the SPA for the lower level of service item exceeds the higher level of service item. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 VI. Proposed Payment Methodologies and Payment Rules for Durable Medical Equipment and Enteral Nutrition Furnished Under the Competitive Bidding Program A. Background The payment rules for DME have changed significantly over the years since 1965, resulting in the replacement of the original monthly rental payment methodology with lump sum purchase and capped rental payment rules, as well as separate payment for repairs, maintenance and servicing, and replacement of expensive accessories for beneficiary-owned equipment. In our experience, these payment rules have been burdensome to administer and have added program costs associated with expensive wheelchair repairs and payment for loaner equipment, and have significantly increased costs associated with frequent replacement of expensive accessories at regular intervals for items such as CPAP devices. We estimate that separate payments for CPAP accessories have increased annual expenditures by approximately $200 million. In some cases, the costs associated with maintaining DME owned by beneficiaries equals or exceeds any savings that might be generated from capping rental payments. In the case of repairs, suppliers are not mandated to service the equipment they furnish once title transfers to the beneficiary—any supplier can provide these services. This could create a hardship for the beneficiary since they must find a supplier willing to repair the equipment and their separate coinsurance payments could be substantial if the repair services are extensive. According to § 414.408(h)(3) of our regulations, payment on a capped rental basis also results in the restart of periods of continuous use for capped rental items, and according to § 414.408(i)(2) of our regulations, an extension in the rental cap periods for oxygen equipment when a beneficiary transitions from a noncontract supplier to a contract supplier at the start of a new CBP. These issues were discussed in the February 26, 2014, ANPRM noted above (79 FR 10758). It is not clear, however, the extent to which the capped rental VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 requirement, combined with separate payments for supplies, accessories, repairs, and program administration, overall results in net savings or net costs to the Medicare program, particularly if we examine the effects of the policy on specific DME items and services. Under the Social Security Amendments of 1965 (Pub. L. 89–97) enacted on July 30, 1965, Medicare Part B covered only rental of DME items. The Social Security Amendments of 1967 (Pub. L. 90–248), approved January 2, 1968, revised the statute to provide authority for making payment for DME on a purchase basis as well as on a rental basis. On May 12, 1972, the Government Accountability Office (GAO) issued a report to the Congress entitled ‘‘Need for Legislation to Authorize More Economical Ways of Providing Durable Medical Equipment under Medicare’’ (B–164031(4), May 12, 1972) that led to Social Security Amendment (section 245) in 1972. Section 245 of the Social Security Amendments of 1972 (Pub. L. 92–603) enacted on October 30, 1972, modified the payment provisions for specific equipment items to LCL of reasonable charges to contain the costs of DME. This law allowed the Department of Health and Human Services (HHS) to experiment with reimbursement approaches and implement any purchase approach found to be feasible and economical in order to avoid prolonged rental payments for expensive DME. Furthermore, section 16 of the Medicare-Medicaid Anti-Fraud and Abuse Amendments (Pub. L. 95– 142), enacted on October 25, 1977, amended section 1833(f) of the Act to read as follows: In the case of durable medical equipment to be furnished an individual as described in section 1861(s)(6), the Secretary shall determine, on the basis of such medical and other evidence as he finds appropriate (including certification by the attending physician with respect to expected duration of need), whether the expected duration of the medical need for the equipment warrants a presumption that purchase of the equipment would be less costly or more practical than rental. If the Secretary determines that such a presumption does exist, he shall require that the equipment be purchased, on a lease-purchase basis or PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 otherwise, and shall make payment in accordance with the lease-purchase agreement (or in a lump sum amount if the equipment is purchased other than on a lease-purchase basis); except that the Secretary may authorize the rental of the equipment notwithstanding such determination if he determines that the purchase of the equipment would be inconsistent with the purposes of this title or would create an undue financial hardship on the individual who will use it. This law required HHS to make leasepurchase decisions on a case-by-case basis based on whether purchase would be less costly or more practical than rental and reimburse on the basis of a lump-sum purchase or a lease/purchase arrangement. To implement the change in the law, HHS issued final regulations (45 FR 44287) on July 1, 1980. This regulation provided that the purpose of the lease purchase payment arrangement for new and used DME was to reduce program costs caused by long and costly rentals of the equipment and reduce beneficiary expenses for annual deductibles and coinsurance for unnecessarily long rentals. However, the regulations were not implemented until 1985 because of uncertainty as to whether they would result in program savings. During the same time period, amidst growing concerns by the agency about prolonged and excessive rentals, Williams College under a grant administered by HCFA (now CMS) issued a report entitled ‘‘Determinants of Current and Future Expenditures on Durable Medical Equipment by Medicare and its Program Beneficiaries’’ on April 1983. This report estimated the excess rentals at about 14 percent of rental payments. Following this report, a GAO report titled ‘‘Procedures for avoiding excess rental payments for durable medical equipment should be modified’’ issued on July 30, 1985, showed that excess rentals represented about 54 percent of the amounts allowed for lower cost items ($120 or less) and 34 percent for higher cost items. In the GAO report, excess rental payments represented the difference between total Medicare rental payments for an item of equipment and Medicare reimbursement for the item if it had been purchased. GAO data showed substantially fewer short-term rentals E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40290 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules than Williams’ data (22 percent versus 64 percent for episodes lasting 1 or 2 months) and substantially more longterm rentals (33 percent. versus 8 percent for episodes lasting more than 12 months). GAO concluded that savings would result for reimbursing low-cost items on a purchase basis because about twothirds of the rented items in its study costing $100 or less would have been cheaper to buy. GAO also found that sufficient data was not available to reliably predict when purchasing a high cost item would be less costly than renting it. The report indicated that purchase price was reached by about month 7, with additional monthly rental payments beyond month 7 resulting in excess rental payments cost thereafter. Because of the uncertainty with respect to the high-cost items, GAO recommended alternative reimbursement approaches such as adjustment of the rental rate and requirements that suppliers accept whatever percentage is adopted. The report further discussed HHS and supplier comments on the GAO report draft. HHS also commented that the cap proposal did not address the issues associated with ownership of DME after the maximum amount of the cap had been reached. The supplier comments included recommendations from National Association of Medical Equipment Suppliers (NAMES) proposal for considering alternative methods that limited rental payments after a specified number of months such as 24 months for non-oxygen-related DME items (wheelchairs and hospital beds). At the end of the 2-year period, any item still being rented would be subject to a monthly maintenance fee in lieu of rental based on 30 percent of the latest allowable rental charge. Title to the items would remain with the supplier, and the item would be returned when no longer needed. Section 4062 of the Omnibus Budget Reconciliation (OBRA) Act of 1987 (Pub. L. 100–203), was enacted on December 22, 1987. This legislation added section 1834(a) to the Act, which mandated payment categories and rules for DME that dictated whether payment would be made on a rental and/or purchase basis for items in each category. These changes were intended to align payment rates and achieve savings in the Medicare program. The new payment categories mandated by section 1834(a) of the Act were promulgated via regulation at § 414.210. Sections 1834(a)(2) through (a)(5) and 1834(a)(7) of the Act set forth separate payment categories of DME and describe how the fee schedule for each of the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 following categories is established: Inexpensive or other routinely purchased items; Items requiring frequent and substantial servicing; Customized items; Oxygen and oxygen equipment; and Other items of DME or capped rental items. Section 13543 of the Omnibus Budget Reconciliation Act (OBRA) of 1993 (Pub. L. 103–66), was enacted on August 10, 1993, and amended section 1834(a) to reclassify nebulizers, CPAP devices, aspirators or suction pumps, and intermittent assist or respiratory assist devices from the category of items requiring frequent and substantial servicing to the capped rental payment category. It also mandated separate payment for accessories used in conjunction with these items. Section 4315 of the Balanced Budget Act of 1997 (Pub. L. 105–33), enacted on August 5, 1997, added section 1842(s) to the Act, to authorize a fee schedule for PEN, which was promulgated via regulations at § 414.100 (66 FR 45173, August 28, 2001). In 42 CFR Part 414, Subpart C of the regulations, govern payment on a fee schedule basis for PEN nutrients, equipment and supplies. Payment for PEN items and services is made in a lump sum for nutrients and supplies that are purchased and on a monthly basis for equipment that is rented. Section 1847 of the Act establishes the Medicare DMEPOS Competitive Bidding Program (CBP) (‘‘Competitive Bidding Program’’). Under the CBP, Medicare sets payment amounts for selected DMEPOS items and services furnished to beneficiaries in CBAs based on bids submitted by qualified suppliers and accepted by Medicare. For competitively bid items, these new payment amounts, referred to as ‘‘single payment amounts,’’ replace the fee schedule payment amounts. Section 1847(b)(5) of the Act provides that Medicare payment for competitively bid items and services is made on an assignment-related basis equal to 80 percent of the applicable SPA amount, less any unmet Part B deductible. Payment errors and increased costs can occur as a result of paying separately for equipment, repairs, accessories, and routine maintenance and servicing associated with beneficiary ownership of DME after the 13-month capped rental period or initial lump sum purchase, which have increased the risk for improper payments. The findings published in the August 2010 OIG report (OEI–07–08– 00550) titled ‘‘A review of claims for capped rental durable medical equipment’’ reveal that from 2006 to 2008, Medicare erroneously paid separately for these services. Medicare PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 paid $2.2 million for routine maintenance and servicing of capped rental DME; from 2006 to 2008, Medicare erroneously allowed nearly $4.4 million for repairs for beneficiaryowned capped rental DME that failed to meet payment requirements; and in 2007, Medicare allowed nearly $27 million for repair claims of beneficiaryowned capped rental DME that failed to meet payment requirements. Based upon our experience, the ownership of equipment by beneficiary after lump sum purchase or after the end of 13 months capped rental period leads to complicated administrative procedures. The program must keep track of separate payment, coverage, medical necessity, and other rules for a number of related codes for replacement supplies and accessories used with the base equipment as well as labor and parts associated with repairing patientowned equipment. In addition, claims processing systems must count rental months and contractors must identify when legitimate breaks in continuous use occur and can result in the start of new capped rental periods. This leads to costly and complicated claims processing systems edits for processing millions of claims for these items and services. Payment on a purchase or capped rental basis results in the need to process and pay separately for numerous items that are not DME but are related to furnishing DME such as repair of equipment or replacement of supplies and accessories used with patient-owned equipment necessary for the effective use of DME. B. Proposed Provisions We believe that we have general authority under section 1847(a) and (b) of the Act to establish payment rules for DME and enteral nutrition equipment that are different than the rules established under section 1834(a) of the Act for DME, section 1842(s) for enteral nutrients, supplies, and equipment, and, section 6112(b) of Omnibus Budget Reconciliation (OBRA) Act of 1989 (Pub. L. 101–239) for enteral pumps. We believe that lump sum purchase and capping rentals for certain DME and enteral nutrition may no longer be necessary to achieve savings under the program when competitive bidding can be used to establish a reasonable monthly payment. We also believe that payment on a continuous rental basis— that is, ongoing monthly payments not subject to a cap—could help to ensure that medically necessary DME and enteral nutrition equipment is kept in good working order for the entire duration of medial need and would make it easier for beneficiaries to change E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules from one supplier to another since the new supplier would not be faced with a finite number of rental payments. Currently, there is no requirement that a supplier take responsibility for repairing equipment once it is owned by a beneficiary, which may cause difficulties for the beneficiary to find a supplier to undertake such services. We believe that continuous rental payment would eliminate such issues because the supplier of the rented equipment would always be responsible for keeping the equipment in good working order. We do not believe that continuous monthly rental payments for DME and enteral nutrition would negatively impact access to items and services and could potentially be implemented in a manner that does not increase program expenditures since suppliers would be paid based on bids for furnishing the same general items and services they would otherwise provide. In addition, since Medicare payment for rental of DME and enteral nutrition equipment include payment for maintenance and servicing of the rented equipment, the suppliers would be directly responsible for meeting the monthly needs of the beneficiary in terms of keeping the rented equipment in good working order. As indicated in section IV above, CMS issued an ANPRM: Medicare Program; Methodology for Adjusting Payment Amounts for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) using Information From Competitive Bidding Programs on February 26, 2014 (79 FR 10754). As part of this ANPRM, comments were solicited on whether payment on a bundled, continuous rental basis for DME and enteral nutrition should be adopted under the DMEPOS CBP. Some commenters were concerned that services such as replacement of CPAP masks and equipment repairs would not be provided if they were not paid for separately. Some commenters supported bundling payments for oxygen and enteral nutrition. Some commenters suggested that the bundling methodology be tested first before it is utilized on a wide scale basis. Thirteen commenters that included beneficiaries, beneficiary advocacy organizations, occupational therapists, and physical therapists raised concerns that access to items such as highly configured wheelchairs and speech generated devices might be disrupted under a continuous monthly bundled rental payment that includes equipment rental, replacement accessories and repairs. They felt that payment on a rental basis would result in patients VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 losing access to these devices when they entered institutions such as hospitals and skilled nursing facilities where separate payment for DME is prohibited by section 1861(n) of the Act. For items that continue to be paid for on a lump sum purchase basis or a capped rental basis where ownership of equipment transfers to the beneficiary following the capped rental period, we solicited comments on whether the supplier of the equipment should be responsible for repairing the equipment following transfer of title. Some commenters were opposed to the idea of making contract suppliers of purchased equipment responsible for ongoing repairs of equipment following transfer of title to the beneficiary. They stated that it would be a significant burden on suppliers to provide ongoing maintenance of equipment they furnished on a purchase basis, especially if the beneficiary moved out of the area. After carefully considering comments received in response to the ANPRM, we are proposing to update the regulations to include proposed special payment rules described below that would be utilized in paying claims for certain DME or enteral nutrition under a limited number of CBPs. As explained in more detail in the sections that follow below, we propose to revise the regulation by adding a new section at 42 CFR 414.409 with special payment rules to replace specific payment rules at § 414.408 for these items and services in these CBPs. We also propose to revise § 414.412 regarding submission of bids for furnishing items and services paid in accordance with these special payment rules. We seek comments on these proposals. We propose to phase-in the special payment rules described in sections 1 and 2 below in a limited number of areas for a limited number of items initially to determine whether it is in the best interest of the Medicare program and its beneficiaries to phase these rules in on a larger scale based on evaluation of the rules’ effects on Medicare program costs, and quality of/ access to care. In order to monitor the impact of phasing in the special payment rules in no more than 12 CBAs, we propose that, at a minimum, we would utilize evaluation criteria that are consistent with the current evaluation criteria for monitoring the impact of the CBP on utilizers of items and services in CBAs. To evaluate the quality of care for beneficiaries affected by the special payment rules, we propose that, at a minimum, we would utilize health status outcomes based criteria that would measure specific indicators such PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 40291 as mortality, morbidity, hospitalizations, emergency room and other applicable indicators unique to each product category. To evaluate beneficiary access to necessary items and services we propose that, at a minimum, we would monitor utilization trends for each product category and track beneficiary complaints related to access issues. To evaluate the cost of the program, we propose that, at a minimum, we would analyze the claims data for allowed services and allowed cost for each product category and the associated accessories, supplies and repair cost in the 12 CBAs and the comparator CBAs. We propose to analyze the effect of the proposed payment rules on beneficiary cost sharing. We propose that in any competition where these rules are applied, suppliers and beneficiaries would receive advance notice about the rules at the time the competitions that utilize the rules are announced. The combined, total number of CBAs where the proposed rules in either section 1 or 2 would apply would be limited to twelve. In other words, it would not be twelve CBAs for the rules in section 1 and an additional twelve CBAs for the rules in section 2, but 12 CBAs total. In addition, we propose that the PCs listed below would be phased in to include one or more of the CBAs that would number no more than twelve total. In addition, if a determination is made to phase-in these rules on a larger scale in additional areas and for additional items based on program evaluation results regarding cost, quality, and access, the process for phasing in the rules and the criteria for determining when the rules would be applied would be addressed in future notice and comment rulemaking. This rulemaking would also address how the methodology for using these SPAs to adjust fee schedule amounts would need to be revised. The Affordable Care Act (Patient Protection and Affordable Care Act of 2010, Pub. L. 111–148 (March 23, 2010), Sec. 3021) establishes the Center for Medicare and Medicaid Innovations (CMMI) which is authorized to test models to reduce Medicare and Medicaid expenditures while preserving or improving quality for beneficiaries of those two programs. The provision includes appropriations of $10 billion for fiscal years 2011 through 2019. We solicit comments on the option for testing the above special payment rules for DME and enteral nutrition using the CMMI demonstration authority in no more than 12 CBAs that would allow us to test and evaluate the special payment rules on a wider scale and determine E:\FR\FM\11JYP2.SGM 11JYP2 40292 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 whether the special payment rules reduce Medicare expenditure while preserving or improving the quality for Medicare beneficiaries. Regardless of the authority used to phase in or test these special payment rules, we would undertake rigorous evaluation to determine the rules’ effects on program costs, quality, and access. We seek comments on the specific proposals below. all accessories used with the hospital bed (for example, mattresses, side rails, trapeze bars, etc.) needed by the patient, as well as all maintenance and servicing of the equipment. As discussed in more detail below, phasing in these rules would help us determine the impact on Medicare expenditures as well as beneficiary access to items and services and other possible costs and benefits. We seek comments on this proposal. 1. Payment on a Continuous Rental Basis for Select Items We propose to revise the regulation at 42 CFR 414.409 to allow for payment on a continuous monthly rental basis under future competitions in no more than 12 CBAs for one or more of the following categories of items and services: enteral nutrition, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, CPAP and respiratory assist devices, and hospital beds. We believe that 12 CBAs represents a limited number of CBAs yet would allow testing in different regions of the country. We propose that the SPAs established under the special payment rules would be based on bids submitted and accepted for furnishing rented DME and enteral nutrition on a monthly basis. We propose that the SPAs would represent a monthly payment for each month that rented DME or enteral nutrition is medically necessary. The SPA for the monthly rental of DME would include payment for each item and service associated with the rental equipment including the ongoing maintenance and servicing of the rental equipment, and replacement of supplies and accessories that are necessary for the effective use of the equipment. In the case of enteral nutrition, we propose that the monthly SPA would include payment for all nutrients, supplies and equipment. Suppliers would be responsible for furnishing all items and services in the applicable CBA needed each month based on the physician’s order. For example, in addition to furnishing the CPAP device, the supplier would be responsible for furnishing the accessories used with the device such as masks, tubing, headgear, humidifiers, etc., as well as all maintenance and servicing of the equipment. For wheelchairs, the supplier would be responsible for furnishing the type of wheelchair and all options and accessories used with the wheelchair that are needed by the patient, as well as well as all maintenance and servicing of the equipment. For hospital beds, the supplier would be responsible for furnishing the type of hospital bed and a. Enteral Nutrition We propose to implement future competitions for enteral nutrition in no more than 12 CBAs, where payment would be based on bids submitted for furnishing all enteral nutrients, supplies, and equipment needed on a monthly basis. We propose that the suppliers would submit a single bid for each CBA for furnishing all items and services related to furnishing such enteral nutrients, supplies, and equipment in the applicable CBA needed by a beneficiary on a monthly basis. We are soliciting comments on whether alternatives to submitting a single bid for enteral nutrition should be considered, such as having separate categories based on mode of delivery (syringe fed, pump fed, or gravity fed) or separate categories based on the type of nutrients delivered. We selected the category of enteral nutrition because we believe that payment on a separate, piecemeal basis for daily supplies, calories of nutrients furnished, and monthly rental of equipment the pumps is unnecessary and overly complex. For example, for a pump-fed patient, the beneficiary must choose whether they wish to rent the pump or purchase the pump. If the beneficiary chooses to rent the pump, the supplier is required to continue furnishing the pump until the capped rental period is over, but then is allowed to bill for maintenance and servicing of the pump once every 6 month, but only if maintenance and servicing is needed and furnished. The supplier must also submit claims for daily supply kits as well as feeding tubes furnished in addition to billing for every 100 calories of enteral nutrient furnished. Finally, the supplier must bill for the pole used to hold the pump; however, the monthly rental payments for the pole are not subject to the cap on rentals that the statute specifically requires for the pump and this is confusing. In addition, issues have been raised regarding replacement parts and supplies for beneficiary-owned enteral nutrition infusion pumps when the manufacturer elects to discontinue the brand and model of pump owned by the beneficiary. Neither the beneficiary nor the supplier is able to obtain supplies VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 that the manufacturer no longer sells and the Medicare rules would generally not allow for the purchase of a new pump since this would be duplicate equipment. We seek comments on this proposal. b. Oxygen and Oxygen Equipment We propose to implement future competitions for oxygen and oxygen equipment in no more than 12 CBAs, where payment would be based on bids submitted for furnishing all oxygen and oxygen equipment needed on a monthly basis. We propose that the suppliers would submit a single bid for each CBA for furnishing all items and services needed on a monthly basis, including all rented equipment and related accessories such as regulators, flowmeters, nasal cannulas, masks, tubing, humidifier bottles, tank stands and carts, and transtracheal catheters, as well as all maintenance and servicing of the equipment and delivery of oxygen contents. We selected the category of oxygen and oxygen equipment because we believe the rental cap for oxygen equipment generates very little savings under CBPs. A small percentage of beneficiaries, approximately 25 percent based on our review of Medicare claims, reach the 36-month cap, which is extended by as much as 9 months at the start of a CBP, and the SPAs for oxygen contents furnished after the cap are roughly the same as the SPAs for furnishing oxygen and oxygen equipment during the 36-month rental cap period. In addition, recent issues related to suppliers abandoning beneficiaries after the rental cap has resulted in the need to pay for lost oxygen and oxygen equipment, eliminating any savings the rental cap might have achieved. Although section 1834(a)(5)(F)(ii)(I) of the Act mandates that the supplier receiving payment for the 36th month of continuous use must continue to furnish the oxygen and oxygen equipment for any period of medical need for the duration of the reasonable useful lifetime of the equipment, certain suppliers have failed to continue providing oxygen and oxygen equipment despite this requirement. Section 414.226 provides that for oxygen and oxygen equipment, Medicare payments are modality neutral, with the exception that the portable oxygen equipment add-on payment for oxygen generating portable equipment (OGPE) is higher than the add-on payment for liquid and gaseous portable oxygen equipment. The Medicare monthly payment for oxygen and oxygen equipment includes payment for stationary equipment E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (concentrators, liquid, or gaseous stationary equipment) as well as payment for oxygen contents (stationary and portable). The add-on payment is only for the portable oxygen equipment and does not include payment for the portable oxygen contents. This fact is often confused and the portable oxygen add-on payment is erroneously viewed as a payment for portable oxygen contents as well as portable oxygen equipment. In a majority of cases, beneficiaries receive both stationary oxygen and oxygen equipment and portable oxygen and oxygen equipment, so having a separate add-on payment for portable oxygen equipment only seems unnecessary. Under our proposal, for oxygen and oxygen equipment payment under the select CBPs, we propose to eliminate the 36-month cap on equipment payments and eliminate separate add-on payments for portable equipment and separate payment for oxygen contents. Under our proposal, the contract suppliers would continue to be responsible for furnishing equipment consistent with the requirements in § 414.420. We seek comments on this proposal. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 c. Standard Manual Wheelchairs We propose to implement future competitions for standard manual wheelchairs in no more than 12 CBAs, where payment would be based on bids submitted for furnishing standard manual wheelchairs and all accessories used in conjunction with the wheelchairs on a monthly basis. We propose that the suppliers would submit a single bid for each HCPCS code describing the wheelchair for each CBA for furnishing the wheelchair and all accessories and services needed on a monthly basis. We are soliciting on this proposal as well as comments on whether all standard manual wheelchairs should be described under one HCPCS code in order to simplify bidding and claims processing procedures. The current HCPCS codes for standard manual wheelchairs include standard, hemi (low seat), lightweight, high strength lightweight, heavy duty, and extra heavy duty wheelchairs described by codes K0001 thru K0004, K0006, and K0007 in the HCPCS. In view of comments to the ANPRM expressing concern regarding beneficiary impact of bundled arrangements for users of highly configured manual wheelchairs, we are requesting comment on what safeguards and monitoring approaches we should use to ensure that access to these items is not disrupted for individuals transitioning between settings and/or VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 residing in remote areas. We seek comments on this proposal. d. Standard Power Wheelchairs We propose to implement future competitions for standard power wheelchairs in no more than 12 CBAs, where payment would be based on bids submitted for furnishing standard power wheelchairs and all accessories used in conjunction with the wheelchairs on a monthly basis. We propose that the suppliers would submit a single bid for each HCPCS code describing the wheelchair for each CBA for furnishing the wheelchair and all accessories (including batteries) and services needed on a monthly basis. We are soliciting comments on whether all standard power wheelchairs should be described under one HCPCS code in order to simplify bidding and claims processing procedures. The current HCPCS codes for standard power wheelchairs include all group 1 and group 2 power wheelchairs that cannot accommodate rehabilitative accessories and features described by codes K0813 thru K0829 in the HCPCS. In view of comments to the ANPRM expressing concern regarding beneficiary impact of bundled arrangements for users of highly configured manual wheelchairs, we are requesting comment on what safeguards and monitoring approaches we should use to ensure that access to these items is not disrupted for individuals transitioning between settings and/or residing in remote areas. We selected the categories of standard manual and power wheelchairs because we believe that payment on a separate, piecemeal basis for hundreds of various wheelchair options and accessories is unnecessary and overly complex. In addition, issues have been raised regarding access to repair of beneficiaryowned wheelchairs following the 13month capped rental period. For example, there are hundreds of codes for various wheelchair accessories and separate payment for each of these items in addition to the payment for the wheelchair. The separate billing, processing and payment of these claims would not be necessary given that the supplier can factor the costs of accessories into their bid for furnishing the rented equipment. In addition, the beneficiary’s needs may change such that the beneficiary needs a different type of accessory from the one that was initially furnished by the supplier. Under the current rules, the accessory may not be covered if it is similar to the one that was already paid for by Medicare. If payments for all types of accessories are included in an ongoing, monthly rental amount for the PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 40293 wheelchair, the beneficiary can receive other accessories included in the program, provided such accessories are medically necessary. We seek comments on this proposal. e. CPAP and Respiratory Assist Devices We propose to implement future competitions for CPAP and respiratory assist devices in no more than 12 CBAs, where payment would be based on bids submitted for furnishing the CPAP or respiratory assist device and supplies, accessories, and services needed on a monthly basis. We propose that the suppliers would submit a single bid for each device for each CBA for furnishing all items and services needed on a monthly basis. We are soliciting comments on our proposal as well as whether all CPAP and respiratory assist devices should be described under one HCPCS code in order to simplify bidding and claims processing procedures. We selected the category of CPAP and respiratory assist devices because we believe the cost of paying separately for the expensive accessories used with these devices may exceed the amount of savings achieved from capping the rental payments for the equipment. We seek comments on this proposal. f. Hospital Beds We propose to implement future competitions for hospital beds in no more than 12 CBAs, where payment would be based on bids submitted for furnishing hospital beds and all accessories used in conjunction with the hospital beds on a monthly basis. We propose that the suppliers would submit a single bid for each HCPCS code describing the hospital bed for each CBA for furnishing the hospital bed and all accessories and services needed on a monthly basis. We are soliciting comments on whether all hospital beds should be described under one HCPCS code in order to simplify bidding and claims processing procedures. We selected the category of hospital beds to allow us to determine the impact of the continuous monthly rental payment rule under CBP on beneficiary access, utilization rate and cost for an item that currently does not have beneficiary access issues or issues related to excessive cost for repair and accessories. We seek comments on this proposal. g. Transition Rules We propose to revise the regulation at 42 CFR 414.409 to include supplier transition rules for enteral nutrition, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, CPAP and respiratory E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40294 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules assist devices, and hospital beds that would be paid in accordance with the rules proposed in this section. We also propose to revise the regulation at 42 CFR 414.408 to provide a cross reference to proposed § 414.409. We propose that changes in suppliers from a non-contract supplier to a contract supplier at the beginning of the CBP where the proposed payment rules would apply would simply result in the contract supplier taking on responsibility for meeting all of the beneficiary’s monthly needs while receiving payment for each month of service. We developed these proposed rules based on that fact that for capped rented DME and oxygen and oxygen equipment, since rental caps would not apply under the proposed rules, there would be no need to restart or extend capped rental periods when a beneficiary transitions from a noncontract supplier to a contract supplier. We propose that supply arrangements for oxygen and oxygen equipment, and rental agreements for standard manual wheelchairs, standard power wheelchairs, CPAP devices, respiratory assist devices, and hospital beds entered into before the start of a CBP and application of the payment rules proposed in this section would be allowed to continue so long as the supplier agrees to furnish all necessary supplies and accessories used in conjunction with the rented equipment and needed on a monthly basis. We propose that non-contract suppliers in these cases would have the option to continue rental agreements; however, we propose that as part of the process of allowing the rental agreements to continue, the grandfathered supplier would be paid based on the payment rules proposed in this section and based on the SPAs established under the CBPs incorporating the proposed rules. We solicit comments on this proposed process. We propose that in the event that a beneficiary relocates from a CBA where the rules proposed in this section apply to an area where rental cap rules apply, that a new period of continuous use would begin for the capped rental item, enteral nutrition equipment, or oxygen equipment as long as the item is determined to be medically necessary. We believe these rules that would result in a new period of continuous use are necessary to safeguard beneficiary access to covered items and services and plan to closely monitor the impact these rules have on beneficiary cost sharing before phasing in these rules in more than a limited number of CBAs. We seek comments on these proposals. VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 h. Beneficiary-Owned Equipment We propose that separate payment for all repairs, maintenance and servicing, and replacement of supplies and accessories for beneficiary-owned DME or enteral nutrition equipment would cease in the CBAs where the payment rules proposed under this section are in effect. We propose that if the beneficiary has a medical need for the equipment, the contract supplier would be responsible for furnishing new equipment and servicing that equipment. This option would ensure that beneficiaries continue to receive medically necessary equipment, including the supplies, accessories, maintenance and servicing that may be needed for such equipment. Please note that this would not apply to items which are not paid on a bundled, continuous rental basis. We propose to revise the regulations at § 414.409 to specify that any beneficiary who owns DME or enteral nutrition equipment and continues to have a medical need for the items should these rules take effect in a CBA where they reside, would have the option to obtain new equipment, if medically necessary, and related servicing from a contract supplier. We are requesting comment as to whether a transitional process should be considered when claims are selected for review to determine whether they are reasonable and necessary and other safeguards are required to ensure timely delivery of the replacement DME so that individuals’ mobility and ability to live independently is not adversely impacted by delays. While this could potentially increase beneficiary cost sharing, it would eliminate issues associated with repair of beneficiaryowned equipment. We plan to closely monitor the impact of this proposed provision, should it be finalized. We seek comments on this proposal, including issues related to the ability of low income beneficiaries to afford additional cost sharing, and how best to monitor beneficiary impact within the 12 CBAs in which these new rules would be phased in. 2. Responsibility for Repair of Beneficiary-Owned Power Wheelchairs Furnished Under CBPs We propose to revise the regulation at 42 CFR 414.409 to add a new payment rule that would apply to future competitions for standard power wheelchairs in no more than 12 CBAs where payment is made on a capped rental basis and not on the basis of the rules proposed under § 1 above. In these CBPs, we propose that contract suppliers for power wheelchairs would PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 be responsible for all necessary repairs and maintenance and servicing of any power wheelchairs they furnish during the contract period under the CBP, including repairs and maintenance and servicing of power wheelchairs after they have transferred title to the equipment to the beneficiary. We propose that this responsibility would end when the reasonable useful lifetime established for the power wheelchair expires, medical necessity for the power wheelchair ends, the contract period ends, or the beneficiary relocates outside the CBA. We propose that the contract supplier would not receive separate payment for these services and would factor the costs of these services into their bids. We believe that based on existing maintenance and servicing requirements, suppliers could project the cost of continuing to repair and service equipment of various ages once title to the equipment has transferred to the beneficiary. As indicated above, under existing rules, the supplier that transfers title to the equipment to the beneficiary after the 13 month period of continuous use is not held responsible for repairing the equipment they furnish after the beneficiary takes over ownership of the equipment. Therefore, we believe the propose rule would safeguard the beneficiary and better ensure that the beneficiary continues to have equipment in good working order to meet their needs. We propose that the contract supplier would not be responsible for repairing power wheelchairs they did not furnish. We propose that services to repair beneficiary-owned equipment furnished prior to the start of the contract period would be paid in accordance with the standard payment rules at § 414.210(e). We seek comments on this proposal. 3. Phasing in the Proposed Payment Rules in CBAs We propose that the CBAs where the proposed rules in §§ 1 or 2 above would be applied would be for MSAs with a general population of at least 250,000 and a Medicare Part B enrollment population of at least 20,000 that are not already included in Round 1 or 2. Based on 2012 population estimates from the Census Bureau and 2011 Medicare enrollment data, there are approximately 80 MSAs that would satisfy this criteria. Selecting MSAs not already included in Round 1 or 2 would allow competitions and rules associated with these competitions to begin after the final rule would take effect in areas that are comparable to existing CBAs. We propose that the boundaries of the CBAs would be established in accordance with the rules set forth at E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 §§ 414.406 and 414.410. We propose that additional CBPs for the items identified in §§ 1 and 2 above be established in ‘‘comparator’’ CBAs concurrent with CBPs where the proposed rules would be applied. Payment for items and services in the comparator CBAs would be made in accordance with the existing payment rules in § 414.408. We propose that these additional comparator CBAs and CBPs be established to facilitate our analysis of the effect of the payment rules proposed in sections 1 and 2 above compared to the effect of the existing payment rules in § 414.408. We propose that for each CBP where either the rules in section 1 or 2 above are implemented, a comparator CBA and CBP would be established. We propose that the comparator CBAs be selected so that they are located in the same state as the CBA where the special payment rules would apply and are similar to the CBAs in which the proposed payment rules would be implemented based on a combination of factors that could include geographic location (region of the country), general population, beneficiary population, patient mix, and utilization of items. We are proposing to establish the comparator CBAs and CBPs to enable us to review the impact of the proposed payment rules on expenditures, quality, and access to items and services in order to determine whether to pursue future rulemaking to expand the proposed payment rules to additional areas and or items. We seek comments on this proposal. 4. Submitting Bids for Items Paid on a Continuous Rental Basis In accordance with section 1847(b)(2)(A)(iii) of the Act, before contracts can be awarded, a determination must be made that the total amounts to be paid to contract suppliers under a CBP are expected to be less than the total amounts that would otherwise be paid. In accordance with § 414.414(f) of the regulations, under the DMEPOS CBP, bids amounts for an item or service are limited to the fee schedule amount that would otherwise be paid for the item or service. We propose that in order to apply the proposed rental payment rules, we would establish the bid limits for enteral nutrition, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, and hospital beds that would be paid in accordance with the proposed payment rules in sections 1 and 2 above based on average monthly expenditures per beneficiary in an area for the items and services related to furnishing the DME. For example, the VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 bid limit for the continuous monthly rental of a standard manual wheelchair in a CBA would be based on the total payment amounts per month in the area for the wheelchair, repair, maintenance and servicing of the wheelchair, and accessories used with the wheelchair, divided by the unduplicated number of beneficiaries receiving these items and services. We propose to revise § 414.412 to specify that the supplier’s bid for furnishing enteral nutrition, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, and hospital beds on a continuous monthly rental basis could not be higher than the average monthly payment made in the area for the items and services prior to the start of the competition. In the case of CPAP devices and respiratory assist devices, these items were paid on a bundled, continuous rental fee schedule basis from 1989 thru 1993, based on the rules mandated by section 4062(b) of OBRA 87, prior to the change by section 13543 of OBRA 93 that moved them from the payment class for items requiring frequent and substantial servicing to the payment class for capped rental items. Payment on a bundled, continuous rental fee schedule basis was mandated by OBRA 87 from 1989 thru 1993. The fee schedule for 1993 is the most current fee schedule where payment was based on a bundled, continuous rental basis. We propose to revise § 414.412 to specify that the supplier’s bid for furnishing CPAP devices and respiratory assist devices on a continuous monthly rental basis could not be higher than the 1993 fee schedule amounts for these items, increased by the covered item update factors provided for these items in section 1834(a)(14) of the Act. We seek comments on this proposal. We seek public comments on phasing in the proposed rules described in section 1 through 4 above. VII. Scope of Hearing Aid Coverage Exclusion A. Background Section 1862(a)(7) of the Act states notwithstanding any other provision of title XVIII, no payment may be made under part A or part B for any expenses incurred for items or services ‘‘where such expenses are for . . . hearing aids or examinations therefor. . . .’’ This policy is codified in the regulation at 42 CFR 411.15(d), which specifically states that hearing aids or examination for the purpose of prescribing, fitting, or changing hearing aids are excluded from Medicare coverage. At the time of passage of the Social Security PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 40295 Amendments of 1965 (Pub. L. 97, 89th Congress), which added the Medicare coverage exclusion for hearing aids at section 1862(a)(7) of the Act, all hearing aids utilized functional air and/or bone conduction pathways to facilitate hearing. In general, to be covered by Medicare, an item or service must fall within one or more benefit categories contained within Part A or Part B, and must not be otherwise excluded from coverage. With regard to section 1862(a)(7) of the Act, we consider that a hearing aid provides assistance or ‘‘aid’’ to hearing that already exists via a functioning ear. Cochlear implants were the first hearing device that was not considered a hearing aid and met the benefit category of a prosthetic device. Prosthetic devices are a Medicare benefit category defined at section 1861(s)(8) of the Act which, in part, states a ‘‘prosthetic devices (other than dental) which replace all or part of an internal body organ.’’ A cochlear implant is considered a prosthetic device primarily because it replaces the function of the cochlea. A cochlear implant device differs from a hearing aid in that it is an electronic instrument, part of which is implanted surgically to directly stimulate auditory nerve fibers, and part of which is worn or carried by the individual to capture, analyze and code sound. Both cochlear devices and brain stem implants, which function in a similar manner, create the perception of sound rather than aid hearing that already exists. We interpret the statute as excluding devices that provide aid to extant hearing (or hearing aids) rather than devices that create the perception of sound and hearing, given that devices with technology that utilize either air or bone conduction via mechanical stimulation to aid extant hearing were primarily utilized when the statute was written. Moreover, we believe that prosthetic hearing devices are not ‘‘hearing aids’’ given that such devices do more than ‘‘aid’’ in hearing and instead replace the function of an internal body organ (i.e., a part of the ear). Historically, CMS has periodically addressed the scope of the Medicare hearing aid coverage exclusion through program instructions and national coverage policies or determinations. We briefly discuss the relevant changes that have occurred over time with regard to Medicare coverage and payment of hearing devices. Cochlear implants were the first device covered for Medicare payment for adult beneficiaries in October 1986, when no other hearing device was being covered under Medicare, and such E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40296 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules coverage was supported by the Office of Health Technology Assessment’s ‘‘Public Health Service Assessment of Cochlear Implant Devices for the Profoundly Hearing Impaired’’, dated June 30, 1986 found at https:// archive.org/stream/ cochlearimplantd00feig/ cochlearimplantd00feig_djvu.txt. Medicare coverage was restricted to cochlear implants that treated patients with post lingual, profound, bilateral, sensorineural deafness who are stimulable and who lack the unaided residual auditory ability to detect sound. Effective January 1, 2003, we clarified that the hearing aid exclusion broadly applied to all hearing aids that utilized functional air and/or bone conduction pathways to facilitate hearing (see section 15903, Hearing Aid Exclusion, Medicare Carriers Manual, Part 3— Claims Process (HCFA-Pub. 14–3), which was later moved to section 100, Hearing Aids and Cochlear Implants, of Chapter 16, of the Medicare Benefit Policy Manual, CMS-Pub. 100–02). Any device that does not produce at its output an electrical signal that directly stimulates the auditory nerve is a hearing aid for purposes of coverage under Medicare. Devices that produce air conduction sound into the external auditory canal, devices that produce sound by mechanically vibrating bone, or devices that produce sound by vibrating the cochlear fluid through stimulation of the round window are considered hearing aids and excluded from Medicare coverage. Effective April 4, 2005, Medicare’s national coverage policy for cochlear implants was modified through the NCD process (see section 65–14 of the Medicare Coverage Issues Manual (HCFA-Pub. 6), which was later moved to section 50.3, Cochlear Implantation, of Chapter 1, Part 1 of the Medicare National Coverage Determinations Manual (CMS-Pub. 100–03)). Our findings under the NCD, in part, state that ‘‘CMS has determined that cochlear implants fall within the benefit category of prosthetic devices under section 1861(s)(8) of the Social Security Act.’’ Medicare is a defined benefit program. An item or device must not be statutorily excluded and fall within a benefit category as a prerequisite to Medicare coverage. We believe that prosthetic hearing devices are not ‘‘hearing aids’’ given that such devices do more than ‘‘aid’’ in hearing and instead replace the function of an internal body organ (i.e., a part of the ear). Additional changes, regarding coverage criteria, have been made to NCD 50.3 over time, however, the NCD VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 decision regarding benefit category and Medicare coverage for cochlear implantation has remained consistent. The NCD states that a cochlear implant device is an electronic instrument, part of which is implanted surgically to stimulate auditory nerve fibers, and part of which is worn or carried by the individual to capture, analyze, and code sound. Cochlear implant devices are available in single-channel and multichannel models. The purpose of implanting the device is to provide awareness and identification of sounds and to facilitate communication for persons who are moderately to profoundly hearing impaired. The regulations at 42 CFR 419.66 were revised to add new requirements, effective January 1, 2006, for transitional pass-through payments for medical devices. The auditory osseointegrated device, referred to as a bone anchored hearing aid (BAHA), was determined to be a new device category according to the new requirements for transitional pass-through payment. Medicare coverage was also expanded to cover auditory osseointegrated and auditory brainstem devices as prosthetic devices. Currently, section 100 of Chapter 16 of the Medicare Benefit Policy Manual (CMS Pub. 100–02) reads as follows: Hearing aids are amplifying devices that compensate for impaired hearing. Hearing aids include air conduction devices that provide acoustic energy to the cochlea via stimulation of the tympanic membrane with amplified sound. They also include bone conduction devices that provide mechanical energy to the cochlea via stimulation of the scalp with amplified mechanical vibration or by direct contact with the tympanic membrane or middle ear ossicles. Certain devices that produce perception of sound by replacing the function of the middle ear, cochlea, or auditory nerve are payable by Medicare as prosthetic devices. These devices are indicated only when hearing aids are medically inappropriate or cannot be utilized due to congenital malformations, chronic disease, severe sensorineural hearing loss or surgery. The following are considered prosthetic devices: • Cochlear implants and auditory brainstem implants, that is, devices that replace the function of cochlear structures or auditory nerve and provide electrical energy to auditory nerve fibers and other neural tissue via implanted electrode arrays. • Osseointegrated implants, that is, devices implanted in the skull that replace the function of the middle ear and provide mechanical energy to the cochlea via a mechanical transducer. B. Current Issues We have received several benefit category determination requests in recent years for the consideration of non-implanted, bone conduction PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 hearing aid devices for single-sided deafness, as prosthetic devices under the Medicare benefit. We have received similar requests for several other types of implanted and non-implanted devices as well. In response to these requests, we have re-examined the scope of the statutory hearing aid exclusion. Currently, we consider all air or bone conduction hearing devices, whether external, internal, or implanted, including, but not limited to, middle ear implants, osseointegrated devices, dental anchored bone conduction devices, and other types of external or non-invasive devices that mechanically stimulate the cochlea, as hearing aids. All of these devices provide traditional ‘‘aid’’ to hearing and are excluded in accordance with section 1862(a)(7) of the Act. In order for an item to be covered by Medicare, it must fall into a Medicare benefit category and not be statutorily excluded. Not only are these devices statutorily excluded they do not fall in a benefit category. Specifically, they do not meet the statutory definition of a prosthetic device found at section 1861(s)(8) of the Act which, in part, states a ‘‘prosthetic devices (other than dental) which replace all or part of an internal body organ.’’ They do not replace the function of an internal body organ and thus are not considered prosthetic devices under Medicare payment policy. In regard to BAHA, it is a bone conduction hearing aid device that is osseointegrated. There are currently only two hearing devices that are not statutorily excluded and are a covered Medicare item that fall into the prosthetic benefit category; namely, the cochlear implant and the auditory brainstem device. These two devices meet the definition of a prosthetic device in that they replace the function of the inner ear consistent with the definition of prosthetic devices described in section 1861(s)(8) of the Act. C. Proposed Provisions After further considering the statutory Medicare hearing aid exclusion under section 1862(a)(7) of the Act, and reexamining the different types of external and implanted devices, we propose to interpret the term ‘‘hearing aid’’ to include all types of air or bone conduction hearing aid devices, whether external, internal, or implanted, including, but not limited to, middle ear implants, osseointegrated devices, dental anchored bone conduction devices, and other types of external or non-invasive devices that mechanically stimulate the cochlea. We believe, based on our understanding of E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules how such devices function, that such devices are hearing aids that are not otherwise covered as prosthetic devices, in that they do not replace all or part of an internal body organ. Therefore, we propose to modify the regulation at § 411.15(d)(1) to specify that the hearing aid exclusion encompasses all types of air conduction and bone conduction hearing aids (external, internal, or implanted). Osseointegrated devices such as the BAHA are bone conduction hearing aids that mechanically stimulate the cochlea; therefore, we believe that the hearing aid exclusion applies to these devices and propose that Medicare should not cover these devices, consistent with our interpretation of section 1862(a)(7) of the Act. In addition, an NCD was issued for cochlear implant devices with the result that this determination and recent requests to expand coverage of hearing devices raises serious questions about the intent and scope of the Medicare coverage exclusion for hearing aids. It is for these reasons that we are addressing the hearing aid coverage exclusion in notice and comment rulemaking, and believe that the BAHA device qualifies as a hearing aid because it functions like other bone conduction hearing aids that are subject to the Medicare statutory coverage exclusion for hearing aids. We continue to believe that the hearing aid exclusion does not apply to brain stem implants and cochlear implants because these devices directly stimulate the auditory nerve, replacing the function of the inner ear rather than aiding the conduction of sound as hearing aids do. Therefore, we are not proposing any changes to our current policy about brain stem implants and cochlear implants and how such implants fall outside of the hearing aid statutory exclusion (that is, such devices would fall outside the Medicare coverage exclusion for hearing aids and remain covered subject to the Medicare NCD 50.3 found at https:// www.cms.gov/Regulations-andGuidance/Guidance/Manuals/ downloads/ncd103c1_Part1.pdf). We propose, however, to modify § 411.15(d)(2) to specifically note that such devices do not fall within the hearing aid exclusion. We seek public comment on this proposal. VIII. Definition of Minimal SelfAdjustment of Orthotics Under Competitive Bidding A. Background Section 1847 (a)(1)(A) of the Act mandates the implementation of CBPs throughout the United States for VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 awarding contracts for furnishing competitively priced items and services, including OTS orthotics described in section 1847(a)(2)(C) of the Act (leg, arm, back or neck braces described in section 1861(s)(9) of the Act for which payment would otherwise be made under section 1834(h)) which require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit the individual. The regulation at 42 CFR 414.402 currently defines ‘‘minimal selfadjustment’’ as ‘‘an adjustment that the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual who is certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification) or an individual who has specialized training.’’ This current definition was proposed in the 71 FR 25669 (May 1, 2006) Notice for Proposed Rulemaking (NPRM) but did not include the term ‘‘individual with specialized training.’’ The definition was finalized in the 72 FR 18022 (April 10, 2007) Final Rule with the term ‘‘individual with specialized training’’ added after receiving comments that disagreed with the May 2006 definition and pointed out that occupational therapists, physical therapists, and physicians are licensed and trained to provide orthotics. B. Current Issues Since adoption of the minimal selfadjustment definition there has been some concerns raised by industry and other stakeholders regarding who is considered an individual with specialized training. We have had many inquiries and comments that this term is too ambiguous and left open for interpretation. In order to identify OTS orthotics for the purpose of implementing CBPs for these items and services in accordance with the statute, we need a clearer distinction between OTS orthotics and those that require more than minimal self-adjustment and expertise in custom fitting. In doing so, we believe it is essential to identify the credentials and training a supplier needs to have in order to be considered a supplier with expertise in custom fitting; therefore, we believe the term ‘‘individual with specialized training’’ must be clarified. We believe these professionals must have specialized training equivalent to a certified orthotist for the provision of custom fitted orthotic devices such that these professionals satisfy requirements PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 40297 concerning higher education, continuing education requirements, licensing, and certification/registration requirements so that they meet a minimum professional skill level in order to ensure the highest standard of care and safety for Medicare beneficiaries. This would also help to prevent any supplier without expertise in custom fitting orthotics from potentially circumventing the competitive bidding process by furnishing custom fitting they are not qualified to provide in the event that they are not awarded a contract for furnishing OTS orthotics in their service area as the custom fitted devices are not statutorily included in the CBP. In addition, for claims processing and payment system purposes under the CBP, we need to identify OTS orthotics, which we accomplish with codes in the HCPCS. The HCPCS codes are used on claims to identify the items and services furnished to the beneficiary, that is, to identify orthotics that are furnished OTS and subject to the CBP and to identify orthotics that have been custom fitted by suppliers with expertise. On February 9, 2012, CMS issued initial guidance identifying specific HCPCS codes considered OTS orthotics and provided a 60-day comment period posted at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ DMEPOSFeeSched/OTS_Orthotics.html. We received 185 comments. There was no general consistency between the various commenters on which specific HCPCS codes the commenters believed were appropriately deemed OTS. Many commenters expressed their support for the proposed list while others made numerous useful recommendations to improve the OTS list. We considered each comment and performed a thorough review of the individual HCPCS codes and devices included in the codes to assess appropriate orthotic categorization. Through this process we identified HCPCS codes that described items that we believe are never furnished OTS, HCPCS codes that described items that are always furnished OTS, and HCPCS codes that described items that may or may not be furnished OTS, depending on whether more than minimal fitting and adjustment of a particular device by an expert is necessary for a particular patient. In order to address this issue we decided to create HCPCS codes for items that may or may not be custom fitted, depending on individual patient’s needs, into separate codes that described the item when it has been furnished OTS and when it has been custom fitted. The new HCPCS codes E:\FR\FM\11JYP2.SGM 11JYP2 40298 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 were published and became effective January 1, 2014 and are published at https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ DMEPOSFeeSched/OTS_Orthotics.html. C. Proposed Provisions Prefabricated orthotics are either furnished OTS or with custom fitting and are identified in the HCPCS. As noted above, with regard to minimal self-adjustment, § 414.402 in part identifies an individual with expertise in fitting as a certified orthotist or an individual with specialized training. Recently a DME Medicare Administrative Contractor (MAC) Web site Article entitled ‘‘Correct Coding— Definitions used for Off-the-Shelf versus Custom Fitted Prefabricated Orthotics (Braces)—Revised,’’ was published March 27, 2014, and included: A physician, a treating practitioner, an occupational therapist, or physical therapist in compliance with all applicable Federal and State licensure and regulatory requirements. The DME MAC published this article following the change in 2014 HCPCS codes for OTS and custom fitted orthotics as an education tool for Medicare enrolled DMEPOS suppliers. We believe physicians, treating practitioners, occupational therapists, and physical therapists are considered ‘‘individuals with specialized training’’ that possess training equivalent to a certified orthotist for the provision of custom fitted orthotic devices through their individual degree programs and continuing education requirements. In addition, physicians, treating practitioners, occupational therapists, and physical therapists possess equivalent or higher educational degrees, continuing education requirements, licensing, and certification and/or registration requirements. We believe these professionals meet a minimum professional skill level in order to ensure the highest standard of care and safety for Medicare beneficiaries. Each of these professionals has undergone medical training in various courses such as kinesiology and anatomy. For example, through coursework the named medical professionals gain a clinical understanding of the human body, proper alignment, normal range of motion, agonist and antagonist relationship, and biomechanics necessary to modify a custom fitted orthotic device properly. Clinical providers such as assistants, fitters, and manufacturer representatives that work under the supervision of the individual with specialized training must do so as required under their VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 governing body Code of Ethics and supervision standards as well as state licensure requirements. These individuals are not considered to have specialized training for the purposes of providing custom fitting; therefore, orthotics adjusted by these individuals but not by individuals with specialized training would still be considered OTS. The current regulation of orthotic provision in the U.S. is inconsistent between individual States. There are currently 17 States that require licensure in P&O. In States that do require licensure for the provision of orthotics, individual states do not all recognize certified orthotic fitters and do not provide licensure for this level of provider. This inconsistency also prompts us to provide clarification on the individuals who are recognized as having specialized training for the purposes of determining what constitutes minimal self-adjustment of OTS orthotics. We propose to update the definition of minimal self-adjustment in § 414.402 to codify an individual with specialized training includes: a physician defined in section 1861(r) of the Act, a treating practitioner defined at section 1861(aa)(5) (physician assistant, nurse practitioner, or clinical nurse specialist), an occupational therapist defined at 42 CFR 484.4, or physical therapist defined at 42 CFR 484.4, who is in compliance with all applicable Federal and State licensure and regulatory requirements for reasons discussed above. We seek comments on this proposal. IX. Revision To Change of Ownership Rules To Allow Contract Suppliers To Sell Specific Lines of Business A. Background Section 1847(a) of the Act, as amended by section 302(b)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), requires the Secretary to establish and implement CBPs in CBAs throughout the United States for contract award purposes for the furnishing of certain competitively priced DMEPOS items and services. The programs mandated by section 1847(a) of the Act are collectively referred to as the ‘‘Medicare DMEPOS Competitive Bidding Program.’’ The 2007 DMEPOS competitive bidding final rule (Medicare Program; Competitive Acquisition for Certain DMEPOS and Other Issues published in the Federal Register on April 10, 2007 (71 FR 17992)), required CBPs for certain Medicare Part B covered items of DMEPOS throughout the United States. The CBP, which was PO 00000 Frm 00092 Fmt 4701 Sfmt 4702 phased in over several years, utilizes bids submitted by qualified suppliers to establish applicable payment amounts under Medicare Part B for certain DMEPOS items for beneficiaries receiving services in designated CBAs. CMS awards contracts to those suppliers who meet all of the competitive bidding requirements and whose composite bid amounts fall at or below the pivotal bid (the bid at which the capacity provided by qualified suppliers meets the demand for the item). These qualified suppliers will be offered a competitive bidding contract for that PC, provided there are a sufficient number of qualified suppliers (there must be at a minimum of 2) to serve the area. Contracts are awarded to multiple suppliers for each PC in each CBA and will be re-competed at least once every 3 years. CMS specifies the duration of the contracts awarded to each contract supplier in the Request for Bid Instructions. We also conduct extensive bidder education where we inform bidders of the requirements and obligations of contract suppliers. Each winning supplier is awarded a single contract that includes all winning bids for all applicable CBAs and PCs. A competitive bidding contract cannot be subdivided. For example, if a contract supplier breaches its contract, the entire contract is subject to termination. In the Physician Fee Schedule final rule published on November 29, 2010, we stated that ‘‘once a supplier’s contract is terminated for a particular round due to breach of contract under the DMEPOS CBP, the contract supplier is no longer a DMEPOS contract supplier for any DMEPOS CBP PC for which it was awarded under that contract. This termination applies to all areas and PCs because there is only one contract that encompasses all CBAs and PCs for which the supplier was awarded a contract.’’ (75 FR 73578) A competitive bidding contract cannot be sold. However, CMS may permit the transfer of a contract to an entity that merges with or acquires a competitive bidding contract supplier if the new owner assumes all rights, obligations, and liabilities of the competitive bidding contract pursuant to regulations at 42 CFR 414.422(d). For the transfer of a contract to be considered, the CHOW must include the assumption of the entire contract, including all CBAs and PCs awarded under the contract. B. Proposed Provisions We propose to revise § 414.422(d) to permit transfer of part of a competitive bidding contract under specific E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules circumstances. We believe requiring a transfer of the entire contract to a successor entity in all circumstances may be overly restrictive, and may be preventing routine merger and acquisition activity. To maintain integrity of the bidding process we award one contract that includes all the CBA/PCs combinations for which the supplier qualifies for and accepts as a contract supplier. This proposed rule would establish an exception to the prohibition against transferring part of a contract by allowing a contract supplier to sell a distinct company (for example, an affiliate, subsidiary, sole proprietor, corporation, or partnership) which furnishes one or more specific PCs or serves one or more specific CBAs and transfer the portion of the contract initially serviced by the distinct company, including the PC(s), CBA(s), and location(s), to a qualified successor entity who meets all competitive bidding requirements (i.e., financial standards, licensing, and accreditation). The proposed exception would not apply to existing contracts but would apply to contracts issued in all future rounds of the program, starting with the Round 2 Recompete. As required in § 414.422(d) we are also requiring a contract supplier that wants to sell a distinct company which furnishes one or more specific PCs or serves one or more specific CBAs to notify CMS 60 days before the anticipated date of a change of ownership. If documentation is required to determine if a successor entity is qualified that documentation must be submitted within 30 days of anticipated change of ownership, pursuant to § 414.422(d)(2)(ii). We propose that CMS would then modify the contract of the original contract supplier by removing the affected PC(s), CBA(s) and locations from the original contract. For CMS to approve the transfer, we propose that several conditions would have to be met. First, we propose that every CBA, PC, and location of the company being sold must be transferred to the new owner. Second, we propose that all CBAs and PC’s in the original contract that are not explicitly transferred by CMS must remain unchanged in that original contract for the duration of the contract period unless transferred by CMS pursuant to a subsequent CHOW. Third, we propose that all requirements in 42 CFR 414.422(d)(2) must be met. Fourth, we propose that the sale of the company must include all of the company’s assets associated with the CBA and/or PC(s). Finally, we propose that CMS must determine that transferring part of the original contract will not result in VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 disruption of service or harm to beneficiaries. No transfer will be permitted for purposes of this program if we determine that the new supplier does not meet the competitive bidding requirements (such as financial requirements) and does not possess all applicable licenses and accreditation for the product(s). In order for the transfer to occur, the contract supplier and successor entity must enter into a novation agreement with CMS and the successor entity must accept all rights, responsibilities and liabilities under the competitive bidding contract. Part of a novation agreement requires successor entity to ‘‘seamlessly continue to service beneficiaries.’’ We believe that these proposed conditions are necessary for proper administration of the program, to ensure that payments are made correctly and also to ensure continued contract accountability and viability along with continuity of service and access to beneficiaries. We specifically invite comments on whether more or different conditions would be appropriate. In addition, we are proposing to update the current CHOW regulation, § 414.422(d) to clarify the language to make it easier to comprehend. The proposed changes reformat the regulation so that the requirements applicable to successor entities and new entities are listed separately. These proposed changes to the regulation are technical, and not substantive in nature. CMS seeks comments on all changes proposed for § 414.422. X. Proposed Changes to the Appeals Process for Termination of Competitive Bidding Contract We propose to modify the DMEPOS CBP’s appeals process for termination of competitive bidding contracts under § 414.423. First, we propose to modify the effective date of termination in the termination notice CMS sends to a contract supplier found to be in breach of contract. Currently, the regulation at 42 CFR 414.423(b)(2)(vi) indicates that the effective date of termination is 45 days from the date of the notification letter unless a timely hearing request ‘‘has been’’ filed or corrective action plan ‘‘has been’’ submitted within 30 days of the effective date of the notification letter (emphasis added). We propose to change these references to provide additional clarification. This change would emphasize that the contract will automatically be terminated if the supplier does not time file a hearing request or submit corrective action plan. This proposed change is also being addressed at 42 CFR 414.423(l). We propose deleting the lead-in sentence, as it does not properly PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 40299 lead into the first paragraph. Additionally, we propose inserting language from the lead-in sentence in the second paragraph to indicate that the contract supplier, ‘‘whose contract has been terminated,’’ must notify beneficiaries of the termination of their contract. Second, we propose to modify the deadline by which a supplier whose competitive bidding contract is being terminated must notify affected beneficiaries that it is no longer a contract supplier. Current regulations at 42 CFR 414.423(l)(2)(i) require a contract supplier to provide this notice within 15 days of receipt of a final notice of termination. We propose to change the beneficiary notification deadline to no later than 15 days prior to the effective date of termination. This proposed change is intended to provide beneficiaries with the protection of advanced notice prior to a contract supplier being terminated from the CBP so they have sufficient time to plan/ coordinate their current and future DMEPOS needs. XI. Technical Change Related To Submitting Bids for Infusion Drugs Under the DMEPOS Competitive Bidding Program The standard payment rules for drugs administered through infusion pumps covered as DME are located at section 1842(o)(1)(D) of the Act, and mandate that payment for infusion drugs furnished through a covered item of DME on or after January 1, 2004, is equal to 95 percent of the average wholesale price for such drug in effect on October 1, 2003. The regulations implementing section 1842(o)(1)(D) of the Act are located at 42 CFR 414.707(a), under Subpart I of Part 414. Section 1847(a)(2)(A) of the Act mandates the establishment of CBPs for covered items defined in section 1834(a)(13), for which payment would otherwise be made under section 1834(a), including items used in infusion and drugs (other than inhalation drugs) and supplies used in conjunction with DME. Section 1847(b)(2)(A)(iii) of the Act prohibits the awarding of contracts under a CBP unless the total amounts to be paid to contract suppliers are expected to be less than would otherwise be paid. The regulations implementing section 1847(b)(2)(A)(iii) of the Act with respect to items paid on a fee schedule basis under Subparts C and D of Part 414 are located at 42 CFR 414.412(b)(2), and specify that ‘‘the bids submitted for each item in a PC cannot exceed the payment amount that would otherwise apply to the item under Subpart C or Subpart D of this part.’’ In addition, the regulations regarding the conditions for awarding E:\FR\FM\11JYP2.SGM 11JYP2 40300 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 contracts under the DMEPOS CBP at 42 CFR 414.414(f) state that ‘‘a contract is not awarded under this subpart unless CMS determines that the amounts to be paid to contract suppliers for an item under a CBP are expected to be less than the amounts that would otherwise be paid for the same item under subpart C or subpart D.’’ The regulations implementing of section 1847(b)(2)(A)(iii) of the Act did not address payments for drugs under subpart I, which was an oversight. We therefore propose to revise §§ 414.412(b)(2) and 414.414(f) to include a reference to drugs paid under subpart I in addition to items paid under subparts C or D. We propose to revise § 414.412(b)(2) to specify that the bid amounts submitted for each drug in a PC cannot exceed the payment limits that would otherwise apply to the drug under subpart I of part 414. This concerns certain infusion drugs with payment limits equal to 95 percent of the average wholesale price for the drug in effect on October 1, 2003, in accordance with § 414.707(a)(3). See https://www.ecfr.gov/cgi-bin/text-idx?c= ecfr&SID=7065f17b411e37b3788b6e7fc ce21f89&rgn=div8&view=text&node= 42:3.0.1.1.1.9.1.3&idno=42. We propose to revise § 414.414(f) to specify that a contract is not awarded under this subpart unless CMS determines that the amounts to be paid to contract suppliers for infusion drugs provided with respect to external infusion pumps under a CBP are expected to be less than the amounts that would otherwise be paid to suppliers for the same drug under subpart I of part 414. We seek comments on this proposal. XII. Accelerating Health Information Exchange HHS believes all patients, their families, and their healthcare providers should have consistent and timely access to their health information in a standardized format that can be securely exchanged between the patient, providers, and others involved in the patient’s care. (HHS August 2013 Statement, ‘‘Principles and Strategies for Accelerating Health Information Exchange’’). The Department is committed to accelerating health information exchange (HIE) through the use of electronic health records (EHRs) and other types of health information technology (HIT) across the broader care continuum through a number of initiatives including: (1) Alignment of incentives and payment adjustments to encourage provider adoption and optimization of HIT and HIE services through Medicare and Medicaid payment policies, (2) adoption of VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 common standards and certification requirements for interoperable HIT, (3) support for privacy and security of patient information across all HIEfocused initiatives, and (4) governance of health information networks. These initiatives are designed to encourage HIE among health care providers, including professionals and hospitals eligible for the Medicare and Medicaid EHR Incentive Programs and those who are not eligible for the EHR Incentive programs, and are designed to improve care delivery and coordination across the entire care continuum. For example, the Transition of Care Measure #2 in Stage 2 of the Medicare and Medicaid EHR Incentive Programs requires HIE to share summary records for at least 10 percent of care transitions. In addition, to increase flexibility in ONC’s regulatory certification structure and expand HIT certification, ONC has proposed a voluntary 2015 Edition EHR Certification rule to more easily accommodate HIT certification for technology used by all health care settings to facilitate greater HIE across the entire care continuum. We believe that HIE and the use of certified EHRs can effectively and efficiently help ESRD facilities and nephrologists improve internal care delivery practices, support management of patient care across the continuum, and support the reporting of electronically specified clinical quality measures (eCQMs). More information on the 2015 Edition EHR certification rule can be found at: https://healthit.gov/ policy-researchers-implementers/ standards-and-certification-regulations. XIII. Collection of Information Requirements A. Legislative Requirement for Solicitation of Comments Under the Paperwork Reduction Act of 1995, we are required to provide 60day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection requirement should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. B. Requirements in Regulation Text In section II.F of this proposed rule, we are proposing changes to regulatory text for the ESRD PPS in CY 2015. However, the changes that are being proposed do not impose any new information collection requirements. C. Additional Information Collection Requirements This proposed rule does not impose any new information collection requirements in the regulation text, as specified above. However, this proposed rule does make reference to several associated information collections that are not discussed in the regulation text contained in this document. The following is a discussion of these information collections. 1. ESRD QIP The information collection requirements associated with the ESRD QIP are currently approved under OMB control number 0938–0386. a. Data Validation Requirements for the PY 2017 ESRD QIP Section III.F.9 in this proposed rule outlines our data validation proposals for PY 2017. Specifically, we propose to randomly sample records from 300 facilities as part of our continuing pilot data-validation program. Each sampled facility would be required to produce approximately 10 records, and the sampled facilities will be reimbursed by our validation contractor for the costs associated with copying and mailing the requested records. The burden associated with these validation requirements is the time and effort necessary to submit the requested records to a CMS contractor. We estimate that it will take each facility approximately 2.5 hours to comply with this requirement. If 300 facilities are asked to submit records, we estimate that the total combined annual burden for these facilities will be 750 hours (300 facilities × 2.5 hours). According to the Bureau of Labor Statistics, the mean hourly wage of a registered nurse is $33.13/hour. Since we anticipate that nurses (or administrative staff who would be paid at a lower hourly wage) would submit this data, we estimate that the aggregate cost of the CROWNWeb data validation would be $24,847.50 (750 hours × $33.13/hour) total or $82.83 ($24,847.50/300 facilities) per facility in the sample. E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Under the proposed feasibility study for validating data reported to the NHSN Dialysis Event Module, we propose to randomly select nine facilities to provide CMS with a quarterly list of all positive blood cultures drawn from their patients during the quarter, including any positive blood cultures collected on the day of, or the day following, a facility patient’s admission to a hospital. A CMS contractor will review the lists to determine if dialysis events for the patients in question were accurately reported to the NHSN Dialysis Event Module. If we determine that additional medical records are needed to validate dialysis events, facilities will be required to provide those records within 60 days of a request for this information. We estimate that the burden associated with this feasibility study will be the time and effort necessary for each selected facility to compile and submit to CMS a quarterly list of positive blood cultures drawn from its patients. We estimate that it will take each participating facility approximately two hours per quarter to comply with this submission. If nine facilities are asked to provide lists, we estimate the quarterly burden for these facilities would be 72 hours per year (9 facilities × 2 hours/quarter × 4 quarters/year). Again, we estimate the mean hourly wage of a registered nurse to be $33.13/ hour, and we anticipate nurses (or administrative staff who would be paid at a lower hourly wage) would be responsible for preparing and submitting the list. Because we anticipate nurses (or administrative staff who would be paid at a lower hourly rate) would compile and submit these data, we estimate that the aggregate annual cost of the feasibility study to validate NHSN data would be $2,385.36 (72 hours × $33.13/hour) total or $265.04 per facility ($2,385.36/9 facilities). b. Proposed NHSN Healthcare Personnel Influenza Vaccination Reporting Measure for PY 2018 We are proposing to include, beginning with the PY 2018 ESRD QIP, a measure requiring facilities to report healthcare personnel influenza vaccination data to NHSN. The NHSN is a secure, Internet-based surveillance system which is maintained and managed by CDC. Many dialysis facilities already submit NHSN Bloodstream Infection clinical measure data to NHSN. Specifically, we are proposing to require facilities to submit on an annual basis an HCP Influenza Vaccination Summary Form to NHSN, according to the specifications available in the NHSN Healthcare Personnel VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Safety Component Protocol. We estimate the burden associated with this measure to be the time and effort necessary for facilities to complete and submit the HCP Influenza Vaccination Summary Form on an annual basis. We estimate that approximately 5,996 facilities will treat ESRD patients in PY 2018. We estimate it will take each facility approximately 75 minutes to collect and submit the data necessary to complete the Healthcare Personnel Influenza Vaccination Summary Form on an annual basis. Therefore, the estimated total annual burden associated with reporting this measure in PY 2018 is 7,495 hours [(75/60) hours × 5,996 facilities]. Again, we estimate the mean hourly wage of a registered nurse to be $33.13, and we anticipate nurses (or administrative staff who would be paid at a lower hourly wage) would be responsible for this reporting. In total, we believe the cost for all ESRD facilities to comply with the reporting requirements associated with the NHSN Healthcare Personnel Influenza Vaccination reporting measure would be approximately $248,309 (7,495 hours × $33.13/hour) total, or $41.37 ($248,309/ 5,996 facilities) per facility. XIV. 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. XV. Economic Analyses A. Regulatory Impact Analysis 1. Introduction We examined the impacts of this proposed rule as required by Executive Order 12866 (September 30, 1993, Regulatory Planning and Review) and Executive Order 13563 on Improving Regulation and Regulatory Review (January 11, 2011). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits of reducing costs, harmonizing rules, and promoting flexibility. This rule has been PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 40301 designated economically significant under section 3(f)(1) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget. We have prepared a Regulatory Impact Analysis that to the best of our ability presents the costs and benefits of the proposed rule. We solicit comments on the regulatory impact analysis provided. 2. Statement of Need This rule proposes a number of routine updates for renal dialysis services in CY 2015 and proposes several policy changes to the ESRD PPS. The routine updates include proposed updates to the wage index values, the wage index budget-neutrality adjustment factor, and the outlier payment threshold amounts. The proposed policy changes to the ESRD PPS include the revisions to the ESRDB market basket, changes in the CBSA delineations, changes to the laborrelated share, clarifications in the lowvolume payment adjustment, and additions and corrections to the ICD–10 codes that will be used for the comorbidity payment adjustment when compliance with ICD–10 is required beginning October 1, 2015. In addition, this rule implements sections 1881(b)(14)(F)(i) and (I), as amended by section 217 (b)(1) and (2) of PAMA, under which the drug utilization adjustment transition is eliminated and a 0.0 percent update to the ESRD PPS base rate is imposed in its place. This rule also implements the delay in payment for oral-only drugs used for the treatment of ESRD under the ESRD PPS until January 1, 2024 as required by section 217(a) of PAMA. Failure to publish this proposed rule would result in ESRD facilities not receiving appropriate payments in CY 2015. This rule proposes to implement requirements for the ESRD QIP by proposing to adopt measure sets for the PYs 2017 and 2018 programs, as directed by section 1881(h) of the Act. Failure to propose requirements for the PY 2017 ESRD QIP would prevent continuation of the ESRD QIP beyond PY 2016. In addition, proposing requirements for the PY 2018 ESRD QIP provides facilities with more time to review and fully understand new measures before their implementation in the ESRD QIP. This proposed rule proposes to establish a methodology for adjusting DMEPOS payment amounts using information from the Medicare DMEPOS CBP. The proposed rule would also phase in special payment rules for certain DME and enteral nutrition in a limited number of areas E:\FR\FM\11JYP2.SGM 11JYP2 40302 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules under the Medicare DMEPOS CBP. This proposed rule also proposes to clarify the Medicare hearing aid coverage exclusion under section 1862(a)(7). In addition, this proposed rule would modify the definition of minimal selfadjustment at § 414.402 to indicate what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists. Finally, if finalized, this proposed rule would provide clarification of the CHOW under the Medicare DMEPOS CBP. 3. Overall Impact We estimate that the proposed revisions to the ESRD PPS will result in an increase of approximately $30 million in payments to ESRD facilities in CY 2015, which includes the amount associated with updates to outlier threshold amounts, updates to the wage index, changes in CBSA delineations, and the labor-related share. For PY 2017, we estimate that the proposed requirements related to the ESRD QIP will cost approximately $27 thousand total, and the payment reductions will result in a total impact of approximately $16 million across all facilities. For PY 2018, we estimate that the proposed requirements related to the ESRD QIP will cost approximately $248 thousand total, and the payment reductions will result in a total impact of approximately $6.4 million across all facilities, resulting in a total impact from the proposed ESRD QIP of approximately $6.6 million. We estimate that the proposed methodology for adjusting DMEPOS payment amounts using information from DMEPOS CBPs would save over $7 billion over FY 2016–2020. The savings would be primarily achieved from the reduced payment amounts for items and services. We estimate the special payment rules would not have a negative impact on beneficiaries and suppliers, or on the Medicare program. Contract suppliers are responsible for furnishing items and services needed by the beneficiary, and the cost to suppliers for furnishing these items and services generally would not change based on whether or not the equipment and related items and services are paid for separately under a capped rental payment method. Because the supplier’s bids would reflect the cost of furnishing items in accordance with the new payment rules, we expect the overall savings generally would be the same as they are under the current payment rules. Furthermore, as indicated above, the special payment rules would be phased in under a limited number of areas first to determine impact on the program, beneficiaries, and suppliers, including their effects on cost, quality, and access before expanding to other areas after notice and comment rulemaking, if supported by evaluation results. We believe that the special payment rules would give beneficiaries more choice and flexibility in changing suppliers. We estimate the proposed clarification of the statutory Medicare hearing aid coverage exclusion leading to withdrawal of coverage for bone anchored hearing aid (BAHA) devices would not have a significant fiscal impact on the Medicare program because the Medicare program expenditure for BAHA paid under Medicare during the period CY2005 through CY 2013 was less than 9,000,000 per year. This proposed regulation would provide guidance as to coverage of DME with regard to the statutory exclusion. The proposed rule proposes to specify that cochlear implants and brain stem implants are not hearing aids subject to the statutory exclusion and therefore, proposes no change to the current Medicare coverage status for these items. We estimate that the proposed clarification of the definition of minimal self-adjustment would have no significant impact on program expenditures or access to orthotics. This proposed clarification would impact suppliers furnishing custom fitted orthotics that do not have the expertise necessary to make more than minimal adjustments to an orthotic that a beneficiary or caregiver could be trained to make. The impact on these few suppliers will vary according to the caseload of custom fitted orthotics provided by an individual supplier. However, we believe the majority of custom fitted devices are currently being furnished by an individual with expertise. We estimate clarifying the CHOW under the Medicare DMEPOS CBP would have no significant impact to DMEPOS suppliers. B. Detailed Economic Analysis 1. CY 2015 End-Stage Renal Disease Prospective Payment System a. Effects on ESRD Facilities To understand the impact of the changes affecting payments to different categories of ESRD facilities, it is necessary to compare estimated payments in CY 2014 to estimated payments in CY 2015. To estimate the impact among various types of ESRD facilities, it is imperative that the estimates of payments in CY 2014 and CY 2015 contain similar inputs. Therefore, we simulated payments only for those ESRD facilities for which we are able to calculate both current payments and new payments. For this proposed rule, we used the December 2013 update of CY 2013 National Claims History file as a basis for Medicare dialysis treatments and payments under the ESRD PPS. We updated the 2013 claims to 2014 and 2015 using various updates. The updates to the ESRD PPS base rate are described in section II.B of this proposed rule. Table 38 shows the impact of the estimated CY 2015 ESRD payments compared to estimated payments to ESRD facilities in CY 2014. TABLE 38—IMPACT OF PROPOSED CHANGES IN PAYMENTS TO ESRD FACILITIES OR CY 2015 PROPOSED RULE Number of facilities mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Effect of 2015 changes in outlier policy % A Facility type Number of treatments (in millions) Effect of 2015 changes in wage indexes, CBSA designations and labor-related share % B C D All Facilities .............................................. Type: Freestanding ..................................... Hospital based .................................. Ownership Type: VerDate Mar<15>2010 19:36 Jul 10, 2014 Jkt 232001 Effect of 2015 changes in payment rate update % Effect of total 2015 changes % E F 5,996 0.3 0.0 0.0 0.3 5,520 476 PO 00000 39.1 36.6 2.5 0.3 0.3 0.0 0.2 0.0 0.0 0.3 0.5 Frm 00096 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40303 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 38—IMPACT OF PROPOSED CHANGES IN PAYMENTS TO ESRD FACILITIES OR CY 2015 PROPOSED RULE— Continued Number of facilities Effect of 2015 changes in outlier policy % A Facility type Number of treatments (in millions) Effect of 2015 changes in wage indexes, CBSA designations and labor-related share % B C D Effect of 2015 changes in payment rate update % Effect of total 2015 changes % E F 4,150 871 582 393 27.5 5.9 3.6 2.1 0.3 0.2 0.2 0.3 ¥0.1 0.2 0.2 0.1 0.0 0.0 0.0 0.0 0.2 0.4 0.4 0.4 1,212 4,784 5.9 33.3 0.3 0.3 ¥0.8 0.1 0.0 0.0 ¥0.5 0.4 979 497 661 352 177 710 42 1,333 438 807 5.8 2.9 4.8 1.9 1.3 5.4 0.3 9.1 2.0 5.6 0.3 0.3 0.3 0.2 0.3 0.2 0.3 0.3 0.3 0.3 ¥0.3 ¥1.2 0.9 ¥0.1 1.3 1.5 ¥3.9 ¥0.6 ¥0.2 ¥0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ¥0.9 1.1 0.1 1.5 1.7 ¥3.6 ¥0.3 0.0 ¥0.3 1,086 2,226 2,523 161 2.7 10.5 25.7 0.3 0.3 0.3 0.3 0.3 ¥0.3 ¥0.3 0.1 ¥0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.2 5,885 48 12 51 Large dialysis organization ............... Regional chain .................................. Independent ...................................... Hospital based 1 ................................ Geographic Location: Rural ................................................. Urban ................................................ Census Region: East North Central ............................ East South Central ........................... Middle Atlantic .................................. Mountain ........................................... New England .................................... Pacific 2 ............................................. Puerto Rico and Virgin Islands ......... South Atlantic .................................... West North Central ........................... West South Central .......................... Facility Size: Less than 4,000 treatments3 ............ 4,000 to 9,999 treatments ................ 10,000 or more treatments ............... Unknown ........................................... Percentage of Pediatric Patients: Less than 2% .................................... Between 2 and 19% ......................... Between 20 and 49% ....................... More than 50% ................................. 38.7 0.4 0.0 0.0 0.3 0.3 0.1 0.0 0.0 0.0 ¥0.4 0.2 0.0 0.0 0.0 0.0 0.3 0.2 ¥0.3 0.3 1 Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership. ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands. 3 Of the 1,086 ESRD facilities with less than 4,000 treatments, approximately 422 would be expected to qualify for the low-volume adjustment in 2015. This estimate is based on actual claims for 2013 plus the number of hospital-based facilities that may newly qualify with a change in policy. The low-volume adjustment is mandated by Congress, and is not applied to pediatric patients. The impact to these low-volume facilities is a 0.4 percent decrease in payments. Note: Totals do not necessarily equal the sum of rounded parts, as percentages are multiplicative, not additive. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 2 Includes 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.4 of this proposed rule is shown in column C. For CY 2015, the impact on all ESRD facilities as a result of the changes to the outlier payment policy will be a 0.3 percent increase in estimated payments. The estimated impact of the changes to outlier payment policy ranges from a 0.0 percent to a 0.3 percent increase. Nearly all ESRD facilities are anticipated to experience a positive effect in their estimated CY 2015 payments as a result of the proposed outlier policy changes. Column D shows the effect of the wage index, new CBSA delineations, VerDate Mar<15>2010 19:36 Jul 10, 2014 Jkt 232001 and labor-related share on ESRD facilities and reflects the CY 2015 wage index values for the ESRD PPS payments. Facilities located in the census region of Puerto Rico and the Virgin Islands would receive a 3.9 percent decrease in estimated payments in CY 2015. Since most of the facilities in this category are located in Puerto Rico, the decrease is primarily due to the change in the labor-related share. The other categories of types of facilities in the impact table show changes in estimated payments ranging from a 3.9 percent decrease to a 1.5 percent increase due to the update of the wage indexes, CBSA delineations and laborrelated share. Column E shows the effect of the ESRD PPS payment rate update of 0.0 percent as required by section PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 1881(b)(14)(F) and (I) as amended by section 217 of PAMA. Column F reflects the overall impact (that is, the effects of the proposed outlier policy changes, the proposed wage index, the proposed CBSA delineations, the proposed labor-related share, and the effect of the payment rate update. We expect that overall ESRD facilities will experience a 0.3 percent increase in estimated payments in 2015. ESRD facilities in Puerto Rico and the Virgin Islands are expected to receive a 3.6 percent decrease in their estimated payments in CY 2015. This larger decrease is primarily due to the negative impact of the change in the labor-related share. The other categories of types of facilities in the impact table show impacts ranging from a decrease of 0.9 percent to increase of 1.7 percent in their 2015 estimated payments. E:\FR\FM\11JYP2.SGM 11JYP2 40304 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules b. Effects on Other Providers Under the ESRD PPS, ESRD facilities are paid directly for the renal dialysis bundle and other provider types such as laboratories, DME suppliers, and pharmacies, may no longer bill Medicare directly for renal dialysis services. Rather, effective January 1, 2011, such other providers can only furnish renal dialysis services under arrangements with ESRD facilities and must seek payment from ESRD facilities rather than Medicare. Under the ESRD PPS, Medicare pays ESRD facilities one payment for renal dialysis services, which may have been separately paid to suppliers by Medicare prior to the implementation of the ESRD PPS. Therefore, in CY 2015, we estimate that the proposed ESRD PPS will have zero impact on these other providers. c. Effects on the Medicare Program We estimate that Medicare spending (total Medicare program payments) for ESRD facilities in CY 2015 will be approximately $9.1 billion. This estimate takes into account a projected increase in fee-for-service Medicare dialysis beneficiary enrollment of 3.2 percent in CY 2015. d. Effects on Medicare Beneficiaries Under the ESRD PPS, beneficiaries are responsible for paying 20 percent of the ESRD PPS payment amount. As a result of the projected 0.3 percent overall increase in the proposed ESRD PPS payment amounts in CY 2015, we estimate that there will be an increase in beneficiary co-insurance payments of 0.3 percent in CY 2015, which translates to approximately $10 million. e. Alternatives Considered For this proposed rule, we proposed to implement a 50/50 blended wage index for CY 2015 that would apply to all ESRD facilities. Specifically, the proposal would transition all ESRD facilities experiencing an impact, or not, due to the implementation of the new CBSA delineations. We considered proposing to implement the new CBSA delineations without a transition; however we decided to mitigate the impact this change would have on ESRD facilities that may experience a decrease in payments due to the change. In addition, for CY 2015 we proposed to implement a revised 50.673 percent labor-related share using a 2-year transition. This proposal would transition all ESRD facilities from the current labor-related share of 41.737 percent to the revised labor-related share of 50.673 percent. We considered proposing to implement the laborrelated share without a transition; however we decided to mitigate the impact this change would have on ESRD facilities that may experience a decrease in payments due to the change. 2. End-Stage Renal Disease Quality Incentive Program a. Effects of the PY 2017 ESRD QIP The ESRD QIP provisions are intended to prevent possible reductions in the quality of ESRD dialysis facility services provided to beneficiaries as a result of payment changes under the ESRD PPS. The methodology that we are proposing to use to determine a facility’s TPS for PY 2017 is described in section III.F.5 of this proposed rule. Any reductions in ESRD PPS payments as a result of a facility’s performance under the PY 2017 ESRD QIP would affect the facility’s reimbursement rates in CY 2017. We estimate that, of the total number of dialysis facilities (including those not receiving a TPS), approximately 20 percent or 1,227 of the facilities would likely receive a payment reduction in PY 2017. Facilities that do not receive a TPS are not eligible for a payment reduction. In conducting our impact assessment, we have assumed that there will be an initial count of 5,996 dialysis facilities paid under the ESRD PPS. Table 39 shows the overall estimated distribution of payment reductions resulting from the PY 2017 ESRD QIP. TABLE 39—ESTIMATED DISTRIBUTION OF PY 2017 ESRD QIP PAYMENT REDUCTIONS Number of facilities Payment reduction (percent) 0.0 0.5 1.0 1.5 2.0 ................................................................................................................................................................ ................................................................................................................................................................ ................................................................................................................................................................ ................................................................................................................................................................ ................................................................................................................................................................ Percent of facilities 4,484 887 264 58 18 78.5 15.5 4.6 1.0 0.3 Note: This table excludes 285 facilities that we estimate will not receive a payment reduction because they will not report enough data to receive a Total Performance Score. To estimate whether or not a facility would receive a payment reduction in PY 2017, we scored each facility on achievement and improvement on several measures we have previously finalized and for which there were available data from CROWNWeb and Medicare claims. Measures used for the simulation are shown in Table 40. TABLE 40—DATA USED TO ESTIMATE PY 2017 ESRD QIP PAYMENT REDUCTIONS Period of time used to calculate achievement thresholds, performance standards, benchmarks, and improvement thresholds mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Measure Vascular Access Type: % Fistula ..................................................................................................................... % Catheter .................................................................................................................. Kt/V: Adult HD ...................................................................................................................... Adult PD ...................................................................................................................... Pediatric HD ................................................................................................................ Hypercalcemia .................................................................................................................... VerDate Mar<15>2010 20:52 Jul 10, 2014 Jkt 232001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 Performance period Jan 2012—Dec 2012 .............. Jan 2012—Dec 2012 .............. Jan 2013—Dec 2013. Jan 2013—Dec 2013. Jan 2012—Dec 2012 .............. Jan 2012—Dec 2012 .............. Jan 2012—Dec 2012 .............. May 2012—Dec 2012 ............. Jan Jan Jan Jan E:\FR\FM\11JYP2.SGM 11JYP2 2013—Dec 2013—Dec 2013—Dec 2013—Dec 2013. 2013. 2013. 2013. 40305 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 40—DATA USED TO ESTIMATE PY 2017 ESRD QIP PAYMENT REDUCTIONS—Continued Measure Period of time used to calculate achievement thresholds, performance standards, benchmarks, and improvement thresholds Performance period SRR .................................................................................................................................... Jan 2011—Dec 2011 .............. Jan 2012—Dec 2012. Clinical measure topic areas with less than 11 cases for a facility were not included in that facility’s Total Performance Score. Each facility’s Total Performance Score was compared to the estimated minimum Total Performance Score and the payment reduction table found in section III.F.8 of this proposed rule. Facility reporting measure scores were estimated using available data from CY 2013. Facilities were required to have a score on at least one clinical and one reporting measure in order to receive a Total Performance Score. To estimate the total payment reductions in PY 2017 for each facility resulting from this proposed rule, we multiplied the total Medicare payments to the facility during the one year period between January 2013 and December 2013 by the facility’s estimated payment reduction percentage expected under the ESRD QIP, yielding a total payment reduction amount for each facility: (Total ESRD payment in January 2013 through December 2013 times the estimated payment reduction percentage). For PY 2017, the total payment reduction for the 1,227 facilities estimated to receive a reduction is approximately $11.9 million ($11,873,127). Further, we estimate that the total costs associated with the collection of information requirements for PY 2017 described in section VIII.1.a of this proposed rule would be approximately $27 thousand for all ESRD facilities. As a result, we estimate that ESRD facilities will experience an aggregate impact of approximately $11.9 million ($27,232 + $11,873,127 = $11,900,359) in PY 2017, as a result of the PY 2017 ESRD QIP. Table 41 below shows the estimated impact of the finalized ESRD QIP payment reductions to all ESRD facilities for PY 2017. The table estimates the distribution of ESRD facilities by facility size (both among facilities considered to be small entities and by number of treatments per facility), geography (both urban/rural and by region), and by facility type (hospital based/freestanding facilities). Given that the time periods used for these calculations will differ from those we are proposing to use for the PY 2017 ESRD QIP, the actual impact of the PY 2017 ESRD QIP may vary significantly from the values provided here. TABLE 41—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017 Number of treatments 2013 (in millions) mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Number of facilities All Facilities ...................................................... Facility Type: Freestanding ............................................. Hospital-based .......................................... Ownership Type: Large Dialysis ........................................... Regional Chain ......................................... Independent .............................................. Hospital-based (non-chain) ....................... Facility Size: Large Entities ............................................ Small Entities 1 .......................................... Rural Status: 1) Yes ....................................................... 2) No ......................................................... Census Region: Northeast .................................................. Midwest ..................................................... South ......................................................... West .......................................................... US Territories 2 ......................................... Census Division: East North Central .................................... East South Central ................................... Middle Atlantic .......................................... Mountain ................................................... New England ............................................ Pacific ....................................................... South Atlantic ............................................ West North Central ................................... West South Central .................................. US Territories 2 ......................................... Facility Size (# of total treatments): VerDate Mar<15>2010 20:52 Jul 10, 2014 Jkt 232001 PO 00000 Number of facilities expected to receive a payment reduction Number of facilities with QIP score Payment reduction (percent change in total ESRD payments) 5,996 39.1 5,711 1,227 ¥0.14 5,520 476 36.6 2.5 5,289 422 1,093 134 ¥0.13 ¥0.24 4,150 871 582 393 27.5 5.9 3.6 2.1 3,995 836 534 346 786 169 157 115 ¥0.12 ¥0.14 ¥0.22 ¥0.25 5,021 975 33.5 5.7 4,831 880 955 272 ¥0.12 ¥0.23 1,212 4,784 5.9 33.3 1,167 4,544 187 1,040 ¥0.10 ¥0.15 792 1,341 2,527 1,015 321 5.8 7.7 17.5 7.1 1.0 770 1,276 2,460 966 239 160 314 504 159 90 ¥0.14 ¥0.16 ¥0.12 ¥0.10 ¥0.33 979 497 661 352 177 710 1,333 438 807 42 5.8 2.9 4.8 1.9 1.3 5.4 9.1 2.0 5.6 0.3 909 475 632 335 168 671 1,279 417 783 42 249 92 139 55 29 119 314 81 125 24 ¥0.19 ¥0.12 ¥0.16 ¥0.10 ¥0.13 ¥0.11 ¥0.15 ¥0.12 ¥0.10 ¥0.42 Frm 00099 Fmt 4701 Sfmt 4702 E:\FR\FM\11JYP2.SGM 11JYP2 40306 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 41—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017—Continued Number of treatments 2013 (in millions) Number of facilities Less than 4,000 treatments ...................... 4,000–9,999 treatments ............................ Over 10,000 treatments ............................ Unknown ................................................... 1 Small 1,086 2,226 2,523 161 Number of facilities expected to receive a payment reduction Number of facilities with QIP score 2.7 10.5 25.7 0.3 928 2,174 2,514 95 Payment reduction (percent change in total ESRD payments) ¥0.17 ¥0.12 ¥0.14 ¥0.38 211 423 557 36 Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status. Puerto Rico and Virgin Islands. on claims and CROWNWeb data through December 2013. 2 Includes 3 Based b. Effects of the PY 2018 ESRD QIP The methodology that we are proposing to use to determine a facility’s TPS for the PY 2018 ESRD QIP is described in sections III.F.6 and III.F.7 of this proposed rule. Any reductions in ESRD PPS payments as a result of a facility’s performance under the PY 2018 ESRD QIP would apply to ESRD PPS payments made to the facility in CY 2018. We estimate that, of the total number of dialysis facilities (including those not receiving a TPS), approximately 16 percent or 919 of the facilities would likely receive a payment reduction in PY 2018. Facilities that do not receive a TPS are not eligible for a payment reduction. In conducting our impact assessment, we have assumed that there will be 5,996 dialysis facilities paid through the PPS. Table 42 shows the overall estimated distribution of payment reductions resulting from the PY 2018 ESRD QIP. To estimate whether or not a facility would receive a payment reduction in PY 2018, we scored each facility on achievement and improvement on several measures we have previously finalized and for which there were TABLE 42—ESTIMATED DISTRIBUTION available data from CROWNWeb and OF PY 2018 ESRD QIP PAYMENT Medicare claims. Measures used for the REDUCTIONS simulation are shown in Table 43. Payment reduction (percent) 0.0 0.5 1.0 1.5 2.0 Number of facilities ............. ............. ............. ............. ............. 4,989 729 132 35 23 Percent of facilities (percent) 84.4 12.3 2.2 0.6 0.4 Note: This table excludes 88 facilities that we estimate will not receive a payment reduction because they will not report enough data to receive a Total Performance Score. TABLE 43-DATA USED TO ESTIMATE PY 2018 ESRD QIP PAYMENT REDUCTIONS Period of time used to calculate achievement thresholds, performance standards, benchmarks, and improvement thresholds Performance period Jan 2012–Dec 2012 ............................................................. Jan 2012–Dec 2012 ............................................................. Jan 2013–Dec 2013. Jan 2013–Dec 2013. Jan 2012–Dec 2012 ............................................................. Jan 2012–Dec 2012 ............................................................. Jan 2012–Dec 2012 ............................................................. Jan 2012–Dec 2012 ............................................................. May 2012–Dec 2012 ............................................................ Jan 2011–Dec 2011 ............................................................. Jan 2011–Dec 2011 ............................................................. Jan Jan Jan Jan Jan Jan Jan Measure mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Vascular Access Type: % Fistula ........................................................................ % Catheter ..................................................................... Kt/V: Adult HD ........................................................................ Adult PD ......................................................................... Pediatric HD ................................................................... Pediatric PD ................................................................... Hypercalcemia ...................................................................... SRR ....................................................................................... STrR ...................................................................................... Clinical measure topic areas with less than 11 cases for a facility were not included in that facility’s Total Performance Score. Each facility’s Total Performance Score was compared to an estimated minimum Total Performance Score and an estimated payment reduction table that were consistent with the proposals outlined in Section III.G.9 of this proposed rule. Facility reporting measure scores were estimated VerDate Mar<15>2010 20:52 Jul 10, 2014 Jkt 232001 using available data from CY 2013. Facilities were required to have a score on at least one clinical and one reporting measure in order to receive a Total Performance Score. To estimate the total payment reductions in PY 2018 for each facility resulting from this proposed rule, we multiplied the total Medicare payments to the facility during the one year period between January 2013 and December 2013 by the facility’s estimated payment PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 2013–Dec 2013–Dec 2013–Dec 2013–Dec 2013–Dec 2012–Dec 2012–Dec 2013. 2013. 2013. 2013. 2013. 2012. 2012 reduction percentage expected under the ESRD QIP, yielding a total payment reduction amount for each facility: (Total ESRD payment in January 2013 through December 2013 times the estimated payment reduction percentage). For PY 2018, the total payment reduction for all of the 919 facilities expected to receive a reduction is approximately $7 million ($6,958,521). Further, we estimate that E:\FR\FM\11JYP2.SGM 11JYP2 40307 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules the total costs associated with the collection of information requirements for PY 2018 described in Section VIII.1.b of this proposed rule would be approximately $248 thousand for all ESRD facilities. As a result, we estimate that ESRD facilities will experience an aggregate impact of approximately $7.2 million ($248,309 + $6,958,521 = $7,206,830) in PY 2018, as a result of the PY 2018 ESRD QIP. Table 44 below shows the estimated impact of the finalized ESRD QIP payment reductions to all ESRD facilities for PY 2018. The table details the distribution of ESRD facilities by facility size (both among facilities considered to be small entities and by number of treatments per facility), geography (both urban/rural and by region), and by facility type (hospital based/freestanding facilities). Given that the time periods used for these calculations will differ from those we propose to use for the PY 2018 ESRD QIP, the actual impact of the PY 2018 ESRD QIP may vary significantly from the values provided here. TABLE 44—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2018 Number of treatments 2013 (in millions) Number of facilities Payment reduction (percent change in total ESRD payments) 5,996 39.1 5,908 919 ¥0.10 5,520 476 36.6 2.5 5,455 453 818 101 ¥0.09 ¥0.17 4,150 871 582 393 27.5 5.9 3.6 2.1 4,115 858 561 374 580 127 123 89 ¥0.08 ¥0.10 ¥0.15 ¥0.19 5,021 975 33.5 5.7 4,973 935 707 212 ¥0.08 ¥0.16 1,212 4,784 5.9 33.3 1,190 4,718 139 780 ¥0.07 ¥0.10 792 1,341 2,527 1,015 321 5.8 7.7 17.5 7.1 1.0 784 1,318 2,517 1,008 281 111 226 337 109 136 ¥0.08 ¥0.10 ¥0.07 ¥0.06 ¥0.43 979 497 661 352 177 710 1,333 438 807 42 5.8 2.9 4.8 1.9 1.3 5.4 9.1 2.0 5.6 0.3 952 493 650 349 172 703 1,315 426 806 42 202 67 106 43 21 90 232 53 90 15 ¥0.13 ¥0.09 ¥0.10 ¥0.08 ¥0.09 ¥0.08 ¥0.10 ¥0.07 ¥0.07 ¥0.25 1,086 2,226 2,523 161 All Facilities ...................................................... Facility Type: Freestanding ............................................. Hospital-based .......................................... Ownership Type: Large Dialysis ........................................... Regional Chain ......................................... Independent .............................................. Hospital-based (non-chain): Facility Size:. Large Entities ............................................ Small Entities 1 .......................................... Rural Status: (1) Yes ...................................................... (2) No ........................................................ Census Region: Northeast .................................................. Midwest ..................................................... South ......................................................... West .......................................................... US Territories 2 ......................................... Census Division: East North Central .................................... East South Central ................................... Middle Atlantic .......................................... Mountain ................................................... New England ............................................ Pacific ....................................................... South Atlantic ............................................ West North Central ................................... West South Central .................................. US Territories 2 ......................................... Facility Size (# of total treatments): Less than 4,000 treatments ...................... 4,000–9,999 treatments ............................ Over 10,000 treatments ............................ Unknown ................................................... 1 Small Number of facilities expected to receive a payment reduction Number of facilities with QIP score 2.7 10.5 25.7 0.3 1,032 2,225 2,523 128 215 277 352 75 ¥0.16 ¥0.07 ¥0.07 ¥0.59 Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status. Puerto Rico and Virgin Islands. on claims and CROWNWeb data through December 2013. 2 Includes 3 Based mstockstill on DSK4VPTVN1PROD with PROPOSALS2 3. DMEPOS Provisions a. Effects of the Proposed Methodology for Adjusting DMEPOS Payment Amounts Using Information From Competitive Bidding Programs We estimate that the proposed methodology for adjusting DMEPOS VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 payment amounts using information from DMEPOS CBPs would save over $7 billion over FY 2016 through 2020. The savings would be primarily achieved from price reductions for items. Therefore, most of the economic impact is expected from the reduced prices. We PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 estimate that approximately half of the DMEPOS items and services furnished to Medicare beneficiaries are furnished to beneficiaries residing outside existing CBAs. (See Table 45.) E:\FR\FM\11JYP2.SGM 11JYP2 40308 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 45—IMPACT OF PRICING ITEMS IN NON-COMPETITIVE AREAS USING COMPETITIVE BIDDING PRICING Impact on the federal government in dollars (to the nearer ten million) FY 2016 2017 2018 2019 2020 b. Effects of the Proposed Special Payment Methodologies and Payment Rules for Durable Medical Equipment and Enteral Nutrition Furnished Under the Competitive Bidding Program We believe that the proposed special payment rules would not have a significant impact on beneficiaries and suppliers. Contract suppliers are responsible for furnishing items and services needed by the beneficiary, and the cost to suppliers for furnishing these items and services does not change based on whether or not the equipment and related items and services are paid for separately under a capped rental payment method. Because the supplier’s bids would reflect the cost of furnishing items in accordance with the new payment rules, we expect the overall savings would be generally the same as they are under the current payment rules. Furthermore, as indicated above, we are proposing that the alterative payment rules would be phased in under a limited number of areas first to determine impact on the program, beneficiaries, and suppliers. If supported by evaluation results, a decision to expand the proposed special payment rules to other areas would be addressed in future rulemaking. c. Effects of the Proposed Clarification of the Scope of the Medicare Hearing Aid Coverage Exclusion mstockstill on DSK4VPTVN1PROD with PROPOSALS2 ¥880 ¥1,430 ¥1,520 ¥1,630 ¥1,750 ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... Although these transfers create incentives that very likely cause changes in the way society uses its resources, we lack data with which to estimate the resulting social costs or benefits. This proposed rule proposes to clarify the scope of the Medicare coverage exclusion for hearing aids and proposes to no longer cover BAHAs. However, if finalized, this proposed rule would have no significant fiscal impact on the Medicare program, because Medicare program expenditures for BAHAs VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 Impact on beneficiary cost sharing in dollars (to the nearer ten million) during the period CY2005 through CY 2013 have been insignificant. This proposed clarification would provide clear guidance about coverage of DME with regard to the statutory hearing aid exclusion. The proposed regulation, if finalized, would explicitly except cochlear implants and brain stem implants from the hearing aid exclusion, and therefore, Medicare coverage for these devices would continue. We estimate that the proposed clarification of the scope of the Medicare hearing coverage exclusion would save Medicare approximately $80 million dollars over five years beginning in January 1, 2015 through September 30, 2019. The savings would be primarily achieved from removing coverage of the BAHA device. (See Table 46.) ¥270 ¥470 ¥510 ¥540 ¥580 in section 1861(r) of the Act, a treating practitioner means a physician assistant, nurse practitioner, or clinical nurse specialist as defined in section 1861(aa)(5) of the Act, an occupational therapist as defined in 42 CFR 484.4, or physical therapist as defined in 42 CFR 484.4 in compliance with all applicable Federal and State licensure and regulatory requirements. We estimate that the proposed clarification of the definition of minimal self-adjustment would have no significant impact on program expenditures or access to orthotics. This proposed clarification would impact suppliers furnishing custom fitted orthotics that do not have the expertise necessary to make more than minimal adjustments to an orthotic that a beneficiary or caregiver could be trained to make. e. Effects of the Proposed Revision to TABLE 46—CLARIFICATION OF THE STATUTORY MEDICARE HEARING AID Change of Ownership Rules To Allow Contract Suppliers To Sell Specific COVERAGE EXCLUSION Lines of Business Impact to the Federal Government (rounded to the nearer $10 millions) FY 2015 2016 2017 2018 2019 ¥10 ¥10 ¥20 ¥20 ¥20 .......................... .......................... .......................... .......................... .......................... d. Effects of the Proposed Definition of Minimal Self-Adjustment of Orthotics Under Competitive Bidding The proposed rule would modify the definition of minimal self-adjustment to indicate that it means an adjustment that the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification) or a physician as defined PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 This rule would clarify the change of ownership rules so as to not interfere with the normal course of business for DME suppliers. This rule would establish an exception under the CHOW rules to allow transfer of part of a competitive bidding contract when a contract supplier sells a distinct line of business to a qualified successor entity r under certain specific circumstances. This clarification would impact businesses in a positive way by allowing them to conduct everyday transactions without interference from our rules and regulations. C. Accounting Statement As required by OMB Circular A–4 (available at https://www.whitehouse. gov/omb/circulars_a004_a-4), in Table 47 below, we have prepared an accounting statement showing the classification of the transfers and costs associated with the various provisions of this proposed rule. E:\FR\FM\11JYP2.SGM 11JYP2 40309 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules TABLE 47—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS Category Transfers ESRD PPS for CY 2015 Annualized Monetized Transfers ................................................................................................ From Whom to Whom ................................................................................................................ Increased Beneficiary Co-insurance Payments ......................................................................... From Whom to Whom ................................................................................................................ $ 30 million. Federal government to ESRD providers. $10 million. Beneficiaries to ESRD providers. ESRD QIP for PY 2017 Annualized Monetized Transfers ................................................................................................ From Whom to Whom ................................................................................................................ ¥$11.9 million. Federal government to ESRD providers. Category Costs Annualized Monetized ESRD Provider Costs ............................................................................ $27 thousand. ESRD QIP for PY 2018 Annualized Monetized Transfers ................................................................................................ From Whom to Whom ................................................................................................................ Annualized Monetized ESRD Provider Costs ............................................................................ ¥$7 million. Federal government to ESRD providers. $248 thousand. Pricing Items in Non-competitive Areas Using Competitive Bidding Pricing Category Transfer Annualized monetized transfer on beneficiary cost sharing Estimates Year dollar ¥$464.5 million ............................................. ¥$469.9 million ............................................. From Whom to Whom .................................... Discount rate (percent) 2014 2014 7 3 Period covered 2016–2020 2016–2020 Beneficiaries to Medicare providers. Transfers Annualized monetized transfer payments Estimates Year dollar ¥$1,415.4 million .......................................... ¥$1,430.5 million .......................................... From Whom to Whom .................................... 2014 2014 Discount rate (percent) 7 3 Period covered 2016–2020 2016–2020 Federal government to Medicare providers. Clarification of the Statutory Medicare Hearing Aid Coverage Exclusion Category Transfers Annualized monetized transfer payments Estimates Year dollar ¥$15.6 million ............................................... ¥$15.8 million ............................................... From Whom to Whom .................................... mstockstill on DSK4VPTVN1PROD with PROPOSALS2 XVI. Regulatory Flexibility Act Analysis The Regulatory Flexibility Act (September 19, 1980, Pub. L. 96–354) (RFA) requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Approximately 16 percent of ESRD VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 2014 2014 Discount rate (percent) 7 3 Period covered 2015–2019 2015–2019 Federal government to Medicare providers. dialysis facilities are considered small entities according to the Small Business Administration’s (SBA) size standards, which classifies small businesses as those dialysis facilities having total revenues of less than $35.5 million in any 1 year. Individuals and States are not included in the definitions of a small entity. For more information on SBA’s size standards, see the Small Business Administration’s Web site at https://www.sba.gov/content/smallbusiness-size-standards (Kidney PO 00000 Frm 00103 Fmt 4701 Sfmt 4702 Dialysis Centers are listed as 621492 with a size standard of $35.5 million). We do not believe ESRD facilities are operated by small government entities such as counties or towns with populations of 50,000 or less, and therefore, they are not enumerated or included in this estimated RFA analysis. Individuals and States are not included in the definition of a small entity. For purposes of the RFA, we estimate that approximately 16 percent of ESRD facilities are small entities as that term is used in the RFA (which includes E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40310 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules small businesses, nonprofit organizations, and small governmental jurisdictions). This amount is based on the number of ESRD facilities shown in the ownership category in Table 38. Using the definitions in this ownership category, we consider the 582 facilities that are independent and the 393 facilities that are shown as hospitalbased to be small entities. The ESRD facilities that are owned and operated by LDOs and regional chains would have total revenues of more than $35.5 million in any year when the total revenues for all locations are combined for each business (individual LDO or regional chain), and are not, therefore, included as small entities. For the ESRD PPS updates proposed in this rule, a hospital-based ESRD facility (as defined by ownership type) is estimated to receive a 0.4 percent increase in payments for CY 2015. An independent facility (as defined by ownership type) is also estimated to receive a 0.4 percent increase in payments for CY 2015. We estimate that of the 1,217 ESRD facilities expected to receive a payment reduction in the PY 2017 ESRD QIP, 275 of those facilities would be ESRD small entity facilities. We present these findings in Table 39 (‘‘Estimated Distribution of PY 2017 ESRD QIP Payment Reductions’’) and Table 41 (‘‘Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY 2017’’) above. We estimate that the payment reductions will average approximately $9,353 per facility across the 1,217 facilities receiving a payment reduction, and $8,698 for each small entity facility. Using our estimates of facility performance, we also estimated the impact of payment reductions on ESRD small entity facilities by comparing the total payment reductions for the 275 small entity facilities with the aggregate ESRD payments to all small facilities. We estimate that there are a total of 885 small facilities, and that the aggregate ESRD PPS payments to these facilities would decrease 0.23 percent in PY 2017. We estimate that of the 1,320 ESRD facilities expected to receive a payment reduction in the PY 2018 ESRD QIP, 282 are ESRD small entity facilities. We present these findings in Table 39 (‘‘Estimated Distribution of PY 2018 ESRD QIP Payment Reductions’’) and Table 41 (‘‘Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY 2018’’) above. We estimate that the payment reductions will average approximately $7,119 per facility across the 895 facilities receiving a payment reduction, and $6,294 for each small entity facility. Using our estimates of VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 facility performance, we also estimated the impact of payment reductions on ESRD small entity facilities by comparing the total estimated payment reductions for 209 small entity facilities with the aggregate ESRD payments to all small entity facilities. We estimate that there are a total of 975 small entity facilities, and that the aggregate ESRD PPS payments to these facilities would decrease 0.16 percent in PY 2018. We expect that the proposed methodology for adjusting DMEPOS payment amounts using information from DMEPOS CBPs would have a significant impact on a substantial number of small suppliers. Although suppliers furnishing items and services outside CBAs do not have to compete and be awarded contracts in order to continue furnishing these items and services, the payment amounts for these items and services would be reduced using the methodology established as a result of the proposed rule. The statute requires that the methodology for adjusting payment amounts take into consideration the costs of furnishing items and services in areas where the adjustments will occur and these considerations are discussed in the preamble (refer to section IV(A)(5) of the preamble). The proposed methodology for making payment adjustments would allow for adjustments based on bids in different geographic regions to reflect regional variation in costs of furnishing items and services and the national floor for adjustments in states with unique costs. We believe that suppliers would be able to continue furnishing items and services to beneficiaries in areas outside the CBAs after the reductions in the payment amounts are applied without a significant change in the rate at which they accept assignment of Medicare claims for these items and services. Because section 1834(a)(1)(F)(ii) of the Act mandates that payment amounts for DME subject to competitive bidding be adjusted in areas where CBPs are not implemented, the only alternative we can consider other than paying based on adjusted fee schedule amounts is to implement CBPs in all areas. However, this approach would have an even greater impact on small suppliers. We expect the proposed special payment rules for DME and enteral nutrition would not have a significant impact on small suppliers. We believe that these rules would benefit affected suppliers since payment for rental of DME and enteral nutrition infusion pumps would no longer be capped and suppliers would retain ownership to the equipment. We expect that the proposal to modify the definition of minimal self- PO 00000 Frm 00104 Fmt 4701 Sfmt 4702 adjustment of orthotics would not have a significant impact on small suppliers. According to the Medicare Pricing, Data Analysis and Coding (PDAC) Contractor from FY 2010 through FY 2013 there were approximately 6,000 DMEPOS suppliers with a provider transaction access number (PTAN) registered with the National Supplier Clearinghouse to supply orthotics. In addition, there are a limited number of applicable HCPCS codes (approximately 77) that require a skilled individual’s expertise. We believe that the majority of businesses providing orthotics already employ a ‘‘skilled individual.’’ However, for those few businesses that do not already have a skilled individual providing custom fitted orthotics they could comply with the proposed changes to the definition and requirements by hiring a skilled individual. For example, according to the Bureau of Labor Statistics Occupational Employment Statistics May 2013 the median pay for a certified orthotist was $30.27 an hour. The impact will vary according to the caseload of custom fitted orthotics provided by an individual supplier. We expect that although the proposal which clarifies the scope of the Medicare statutory exclusion for hearing aids would withdraw the coverage for BAHAs, it would not have a significant impact on small suppliers since the volume of allowed services for bone anchored hearing aids covered by Medicare is very small (less than 2,000 nationwide) and would not account for a large percentage of any individual supplier’s total revenue. We expect that the proposed revisions to CHOW rules to allow contract suppliers to sell specific lines of business provision would have a positive impact on suppliers and no significant negative impact on small suppliers. Therefore, the Secretary has determined that this proposed rule would have a significant economic impact on a substantial number of small entities. We solicit comment on the RFA analysis provided. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. Any such regulatory impact analysis must conform to the provisions of section 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 E:\FR\FM\11JYP2.SGM 11JYP2 40311 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules small rural hospitals because most dialysis facilities are freestanding. While there are 145 rural hospital-based dialysis facilities, we do not know how many of them are based at hospitals with fewer than 100 beds. However, overall, the 145 rural hospital-based dialysis facilities will experience an estimated 0.1 percent decrease in payments. As a result, this proposed rule is not estimated to have a significant impact on small rural hospitals. Therefore, the Secretary has determined that this proposed rule will not have a significant impact on the operations of a substantial number of small rural hospitals. XVII. Unfunded Mandates Reform Act Analysis Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104–4) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year $100 million in 1995 dollars, updated annually for inflation. In 2013, that threshold is approximately $141 million. This proposed rule does not include any mandates that would impose spending costs on State, local, or Tribal governments in the aggregate, or by the private sector, of $141 million. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 XVIII. Federalism Analysis Executive Order 13132 on Federalism (August 4, 1999) establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have reviewed this 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. XXI. Congressional Review Act This proposed rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress and the Comptroller General for review. In accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the Office of Management and Budget. XX. Files Available to the Public via the Internet The Addenda for the annual ESRD PPS proposed and final rulemakings VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 will no longer appear in the Federal Register. Instead, the Addenda will be available only through the Internet and is posted on the CMS Web site at https://www.cms.gov/ESRDPayment/ PAY/list.asp. In addition to the Addenda, limited data set (LDS) files are available for purchase at https:// www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/ LimitedDataSets/ EndStageRenalDiseaseSystemFile.html. Readers who experience any problems accessing the Addenda or LDS files should contact Stephanie Frilling at (410) 786–4507. List of Subjects 42 CFR Part 405 Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medical devices, Medicare, Reporting and recordkeeping requirements, Rural areas, and X-rays 42 CFR Part 411 Kidney diseases, Medicare, Physician Referral, and Reporting and recordkeeping requirements 42 CFR Part 413 Health facilities, Kidney diseases, Medicare, Reporting and recordkeeping requirements. 42 CFR Part 414 Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, and Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as follows: PART 405—FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED 1. The authority for part 405 continues to read as follows: ■ Authority: Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 263a). § 405.2102 [Amended] 2. Section 405.2102 is amended by removing all the definitions, with the exception of two definitions, ‘‘Network, ESRD’’, and ‘‘Network organization’’. ■ PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 PART 411—EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT 3. The authority citation for part 411 continues to read as follows: ■ Authority: Secs. 1102, 1860D–1 through 1860D–42, 1871, and 1877 of the Social Security Act (42 U.S.C. 1302, 1395w–101 through 1395w–152, 1395hh, and 1395nn). 4. Section 411.15 is amended by revising paragraph (d) to read as follows: ■ § 411.15 Particular services excluded from coverage. * * * * * (d) Hearing aids or examinations for the purpose of prescribing, fitting, or changing hearing aids. (1) Scope. The scope of the hearing aid exclusion encompasses all types of air conduction and bone conduction hearing aids (external, internal, or implanted). (2) Devices not subject to the hearing aid exclusion. Cochlear implants and auditory brainstem implants that replace the function of cochlear structures or auditory nerve and provide electrical energy to auditory nerve fibers and other neural tissue via implanted electrode arrays. These devices produce the perception of sound and do not meet the definition of hearing aid. * * * * * PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END–STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES 5. The authority citation for part 413 is revised to read as follows: ■ Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of Pub. L. 106–113 (113 Stat. 1501A– 332), sec. 3201 of Pub. L. 112–96 (126 Stat. 156), sec. 632 of Pub. L. 112–240 (126 Stat. 2354), and sec. 217 of Pub. L. 113–93. § 413.174 [Amended] 6. In § 413.174, paragraph (f)(6) is amended by removing ‘‘January 1, 2016’’ and by adding in its place ‘‘January 1, 2024.’’ ■ 7. Section 413.232 is amended revising paragraphs (b) introductory text and (f) and adding paragraph (h) to read as follows: ■ § 413.232 Low-volume adjustment. * * E:\FR\FM\11JYP2.SGM * 11JYP2 * * mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40312 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (b) Definition of low-volume facility. A low-volume facility is an ESRD facility that, as determined based on the documentation submitted pursuant to paragraph (h) of this section: * * * * * (f) Except as provided in paragraph (g) of this section, to receive the lowvolume adjustment an ESRD facility must provide an attestation statement, by November 1st of each year preceding the payment year, to its Medicare Administrative Contractor that the facility meets all the criteria established in this section. For calendar year 2012, the attestation must be provided by January 3, 2012. For calendar year 2015, the attestation must be provided by December 31, 2014. * * * * * (h) To receive the low-volume adjustment, an ESRD facility must include in their attestation provided pursuant to paragraph (f) of this section a statement that the ESRD facility meets the definition of a low-volume facility in paragraph (b) of this section. To determine eligibility for the low-volume adjustment, the Medicare Administrative Contractor (MAC) on behalf of CMS relies upon as filed or final settled 12-consecutive month cost reports for the 3 cost reporting years preceding the payment year to verify the number of treatments, except that: (1) In the case of a hospital-based ESRD facility as defined in § 413.174(c), the MAC relies upon the attestation submitted pursuant to paragraph (f) of this section and may consider other supporting data in addition to the total treatments reported in each of the 12consecutive month cost reports for the 3 cost reporting years preceding the payment year to verify the number of treatments that were furnished by the individual hospital-based ESRD facility seeking the adjustment; and (2) In the case of an ESRD facility that has undergone a change of ownership that does not result in a new Provider Transaction Access Number for the ESRD facility, the MAC relies upon the attestation and when the change of ownership results in two non-standard cost reporting periods (less than or greater than 12-consecutive months), does one or both of the following for the 3 cost reporting years preceding the payment year to verify the number of treatments: (i) Combines the two non-standard cost reporting periods of less than 12 months to equal a full 12-consecutive month period; and/or (ii) Combines the two non-standard cost reporting periods that in combination may exceed 12-consecutive VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 months and prorates the data to equal a full 12-consecutive month period. § 413.237 [Amended] 8. In § 413.237, paragraph (a)(1)(iv) is amended by removing ‘‘January 1, 2016’’ and adding in its place ‘‘January 1, 2024.’’ ■ PART 414—PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES 9. The authority citation for part 414 continues to read as follows: ■ Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)). 10. Section 414.105 is added to read as follows: ■ § 414.105 Application of Competitive Bidding Information and Limitation of Inherent Reasonableness Authority (a) For enteral nutrients, equipment and supplies furnished on or after January 1, 2011, the fee schedule amounts may be adjusted based on information on the payment determined as part of implementation of the programs under subpart F using the methodologies set forth at § 414.210(g). (b) In the case of such adjustments, the rules at § 405.502(g) and (h) of this chapter shall not be applied. Subpart D—Payment for Durable Medical Equipment and Prosthetic and Orthotic Devices 11. The heading for subpart D is revised to read as set forth above. ■ 12. Section 414.202 is amended by: ■ A. Adding the definition of ‘‘Frontier state’’. ■ B. Revising the definition of ‘‘Region’’. ■ C. Adding the definition of ‘‘Rural State’’. The additions and revision read as follows: ■ § 414.202 Definitions. * * * * * Frontier state means a state where at least 50 percent of counties in the state have a population density of 6 people or less per square mile. * * * * * Region means, for the purpose of implementing § 414.210(g), geographic areas defined by the Bureau of Economic Analysis in the United States Department of Commerce for economic analysis purposes, and, for the purpose of implementing § 414.228, those contractor service areas administered by CMS regional offices. Rural State means a state where more than 50 percent of the population is rural as determined through census data. PO 00000 Frm 00106 Fmt 4701 Sfmt 4702 13. Section 414.210 is amended by revising paragraph (a) and adding paragraph (g) to read as follows: ■ § 414.210 General payment rules. (a) General rule. For items furnished on or after January 1, 1989, except as provided in paragraphs (c), (d), and (g) of this section, Medicare pays for durable medical equipment, prosthetics and orthotics, including a separate payment for maintenance and servicing of the items as described in paragraph (e) of this section, on the basis of 80 percent of the lesser of— (1) The actual charge for the item; (2) The fee schedule amount for the item, as determined in accordance with the provisions of §§ 414.220 through 414.232 * * * * * (g) Application of Competitive Bidding Information and Limitation of Inherent Reasonableness Authority. For items furnished on or after January 1, 2011, the fee schedule amounts may be adjusted based on information on the payment determined as part of implementation of the programs under subpart F, of this part, excluding information on the payment determined in accordance with the special payment rules at § 414.409. In the case of such adjustments, the rules at § 405.502(g) and (h) of this chapter shall not be applied (1) Payment adjustments for areas within the contiguous United States using information from competitive bidding programs. For an item or service subject to the programs under subpart F, that payment amount for such item or services for areas within the contiguous United States shall be established as follows: (i) CMS determines a regional price for each state in the contiguous United States and the District of Columbia equal to the un-weighted average of the single payment amount for an item or service established in accordance with § 414.416 for competitive bidding areas that are fully or partially located in the same region where the state or District of Columbia is located. (ii) CMS determines a national average price equal to the average of the regional prices determined under paragraph (g)(1)(i) of this section. (iii) A regional price determined under paragraph (g)(1)(i) of this section cannot be greater than 110 percent of the national average price determined under paragraph (g)(1)(ii) of this section nor less than 90 percent of the national average price determined under paragraph (g)(1)(ii) of this section. In addition, a regional price determined under paragraph (g)(1)(i) of this section E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules for a state designated as a rural or frontier state cannot be less than 110 percent of the national average price determined under paragraph (g)(1)(ii) of this section. (2) Payment adjustments for areas outside the contiguous United States using information from competitive bidding programs. For an item or service subject to the programs under subpart F, the fee schedule amounts for areas outside the contiguous United States are adjusted based on the greater of— (i) The average of the single payment amounts for the item or service for CBAs outside the contiguous United States. (ii) 110 percent of the national average price for the item or service determined under paragraph (g)(1)(ii) of this section. (3) Payment adjustments for items and services included in no more than ten competitive bidding programs. Notwithstanding paragraph (g)(1) of this section, for an item or service that is included in ten or fewer competitive bidding programs as defined at § 414.402, the fee schedule amounts applied for all areas within and outside the contiguous United States are adjusted based on 110 percent of the unweighted average of the single payment amounts for the item or service. (4) Payment adjustments using data on items and services included in competitive bidding programs no longer in effect. In the case where adjustments to fee schedule amounts are made using any of the methodologies described, if the adjustments are based solely on single payment amounts from competitive bidding programs that are no longer in effect, the adjusted fee schedule amounts shall be increased on an annual basis using the percentage change in the Consumer Price Index for all Urban Consumers (CPI–U) from the mid-point of the last year the single payment amounts were in effect to the month ending 6 months prior to the date the initial payment adjustments would go into effect. Following the initial adjustment to the fee schedule amounts, the adjusted fee schedule amounts would continue to be updated every 12 months using the percentage change in the CPI–U for the 12-month period ending 6 months prior to the date the updated payment adjustments would go into effect. (5) Adjusted payment amounts for accessories used with different types of base equipment. In situations where a HCPCS code that describes an item used with different types of base equipment is included in more than one product category in a CBA under competitive bidding, a weighted average of the single payment amounts for the code is computed for each CBA, weighted based VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 on national allowed services for the code when used with different equipment. The weighted average single payment amount per code per CBA would then be used in applying the payment adjustment methodologies proposed in this section. (6) Payment adjustments consistent with items and services furnished. In the case where payment amounts are established under subpart F of this part for an item or service that are greater than the payment amounts established under subpart F of this part for a higher level item or service (i.e., one with additional features or functionality), the payment amounts for the lower level of service are adjusted so that they are no greater than the payment amounts for the higher level of service before making payment adjustments using any of the methodologies above. (7) Payment adjustments for mail order items furnished in the Northern Mariana Islands. The fee schedule amounts for mail order items furnished to beneficiaries in the Northern Mariana Islands are adjusted so that they are equal to 100 percent of the single payment amounts established under a national mail order competitive bidding program. (8) Updating adjusted fee schedule amounts. The adjusted fee schedule amounts are revised each time a single payment amount for an item or service is updated following one or more new competitions and as other items are added to programs established under subpart F of this part. ■ 14. Section 414.402 is amended by revising the definition of ‘‘Minimal selfadjustment’’ to read as follows: § 414.402 Definitions. * * * * * Minimal self-adjustment means an adjustment the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification), or a physician as defined in 1861(r) of the Act, a treating practitioner which means a physician assistant, nurse practitioner, or clinical nurse specialist as defined in section 1861(aa)(5) of the Act, an occupational therapist as defined in § 484.4 of this chapter, or physical therapist as defined in § 484.4 of this chapter who are in compliance with all applicable Federal and State licensure and regulatory requirements. * * * * * PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 40313 15. Section 414.408 is amended by adding paragraph (l) to read as follows: ■ § 414.408 Payment rules. * * * * * (l) Exceptions for certain items and services paid in accordance with special payment rules. The payment rules in paragraphs (f) thru (i), (j)(2), (j)(3), (j)(7), and (k) of this section do not apply to items and services paid in accordance with the special payment rules at § 414.409. ■ 16. Section 414.409 is added to read as follows: § 414.409 Special payment rules. (a) Payment on a bundled, continuous rental basis. (1) In no more than 12 CBAs, in conjunction with competitions that begin on or after January 1, 2015, payment is made on a bundled, continuous monthly rental basis for enteral nutrients, supplies and equipment, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, CPAP and respiratory assist devices, and hospital beds. The CBAs and competitions where these payment rules apply are announced in advance of each competition, with the payment rules in this section used in lieu of the payment rules at § 414.408(f) thru (i), (j)(2), (j)(3), (j)(7), and (k). The single payment amounts are established based on bids submitted and accepted for furnishing rented DME and enteral nutrition on a monthly basis for each month of medical need during the contract period monthly single payment amount would include payment for all nutrients, supplies and equipment. (2) Payment is made on a continuous monthly rental basis for DME. The single payment amount for the monthly rental of DME includes payment for the rented equipment, maintenance and servicing of the rented equipment, and replacement of supplies and accessories necessary for the effective use of the rented equipment. Separate payment for replacement of equipment, repair or maintenance and servicing of equipment, or for replacement of accessories and supplies necessary for the effective use of equipment is not allowed under any circumstances. (3) Payment is made on a monthly basis for enteral nutrition. The single payment amount includes payment for all nutrients, supplies and equipment. Separate payment for replacement of equipment, repair or maintenance and servicing of equipment, or for replacement of accessories and supplies necessary for the effective use of equipment is not allowed under any circumstances. E:\FR\FM\11JYP2.SGM 11JYP2 mstockstill on DSK4VPTVN1PROD with PROPOSALS2 40314 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (b) Payment for grandfathered DME items paid on a bundled, continuous rental basis. Payment to a supplier that elects to be a grandfathered supplier of DME furnished in CBPs where these special payment rules apply is made in accordance with § 414.408(a)(1). (c) Supplier transitions for DME and enteral nutrition paid on a bundled, continuous rental basis. Changes from a non-contract supplier to a contract supplier at the beginning of a CBP where payment is made on a bundled, continuous monthly rental basis results in the contract supplier taking on responsibility for meeting all of the monthly needs for furnishing the covered DME or enteral nutrition. In the event that a beneficiary relocates from a CBA where these special payment rules apply to an area where rental cap rules apply, a new period of continuous use begins for the capped rental item, enteral nutrition equipment, or oxygen equipment as long as the item is determined to be medically necessary. (d) Responsibility for repair and maintenance and servicing of power wheelchairs. In no more than 12 CBAs where payment for power wheelchairs is made on a capped rental basis, for power wheelchairs furnished in conjunction with competitions that begin on or after January 1, 2015, contract suppliers that furnish power wheelchairs under contracts awarded based on these competitions shall continue to repair power wheelchairs they furnish following transfer of title to the equipment to the beneficiary. The responsibility of the contract supplier to repair, maintain and service beneficiaryowned power wheelchairs does not apply to power wheelchairs that the contract supplier did not furnish to the beneficiary. For power wheelchairs that the contract supplier furnishes during the contract period, the responsibility of the contract supplier to repair, maintain and service the power wheelchair once it is owned by the beneficiary continues until the reasonable useful lifetime of the equipment expires, coverage for the power wheelchair ends, or the beneficiary relocates outside the CBA where the item was furnished. The contract supplier may not charge the beneficiary or the program for any necessary repairs or maintenance and servicing of a beneficiary-owned power wheelchair it furnished during the contract period. ■ 17. Section 414.412 is amended by revising paragraph (b)(2) and adding paragraphs (b)(3) through (5) to read as follows: VerDate Mar<15>2010 19:27 Jul 10, 2014 Jkt 232001 § 414.412 Submission of bids under a competitive bidding program. * * * * * (b) * * * (2) The bids submitted for each item or drug in a product category cannot exceed the payment amount that would otherwise apply to the item under Subpart C, Subpart D, or Subpart I of this part. (3) The bids submitted for enteral nutrition, oxygen and oxygen equipment, standard manual wheelchairs, standard power wheelchairs, and hospital beds paid in accordance with the special payment rules at § 414.409(a) cannot exceed the average monthly payment for the bundle of items and services that would otherwise apply to the item under subpart C or subpart D of this part. (4) The bids submitted for continuous positive airway pressure (CPAP) devices and respiratory assist devices paid in accordance with the special payment rules at § 414.409(a) cannot exceed the 1993 fee schedule amounts for these items, increased by the covered item update factors provided for these items in section 1834(a)(14) of the Act. (5) Suppliers shall take into consideration the special payment rules at § 414.409(d) when submitting bids for furnishing power wheelchairs under competitions where these rules apply. * * * * * ■ 18. Section 414.414 is amended by revising paragraph (f) to read as follows: § 414.414 Conditions for awarding contracts. * * * * * (f) Expected savings. A contract is not awarded under this subpart unless CMS determines that the amounts to be paid to contract suppliers for an item or drug under a competitive bidding program are expected to be less than the amounts that would otherwise be paid for the same item under subpart C or subpart D or the same drug under subpart I based on 95 percent of the average wholesale price in effect on October 1, 2003. * * * * * ■ 19. Section 414.422 is amended by revising paragraph (d) to read as follows: § 414.422 Terms of contracts. * * * * * (d) Change of ownership. (1) A contract supplier must notify CMS if it is negotiating a change in ownership no later than 60 days before the anticipated date of the change. (2) CMS may transfer a contract to an entity that merges with, or acquires, a contract supplier if the entity meets the following requirements: PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 (i) A successor entity— (A) Meets all requirements applicable to contract suppliers for the applicable competitive bidding program; (B) Submits to CMS the documentation described under § 414.414(b) through (d) if documentation has not previously been submitted by the successor entity or if the documentation is no longer sufficient for CMS to make a financial determination. A successor entity is not required to duplicate previously submitted information if the previously submitted information is not need to make a financial determination. This documentation must be submitted no later than 30 days prior to the anticipated effective date of the change of ownership; and (C) Submits to CMS, at least 30 days before the anticipated effective date of the change of ownership, a signed novation agreement acceptable to CMS stating that it will assume all obligations under the contract; or (ii) A new entity— (A) Meets the requirements of (d)(2)(i)(A) and (B) of this section; and (B) Contract supplier submits to CMS, at least 30 days before the anticipated effective date of the change of ownership, its final draft of a novation agreement as described in paragraph (d)(2)(iii) of this section for CMS review. The new entity submits to CMS, within 30 days after the effective date of the change of ownership, an executed novation agreement acceptable to CMS. (3) Except as specified in paragraph (d)(4) of this section, CMS transfers the entire contract, including all product categories and competitive bidding areas, to a new entity. (4) For contracts issued in the Round 2 Recompete and subsequent rounds in the case of a CHOW where a contract supplier sells a distinct company, (e.g., an affiliate, subsidiary, sole proprietor, corporation, or partnership) that furnishes a specific product category or services a specific CBA, CMS may transfer the portion of the contract performed by that company to a successor, if the following conditions are met: (i) Every CBA, product category, and location of the company being sold must be transferred to the new qualified owner who meets all competitive bidding requirements; i.e. financial, accreditation and licensure; (iii) All CBAs and product categories in the original contract that are not explicitly transferred by CMS remain unchanged in that original contract for the duration of the contract period unless transferred by CMS pursuant to a subsequent CHOW; E:\FR\FM\11JYP2.SGM 11JYP2 Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Proposed Rules (iv) All requirements of paragraph (d)(2) of this section are met; and (v) The sale of the distinct company includes all of the contract supplier’s assets associated with the CBA and/or product category(s); and (vi) CMS determines that transfer of part of the original contract will not result in disruption of service or harm to beneficiaries. * * * * * ■ 20. Section 414.423 is amended by revising paragraphs (b)(1)(vi), (l)(2) introductory text, and (l)(2)(i) to read as follows: § 414.423 Appeals Process for Termination of Competitive Bidding Contract. mstockstill on DSK4VPTVN1PROD with PROPOSALS2 * * * (b) * * * VerDate Mar<15>2010 * * 19:27 Jul 10, 2014 Jkt 232001 (1) * * * (vi) The effective date of termination is 45 days from the date of the notification letter unless a timely hearing request is filed or a corrective action plan (CAP) is submitted within 30 days of the date on the notification letter. * * * * * (l) * * * (2) A contract supplier whose contract has been terminated must notify all beneficiaries who are receiving rented competitive bid items or competitive bid items received on a recurring basis, of the termination of their contract. (i) The notice to the beneficiary from the supplier whose contract is terminated must be provided no later PO 00000 Frm 00109 Fmt 4701 Sfmt 9990 40315 than 15 days prior to the effective date of termination. * * * * * (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: June 24, 2014. Marilyn Tavenner, Administrator, Centers for Medicare & Medicaid Services. Approved: June 27, 2014. Sylvia M. Burwell, Secretary, Department of Health and Human Services. [FR Doc. 2014–15840 Filed 7–2–14; 4:15 pm] BILLING CODE 4120–01–P E:\FR\FM\11JYP2.SGM 11JYP2

Agencies

[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Proposed Rules]
[Pages 40207-40315]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15840]

[[Page 40207]]

Vol. 79

Friday,

No. 133

July 11, 2014

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 411, 413, et al.

Medicare Program; End-Stage Renal Disease Prospective Payment System,
Quality Incentive Program, and Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies; Proposed Rule

Federal Register / Vol. 79 , No. 133 / Friday, July 11, 2014 /
Proposed Rules

[[Page 40208]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 411, 413 and 414

[CMS-1614-P]
RIN 0938-AS13

Medicare Program; End-Stage Renal Disease Prospective Payment
System, Quality Incentive Program, and Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies

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

ACTION: Proposed rule.

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SUMMARY: This rule proposes to update and make revisions to the End-
Stage Renal Disease (ESRD) prospective payment system (PPS) for
calendar year (CY) 2015. This rule also proposes to set forth
requirements for the ESRD quality incentive program (QIP), including
payment years (PYs) 2017 and 2018. This rule also proposes to make a
technical correction to remove outdated terms and definitions. In
addition, this rule proposes to set forth the methodology for adjusting
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) fee schedule payment amounts using information from the
Medicare DMEPOS Competitive Bidding Program (CBP); make alternative
payment rules for DME and enteral nutrition under the Medicare DMEPOS
CBP; clarify the statutory Medicare hearing aid coverage exclusion and
specify devices not subject to the hearing aid exclusion; update the
definition of minimal self-adjustment regarding what specialized
training is needed by suppliers to provide custom fitting services if
they are not certified orthotists; clarify the Change of Ownership
(CHOW) and provides for an exception to the current requirements;
revise the appeal provisions for termination of a contract and
notification to beneficiaries under the Medicare DMEPOS CBP, and add a
technical change related to submitting bids for infusion drugs under
the Medicare DMEPOS CBP.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. E.S.T. on September
2, 2014.

ADDRESSES: In commenting, please refer to file code CMS-1614-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://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-1614-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-1614-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period: a. For delivery in Washington, DC--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)

b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Stephanie Frilling, (410) 786-4507,
for issues related to the ESRD PPS, the ESRD PPS CY 2015 Base Rate and
Payment for Frequent Hemodialysis.
Michelle Cruse, (410) 786-7540, for issues related to the ESRD PPS
and the Low Volume Payment Adjustment.
Karen Reinhardt, (410) 786-0189, for issues related to the ESRD PPS
and the Outlier Payment Policy.
Wendy Tucker, (410) 786-3004, for issues related to the ESRD PPS
and Wage Index.
Heidi Oumarou, (410) 786-7342, for issues related to the ESRD PPS
Market Basket Update.
Anita Segar, (410) 786-4614, for issues related to the ESRD QIP.
Christopher Molling (410) 786-6399 and Hafsa Vahora (410) 786-7899
for issues related to the methodology for making national price
adjustments based upon information gathered from the DMEPOS CBP.
Sandhya Gilkerson, (410) 786-4085, for issues related to the
alternative payment methodologies under the CBP.
Sandhya Gilkerson, (410) 786-4085 and Michelle Peterman, 410-786-
2581 for issues related to the clarification of the statutory Medicare
hearing aid coverage exclusion.
Michelle Peterman, (410) 786-2591 for issues related to the
definition of minimal self-adjustment at 414.402.
Janae James (410) 786-0801 for issues related to CHOW and breach of
contract appeals.

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

Electronic Access

This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S.

[[Page 40209]]

Government Printing Office. This database can be accessed via the
internet at https://www.gpo.gov/fdsys/.

Addenda Are Only Available Through the Internet on the CMS Web site

In the past, a majority of the Addenda referred to throughout the
preamble of our proposed and final rules were available in the Federal
Register. However, the Addenda of the annual proposed and final rules
will no longer be available in the Federal Register. Instead, these
Addenda to the annual proposed and final rules will be available only
through the Internet on the CMS Web site. The Addenda to the End-Stage
Renal Disease (ESRD) Prospective Payment System (PPS) rules are
available at: https://www.cms.gov/ESRDPayment/PAY/list.asp. Readers who
experience any problems accessing any of the Addenda to the proposed
and final rules of the ESRD PPS that are posted on the CMS Web site
identified above should contact Stephanie Frilling at 410-786-4507.

Table of Contents

To assist readers in referencing sections contained in this
preamble, we are providing a Table of Contents. Some of the issues
discussed in this preamble affect the payment policies, but do not
require changes to the regulations in the Code of Federal Regulations
(CFR).
I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD) Prospective Payment System
(PPS)
2. End-Stage Renal Disease (ESRD) Quality Incentive Program
(QIP)
3. Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS)
B. Summary of the Major Provisions
1. ESRD PPS
2. ESRD QIP
3. DMEPOS
C. Summary of Costs and Benefits
1. Impacts of the Proposed ESRD PPS
2. Impacts for ESRD QIP
3. Impacts for DMEPOS
II. Calendar Year (CY) 2015 End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
A. Background on the End-Stage Renal Disease (ESRD) Prospective
Payment System (PPS)
B. Routine Updates and Proposed Policy Changes to the CY 2015
ESRD PPS
1. ESRD PPS Base Rate
a. Changes to the Drug Utilization Adjustment
i. The Drug Utilization Adjustment Finalized in CY 2014 ESRD PPS
Final Rule
ii. PAMA Changes to the Drug Utilization Adjustment
b. Payment Rate Update for CY 2015
c. CY 2015 ESRD PPS Wage Index Budget Neutrality Adjustment
d. Labor-Related Share
2. ESRD Bundled Market Basket and Labor-Related Share
a. Background
b. Rebasing and Revision the ESRD Bundled Market Basket
i. Cost Category Weights
ii. Proposed Price Proxies for the CY 2012 ESRDB Market Basket
iii. Proposed Market Basket Estimate for the CY 2015 ESRDB PPS
Update
c. Proposed Productivity Adjustment
d. Calculation of the Proposed ESRDB Market Basket Update,
Adjusted for Multifactor Productivity for CY 2015
e. Labor-Related Share
3. The Proposed CY 2015 ESRD PPS Wage Indices
a. Background
b. Proposed Implementation of New Labor Market Delineations
c. Transition Period
4. Proposed Revisions to the Outlier Policy
a. Proposed Changes to the Outlier Services MAP Amounts and
Fixed Dollar Loss Amounts
b. Outlier Policy Percentage
C. Restatement of Policy Regarding Reporting and Payment for
More than Three Dialysis Treatments per Week -
1. Reporting More than Three Dialysis Treatments per Week on
Claims
2. Medical Necessity for More Than Three Treatments per Week
D. Delay of Payment for Oral-Only Drugs under the ESRD PPS
E. ESRD Drug Categories Included in the ESRD PPS Base Rate
F. Low-Volume Payment Adjustment (LVPA)
1 . Background
2. The United States Government Accountability Office Study on
the LVPA
a. The GAO's Main Findings
b. The GAO's Recommendations
3. Clarification of the LVPA Policy
a. Hospital-Based ESRD Facilities
b. Cost Reporting Periods Used for Eligibility
G. Continued Use of ICD-9-CM Codes and Corrections to the ICD-
10-CM Codes Eligible for the Comorbidity Payment Adjustment
III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
A. Background
B. Considerations in Updating and Expanding Quality Measures
under the ESRD QIP
C. Web sites for Measure Specifications
D. Updating the NHSN Bloodstream Infection in Hemodialysis
Outpatients Clinical Measure for the PY 2016 ESRD QIP and Future
Payment Years
E. Oral-Only Drugs Measures in the ESRD QIP
F. Proposed Requirements for the PY 2017 ESRD QIP
1. Proposed Revision to the Expanded ICH CAHPS Reporting Measure
2. Proposed Measures for the PY 2017 ESRD QIP
a. PY 2016 Measures Continuing in PY 2017 and Future Payment
Years
b. Proposal to Determine when a Measure is ``Topped-Out'' in the
ESRD QIP, and Proposal to Remove a Topped-Out Measure from the ESRD
QIP, Beginning with PY 2017
c. New Measures Proposed for PY 2017 and Future Payment Years
i. Proposed Standardized Readmission Ratio (SRR) Clinical
Measure
3. Proposed Performance Period for the PY 2017 ESRD QIP
4. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the PY 2017 ESRD QIP
a. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures in the PY 2017 ESRD QIP
b. Estimated Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures Proposed for the PY 2017 ESRD
QIP
c. Proposed Performance Standards for the PY 2017 Reporting
Measures
5. Proposal for Scoring the PY 2017 ESRD QIP Measures
a. Scoring Facility Performance on Clinical Measures Based on
Achievement
b. Scoring Facility Performance on Clinical Measures Based on
Improvement
6. Weighting the Total Performance Score
7. Proposed Minimum Data for Scoring Measures for the PY 2017
ESRD QIP and Proposal for Changing Attestation Process for Patient
Minimums
8. Proposed Payment Reductions for the PY 2017 ESRD QIP
9. Proposal for Data Validation
10. Proposal to Monitor Access to Dialysis Facilities
11. Proposed Extraordinary Circumstances Exception
G. Proposed Requirements for the PY 2018 ESRD QIP Beginning in
PY 2018
1. Proposal to Modify the Mineral Metabolism Reporting Measure
2. Proposed New Measures for the PY 2018 ESRD QIP and Future
Payment Years
a. Proposed Standardized Transfusion Ratio (STrR) Clinical
Measure
b. Proposal to Adopt the Pediatric Peritoneal Dialysis Adequacy
Clinical Measure and Add the Proposed Measure to the Dialysis
Adequacy Measure Topic
c. Proposed ICH CAHPS Clinical Measure
d. Proposed Screening for Clinical Depression and Follow-Up
Reporting Measure
e. Proposed Pain Assessment and Follow-Up Reporting Measure
f. Proposed NHSN Healthcare Personnel Influenza Vaccination
Reporting Measure
2. Proposed Performance Period for the PY 2018 ESRD QIP
3. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the PY 2018 ESRD QIP
a. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures in the PY 2018 ESRD QIP
b. Estimated Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures Proposed for the PY 2018 ESRD
QIP
c. Proposed Performance Standards for the PY 2018 Reporting
Measures

[[Page 40210]]

4. Proposal for Scoring the PY 2018 ESRD QIP Measures
a. Scoring Facility Performance on Clinical Measures Based on
Achievement
b. Scoring Facility Performance on Clinical Measures Based on
Improvement
c. Proposal for Scoring the ICH CAHPS Clinical Measure
d. Proposals for Calculating Facility Performance on Reporting
Measures
5. Proposed Minimum Data for Scoring Measures for the PY 2018
ESRD QIP
6. Proposal for Calculating the Clinical Measure Domain Score
7. Proposal for Calculating the Reporting Measure Domain Score,
the Reporting Measure Adjuster, and the TPS for the PY 2018 ESRD QIP
8. Example of the Proposed PY 2018 ESRD QIP Scoring Methodology
H. Future Considerations for Stratifying ESRD QIP Measures for
Dual-Eligible Beneficiaries
IV. Technical Corrections for 42 Part 405
V. Methodology for Adjusting DMEPOS Payment Amounts using
Information from Competitive Bidding Programs
A. Background
1. Payment Basis for Certain DMEPOS
2. Fee Schedule Payment Methodologies
3. Regional Fee Schedule Payment Methodology for P&O
4. DMEPOS Competitive Bidding Programs Payment Rules
5. Adjusting Payment Amounts using Information from the DMEPOS
Competitive Bidding Program
6. Diversity of Costs
7. Advanced Notice of Proposed Rulemaking
B. Proposed Provisions
1. Proposed Regional Adjustments Limited by National Parameters
a. Regional Payment Adjustments
1. P&O Regional Fee Weights--CMS Region 1 (Boston) (Weighted by
Total Paid Claims for Dates of Service from July 1, 1991, thru June
30, 1992)
b. National Parameters
c. Rural and Frontier State Adjustments
d. Areas Outside the Contiguous United States
2. Methodology for Items and Services Included in Limited Number
of Competitive Bidding Programs
3. Adjusted Payment Amounts for Accessories used with Different
Types of Base Equipment
4. Adjustments to Single Payment Amounts that Result from
Unbalanced Bidding
5. National Mail Order Program--Northern Mariana Islands
6. Updating Adjusted Payment Amounts
7. Summary of Proposed Methodologies
VI. Proposed Payment Methodologies and Payment Rules for Durable
Medical
Equipment and Enteral Nutrition Furnished under the Competitive
Bidding Program
A. Background
B. Proposed Provisions
1. Payment on a continuous rental basis for select items
a. Enteral nutrition
b. Oxygen and oxygen equipment
c. Standard manual wheelchairs
d. Standard power wheelchairs
e. CPAP and respiratory assist devices
f. Hospital beds
g. Transition rules
h. Beneficiary-owned equipment
2. Responsibility for repair of beneficiary-owned power
wheelchairs furnished under CBPs
3. Phasing in the proposed payment rules in CBAs
4. Submitting bids for items paid on a continuous rental basis
VII. Scope of Hearing Aid Coverage Exclusion
A. Background
B. Current Issues
C. Proposed Provisions
VIII. Definition of Minimal Self-Adjustment of Orthotics Under
Competitive Bidding
A. Background
B. Current Issues
C. Proposed Provisions
IX. Revision to Change of Ownership Rules to Allow Contract
Suppliers to Sell Specific Lines of Business
A. Background
B. Proposed Provisions
X. Proposed Changes to the Appeals Process for Termination of
Competitive Bidding Contract
XI. Technical Change Related to Submitting Bids for Infusion Drugs
under the DMEPOS Competitive Bidding Program
XII. Accelerating Health Information Exchange
XIII. Collection of Information Requirements
XIV. Response to Comments
XV. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
B. Detailed Economic Analysis
1. CY 2015 End-Stage Renal Disease Prospective Payment System
a. Effects on ESRD Facilities
b. Effects on Other Providers
c. Effects on the Medicare Program
d. Effects on Medicare Beneficiaries
e. Alternatives Considered
2. End-Stage Renal Disease Quality Incentive Program
3. DMEPOS Provisions
C. Accounting Statement
XVI. Regulatory Flexibility Act Analysis
XVII. Unfunded Mandates Reform Act Analysis
XVIII. Federalism Analysis
XIX. Congressional Review Act
XX. Files Available to the Public via the Internet
Regulations Text

Acronyms

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

AHRQ--Agency for Healthcare Research and Quality
ANOVA--Analysis of Variance
ANPRM--Advanced Notice of Proposed Rulemaking
ARM--Adjusted Ranking Metric
ASP--Average Sales Price
ATRA--The American Taxpayer Relief Act of 2012
BEA--Bureau of Economic Analysis
BLS--Bureau of Labor Statistics
BMI--Body Mass Index
CBA--Competitive Bidding Area
CBP--Competitive Bidding Program
CBSA--Core based statistical area
CCN--CMS Certification Number
CDC--Centers for Disease Control and Prevention
CfC--Conditions for Coverage
CHOW--Change of Ownership
CKD--Chronic Kidney Disease
CPAP--Continuous positive airway pressure
CY--Calendar Year
DFC--Dialysis Facility Compare
DME--Durable Medical Equipment
DMEPOS--Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies
ESA--Erythropoiesis stimulating agent
ESRD--End-Stage Renal Disease
ESRDB End-Stage Renal Disease bundled
ESRD PPS-- End-Stage Renal Disease Prospective Payment System
FDA--Food and Drug Administration
GEM--General Equivalence Mappings
HCP--Healthcare Personnel
HD--Hemodialysis
HAIs--Healthcare-Acquired Infections
HCPCS--Healthcare Common Procedure Coding System
HCFA--Health Care Financing Administration
HLM--Hierarchical Logistic Modeling
HHS--Department of Health and Human Services
ICD--International Classification of Diseases
ICD-9-CM--International Classification of Disease, 9th Revision,
Clinical Modification
ICD-10-CM--International Classification of Disease, 10th Revision,
Clinical Modification
ICH CAHPS--In-Center Hemodialysis Consumer Assessment of Healthcare
Providers and Systems
IGI--IHS Global Insight
IIC--Inflation-indexed charge
IOLs--Intraocular Lenses
IPPS--Inpatient Prospective Payment System
ICH CAHPS--In-Center Hemodialysis Consumer Assessment of Healthcare
Providers and Services
IUR--Inter-unit reliability
MAC--Medicare Administrative Contractor
MAP--Medicare Allowable Payment
MFP--Multifactor Productivity
MIPPA--Medicare Improvements for Patients and Providers Act of 2008
MLR--Minimum Lifetime Requirement
MSA--Metropolitan statistical areas
NAMES--National Association of Medical Equipment Suppliers
NHSN--National Health Safety Network
NQF--National Quality Forum
NQS--National Quality Strategy
OBRA--Omnibus Budget Reconciliation Act
OMB--Office of Management and Budget
P&O--Prosthetics and orthotics
PAMA--Protecting Access to Medicare Act of 2014
PC--Product category
PD--Peritoneal Dialysis

[[Page 40211]]

PEN--Parenteral and enteral nutrition
PFS--Physician Fee Schedule
QIP--Quality Incentive Program
RMA--Reporting Measure Adjuster
RSPA--Regional single payment amounts
RUL--Reasonable useful lifetime
SAF--Standard Analysis File
SHR--Standardized Hospitalization Ratio Admissions
SMR--Standardized Mortality Ratio
SPA--Single payment amount
STrR--Standardized Transfusion Ratio
TENS--Transcutaneous electrical nerve stimulation
TEP--Technical Expert Panel
TPS--Total Performance Score
VBP--Value Based Purchasing

I. Executive Summary

A. Purpose

1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
On January 1, 2011, we implemented the ESRD PPS, a case-mix
adjusted bundled prospective payment system for renal dialysis services
furnished by ESRD facilities. This rule proposes to update and make
revisions to the End-Stage Renal Disease (ESRD) prospective payment
system (PPS) for calendar year (CY) 2015. Section 1881(b)(14) of the
Social Security Act (the Act), as added by section 153(b) of the
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)
(Pub. L. 110-275), and section 1881(b)(14)(F) of the Act, as added by
section 153(b) of MIPPA and amended by section 3401(h) of the
Affordable Care Act (Pub. L. 111-148), established that beginning CY
2012, and each subsequent year, the Secretary shall annually increase
payment amounts by an ESRD market basket increase factor, reduced by
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)
of the Act.
Section 632 of the American Taxpayer Relief Act of 2012 (ATRA)
(Pub. L. 112-240) included several provisions that apply to the ESRD
PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act,
which required the Secretary, by comparing per patient utilization data
from 2007 with such data from 2011, to reduce the single payment amount
to reflect the Secretary's utilization of ESRD-related drugs and
biologicals. We finalized the amount of the drug utilization adjustment
pursuant to this section in the CY 2014 ESRD PPS final rule with a 3-
to 4-year transition (78 FR 72161 through 72170). Section 632(b) of
ATRA prohibited the Secretary from paying for oral-only ESRD-related
drugs and biologicals under the ESRD PPS before January 1, 2016. And
finally, section 632(c) of ATRA requires the Secretary, by no later
than January 1, 2016, to analyze the case mix payment adjustments under
section 1881(b)(14)(D)(i) of the Act and make appropriate revisions to
those adjustments.
On April 1, 2014, the Congress enacted the Protecting Access to
Medicare Act of 2014 (PAMA) (Pub. L. 113-93). PAMA section 217 includes
several provisions that apply to the ESRD PPS. Specifically, sections
217(b)(1) and (2) of PAMA amend sections 1881(b)(14)(F) and (I) of the
Act. We interpret the amendments to sections 1881(b)(14)(F) and (I) as
replacing the drug utilization adjustment that was finalized in the CY
2014 ESRD PPS final rule with specific provisions that dictate what the
market basket update will be for CY 2015 (0.0 percent) and how it will
be reduced in CYs 2016 through 2018. Section 217(a)(1) of PAMA amends
section 632(b)(1) of ATRA, which now provides that the Secretary may
not pay for oral-only drugs and biologicals used for the treatment of
ESRD under the ESRD PPS prior to January 1, 2024. Section 217(a)(2)
further amends section 632(b)(1) of ATRA by adding a sentence that
provides: ``Notwithstanding section 1881(b)(14)(A)(ii) of the Social
Security Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), implementation of the
policy described in the previous sentence shall be based on data from
the most recent year available.'' Finally, PAMA section 217(c) provides
that, as part of the CY 2016 ESRD PPS rulemaking, the Sectary shall
establish a process for (1) determining when a product is no longer an
oral-only drug; and (2) including new injectable and intravenous
products into the ESRD PPS bundled payment.
As discussed further below, section 212 of PAMA provides that the
Secretary may not adopt ICD-10 prior to October 1, 2015. HHS has
announced that it intends to issue an interim final rule that will
require use of ICD-10 beginning October 1, 2015 and will require the
continued use of ICD-9-CM through September 30, 2015. Therefore, the
ESRD PPS will continue to use ICD-9 through September 30, 2015 and will
require use of ICD-10 beginning October 1, 2015 for purposes of the
comorbidity payment adjustment.
2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
This rule also proposes to set forth requirements for the ESRD
Quality Incentive Program (QIP), including for payment years (PYs) 2017
and 2018. The program is authorized under section 1881(h) of the Social
Security Act (the Act). The ESRD QIP is the most recent step in
fostering improved patient outcomes by establishing incentives for
dialysis facilities to meet or exceed performance standards established
by CMS.
3. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS)
This proposed rule proposes a methodology for making national price
adjustments to payments for Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) paid under fee schedules based upon
information gathered from the DMEPOS competitive bidding programs
(CBPs) and proposes to phase in special payment rules in a limited
number of competitive bidding areas (CBAs) under the CBP for certain,
specified DME and enteral nutrition. This rule proposes to clarify the
statutory Medicare hearing aid coverage exclusion under section
1862(a)(7) of the Act and the regulation at 42 CFR 411.15(d) to further
specify the scope of this exclusion and to note certain devices
excepted from the hearing aid exclusion. In addition, this rule
proposes to update the definition of minimal self-adjustment at Sec.
414.402 to note the specialized training that is needed by suppliers to
provide custom fitting services if they are not certified orthotists.
Finally, this rule proposes a revision to the Change of Ownership
(CHOW) policy in the current regulations to allow a product category to
be severed from a competitive bidding contract and transferred to a new
contract when a contract supplier sells a distinct line of business to
a qualified successor entity.

B. Summary of the Major Provisions

1. ESRD PPS
Update to the ESRD PPS base rate for CY 2015: For CY 2015,
we are proposing an ESRD PPS base rate of $239.33. This amount reflects
a 0.0 percent update to the payment rate as required by section
1881(b)(14)(F)(i) of the Act, as amended by section 217(b)(2) of PAMA,
and the application of the proposed wage index budget-neutrality
adjustment factor of 1.001306 to the CY 2014 ESRD PPS base rate of
$239.02.
Rebasing and revision of the ESRD bundled (ESRDB) market
basket: For CY 2015, we are proposing to rebase and revise the ESRDB
market basket so the cost weights and price proxies would reflect the
mix of goods and services that underlie ESRD bundled operating and
capital costs for CY 2012. We note that if PAMA had not been enacted
the proposed 2012-based ESRDB market basket update less productivity
for CY

[[Page 40212]]

2015 would have been 1.6 percent, or (2.0 percent less 0.4 percentage
point).
Update to the labor-related share: Because the cost
distributions would change significantly as a result of the proposed
ESRDB market basket revision, the proposed labor-related share would be
50.673 percent compared to the current labor-related share of 41.737
percent. The change to the labor-related share would have a significant
impact on payments for certain ESRD facilities, specifically those ESRD
facilities that have low wage index values. Therefore, for CY 2015 we
are proposing a 2-year transition, in which the CY 2015 payment would
be based on a 50/50 blended labor-related share that would apply to all
ESRD facilities. ESRD facilities would receive 50 percent of their
current labor-related share and 50 percent of their revised labor-
related share. Specifically, we would apply a labor-related share of
46.205 ((41.737+50.673)/2 = 46.205). For CY 2016, the labor-related
share would be based on 100 percent of the revised labor-related share.
Update to the wage index and wage index floor: We adjust
wage indices on an annual basis using the most current hospital wage
data to account for differing wage levels in areas in which ESRD
facilities are located. In CY 2015, we are not proposing any changes to
the application of the wage index budget-neutrality adjustment factor
and will continue to apply the budget-neutrality adjustment to the base
rate for the ESRD PPS. We will continue our policy for the gradual
phase-out of the wage index floor and reduce the wage index floor
values to 0.40, as finalized in the CY 2014 ESRD PPS final rule (78 FR
72173-72174).
Update to the Core-Based Statistical Areas (CBSA): For CY
2015, we are proposing to implement the new CBSA delineations as
described in the February 28, 2013 OMB Bulletin No. 13-01, beginning
with the CY 2015 ESRD PPS wage index. In addition, we are proposing to
implement a 2-year transition, under which a 50/50 blended wage index
would apply to all ESRD facilities for CY 2015. Specifically,
facilities would receive 50 percent of their CY 2015 wage index based
on the CBSA delineations for CY 2014 and 50 percent of their CY 2015
wage index based on the proposed new CBSA delineations. In CY 2016,
facilities' wage index values would be based 100 percent on the new
CBSA delineations.
Update to the outlier policy: We are updating the outlier
services fixed dollar loss amounts for adult and pediatric patients and
Medicare Allowable Payments (MAPs) for adult patients for CY 2015 using
2013 claims data. Based on the use of more current data, the fixed-
dollar loss amount for pediatric beneficiaries would increase from
$54.01 to $56.30 and the MAP amount would increase from $37.29 to
$40.05, as compared to CY 2014 values. For adult beneficiaries, the
fixed-dollar loss amount would decrease from $98.67 to $85.24 and the
MAP amount would increase from $51.97 to $52.61. The 1 percent target
for outlier payments was not achieved in CY 2013. We believe using CY
2013 claims data to update the outlier MAP and fixed dollar loss
amounts for CY 2015 will increase payments for ESRD beneficiaries
requiring higher resource utilization in accordance with a 1 percent
outlier percentage.
Clarification for the low-volume payment adjustment
(LVPA): We are clarifying two policies regarding MAC verification and
proposing conforming changes to the LVPA regulation. The first
clarification explains that MACs can consider supporting data from
hospital-based ESRD facilities to verify the facility's total treatment
count. The second clarification explains that MACs can add or prorate
treatment counts from non-standard cost reporting periods (those that
are not 12-month periods) where there is a change in ownership that
does not result in a new Provider Transaction Access Number.
Continued use of ICD-9-CM codes and corrections to the
ICD-10-CM codes eligible for the comorbidity payment adjustment:
Section 212 of PAMA provides that the Secretary may not adopt ICD-10
prior to October 1, 2015. HHS has announced that it intends to issue an
interim final rule that will require use of ICD-10 beginning October 1,
2015 and will require the continued use of ICD-9-CM through September
30, 2015. Therefore, the ESRD PPS will continue to use ICD-9 through
September 30, 2015 and will require use of ICD-10 beginning October 1,
2015 for purposes of the comorbidity payment adjustment. For CY 2015,
we are correcting several typographical errors and omissions in the
Tables that appeared in the CY 2014 ESRD PPS final rule.
2. ESRD QIP
This rule proposes to implement requirements for the ESRD QIP,
including measure sets for PYs 2017 and 2018.
PY 2017 Measure Set: For PY 2017, we are proposing to
remove one measure from the ESRD QIP, the Hemoglobin Greater than 12 g/
dL clinical measure, on the grounds that it is ``topped out''. We are
also proposing to adopt the Standardized Readmission Ratio (SRR)
clinical measure, which evaluates care coordination.
PY 2018 Measure Set: For PY 2018, we are proposing to
adopt two new clinical measures--the Standardized Transfusion Ratio
(STrR) and Pediatric Peritoneal Dialysis Adequacy--and three new
reporting measures: (1) Pain Assessment and Follow-Up; (2) Clinical
Depression Screening and Follow-Up; and (3) National Healthcare Safety
Network (NHSN) Healthcare Personnel Influenza Vaccination. We are also
proposing to transition the In-Center Hemodialysis Consumer Assessment
of Healthcare Providers and Systems (ICH CAHPS) survey reporting
measure to a clinical measure.
Revision to the ICH CAHPS Reporting Measure: Beginning
with the PY 2017 program year, we are proposing to revise the ICH CAHPS
reporting measure to determine facility eligibility for the measure
based on the number of survey-eligible patients treated during the
``eligibility period'', which we propose to define as the Calendar Year
(CY) that immediately precedes the performance period. Survey-eligible
patients are defined in the ICH CAHPS measure specifications available
at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html and https://ichcahps.org.
Revision to the NHSN Bloodstream Infection in Hemodialysis
Outpatients Clinical Measure: Beginning with the PY 2016 program year,
we are proposing to revise the NHSN Bloodstream Infection in
Hemodialysis Outpatients clinical measure to calculate facility
performance using the Adjusted Ranking Metric (ARM).
Revision to the Mineral Metabolism Reporting Measure:
Beginning with the PY 2018 program year, we are proposing to revise the
Mineral Metabolism reporting measure to allow facilities to submit both
serum phosphorus and plasma phosphorus measurements.
Extraordinary Circumstances Exemption: Beginning with the
PY 2017 ESRD QIP, we are proposing to exempt dialysis facilities from
all requirements of the ESRD QIP clinical and reporting measures during
the months in which they are forced to close due to a natural disaster
or other extraordinary circumstances.
New Scoring Methodology for PY 2018: For PY 2018, we are
proposing to use a new scoring methodology for the ESRD QIP. This
proposed scoring methodology would assign facility Total Performance
Scores (TPS) on the basis of two domains, the Clinical Measure

[[Page 40213]]

Domain and the Reporting Measure Domain. Facility scores on clinical
measures in the Clinical Measure Domain would be divided into
subdomains that align with National Quality Strategy (NQS) domains and
weighted according to the number of measures in a subdomain, facility
experience with the measure, and the measure's alignment with CMS
priorities for quality improvement. These weighted scores would be
summed to produce a facility's Clinical Measure Domain score. Facility
scores on reporting measures in the Reporting Measure Domain would be
summed and calculated to produce a facility's Reporting Measure
Adjuster, which would be subtracted from the facility's Clinical
Measure Domain score to produce a facility's TPS.
3. DMEPOS
The methodology for making national price adjustments
based upon information gathered from the DMEPOS CBPs: As required by
the MIPPA, this rule proposes methodologies for using information from
the DMEPOS CBP to adjust the fee schedule amounts for DME in areas
where CBPs are not implemented. The rule proposes to use the same
methodologies to adjust the fee schedule amounts for enteral nutrition
and off-the shelf (OTS) orthotics in areas where CBPs are not
implemented.
Phase in of special payment rules in a limited number of
CBAs under the CBP for certain, specified DME and enteral nutrition.
This rule proposes to phase-in special payment rules for certain DME
and enteral nutrition under the DMEPOS CBP in a limited number of CBAs.
Medicare hearing aid coverage exclusion under section
1862(a)(7) of the Act: This rule proposes to modify the regulation at
Sec. 411.15 to address the scope of the statutory hearing aid
exclusion and note the types of devices that are not subject to the
hearing aid exclusion.
Definition of minimal self-adjustment at Sec. 414.402:
This rule proposes to update the regulation to indicate what
specialized training is needed to provide custom fitting services if
suppliers are not certified orthotists.
Change of Ownership Rules to Allow Contract Suppliers to
Sell Specific Lines of Business: This proposed rule proposes to
establish an exception under the CHOW rules to allow CMS to sever a
product category from a contract, incorporate the product category into
a new contract, and transfer the new contract to a qualified new owner
under certain specific circumstances.
Termination of a Competitive Bidding Contract: This rule
proposes to clarify the effective date for terminations of competitive
bidding contracts, which impacts the deadline for which contract
suppliers must notify its beneficiaries of the termination.

C. Summary of Costs and Benefits

In section XII.B 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 chart in section XII.B.1.a of this proposed rule
displays the estimated change in payments to ESRD facilities in CY 2015
compared to estimated payments in CY 2014. The overall impact of the CY
2015 changes is projected to be a 0.3 percent increase in payments.
Hospital-based ESRD facilities have an estimated 0.5 percent increase
in payments compared with freestanding facilities with an estimated 0.3
percent increase.
We estimate that the aggregate ESRD PPS expenditures would increase
by approximately $30 million from CY 2014 to CY 2015. This reflects a
$0 million change from the payment rate update and a $30 million
increase due to the updates to the outlier threshold amounts. As a
result of the projected 0.3 percent overall payment increase, we
estimate that there will be an increase in beneficiary co-insurance
payments of 0.3 percent in CY 2015, which translates to approximately
$10 million.
2. Impacts for ESRD QIP
The overall economic impact of the ESRD QIP is an estimated $11.9
million in PY 2017 and $7.2 million in PY 2018. In PY 2017, we expect
the total payment reductions to be approximately $11.9 million, and the
costs associated with the collection of information requirements for
the validation of NHSN data feasibility study to be approximately $27
thousand for all ESRD facilities. In PY 2018, we expect the total
payment reductions to be approximately $7 million, and the costs
associated with the collection of information requirements for the NHSN
Healthcare Personnel Influenza Vaccination reporting measure to be
approximately $248 thousand for all ESRD facilities.
The ESRD QIP will continue to incentivize facilities to provide
high-quality care to beneficiaries.
3. Impacts for DMEPOS
a. Proposed methodology for making national price adjustments to DMEPOS
fee schedule amounts based upon information gathered from the DMEPOS
competitive bidding programs
The proposed regulation proposes to adjust Medicare fee schedule
amounts for items subject to DMEPOS CBPs beginning January 1, 2016,
using information from the DMEPOS CBPs to be applied to items in non-
competitive bidding areas. It is estimated that these adjustments would
save over $7 billion for the 5-year period beginning January 1, 2016,
and ending December 30, 2020. The estimated savings are primarily
derived from price reductions for items. It is expected that most of
the economic impact would result from reduced payment amounts. The
ability of suppliers to furnish items is not expected to be impacted.
b. Proposed phase in of special payment rules under the competitive
bidding program for certain DME and enteral nutrition
We believe that the proposed special payment rules for certain DME
and enteral nutrition under the DMEPOS CBPs would not have a
significant impact on beneficiaries and suppliers. Contract suppliers
are responsible for furnishing items and services needed by the
beneficiary, and the cost to suppliers for furnishing these items and
services does not change based on whether or not the equipment and
related items and services are paid for separately under a capped
rental payment method. Because the supplier's bids would reflect the
cost of furnishing items in accordance with the new payment rules, we
expect the overall savings to generally be the same as they are under
the current payment rules.
Furthermore, the proposed special payment rules would be phased
under a limited number of areas first to evaluate their impact on the
program, beneficiaries, and suppliers, including costs, quality, and
access. Expanded use of the special payment rules in other areas or for
other items would be addressed in future rulemaking.
c. Proposed clarification of the statutory Medicare hearing aid
coverage exclusion stipulated at section 1862(a)(7) of the Act
This proposed rule proposes to clarify the scope of the Medicare
coverage exclusion for hearing aids and withdraw coverage of bone
anchored hearing aids. This proposal would not have a significant
fiscal impact on the Medicare program, because the

[[Page 40214]]

Medicare program expenditures for bone anchored hearing aids during the
period CY2005 through CY 2013 are less than $9,000,000. This proposed
rule, if finalized, would provide further guidance about coverage of
DME with regard to the statutory hearing aid exclusion. The proposed
rule, if finalized, would leave unchanged coverage of cochlear implants
and brain stem implants, which are not considered hearing aids.
d. Proposed update of the definition of minimal self-adjustment at 42
CFR 414.402
The proposed rule proposes to update the definition of minimal
self-adjustment to make clear that minimal self-adjustment means an
adjustment that the beneficiary, caretaker for the beneficiary, or
supplier of the device can perform and does not require the services of
a certified orthotist (that is, an individual certified by either the
American Board for Certification in Orthotics and Prosthetics, Inc., or
the Board for Orthotist/Prosthetist Certification) or a physician as
defined in section 1861(r) of the Act, a treating practitioner means a
physician assistant, nurse practitioner, or clinical nurse specialist
as defined in section 1861(aa)(5) of the Act, an occupational therapist
as defined in 42 CFR 484.4, or physical therapist as defined in 42 CFR
484.4 in compliance with all applicable Federal and State licensure and
regulatory requirements. If finalized, this revised definition would
impact suppliers furnishing custom fitted orthotics that do not have
this expertise. These suppliers would be required to hire an individual
with expertise. For example, according to the Bureau of Labor
Statistics Occupational Employment Statistics May 2013 the median pay
for a certified orthotist is $30.27 an hour. The impact will vary
according to the caseload of custom fitted orthotics provided by an
individual supplier.
e. Change of Ownership Rules to Allow Contract Suppliers to Sell
Specific Lines of Business
This rule proposes to clarify the CHOW rules in order to limit
disruption to the normal course of business for DME suppliers. This
rule proposes to establish an exception under the current CHOW rules to
allow CMS to sever a product category from a contract, incorporate the
product category into a new contract, and transfer the new contract to
a qualified new owner under certain specific circumstances. This
proposed clarification would impact businesses in a positive way by
allowing them to conduct everyday transactions with less disruption
from our rules and regulations.

II. Calendar Year (CY) 2015 End-Stage Renal Disease (ESRD) Prospective
Payment System (PPS)

A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment
System (PPS)

On August 12, 2010, we published in the Federal Register a final
rule (75 FR 49030 through 49214) in which we implemented a case-mix
adjusted bundled PPS for Medicare outpatient ESRD dialysis services
beginning January 1, 2011, in accordance with section 1881(b)(14) of
the Act, as added by section 153(b) of MIPPA. On November 10, 2011, we
published in the Federal Register a final rule (76 FR 70228 through
70316) in which we made a number of routine updates for CY 2012,
implemented the second year of the transition to the ESRD PPS, made
several policy changes and clarifications, and made technical changes.
On November 9, 2012, we published in the Federal Register a final rule
(77 FR 67450 through 67531) in which we made a number of routine
updates for CY 2013, implemented the third year of the transition to
the ESRD PPS, and made several policy changes and reiterations.
On December 2, 2013, we published in the Federal Register a final
rule (78 FR 72156 through 72253) titled, Medicare Program; End-Stage
Renal Disease Prospective Payment System, Quality Incentive Program,
and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies''
(hereinafter referred to as the CY 2014 ESRD PPS final rule). In that
final rule, for the ESRD PPS, we made a number of routine updates for
CY 2014, implemented the fourth and final year of the transition,
implemented sections 632(a) and (b)(1) of ATRA, and made policy changes
and clarifications. Specifically, in that rule, we finalized the
following:
Update to the ESRD PPS base rate for CY 2015. An ESRD PPS
base rate of $239.02 per treatment for renal dialysis services. This
amount reflected the CY 2014 ESRD bundled (ESRDB) market basket update
of 3.2 percent minus a multifactor productivity adjustment of 0.4
percent, that is, a 2.8 percent increase. This amount also reflected
the application of the wage index budget-neutrality adjustment of
1.000454, the home dialysis training add-on budget neutrality
adjustment factor of 0.999912, and the portion of the drug utilization
adjustment that was transitioned for CY 2014, or $8.16.
Update to the wage index floor. A 0.05 reduction to the CY
2014 and CY 2015 wage index floor values, which resulted in a wage
index floor value of 0.45 for CY 2014 and a wage index floor value of
0.40 for CY 2015 under the ESRD PPS.
Update to the outlier policy. Using CY 2012 claims data to
update the outlier Medicare Allowable Payments (MAPs) and fixed dollar
loss amounts for CY 2014, which resulted in updated fixed dollar loss
amounts for adult and pediatric patients and MAPs for adult patients.
Specifically, for pediatric beneficiaries, we finalized a fixed-dollar
loss amount of $54.01 and a MAP amount of $40.49. For adult
beneficiaries, we finalized a fixed-dollar loss amount of $98.67 and a
MAP amount of $50.25.
The application of ICD-10-CM diagnosis codes to the
comorbidity payment adjustment. We discussed and provided a crosswalk
from ICD-9-CM to ICD-10-CM for codes that are subject to the
comorbidity payment adjustment. We finalized a policy under which all
ICD-10-CM codes to which ICD-9-CM codes that are eligible for the
comorbidity payment adjustment crosswalk are eligible for the
comorbidity payment adjustment beginning on October 1, 2014 with two
exceptions. As discussed further below, however, section 212 of the
Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93)
provides that the Secretary may not adopt ICD-10 prior to October 1,
2015. HHS has announced that it intends to issue an interim final rule
that will require use of ICD-10 beginning October 1, 2015 and will
continue to require use of ICD-9-CM through September 30, 2015.
Accordingly, we plan to continue to require facilities to utilize ICD-
9-CM codes to identify comorbidities eligible for the comorbidity
payment adjustment through September 30, 2015, and then to use ICD-10-
CM codes beginning October 1, 2015.
The self-dialysis and home dialysis training add-on
adjustment. An increase to the self-dialysis and home dialysis training
add-on adjustment from $33.44 to $50.16.
The delay in payment for oral-only ESRD-related drugs and
biologicals until January 1, 2016. We also delayed payment for oral-
only ESRD-related drugs under the ESRD PPS until January 1, 2016. As
discussed further below, section 217(a)(1) of PAMA amended section
632(b)(1) of ATRA to provide that the Secretary may not include oral-
only ESRD-related drugs for payment

[[Page 40215]]

under the ESRD PPS prior to January 1, 2024.

B. Routine Updates and Proposed Policy Changes to the CY 2015 ESRD PPS

1. ESRD PPS Base Rate
In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we
discussed the development of the ESRD PPS per treatment base rate that
is codified in the Medicare regulations at 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 Medicare Allowable Payment
(MAP) for composite rate and separately billable services. In
accordance with section 1881(b)(14)(D) of the Act and regulations at
Sec. 413.230, the ESRD PPS base rate is adjusted for the patient-
specific case-mix adjustments, applicable facility adjustments,
geographic differences in area wage levels using an area wage index, as
well as applicable outlier payments or training payments.
a. Changes to the Drug Utilization Adjustment
i. The Drug Utilization Adjustment Finalized in the CY 2014 ESRD PPS
Final Rule
Section 1881(b)(14)(I) of the Act, as added by section 632(a) of
the American Taxpayer Relief Act of 2012 (ATRA), required that, for
services furnished on or after January 1, 2014, the Secretary shall
make reductions to the single payment for renal dialysis services to
reflect the Secretary's estimate of the change in the utilization of
ESRD-related drugs and biologicals (excluding oral-only ESRD-related
drugs) by comparing per patient utilization data from 2007 with such
data from 2012. Section 1881(b)(14)(I) further required that in making
the reductions, the Secretary take into account the most recently
available data on Average Sales Prices (ASP) and changes in prices for
drugs and biologicals reflected in the ESRD market basket percentage
increase factor under section 1881(b)(14)(F). Consistent with these
requirements, in CY 2014, we finalized a payment adjustment to the CY
2014 ESRD PPS base rate that reflected the change in utilization of
ESRD-related drugs and biologicals from CY 2007 to CY 2012.
Specifically, we finalized the drug utilization adjustment amount
of $29.93 per treatment, and finalized a policy to implement this
amount over a 3- to 4-year transition period. For CYs 2014 and 2015, we
stated that we would implement the transition by offsetting the payment
update by a portion of the reduction amount necessary to create an
overall impact of a zero percent for facilities from the previous
year's payments. For example, in CY 2014 we finalized a per treatment
drug utilization adjustment amount for the first transition year of
$8.16 or 3.3 percent, which represented the CY 2014 ESRDB market basket
update minus productivity and other impacts to create an overall impact
of zero percent. For a complete discussion of the methodology for
computing the drug adjustment please see the CY 2014 ESRD PPS final
rule (78 FR 72161 through 72170).
ii. PAMA Changes to the Drug Utilization Adjustment
On April 1, 2014, Congress enacted PAMA. Section 217(b), titled
Mitigation of the Application of Adjustment to ESRD Bundled Payment
Rate to Account for Changes in the Utilization of Certain Drugs and
Biologicals, amends section 1881(b)(14)(I) of the Act by inserting
``and before January 1, 2015'' after January 1, 2014. This amendment
effectively eliminates the remaining years of the drug utilization
adjustment transition. In its place, the PAMA amendments to section
1881(b)(14)(F)(i) dictate what the market basket increase factor will
be for 2015 and how it will be reduced in 2016 through 2018. In
particular, PAMA section 217(b)(2)(C) amended section 1881(b)(14)(F)(i)
by adding subclause (III), which provides that ``[n]otwithstanding
subclauses (I) and (II), in order to accomplish the purposes of
subparagraph (I) with respect to 2015, the increase factor described in
subclause (I) for 2015 shall be 0.0 percent.'' We interpret subclause
(III) to mean that the market basket increase factor less the
productivity adjustment for 2015 is 0.0 percent. The PAMA amendments
also provide for a payment reduction in lieu of the drug utilization
adjustment in 2016 through 2018. In particular, PAMA section
217(b)(2)(ii) further amends section 1881(b)(14)(i)(I) by adding at the
end the following new sentence, `` In order to accomplish the purpose
of subparagraph (I) with respect to 2016, 2017, and 2018, after
determining the increase factor described in the preceding sentence for
each of 2016, 2017, and 2018, the Secretary shall reduce such increase
factor by 1.25 percentage points for each of 2016 and 2017 and by 1
percentage point for 2018.'' We interpret this provision as requiring
us to reduce the market basket increase factor for 2016 through 2018 by
the percentages prescribed in the statute.
b. Payment Rate Update for CY 2015
As discussed in section II.B.2 of this proposed rule, section
1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and
amended by section 3401(h) of the Affordable Care Act, provides that,
beginning in 2012, the ESRD PPS payment amounts are required to be
annually increased by the rate of increase in the ESRD market basket,
reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. If PAMA had not stipulated a 0.0
percent payment update for CY 2015, we would have proposed a payment
update of 1.6 percent, (a 2.0 percent ESRDB market basket update less a
0.4 percent productivity adjustment). In accordance with section
1881(b)(14)(F)(i)(III) of the Act, as added by PAMA section
217(b)(2)(C), however, we propose a 0.0 percent update to the CY 2014
ESRD PPS base rate of $239.02 for CY 2015.
c. CY 2015 ESRD PPS Wage Index Budget Neutrality Adjustment
For CY 2015 we propose to apply the wage index budget-neutrality
adjustment factor of 1.001306 to the unadjusted CY 2014 and CY 2015
ESRD PPS base rate (that is, $239.02), yielding a proposed CY 2015 ESRD
PPS wage-index budget-neutrality adjusted base rate of $239.33 ($239.02
x 1.001306 = $239.33).
d. Labor-Related Share
As discussed in section II.2.e, as part of the proposed ESRDB
market basket rebasing and revision, we are proposing to update the
labor-related share value from 41.737 percent to 50.673 percent. We
note that some ESRD facilities are adversely affected by this proposal.
For example, rural facilities and facilities located in CBSA areas with
wage indexes below 1 will experience reduced payments due to an
increase in the labor-related share, while other facilities located in
CBSA area where wage indices are above 1 will experience increased
payments. While we are proposing the new labor-related share under the
ESRD PPS payment system computed at 50.673 percent, we propose to
implement this value using a 2-year 50/50 blend transition.

[[Page 40216]]

Therefore, for CY 2015 we propose to apply 50 percent of the value of
the current labor-related share under the ESRD PPS (41.737) and 50
percent of the value of the new labor-related share, (50.673), add the
values together and divide by two, for a CY 2015 labor-related value of
46.205 ((41.737 + 50.673)/2 = 46.205). Beginning in CY 2016 we propose
to apply 100 percent of the proposed labor-related share value of
50.673 percent. We propose to continue to apply a labor-related share
value of 50.673 percent until such time in the future the ESRDB market
basket is again rebased in computing a wage index-adjusted base rate
for ESRD facilities. We believe that this approach is similar to the
50/50 blend transition proposed for the CY 2015 wage indexes and
discussed in section II.3.c of this rule and that a 2- year transition
is necessary to allow ESRD facilities time to adjust to the new labor
related-share value.
We note that we considered implementing the computed labor related
share value of 50.673 for CY 2015, but that would have increased the CY
2015 proposed wage index budget neutrality factor to 1.002081. This
increase would have resulted in a decrease in CY 2015 Medicare payments
to rural facilities of 1.3 percent, and an increase to urban facilities
0.5 percent. When we apply the transition labor-related share value of
46.205, the disparity in impacts for rural and urban facilities is
reduced to less than 1.0 percent. Specifically, rural facilities would
experience a decrease in payments of 0.5 percent and urban facilities
would experience an increase in payments of 0.4 percent. (For more
information of the CY 2015 Impact of Proposed Changes in Payments to
ESRD Facilities for CY 2015 ESRD proposed rule, see section XV of this
rule). Therefore, we believe a 2-year transition strikes an appropriate
balance between ensuring that ESRD PPS payments are as accurate and
stable as possible while giving facilities time to adjust to the new
labor-related share factor.
In summary, we propose a CY 2015 ESRD PPS base rate update of
$239.33. This reflects a 0.0 percent payment update consistent with
section 1881(b)(14)(F)(i)(III), as added by section 217(b)(2) of PAMA.
This base rate reflects the CY 2015 proposed wage index budget
neutrality factor of 1.001306, and a labor-related share value of
46.205.
2. ESRD Bundled Market Basket and Labor-Related Share
a. Background
In accordance with section 1881(b)(14)(F)(i) of the Act, beginning
in 2012, the ESRD payment amounts are required to be annually increased
by an ESRD market basket increase factor that is reduced by the
productivity adjustment in section 1886(b)(3)(B)(xi)(II) of the Act.
The application of the productivity adjustment may result in the
increase factor being less than 0.0 for a year and may result in
payment rates for a year being less than the payment rates for the
preceding year. The statute also provides that the market basket
increase factor should reflect the changes over time in the prices of
an appropriate mix of goods and services used to furnish renal dialysis
services.
In the CY 2011 ESRD PPS final rule (75 FR 49151 through 49162), we
established an ESRD Bundled market basket using CY 2008 as the base
year. This market basket was used to annually update the ESRD base rate
payments for CY 2012, CY 2013, and CY 2014. In this CY 2015 ESRD PPS
proposed rule, we are proposing to revise and rebase the ESRDB market
basket to a base year of CY 2012. We note that PAMA dictates a market
basket update for CY 2015 of 0.0 percent and a reduction to the market
basket updates in CYs 2016 through 2018 (by 1.25 percentage points for
each of 2016 and 2017 and by 1 percentage point for 2018).
The term ``market basket'' refers to the mix of goods and services
needed to produce ESRD care, and is also commonly used to denote the
input price index that includes both weights (mix of goods and
services) and price factors. The term ``ESRDB market basket'' as used
in this proposed rule refers to the ESRDB input price index.
The proposed CY 2012-based ESRDB market basket represents the costs
of operating and capital-related costs. The percentage change in the
ESRDB market basket reflects the average change in the price of a fixed
set of goods (both operating and capital) and services purchased by
ESRD facilities in providing renal dialysis services. For further
background information, see the CY 2011 final rule with comment period
(75 FR 49151 through 49162).
For purposes of the ESRDB PPS, the ESRDB market basket is a fixed-
weight (Laspeyres-type) price index. A Laspeyres-type index compares
the cost of purchasing a specified mix of goods and services in a
selected base period to the cost of purchasing that same group of goods
and services at current prices. The effects on total expenditures
resulting from changes in the quantity or mix of goods and services
purchased subsequent or prior to the base period are, by design, not
considered.
We construct the market basket in three steps. The first step is to
select a base period and estimate total base period expenditure shares
for mutually exclusive and exhaustive spending categories. We use total
costs for operating and capital expenses. These shares are called
``cost'' or ``expenditure'' weights. The second step is to match each
expenditure category to a price/wage variable, called a price proxy. We
draw these price proxy variables from publicly available statistical
series published on a consistent schedule, preferably at least
quarterly. The final step involves multiplying the price series for
each spending category by the cost weight for that category. The sum of
these products (that is, weights multiplied by proxy index levels) for
all cost categories yields the composite index level of the market
basket for a given quarter or year. Repeating the third step for other
quarters and years produces a time series of market basket index
levels, from which we can calculate rates of growth.
The market basket represents a fixed-weight index because it
answers the question of how much more or less it would cost, at a later
time, to purchase the same mix of goods and services that was purchased
in the base period.
We are proposing to use CY 2012 as the base year for the proposed
rebased and revised 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 market basket as a CY
market basket because the base period for all price proxies and weights
are set to CY 2012 = 100. Source data included CY 2012 Medicare cost
reports (Form CMS-265-11), supplemented with 2012 data from the U.S.
Census Bureau's Services Annual Survey (SAS). Medicare cost reports
from hospital-based ESRD providers were not used to construct the
proposed ESRDB market basket because data from independent ESRD
facilities tend to better reflect the actual cost structure faced by
the ESRD facility itself, and are not influenced by the allocation of
overhead over the entire institution, as can be the case with hospital-
based providers. This approach is consistent with our standard
methodology used in the development of other market baskets.
Consistent with our discussion in the CY 2011 final rule with
comment period

[[Page 40217]]

(75 FR 49153), and as further discussed below, to implement section
1881(b)(14)(F)(i) of the Act we propose to revise and rebase the market
basket so the cost weights and price proxies reflect the mix of goods
and services that underlie ESRD bundled operating and capital costs for
CY 2012.
b. Rebasing and Revision of the ESRD Bundled Market Basket
The terms ``rebasing'' and ``revising'', while often used
interchangeably, actually denote different activities. Rebasing means
shifting the base year for the structure of costs of the input price
index (for example, for this proposed rule, we propose to shift the
base year cost structure from CY 2008 to CY 2012). Revising means
changing data sources, cost categories, price proxies, and/or
methodology used in developing the input price index. We are proposing
both to rebase and revise the ESRDB market basket to reflect CY 2012
total cost data.
We selected CY 2012 as the new base year because 2012 is the most
recent year for which relatively complete Medicare cost report (MCR)
data are available. In developing the proposed market basket, we
reviewed ESRD expenditure data from ESRD MCRs (CMS Form 265-11) for CY
2012 for each freestanding ESRD facility that reported expenses and
payments. The CY 2012 cost reports are those with cost reporting
periods beginning on or after January 1, 2012 and before December 31,
2012. We propose to maintain our policy of using data from freestanding
ESRD facilities because freestanding ESRD data reflect the actual cost
structure faced by the ESRD facility itself. In contrast, expense data
for a hospital-based ESRD reflect the allocation of overhead over the
entire institution. Due to this method of allocation, the expenses of
each hospital-based component may be skewed.
We developed cost category weights for the proposed CY 2012-based
ESRDB market basket in two stages. First, we derived base weights for
nine major categories (Wages and Salaries, Employee Benefits, Medical
Supplies, Lab Services, Housekeeping & Operations, Pharmaceuticals,
Administrative and General, Capital-Related Building & Fixed Equipment,
and Capital-Related Machinery) from the ESRD MCRs. Second, we are
proposing to divide the Administrative & General cost category into
further detail using 2012 U.S. Census Bureau Services Annual Survey
(SAS) Data for the industry Kidney Dialysis Centers (NAICS 621492). We
apply the 2012 distributions from the SAS data to the 2012
``Administrative & General'' cost weight to yield the more detailed
2012 cost weights. This is similar to the methodology we used to break
the 2008-based Administrative & General Costs into more detail for the
ESRDB market basket as detailed in the CY 2011 ESRD final rule (75 FR
49154 through 49159). The main difference is that in the 2008-based
market basket we relied on data from the U.S. Census Bureau Business
Expenses Survey (BES). The BES data was the predecessor to the SAS. The
Census Bureau SAS data are published annually, with the most recent
data available being 2012. For more information on the SAS data, see
https://www.census.gov/services/sas/about_the_surveys.html.
We are proposing to include a total of 20 detailed cost categories
for the proposed CY 2012-based ESRDB market basket, which is four more
cost categories than the CY 2008-based ESRDB market basket. In
addition, we are proposing to further decompose both the Wages and
Salaries and Employee Benefits cost categories into four more detailed
cost categories reflecting the occupational mix of full time
equivalents (FTEs) at ESRD facilities. The four detailed occupational
categories that will underlie both Wages and Salaries and Employee
Benefits are: (1) Health-related workers; (2) Management workers; (3)
Administrative workers; and (4) Service workers. Having more detailed
cost categories for these compensation costs enables them to be proxied
more precisely. We are also proposing to collapse the Professional Fees
and All Other Services cost categories into single categories rather
than splitting those categories into Labor-Related and Non-Labor-
Related Services. We will continue to assume that 87 percent of
Professional Fees are labor-related costs and will be included in the
proposed labor-related share. In addition, we are proposing to revise
our labels for All Other Materials to Medical Materials and Supplies,
Laboratories to Lab Services, and All Other Labor-Related/Non Labor-
Related to All Other Goods and Services. A more thorough discussion of
our proposals is provided below.
i. Cost Category Weights
Using Worksheets A and B from the CY 2012 Medicare cost reports, we
first computed cost shares for nine major expenditure categories: Wages
and Salaries, Employee Benefits, Pharmaceuticals, Supplies, Lab
Services, Administrative and General (A&G), Housekeeping and
Operations, Capital-Related Building & Equipment, and Capital-Related
Machinery. Edits were applied to include only cost reports that had
total costs greater than zero. In order to reduce potential distortions
from outliers in the calculation of the cost weights for the major
expenditure categories, cost values for each category less than the 5th
percentile or greater than the 95th percentile were excluded from the
computations. The resulting data set included information from
approximately 4,700 independent ESRD facilities' cost reports from an
available pool of 5,333 cost reports. Expenditures for the nine cost
categories as a proportion of total expenditures are shown in Table 1.
Table 1 presents the proposed CY 2012-based ESRDB and CY 2008-based
ESRDB market basket major cost weights as derived directly from the MCR
data. Following the table, we describe the sources of the major
category weights and their subcategories in the proposed CY 2012-based
ESRDB market basket.

Table 1--Proposed CY 2012-Based ESRDB Market Basket Major Cost Weights
----------------------------------------------------------------------------------------------------------------
Proposed CY 2012-based ESRDB CY 2008-based ESRDB market
Cost category market basket basket
----------------------------------------------------------------------------------------------------------------
Wages and Salaries.................................. 31.839% 26.338%
Employee Benefits................................... 6.570% 5.163%
Pharmaceuticals..................................... 16.510% 26.358%
Supplies............................................ 10.097% 9.726%
Lab Services........................................ 1.532% 0.356%
Housekeeping & Operations........................... 3.785% 3.604%
Administrative & General (residual)................. 17.419% 17.594%
Capital-related Building & Fixed Equipment.......... 8.378% 7.910%

[[Page 40218]]

Capital-related Machinery........................... 3.870% 2.951%
----------------------------------------------------------------------------------------------------------------
Note: Totals may not sum to 100.000% due to rounding.

Some costs are reported on the Medicare cost report but are not
included in the ESRD bundled payment. For example, we removed the
expenses related to vaccine costs from total expenditures since these
are excluded from the ESRD bundled payment, but reported on the
Medicare cost report.
We are proposing to expand the expenditure categories developed
from the Medicare cost reports to allow for more detailed expenditure
decomposition. To expand these cost categories, SAS data were used
because the Medicare cost reports do not collect detailed information
on the items of interest. Those categories include: benefits for all
employees, professional fees, telephone, utilities, and all other goods
and services. We chose to separately break out these categories to more
accurately reflect ESRD facility costs. We describe below how the
initially computed categories and weights from the cost reports were
modified to yield the final 2012 ESRDB market basket expenditure
categories and weights presented in this proposed rule.
Wages and Salaries
The weight for wages and salaries for direct patient care for 2012
was initially derived from Worksheet B of the Medicare cost report.
However, because the cost center for direct patient care salaries does
not include all other wage and salary costs for non-health workers and
physicians, it was necessary to derive a methodology to include all
salaries, not just direct patient care salaries, in order to calculate
the appropriate market basket cost weight. This was accomplished in the
following steps.
(1) From the trial balance of the cost report (Worksheet A), we
computed the ratio of salaries to total costs in each of the following
cost centers: housekeeping and operations, employee benefits for direct
patient care, Administrative & General, Supplies, Laboratories, and
Pharmaceuticals.
(2) We then multiplied the ratios computed in step 1 by the total
costs for each corresponding cost center from Worksheet B. This
provided us with an estimate of salaries other than direct-patient care
for each cost center.
(3) The estimated salaries for each of the cost centers on
Worksheet B estimated in step 2 were subsequently summed and added to
the direct patient care salary figure (resulting in a new total
salaries figure).
(4) The estimated non-direct patient care salaries (see step 2)
were then subtracted from their respective cost categories to avoid
double-counting their values in the total costs.
As a result of this process, we moved from an estimated Wages and
Salaries cost weight of 23.242 percent (as estimated using only direct
patient care salaries as a percent of total costs) to a weight of
31.839 percent (capturing both direct patient care salaries and all
other salary costs and, again, dividing that by total costs found on
the Medicare cost report), as seen in Table 2.
The final adjustment made to this category is to include contract
labor costs. These costs appear on the Medicare cost report; however,
they are embedded in the Administrative and General category and cannot
be disentangled using the Medicare cost reports alone. To move the
appropriate expenses from the A&G category to Wages and Salaries, we
used data from the 2012 SAS, which reported 2.3 of total expenses were
spent on contract labor costs. We allocated 80 percent of that figure
to Wages and Salaries. At the same time, we subtracted that same amount
from A&G, where the contract labor expenses would be reported on the
cost report. The 80 percent figure that was used was determined by
taking salaries as a percentage of total compensation (excluding
contract labor) from the 2012 MCR data. The resulting cost weight for
Wages and Salaries increases to 33.650 percent.

Table 2--ESRD Wages & Salaries Share Determination
------------------------------------------------------------------------
Cost share
Components (%)
------------------------------------------------------------------------
08 MCR Salaries Direct Patient Care (DPC)............... 22.297
08 MCR Additional Salaries Weight (other than DPC)...... 4.041
08 Wage & Salary Weight normalized after adding -1.373
separately billable services into the bundle...........
08 Contract Labor (wages) (80% of BES CL share)......... 1.790
08 Final Wage & Salary Weight........................... 26.755
12 MCR Salaries Direct Patient Care (DPC)............... 23.242
12 MCR Additional Salaries Weight (other than DPC)...... 8.597
12 Contract Labor (80% of SAS CL share)................. 1.811
12 Final Wage & Salary Weight........................... 33.650
------------------------------------------------------------------------

Benefits
The Benefits weight was derived from the MCR data for employee
benefits for direct patient care and supplemented with data from the
2012 SAS to account for non-direct patient care benefits. The cost
report only reflects health-related benefit costs associated with
direct patient care; that is, it does not reflect retirement benefits.
In order to include the benefits related to non-direct patient care, we
estimated this marginal increase from the SAS Benefits weight. Unlike
the MCR, data the SAS benefits share includes expenses related to the
retirement and pension benefits. In order to be consistent with the
cost report definitions we do not want to include the costs associated
with retirement and pension benefits in the cost share weights. These
costs are relatively small compared to the costs for the health related
benefits, accounting for only 2.7 percent of the total benefits costs
as reported on the SAS. Our method produced a Benefits

[[Page 40219]]

(both direct patient care and non-direct patient care) weight that was
1.824 percentage points larger (8.394 vs. 6.570) than the Benefits
weight for direct patient care calculated directly from the cost
reports. To avoid double-counting and to ensure all of the market
basket weights still totaled 100 percent, we removed this additional
1.824 percentage point for Benefits from the residual category.
The final adjustment made to this category is to include contract
labor costs. Once again, these costs appear on the Medicare cost
report; however, they are embedded in the Administrative and General
category and cannot be disentangled using the Medicare cost report
alone. 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 resulting cost weight for Benefits increases to
8.847 percent.
The Table 3 compares the 2008-based Benefits cost share derivation
as detailed in the CY 2011 ESRD final rule (75 FR 49155-49156) to the
proposed 2012-based Benefits cost share derivation as explained above.

Table 3--ESRD Benefit Share Determination
------------------------------------------------------------------------
Cost share
Components (percent)
------------------------------------------------------------------------
08 MCR Benefits......................................... 5.163
08 BES Additional Benefits Weight (Health only)......... 1.143
08 Contract Labor (20% of BES benefits share)........... 0.448
08 Final Benefit Weight................................. 6.754
12 MCR Benefits......................................... 6.570
12 SAS Additional Benefits Weight (Health only)......... 1.824
12 Contract Labor (20% of SAS benefits share)........... 0.453
12 Final Benefit Weight................................. 8.847
------------------------------------------------------------------------

Utilities
We developed a weight for Utility expenses using the 2012 SAS data,
as utilities are not separately identified on the Medicare cost report.
The SAS data reports the percentage of expenses for `purchased fuels
(except motor fuels)', `purchased electricity', and `water, sewer,
refuse, and other utilities.' We applied these ratios to the
administrative and general cost share (net of contract labor and
additional benefits). The resulting Electricity, Fuel (Natural Gas),
and Water and Sewerage weights in the proposed 2012 ESRDB market basket
are 0.973, 0.101, and 0.765 percent, respectively; together these
categories yield a combined Utilities cost weight of 1.838 percent.
Pharmaceuticals
The proposed ESRDB market basket includes expenditures for all
drugs, including formerly separately billable drugs and ESRD-related
drugs that were covered under Medicare Part D before the ESRD PPS was
implemented. We were able to calculate an expenditure weight for
pharmaceuticals directly from the following cost centers on Worksheet
B: columns 11 `Drugs Included in Composite Rate'; 12 `ESAs'; 13 `ESRD-
Related Drugs; and drug expenses reported on line 5 column 10, `Non-
ESRD related drugs.' The Non-ESRD related drugs would include drugs and
biologicals, administered during dialysis for non-ESRD related
conditions as well as oral-only drugs. Since these are costs to the
facility for providing ESRD treatment to the patient we propose to
include them in the drug cost share weight. Vaccine expenditures, which
are mandated as separately reimbursable, were excluded when calculating
this cost weight. Section 1842(o)(1)(A)(iv) of the Act requires that
influenza, pneumococcal, and hepatitis B vaccines described in
subparagraph (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
drugs are excluded from other prospective payment systems, we exclude
them from the proposed ESRDB market basket, as well.
Finally, to avoid double-counting, the weight for the
Pharmaceuticals category was reduced to exclude the estimated share of
non-direct patient care salaries and benefits associated with the
applicable drug cost centers referenced above. This resulted in a
proposed ESRDB market basket weight for Pharmaceuticals of 16.510
percent. ESA expenditures accounted for 12.383 percentage points of the
Pharmaceuticals weight, and all other drugs accounted for the remaining
4.127 percentage points (.438 percent for Drugs Included in Composite
Rate, 3.534 percent for ESRD-Related Drugs, and 0.155 percent for Non-
ESRD related drugs).
The 9-percentage point decrease in the pharmaceutical share between
2008 and 2012 (25.052 percent to 16.510 percent) is due largely to the
drop in drug utilization. The drug percentage of the base rate used in
2011 was about 31 percent; however, the analysis conducted for the drug
utilization adjustment showed that the drug portion of the base rate in
2014 would have fallen to only be 22 percent of the base rate had it
been fully implemented. The cost report data corroborate the drop in
drug costs for facilities over the same time frame.
Supplies
We calculated the weight for Supplies included in the bundled rate
using the costs reported in the Supplies cost center (column 7 on
Worksheet B) of the Medicare cost report. This total was divided by
total expenses to derive a weight for the Supplies component in the
ESRDB market basket. Finally, to avoid double-counting, the weight for
the Supplies category was reduced to exclude the estimated share of
non-direct patient care salaries and benefits associated with this cost
center. The resulting proposed 2012-based ESRDB market basket weight
for Supplies is 10.097 percent.
Lab Services
We calculated the weight for Lab Services included in the bundled
rate using the costs reported in the Laboratory cost center (column 8
on Worksheet B) of the Medicare cost report. This total was divided by
total expenses to derive a weight for the Lab component in the ESRDB
market basket. Finally, to avoid double-counting, the weight for the
Lab services category was reduced to exclude the estimated share of
non-direct patient care salaries and benefits associated with this cost
center. The resulting proposed 2012-based ESRDB market basket weight
for Lab Services is 1.532 percent.
The cost weight for lab services is substantially lower than the
2008 ESRDB market basket lab weight of 5.497 percent. This is due to
the change in the method used to determine lab costs. In 2008, we
relied on MCR data for the cost share weight; however, the majority of
lab services were performed by labs outside of the dialysis facility
and those costs were not reported on the MCR. Therefore, in the 2008
ESRDB market basket we inflated the expenses reported for labs in ESRD
facilities to reflect the use from other provider types. This
adjustment factor was estimated based on the lab payment to dialysis
facilities relative to the lab fee payment to other providers. For the
rebased ESRDB market basket, the 2012 cost report data represents the
expenses under the bundled payment system, and all of the expenses
related to lab fees (whether in house or contracted through an outside
lab) are reported in the MCR data.
Housekeeping & Operations
We calculated the weight for Housekeeping and Operations included
in the bundled rate using the costs reported on worksheet A, column 8,

[[Page 40220]]

lines 3 & 4 of the Medicare Cost Report. This total was divided by
total expenses to derive a weight for the Housekeeping and Operations
component in the ESRDB market basket. Finally, to avoid double-
counting, the weight for the Housekeeping & Operations category was
reduced to exclude the estimated share of non-direct patient care
salaries and benefits associated with this cost center. The resulting
proposed 2012-based ESRDB market basket weight for Housekeeping and
Operations is 3.785 percent.
Administrative and General (A&G)
We computed the proportion of total A&G expenditures using the A&G
cost center data from Worksheet B (column 9) of the Medicare cost
reports. As described above, we exclude contract labor from this cost
category and apportion these costs to the salary and benefits cost
weights. Similar to other expenditure category adjustments, we then
reduced the computed weight to exclude salaries and benefits associated
with the A&G cost center and the additional benefits for non-direct
patient care. The resulting A&G cost weight is 13.331 percent. This A&G
cost weight is then fully apportioned to derive detailed cost weights
for Utilities, Telephone, Professional Fees, and All Other Goods and
Services.
Professional Fees
A separate weight for Professional Fees was developed using the
2012 SAS data. Professional fees include fees associated with the
following: purchased professional & technical services (such as
accounting, bookkeeping, legal, management, consulting, and other
professional services fees) and purchased advertising & promotional
services. To estimate professional fees, we first calculated the ratio
of SAS professional fees to SAS expenses that match the A&G expenses
from the cost reports. We then applied this ratio to the A&G total cost
weight to estimate the proportion of ESRD facility professional fees.
The resulting weight for the proposed 2012-based ESRDB market basket is
0.617 percent. An estimated 87 percent of the expenses are considered
labor-related and subsequently included in the proposed labor-related
share, which is described in more detail below.
Telephone
Because telephone service expenses are not separately identified on
the Medicare cost report, we developed a Telephone Services weight
using the 2012 SAS expenses. We estimated a ratio of telephone services
expenses to total administrative and general expenses from SAS. We
applied this ratio to the total A&G cost weight from the cost reports
to estimate the proportion of ESRD facility telephone expenses. The
resulting proposed 2012-based ESRDB market basket cost weight for
Telephone Services is 0.468 percent.
All Other Goods and Services
A separate weight for All Other Goods and Services was developed
using the 2012 SAS data. All other Goods and Services include expenses
for purchased software, professional liability insurance, data
processing and other purchased computer services, and all other
operating expenses not otherwise captured. We estimated a ratio of All
Other Goods and Services expenses to Total Administrative and General
expenses from SAS. We then applied this ratio to the total A&G cost
weight from the cost reports to estimate the cost weight for ESRD
facility All Other Goods and Services. The resulting proposed 2012-
based ESRDB market basket cost weight for All Other Goods and Services
is 10.407 percent.
Capital
We developed a market basket weight for the Capital category using
data from Worksheet B of the Medicare cost reports. Capital-related
costs include depreciation and lease expense for buildings, fixtures,
movable equipment, property taxes, insurance, the costs of capital
improvements, and maintenance expense for buildings, fixtures, and
machinery. Because housekeeping as well as operation & maintenance
costs are included in the Worksheet B cost center for Capital-Related
costs (Worksheet B, column 2), we excluded the costs for these two
categories and developed a separate expenditure category for
housekeeping & operations, as detailed above. Similar to the
methodology used for other market basket cost categories with a
salaries component, we computed a share for non-direct patient care
salaries and benefits associated with the Capital-related Machinery
cost center. We used Worksheet B to develop two capital-related cost
categories, one for Buildings and Equipment (based on worksheet B
column 2 less housekeeping & operations), and one for Machinery (based
on worksheet B column 4). We reasoned this delineation was particularly
important given the critical role played by dialysis machines.
Likewise, because price changes associated with Buildings and Equipment
could move differently than those associated with Machinery, we felt
that separate price proxies would be more appropriate. The resulting
proposed 2012-based ESRDB market basket weights for Capital-related
Buildings and Equipment and Capital-related Machinery are 8.378 and
3.870 percent, respectively.
Table 4 lists all of the cost categories and cost weights in the
proposed CY 2012 ESRDB market basket compared to the cost categories
and cost weights in the CY 2008 ESRDB market basket.

Table 4--Comparison of the Proposed CY 2012-Based ESRDB Market Basket Cost Categories & Weights and the CY 2008-Based ESRDB Market Basket Cost
Categories & Weights.
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008 Cost Proposed 2012
2008 Cost category weight cost weight Proposed 2012 cost category
(percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...................................... 100.000 100.000 Total.
Compensation........................... 33.509 42.497 Compensation.
Wages and Salaries................. 26.755 33.650 Wages and Salaries.
Employee Benefits.................. 6.754 8.847 Employee Benefits.
Utilities.............................. 1.264 1.839 Utilities.
Electricity........................ 0.621 0.973 Electricity.
Natural Gas........................ 0.127 0.101 Natural Gas.
Water and Sewerage................. 0.516 0.765 Water and Sewerage.
All Other Materials.................... 39.765 28.139 Medical Materials and Supplies.
Pharmaceuticals.................... 25.052 16.510 Pharmaceuticals.
Supplies........................... 9.216 10.097 Supplies.

[[Page 40221]]

Lab Services....................... 5.497 1.532 Lab Services.
All Other Services..................... 15.929 15.277 All Other Goods and Services.
Telephone.......................... 0.597 0.468 Telephone Service.
Housekeeping and Operations........ 2.029 3.785 Housekeeping and Operations.
Labor-Related Services............. 2.768
Prof. Fees: Labor-related.......... 1.549 0.617 Professional Fees (Labor-related and NonLabor-related services).
All Other Labor-related............ 1.219
NonLabor-Related Services.......... 10.535 10.407 All Other Goods and Services.
Prof. Fees: Nonlabor-related....... 0.224
All Other Nonlabor-related......... 10.311
Capital Costs.......................... 9.533 12.248 Capital Costs.
Capital Related-Building and 7.459 8.378 Capital Related-Building and Equipment.
Equipment.
Capital Related-Machinery.......... 2.074 3.870 Capital Related-Machinery.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not sum to 100.000 percent due to rounding.

ii. Proposed Price Proxies for the CY 2012 ESRDB Market Basket
After developing the cost weights for the proposed CY 2012-based
ESRDB market basket, we selected the most appropriate wage and price
proxies currently available to represent the rate of price change for
each expenditure category. We base the price proxies on Bureau of Labor
Statistics (BLS) data and group them into one of the following BLS
categories:
Employment Cost Indexes. Employment Cost Indexes (ECIs)
measure the rate of change in employment wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. 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 North American
Classification System (NAICS) and the occupational ECIs are based on
the Standard Occupational Classification System (SOC).
Producer Price Indexes. Producer Price Indexes (PPIs)
measure price changes for goods sold in other than retail markets. PPIs
are used when the purchases of goods or services are made at the
wholesale level.
Consumer Price Indexes. Consumer Price Indexes (CPIs)
measure change in the prices of final goods and services bought by
consumers. CPIs are only used when the purchases are similar to those
of retail consumers rather than purchases at the wholesale level, or if
no appropriate PPIs were available.
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (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 will help ensure that our market basket updates 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
regulation 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 price proxies for the proposed revised and
rebased ESRDB market basket. Below is a detailed explanation of the
price proxies used for each cost category weight.
Wages and Salaries
We will continue using an ECI blend for wages and salaries in the
proposed 2012-based ESRDB market basket. However, we are proposing to
expand the number of occupation categories and associated ECIs from two
to four based on FTE data from ESRD Medicare Cost Reports and the
availability of ECIs from BLS. We calculated weights for the Wages and
Salaries sub-categories using 2012 FTE data and associated 2012 Average
Mean Wage data from the Bureau of Labor Statistics' Occupational
Employment Statistics.
Wages and Salaries--Health Related
We are proposing to continue using the ECI for Wages & Salaries for
Hospitals (All Civilian) (BLS series code CIU1026220000000I).
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

[[Page 40222]]

Health Care and Social Assistance NAICS sector (62).
The Wages and Salaries--Health Related subcategory weight within
the Wages and Salaries cost category is 80percent. The ESRD Medicare
Cost Report FTE categories used to define the Wages and Salaries--
Health Related subcategory include ``Physicians,'' ``Registered
Nurses,'' ``Licensed Practical Nurses,'' ``Nurses' Aides,''
``Technicians,'' and ``Dieticians.''
The current 2008-based ESRD Market Basket uses the ECI for Wages &
Salaries for Hospitals (All Civilian) for 50 percent of Wages and
Salaries.
Wages and Salaries--Management
We propose using the ECI for Wages & Salaries for Management,
Business, and Financial (Private Industry) (BLS series code
CIU2020000110000I). We feel this ECI is the most appropriate
price proxy to measure the price growth of management functions at ESRD
facilities. Furthermore, we regularly use this ECI-wages for
management, business, and financial in our other market baskets, such
as the MEI.
The Wages and Salaries--Management subcategory weight within the
Wages and Salaries cost category is 8 percent. The ESRD Medicare Cost
Report FTE category used to define the Wages and Salaries--Management
subcategory is ``Management.''
Wages and Salaries--Administrative
We propose using the ECI for Wages & Salaries for Office and
Administrative Support (Private Industry) (BLS series code
CIU2020000220000I). We feel this ECI is the most appropriate
price proxy to measure the price growth of administrative support at
ESRD facilities. Furthermore, we regularly use this ECI for
administrative wages in our other market baskets, such as the MEI.
The Wages and Salaries--Administrative subcategory weight within
the Wages and Salaries cost category is 7 percent. The ESRD Medicare
Cost Report FTE category used to define the Wages and Salaries--
Administrative subcategory is ``Administrative.''
Wages and Salaries--Services
We propose using the ECI for Wages & Salaries for Service
Occupations (Private Industry) (BLS series code
CIU2020000300000I). We feel this ECI is the most appropriate
price proxy to measure the price growth of all other non-health
related, non-management, and non-administrative service support at ESRD
facilities. Furthermore, we regularly use this ECI for all other
service wages in our other market baskets, such as the MEI.
The Wages and Salaries--Services subcategory weight within the
Wages and Salaries cost category is 6 percent. The ESRD Medicare Cost
Report 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. We
feel this new ECI blend is the most appropriate price proxy to measure
the growth of wages and salaries faced by ESRD facilities.

Table 5--ECI Blend for Wages and Salaries in the Proposed 2012 Based
ESRDB Market Basket
------------------------------------------------------------------------
Cost category ECI Series Weight (%)
------------------------------------------------------------------------
Wages and Salaries--Health ECI--Wages & 80
Related. Salaries--Hospital
(All Civilian).
Wages and Salaries--Management ECI--Wages & 7
Salaries--Management
, Business, and
Financial (Private
Industry).
Wages and Salaries-- ECI--Wages & 7
Administrative. Salaries--Office and
Administrative
Support (Private
Industry).
Wages and Salaries--Services.. ECI--Wages & 6
Salaries--Service
Occupations (Private
Industry).
------------------------------------------------------------------------

The current 2008-based ESRDB market basket uses a 50 percent/50
percent blend of the ``ECI--Wages & Salaries--Hospital (All Civilian)''
and the ``ECI--Wages and Salaries--Healthcare and Social Assistance''
for the wages and salaries ECI blend.
Benefits
We will continue using an ECI blend for Benefits in the proposed
2012-based ESRDB market basket; however, we are proposing to expand the
number of occupation categories and associated ECIs from two to four
based on the components of the proposed Wage and Salaries ECI blend.
Benefits--Health Related
We are proposing to continue using the ECI for Benefits for
Hospitals (All Civilian) to measure price growth of this subcategory.
The ECI for Benefits for Hospitals is calculated using the ECI for
Total Compensation for Hospitals (BLS series code
CIU1016220000000I) and the relative importance of wages and salaries
within total compensation. We believe this constructed ECI series is
technically appropriate for the reason stated above in the wages and
salaries price proxy section.
Benefits--Management
We propose using the ECI for Benefits for Management, Business, and
Financial (Private Industry) to measure price growth of this
subcategory. The ECI for Benefits for Management, Business, and
Financial is calculated using the ECI for Total Compensation for
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 above in the wages and
salaries price proxy section.
Benefits--Administrative
We propose using the ECI for Benefits for Office and Administrative
Support (Private Industry) to measure price growth of this subcategory.
The ECI for Benefits for Office and Administrative Support is
calculated using the ECI for Total Compensation for 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 above in the wages and salaries price
proxy section.
Benefits--Services
We propose using the ECI for Benefits for Service Occupations
(Private Industry) to measure price growth of this subcategory. The ECI
for Benefits for Service Occupations is calculated using the ECI for
Total Compensation for Service Occupations (BLS series code
CIU2030000300000I) and the relative importance of wages and salaries
within total compensation. We believe this constructed ECI series is
technically appropriate for the reason stated above in the wages and
salaries price proxy section.
We feel the new benefits ECI blend is the most appropriate price
proxy to measure the growth of prices faced by

[[Page 40223]]

ESRD facilities. Table 6 lists the four ECI series and the
corresponding weights used to construct the proposed benefits ECI
blend.

Table 6--Benefites ECI Blend in the Proposed 2012-Based ESRDB Market
Basket
------------------------------------------------------------------------
Cost category ECI Series Weight (%)
------------------------------------------------------------------------
Benefits--Health Related...... ECI--Benefits--Hospit 80
al (All Civilian).
Benefits--Management.......... ECI--Benefits--Manage 7
ment, Business, and
Financial (Private
Industry).
Benefits--Administrative...... ECI--Benefits--Office 7
and Administrative
Support (Private
Industry).
Benefits--Services............ ECI--Benefits--Servic 6
e Occupations
(Private Industry).
------------------------------------------------------------------------

The current 2008-based ESRDB market basket uses a 50 percent/50
percent blend of the ``ECI--Benefits--Hospital (All Civilian)'' and the
``ECI--Benefits--Healthcare and Social Assistance'' for the benefits
ECI blend.
Electricity
We propose to continue using the PPI for Commercial Electric Power
(BLS series code WPU0542) to measure the price growth of this
cost category. This is the same proxy used in the current 2008-based
ESRDB market basket.
Natural Gas
We propose to continue using the PPI for Commercial Natural Gas
(BLS series code WPU0552) to measure the price growth of this
cost category. This is the same proxy used in the current 2008-based
ESRDB market basket.
Water and Sewerage
We propose to continue using the CPI for Water and Sewerage
Maintenance (BLS series code CUUR0000SEHG01) to measure the
price growth of this cost category. This is the same proxy used in the
current 2008-based ESRDB market basket.
Pharmaceuticals
We propose to change the price proxy used for the pharmaceuticals
cost category. A recent Health and Human Services Office of the
Inspector General (OIG) report titled ``Update: Medicare Payment for
End Stage Renal Disease Drugs'' recommended that CMS consider updating
the ESRD payment bundle using a factor that takes into account drug
acquisition costs. CMS had responded to this recommendation by stating
that we would consider these findings in the continual evaluation of
the ESRD market basket, particularly during the next rebasing and
revising of the market basket index.\1\
---------------------------------------------------------------------------

\1\ https://oig.hhs.gov/oei/reports/oei-03-12-00550.asp.
---------------------------------------------------------------------------

Drug acquisition cost data is neither publicly available nor the
methods used to determine it transparent, and, therefore, wouldn't meet
our price proxy criteria of relevance, reliability, transparency, and
public availability. However, after considering several viable options
that do meet the criteria we are proposing to use the PPI: Vitamin,
Nutrient, and Hematinic Preparations (BLS series code
WPU063807). This index includes drugs that are most similar to
ESAs and other drugs used in the ESRD setting, such as iron
supplements. The definition of a hematinic is a medicine that increases
the hemoglobin content of the blood, and these types of drugs are used
to treat iron-deficiency anemia essential for normal erythropoiesis.
We believe the PPI: Vitamin, Nutrient, and Hematinic Preparations
to be the most technically appropriate index available to measure the
price growth of the pharmaceuticals cost category in the proposed 2012-
based ESRDB market basket. The current 2008-based ESRDB market basket
uses the PPI: Pharmaceuticals for Human Use.
Supplies
We propose using the PPI for Surgical and Medical Instruments (BLS
series code WPU1562) since it excludes orthopedic, prosthetic,
ophthalmic, and dental type medical equipment and devices, which are
not likely to be used extensively in the ESRD setting. The types of
equipment under Surgical and Medical Instruments, particularly blood
transfusion and IV equipment, seem most similar to the medical
equipment and supplies that would be used in the ESRD setting. The
current 2008-based ESRDB market basket uses the PPI for Medical,
Surgical, and Personal Aid Devices.
Lab Services
We propose to continue using the PPI for Medical Laboratories (BLS
series code PCU621511621511) to measure the price growth of
this cost category. This is the same proxy used in the current 2008-
based ESRDB market basket.
Telephone Service
We propose to continue using the CPI for Telephone Services (BLS
series code CUUR0000SEED) to measure the price growth of this
cost category. This is the same proxy used in the current 2008-based
ESRDB market basket.
Housekeeping and Operations
We propose to continue using the PPI for Cleaning and Building
Maintenance Services (BLS series code WPU49) to measure the
price growth of this cost category. This is the same proxy used in the
current 2008-based ESRDB market basket.
Professional Fees
We propose to continue using the ECI (Compensation) for
Professional and Related Occupations (Private Industry) (BLS series
code CIU2010000120000I) to measure the price growth of this
cost category. This is the same proxy used in the current 2008-based
ESRDB market basket.
All Other Goods and Services
We propose using the PPI for Finished Goods less Foods and Energy
(BLS series code WPUFD4131) as the price proxy for the All
Other Goods and Services cost category. This PPI series is used in most
of CMS' other market baskets to measure the expenses for the residual
category of all other goods and services. It is more consistent with
the purchase of items at a wholesale rather than a consumer level. The
current 2008-based ESRDB market basket (specifically, the ``All Other
Non Labor-Related Services'' cost category) uses the CPI-U, All Items
less Foods and Energy.
Capital-Related Building and Equipment
We propose using the PPI for Lessors of Nonresidential Buildings
(BLS series code PCU531120531120) as it represents the types
of fixed capital expenses most likely faced by ESRD facilities. We also
use this proxy in the MEI as the fixed capital proxy for physicians. We
believe the PPI for Lessors of Nonresidential Buildings is more
appropriate as fixed capital expenses in both the ESRD and physician
office setting should be more congruent with trends in business office
space costs rather than residential costs. The current 2008-based ESRDB
market

[[Page 40224]]

basket uses the CPI for Owners' Equivalent Rent of Residences.
Capital Related Machinery
We propose to continue using the PPI for Electrical Machinery and
Equipment (BLS series code WPU117) to measure the price growth
of this cost category. This is the same proxy used in the current 2008-
based ESRDB market basket.
Table 7 shows all the proposed price proxies for the proposed CY
2012-based ESRDB Market Basket.

Table 7--Proposed Price Proxies for the CY 2012-Based ESRDB Market
Basket
------------------------------------------------------------------------
Cost category Price proxy Cost weight %
------------------------------------------------------------------------
Compensation ..................... 42.497
Wages and Salaries........ ..................... 33.650
Health-related Wages.. ECI--Wages & 26.920
Salaries--Hospital
(Civilian).
Management Wages...... ECI--Wages & 2.356
Salaries--Management
, Business, and
Financial (Private).
Administrative Wages.. ECI--Wages & 2.356
Salaries--Office and
Administrative
Support (Private).
Service Wages......... ECI--Wages & 2.019
Salaries--Service
Occupations
(Private).
Employee Benefits......... ..................... 8.847
Health-related ECI--Benefits--Hospit 7.078
Benefits. al (Civilian).
Management Benefits... ECI--Benefits--Manage 0.619
ment, Business, and
Financial (Private).
Administrative ECI--Benefits--Office 0.619
Benefits. and Administrative
Support (Private).
Service Benefits...... ECI--Benefits--Servic 0.531
e Occupations
(Private).
Utilities ..................... 1.839
Electricity............... PPI--Commercial 0.973
Electric Power.
Natural Gas............... PPI--Commercial 0.101
Natural Gas.
Water and Sewerage........ CPI--Water and 0.765
Sewerage Maintenance.
Medical Materials and Supplies ..................... 28.139
Pharmaceuticals........... PPI--Vitamin, 16.510
Nutrient, and
Hematinic
Preparations.
Supplies.................. PPI--Surgical and 10.097
Medical Instruments.
Lab Services.............. PPI--Medical 1.532
Laboratories.
All Other Goods and Services ..................... 15.277
Telephone Service......... CPI--Telephone 0.468
Services.
Housekeeping and PPI--Cleaning and 3.785
Operations. Building Maintenance
Services.
Professional Fees......... ECI--Compensation--Pr 0.617
ofessional and
Related Occupations
(Private).
All Other Goods and PPI--Finished Goods 10.407
Services. less Foods and
Energy.
Capital Costs ..................... 12.248
Capital Related Building PPI--Lessors of 8.378
and Equipment. Nonresidential
Buildings.
Capital Related Machinery. PPI--Electrical 3.870
Machinery and
Equipment.
Total................. ..................... 100.000
------------------------------------------------------------------------
Note: Totals may not sum to 100.000% due to rounding.

iii. Proposed Market Basket Estimate for the CY 2015 ESRDB PPS Update
As discussed previously in this proposed rule, beginning with the
CY 2015 ESRD PPS update, we are proposing to adopt the CY 2012-based
ESRDB market basket as the appropriate market basket of goods and
services for the ESRD PPS.
Based on the IHS Global Insight, Inc. (IGI) first quarter 2014
forecast with history through the fourth quarter of 2013, the most
recent estimate of the proposed CY 2012-based ESRDB market basket for
CY 2015 is 2.0 percent. IGI is a nationally recognized economic and
financial forecasting firm that contracts with CMS to forecast the
components of the CMS market baskets. Based on IGI's first quarter 2014
forecast with history through the fourth quarter of 2013, the estimate
of the current CY 2008-based ESRDB market basket for CY 2015 is 2.7
percent.
Table 8 compares the proposed CY 2012-based ESRDB market basket and
the CY 2008-based ESRDB market basket percent changes. For the
historical period between CY 2011 and CY 2013, the average difference
between the two market baskets is -1.8 percentage points. This is
primarily the result of the lower pharmaceutical cost share combined
with the proposed revised price proxy for the pharmaceutical cost
category. For the CY 2014 and CY 2015 forecasts, the difference in the
market basket forecasts are mainly driven by the same factors as in the
historical period; however, it is important to note that the
differences between the two market baskets are projected to be smaller
as the growth in the price proxy for the pharmaceutical category are
projected to grow at more similar growth rates in the projected period
than the growth rates in the recent historical period.

Table 8--Proposed CY 2012-Based ESRDB Market Basket and CY 2008 Based ESRDB Market Basket, Percent Changes: 2011-
2015
----------------------------------------------------------------------------------------------------------------
Proposed Rebased CY 2012- CY 2008-Based ESRDB Market
Calendar Year (CY) based ESRDB Market Basket Basket
----------------------------------------------------------------------------------------------------------------
Historical data.....................................
CY 2011......................................... 1.2 2.8
CY 2012......................................... 1.4 3.4
CY 2013......................................... 1.1 3.0
Average CY 2011-2013............................ 1.3 3.1
Forecast:
CY 2014......................................... 1.8 2.3

[[Page 40225]]

CY 2015......................................... 2.0 2.7
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Insight, Inc. 1st quarter 2014 forecast with historical data through 4th quarter 2013.

c. 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 as equal to the 10-year moving average of changes in annual
economy-wide private nonfarm business multifactor productivity (MFP)
(as projected by the Secretary for the 10- year period ending with the
applicable fiscal year, year, cost reporting period, or other annual
period) (the ``MFP adjustment''). The Bureau of Labor Statistics (BLS)
is the agency that publishes the official measure of private nonfarm
business MFP. Please see https://www.bls.gov/mfp to obtain the BLS
historical published MFP data. We note that the proposed and final
methodology for calculating and applying the MFP adjustment to the ESRD
payment update is similar to the methodology used in other payment
systems, as required by section 3401 of the Affordable Care Act.
The projection of MFP is currently produced by IGI. The details
regarding the methodology for forecasting MFP and how it is applied to
the market basket were finalized in the CY 2012 ESRD PPS final rule (76
FR 70232 through 70234). Using this method and the IGI forecast for the
first quarter of 2014 of the 10-year moving average of MFP, the CY 2015
MFP factor we would have proposed is 0.4 percent. As discussed further
below, however, section 1881(b)(F)(i)(III) of the Act, as added by
section 217(b)(2) of PAMA, requires the Secretary to implement a 0.0
percent payment update in CY 2015.
d. Calculation of the Proposed ESRDB Market Basket Update, Adjusted for
Multifactor Productivity for CY 2015
Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD
PPS payment amounts shall be annually increased by an ESRD market
basket percentage increase factor reduced by the productivity
adjustment. For CY 2015, section 1881(b)(14)(F)(i)(III) of the Act, as
added by section 217(b)(2) of PAMA, requires the Secretary to implement
a 0.0 percent ESRDB market basket increase to the ESRD PPS base rate.
In addition, we interpret the reference to ``[n]otwithstanding
subclause (III)'' that was added to amended section
1881(b)(14)(F)(i)(III) as precluding the application of the multi-
factor productivity (MFP) adjustment in 2015. As a result of these
provisions, the proposed CY 2015 ESRD market basket increase is 0.0
percent. We note that if PAMA had not been enacted the proposed 2012-
based ESRDB market basket update less productivity for CY 2015 would
have been 1.6 percent, or 2.0 percent less 0.4 percentage point.
e. Labor-Related Share
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. The
labor-related share is typically the sum of Wages and Salaries,
Benefits, Professional Fees, Labor-related Services, and a portion of
the Capital share from a given market basket.
We propose to use the proposed 2012-based ESRDB market basket costs
to determine the proposed labor-related share for ESRD facilities of
50.673 percent, as shown in Table 9 below. These figures represent the
sum of Wages and Salaries, Benefits, Housekeeping and Operations, 87
percent of the weight for Professional Fees (details discussed below),
and 46 percent of the weight for Capital-related Building and Equipment
expenses (details discussed below). We note that this is a similar
methodology used to compute the labor-related share used from CY 2011
through CY 2014.

Table 9--Proposed CY 2015 Labor-Related Share and CY 2014 ESRDB Labor-Related Share
----------------------------------------------------------------------------------------------------------------
Proposed CY 2015 ESRDB labor- CY 2014 ESRDB labor-related
Cost category related share (percent) share (percent)
----------------------------------------------------------------------------------------------------------------
Wages............................................... 33.650 26.755
Benefits............................................ 8.847 6.754
Housekeeping and operations......................... 3.785 2.029
Professional fees (labor-related)................... 0.537 2.768
Capital labor-related............................... 3.854 3.431
-----------------------------------------------------------
Total........................................... 50.673 41.737
----------------------------------------------------------------------------------------------------------------

The labor-related share for Professional Fees (87 percent) reflects
the proportion of ESRD facilities' professional fees expenses that we
believe vary with local labor market. We conducted a survey of ESRD
facilities in 2008 to better understand the proportion of contracted
professional services that ESRD facilities typically purchase outside
of their local labor market. These purchased professional services
include functions such as accounting and auditing, management
consulting, engineering, and legal services. Based on the survey
results, we determined that, on average, 87 percent of professional
services are purchased from local firms and 13 percent are purchased
from businesses located outside of the ESRD facility's local labor
market. Thus, we are proposing to

[[Page 40226]]

include 87 percent of the cost weight for Professional Fees in the
labor-related share, the same percentage as used in prior years.
The labor-related share for capital-related expenses (46 percent of
ESRD facilities' adjusted Capital-related Building and Equipment
expenses) reflects the proportion of ESRD facilities' capital-related
expenses that we believe varies with local labor market wages. Capital-
related expenses are affected in some proportion by variations in local
labor market costs (such as construction worker wages) that are
reflected in the price of the capital asset. However, many other inputs
that determine capital costs are not related to local labor market
costs, such as interest rates. The 46-percent figure is based on
regressions run for the inpatient hospital capital PPS in 1991 (56 FR
43375). We use a similar methodology to calculate capital-related
expenses for the labor-related shares for rehabilitation facilities (70
FR 30233), psychiatric facilities, long-term care facilities, and
skilled nursing facilities (66 FR 39585).
3. The Proposed CY 2015 ESRD PPS Wage Indices
a. Background
Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD
PPS may include a geographic wage index payment adjustment, such as the
index referred to in section 1881(b)(12)(D) of the Act. In the CY 2011
ESRD PPS final rule (75 FR 49117), we finalized for the ESRD PPS the
use of the Office of Management and Budget's (OMB) Core-Based
Statistical Areas (CBSAs)-based geographic area designations described
in OMB bulletin 03-04, issued June 6, 2003 as the basis for revising
the urban and rural areas and their corresponding wage index values.
This bulletin, as well as subsequent bulletins, is available online at
https://www.whitehouse.gov/omb/bulletins_index2003-2005.
We also finalized that we would use the urban and rural definitions
used for the Medicare IPPS but without regard to geographic
reclassification authorized under section 1886(d)(8) and (d)(10) of the
Act. In the CY 2012 ESRD PPS final rule (76 FR 70239), we finalized
that, under the ESRD PPS, we will continue to utilize the ESRD PPS wage
index methodology, first established under the basic case-mix adjusted
composite rate payment system, for updating the wage index values using
the OMB's CBSA-based geographic area designations to define urban and
rural areas.
b. Proposed Implementation of New Labor Market Delineations
OMB publishes bulletins regarding CBSA changes, including changes
to CBSA numbers and titles. In accordance with our established
methodology, we have historically adopted via rulemaking CBSA changes
that are published in the latest OMB bulletin. On February 28, 2013,
OMB issued OMB Bulletin No. 13-01, which established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of this bulletin may be obtained at https://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. According to OMB,
``[t]his bulletin provides the delineations of all Metropolitan
Statistical Areas, Metropolitan Divisions, Micropolitan Statistical
Areas, Combined Statistical Areas, and New England City and Town Areas
in the United States and Puerto Rico based on the standards published
on June 28, 2010, in the Federal Register (75 FR 37246-37252) and
Census Bureau data.'' In this CY 2015 ESRD PPS proposed rule, when
referencing the new OMB geographic boundaries of statistical areas, we
are using the term ``delineations'' rather than the term
``definitions'' that we have used in the past, consistent with OMB's
use of the terms (75 FR 37249). Because the bulletin was not issued
until February 28, 2013, with supporting data not available until
later, and because the changes made by the bulletin and their
ramifications needed to be extensively reviewed and verified, we were
unable to undertake such a lengthy process before publication of the FY
2014 IPPS/LTCH PPS proposed rule and, thus, did not implement changes
to the hospital wage index for FY 2014 based on these new CBSA
delineations.
Likewise, for the same reasons, the CY 2014 ESRD PPS wage index
(based upon the pre-floor, pre-reclassified hospital wage data, which
is unadjusted for occupational mix) also did not reflect the new CBSA
delineations. In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed
to implement the new CBSA delineations as described in the February 28,
2013 OMB Bulletin No. 13-01, beginning with the FY 2015 IPPS wage index
(79 FR 28054 through 28055).
Similarly, in this CY 2015 ESRD PPS proposed rule, we are proposing
to implement the new CBSA delineations as described in the February 28,
2013 OMB Bulletin No. 13-01, beginning with the CY 2015 ESRD PPS wage
index. We believe that the most current CBSA delineations accurately
reflect the local economies and wage levels of the areas where
facilities are located, and we believe that it is important for the
ESRD PPS to use the latest CBSA delineations available in order to
maintain an up-to-date payment system that accurately reflects the
reality of populations shifts and labor market conditions. We have
reviewed our findings and impacts relating to the new CBSA delineations
using the most recent data available at the time of this proposed rule,
and have concluded that there is no compelling reason to further delay
the implementation of the CBSA delineations as set forth in OMB
Bulletin 13-01.
In order to implement these changes for the ESRD PPS, it is
necessary to identify the new labor market area delineation for each
county and facility in the country. For example, if we adopt the new
CBSA delineations, there would be new CBSAs, urban counties that would
become rural, rural counties that would become urban, and existing
CBSAs that would be split apart. Because the wage index of urban areas
is typically higher than that of rural areas, ESRD facilities currently
located in rural counties that would become urban if we adopt the new
CBSA delineations would generally experience an increase in their wage
index values. We have identified 105 counties and 113 facilities that
would move from rural to urban status if we adopt the new CBSA
delineations beginning in CY 2015. Table 10: (CY 2015 Proposed Rural to
Urban CBSA Crosswalk) shows the CBSA delineations for CY 2014 and the
rural wage index values proposed for CY 2015 based on those
delineations, compared to the proposed CBSA delineations for CY 2015
and the proposed urban wage index values for CY 2015 based on the new
delineations, and the percentage change in these values for those
counties that would change from rural to urban if we adopt the new CBSA
delineations. If we adopt the new OMB delineations illustrated in Table
10 below, approximately 100 facilities would experience an increase in
their wage index values.

[[Page 40227]]

Table 10--CY 2015 Proposed Rural to Urban CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESRD PPS CY 2014 CBSA delineations Proposed ESRD PPS CY 2015 CBSA
-------------------------------------------- delineations
------------------------------------------- Change in
County name State Wage Wage value
CBSA Urban/Rural index CBSA Urban/Rural index (percent)
value value
--------------------------------------------------------------------------------------------------------------------------------------------------------
BALDWIN............................ AL 01 RURAL................. 0.6981 19300 URBAN................ 0.7279 4.27
PICKENS............................ AL 01 RURAL................. 0.6981 46220 URBAN................ 0.8288 18.72
COCHISE............................ AZ 03 RURAL................. 0.9159 43420 URBAN................ 0.8970 -2.06
LITTLE RIVER....................... AR 04 RURAL................. 0.7265 45500 URBAN................ 0.7390 1.72
WINDHAM............................ CT 07 RURAL................. 1.1292 49340 URBAN................ 1.1536 2.16
SUSSEX............................. DE 08 RURAL................. 1.0248 41540 URBAN................ 0.9296 -9.29
CITRUS............................. FL 10 RURAL................. 0.8010 26140 URBAN................ 0.7653 -4.46
GULF............................... FL 10 RURAL................. 0.8010 37460 URBAN................ 0.7861 -1.86
HIGHLANDS.......................... FL 10 RURAL................. 0.8010 42700 URBAN................ 0.8011 0.01
SUMTER............................. FL 10 RURAL................. 0.8010 45540 URBAN................ 0.8125 1.44
WALTON............................. FL 10 RURAL................. 0.8010 18880 URBAN................ 0.8260 3.12
LINCOLN........................... GA 11 RURAL................. 0.7425 12260 URBAN................ 0.9213 24.08
MORGAN............................. GA 11 RURAL................. 0.7425 12060 URBAN................ 0.9358 26.03
PEACH.............................. GA 11 RURAL................. 0.7425 47580 URBAN................ 0.7570 1.95
PULASKI............................ GA 11 RURAL................. 0.7425 47580 URBAN................ 0.7570 1.95
KALAWAO............................ HI 12 RURAL................. 0.9953 27980 URBAN................ 0.9510 -4.45
MAUI............................... HI 12 RURAL................. 0.9953 27980 URBAN................ 0.9510 -4.45
BUTTE.............................. ID 13 RURAL................. 0.7425 26820 URBAN................ 0.8966 20.75
DE WITT............................ IL 14 RURAL................. 0.8363 14010 URBAN................ 0.8935 6.84
JACKSON............................ IL 14 RURAL................. 0.8363 16060 URBAN................ 0.8354 -0.11
WILLIAMSON......................... IL 14 RURAL................. 0.8363 16060 URBAN................ 0.8354 -0.11
SCOTT.............................. IN 15 RURAL................. 0.8454 31140 URBAN................ 0.8319 -1.60
UNION.............................. IN 15 RURAL................. 0.8454 17140 URBAN................ 0.8942 5.77
PLYMOUTH........................... IA 16 RURAL................. 0.8483 43580 URBAN................ 0.8948 5.48
KINGMAN............................ KS 17 RURAL................. 0.7838 48620 URBAN................ 0.8503 8.48
ALLEN.............................. KY 18 RURAL................. 0.7770 14540 URBAN................ 0.8403 8.15
BUTLER............................. KY 18 RURAL................. 0.7770 14540 URBAN................ 0.8403 8.15
ACADIA............................. LA 19 RURAL................. 0.7608 29180 URBAN................ 0.7896 3.79
IBERIA............................. LA 19 RURAL................. 0.7608 29180 URBAN................ 0.7896 3.79
ST. JAMES.......................... LA 19 RURAL................. 0.7608 35380 URBAN................ 0.8778 15.38
TANGIPAHOA......................... LA 19 RURAL................. 0.7608 25220 URBAN................ 0.9487 24.70
VERMILION.......................... LA 19 RURAL................. 0.7608 29180 URBAN................ 0.7896 3.79
WEBSTER............................ LA 19 RURAL................. 0.7608 43340 URBAN................ 0.8347 9.71
ST. MARYS.......................... MD 21 RURAL................. 0.8586 15680 URBAN................ 0.8625 0.45
WORCESTER.......................... MD 21 RURAL................. 0.8586 41540 URBAN................ 0.9296 8.27
MIDLAND............................ MI 23 RURAL................. 0.8232 33220 URBAN................ 0.7964 -3.26
MONTCALM........................... MI 23 RURAL................. 0.8232 24340 URBAN................ 0.8832 7.29
FILLMORE........................... MN 24 RURAL................. 0.9057 40340 URBAN................ 1.1384 25.69
LE SUEUR........................... MN 24 RURAL................. 0.9057 33460 URBAN................ 1.1162 23.24
MILLE LACS......................... MN 24 RURAL................. 0.9057 33460 URBAN................ 1.1162 23.24
SIBLEY............................. MN 24 RURAL................. 0.9057 33460 URBAN................ 1.1162 23.24
BENTON............................. MS 25 RURAL................. 0.7603 32820 URBAN................ 0.9069 19.28
YAZOO.............................. MS 25 RURAL................. 0.7603 27140 URBAN................ 0.7932 4.33
GOLDEN VALLEY...................... MT 27 RURAL................. 0.9055 13740 URBAN................ 0.8718 -3.72
HALL............................... NE 28 RURAL................. 0.8957 24260 URBAN................ 0.9253 3.30
HAMILTON........................... NE 28 RURAL................. 0.8957 24260 URBAN................ 0.9253 3.30
HOWARD............................. NE 28 RURAL................. 0.8957 24260 URBAN................ 0.9253 3.30
MERRICK............................ NE 28 RURAL................. 0.8957 24260 URBAN................ 0.9253 3.30
JEFFERSON.......................... NY 33 RURAL................. 0.8226 48060 URBAN................ 0.8417 2.32
YATES.............................. NY 33 RURAL................. 0.8226 40380 URBAN................ 0.8783 6.77
CRAVEN............................. NC 34 RURAL................. 0.7963 35100 URBAN................ 0.8547 7.33
DAVIDSON........................... NC 34 RURAL................. 0.7963 49180 URBAN................ 0.8660 8.75
GATES.............................. NC 34 RURAL................. 0.7963 47260 URBAN................ 0.9156 14.98
IREDELL............................ NC 34 RURAL................. 0.7963 16740 URBAN................ 0.9123 14.57
JONES.............................. NC 34 RURAL................. 0.7963 35100 URBAN................ 0.8547 7.33
LINCOLN............................ NC 34 RURAL................. 0.7963 16740 URBAN................ 0.9123 14.57
PAMLICO............................ NC 34 RURAL................. 0.7963 35100 URBAN................ 0.8547 7.33
ROWAN.............................. NC 34 RURAL................. 0.7963 16740 URBAN................ 0.9123 14.57
OLIVER............................. ND 35 RURAL................. 0.7125 13900 URBAN................ 0.7251 1.77
SIOUX.............................. ND 35 RURAL................. 0.7125 13900 URBAN................ 0.7251 1.77
HOCKING............................ OH 36 RURAL................. 0.8315 18140 URBAN................ 0.9499 14.24
PERRY.............................. OH 36 RURAL................. 0.8315 18140 URBAN................ 0.9499 14.24
COTTON............................. OK 37 RURAL................. 0.7824 30020 URBAN................ 0.7948 1.58
JOSEPHINE.......................... OR 38 RURAL................. 1.0120 24420 URBAN................ 1.0123 0.03
LINN............................... OR 38 RURAL................. 1.0120 10540 URBAN................ 1.0919 7.90
ADAMS.............................. PA 39 RURAL................. 0.8730 23900 URBAN................ 1.0142 16.17
COLUMBIA........................... PA 39 RURAL................. 0.8730 14100 URBAN................ 0.9382 7.47
FRANKLIN........................... PA 39 RURAL................. 0.8730 16540 URBAN................ 1.0997 25.97

[[Page 40228]]

MONROE............................. PA 39 RURAL................. 0.8730 20700 URBAN................ 0.9406 7.74
MONTOUR............................ PA 39 RURAL................. 0.8730 14100 URBAN................ 0.9382 7.47
UTUADO............................. PR 40 RURAL................. 0.4000 10380 URBAN................ 0.4000 0.00
BEAUFORT........................... SC 42 RURAL................. 0.8381 25940 URBAN................ 0.8807 5.08
CHESTER............................ SC 42 RURAL................. 0.8381 16740 URBAN................ 0.9123 8.85
JASPER............................. SC 42 RURAL................. 0.8381 25940 URBAN................ 0.8807 5.08
LANCASTER.......................... SC 42 RURAL................. 0.8381 16740 URBAN................ 0.9123 8.85
UNION.............................. SC 42 RURAL................. 0.8381 43900 URBAN................ 0.8275 -1.26
CUSTER............................. SD 43 RURAL................. 0.8343 39660 URBAN................ 0.9075 8.77
CAMPBELL........................... TN 44 RURAL................. 0.7387 28940 URBAN................ 0.7039 -4.71
CROCKETT........................... TN 44 RURAL................. 0.7387 27180 URBAN................ 0.7775 5.25
MAURY.............................. TN 44 RURAL................. 0.7387 34980 URBAN................ 0.9053 22.55
MORGAN............................. TN 44 RURAL................. 0.7387 28940 URBAN................ 0.7039 -4.71
ROANE.............................. TN 44 RURAL................. 0.7387 28940 URBAN................ 0.7039 -4.71
FALLS.............................. TX 45 RURAL................. 0.7917 47380 URBAN................ 0.8202 3.60
HOOD............................... TX 45 RURAL................. 0.7917 23104 URBAN................ 0.9412 18.88
HUDSPETH........................... TX 45 RURAL................. 0.7917 21340 URBAN................ 0.8356 5.55
LYNN............................... TX 45 RURAL................. 0.7917 31180 URBAN................ 0.8870 12.04
MARTIN............................. TX 45 RURAL................. 0.7917 33260 URBAN................ 0.8973 13.34
NEWTON............................. TX 45 RURAL................. 0.7917 13140 URBAN................ 0.8541 7.88
OLDHAM............................. TX 45 RURAL................. 0.7917 11100 URBAN................ 0.8308 4.94
SOMERVELL.......................... TX 45 RURAL................. 0.7917 23104 URBAN................ 0.9412 18.88
BOX ELDER.......................... UT 46 RURAL................. 0.8877 36260 URBAN................ 0.9259 4.30
AUGUSTA............................ VA 49 RURAL................. 0.7694 44420 URBAN................ 0.8357 8.62
BUCKINGHAM......................... VA 49 RURAL................. 0.7694 16820 URBAN................ 0.9087 18.11
CULPEPER........................... VA 49 RURAL................. 0.7694 47894 URBAN................ 1.0418 35.40
FLOYD.............................. VA 49 RURAL................. 0.7694 13980 URBAN................ 0.8504 10.53
RAPPAHANNOCK....................... VA 49 RURAL................. 0.7694 47894 URBAN................ 1.0418 35.40
STAUNTON CITY...................... VA 49 RURAL................. 0.7694 44420 URBAN................ 0.8357 8.62
WAYNESBORO CITY.................... VA 49 RURAL................. 0.7694 44420 URBAN................ 0.8357 8.62
COLUMBIA........................... WA 50 RURAL................. 1.0932 47460 URBAN................ 1.0974 0.38
PEND OREILLE....................... WA 50 RURAL................. 1.0932 44060 URBAN................ 1.1467 4.89
STEVENS............................ WA 50 RURAL................. 1.0932 44060 URBAN................ 1.1467 4.89
WALLA WALLA........................ WA 50 RURAL................. 1.0932 47460 URBAN................ 1.0974 0.38
FAYETTE............................ WV 51 RURAL................. 0.7391 13220 URBAN................ 0.8037 8.74
RALEIGH............................ WV 51 RURAL................. 0.7391 13220 URBAN................ 0.8037 8.74
GREEN.............................. WI 52 RURAL................. 0.9074 31540 URBAN................ 1.1190 23.32
--------------------------------------------------------------------------------------------------------------------------------------------------------

The wage index values of rural areas are typically lower than that
of urban areas. Therefore, ESRD facilities located in a county that is
currently designated as urban under the ESRD PPS wage index that would
become rural if we adopt the new CBSA delineations may experience a
decrease in their wage index values. We have identified 39 counties and
29 ESRD facilities that would move from urban to rural status if we
adopt the new CBSA delineations beginning in CY 2015. Table 11: (CY
2015 Proposed Urban to Rural CBSA Crosswalk) shows the CBSA
delineations for CY 2014 and the proposed urban wage index values for
CY 2015 based on those delineations, compared with the proposed CBSA
delineations and wage index values for CY 2015 based on those
delineations, and the percentage change in these values for those
counties that would change from urban to rural if we adopt the new CBSA
delineations. If we adopted the new CBSA delineations illustrated in
Table 11 below, approximately 30 facilities would experience a decrease
in their wage index values.

Table 11--CY 2015 Proposed Urban to Rural CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESRD PPS CY 2014 CBSA delineations Proposed ESRD PPS CY 2015 CBSA
------------------------------------------- delineations
------------------------------------------ Change
County name State Wage Wage in value
CBSA Urban/Rural index CBSA Urban/Rural index (%)
value value
--------------------------------------------------------------------------------------------------------------------------------------------------------
GREENE............................ AL................... 46220 URBAN................ 0.8336 01 RURAL............... 0.6930 -16.9
FRANKLIN.......................... AR................... 22900 URBAN................ 0.7593 04 RURAL............... 0.7265 -4.3
POWER............................. ID................... 38540 URBAN................ 0.9707 13 RURAL............... 0.7425 -23.5
FRANKLIN.......................... IN................... 17140 URBAN................ 0.8942 15 RURAL............... 0.8454 -5.5
GIBSON............................ IN................... 21780 URBAN................ 0.8524 15 RURAL............... 0.8454 -0.8
GREENE............................ IN................... 14020 URBAN................ 0.9096 15 RURAL............... 0.8454 -7.1
TIPTON............................ IN................... 29020 URBAN................ 0.9023 15 RURAL............... 0.8454 -6.3

[[Page 40229]]

FRANKLIN.......................... KS................... 28140 URBAN................ 0.9454 17 RURAL............... 0.7811 -17.4
GEARY............................. KS................... 31740 URBAN................ 0.7225 17 RURAL............... 0.7811 8.1
NELSON............................ KY................... 31140 URBAN................ 0.8313 18 RURAL............... 0.7774 -6.5
WEBSTER........................... KY................... 21780 URBAN................ 0.8524 18 RURAL............... 0.7774 -8.8
FRANKLIN.......................... MA................... 44140 URBAN................ 1.0309 22 RURAL............... 1.1596 12.5
IONIA............................. MI................... 24340 URBAN................ 0.8998 23 RURAL............... 0.8313 -7.6
NEWAYGO........................... MI................... 24340 URBAN................ 0.8998 23 RURAL............... 0.8313 -7.6
GEORGE............................ MS................... 37700 URBAN................ 0.7423 25 RURAL............... 0.7584 2.2
STONE............................. MS................... 25060 URBAN................ 0.8209 25 RURAL............... 0.7584 -7.6
CRAWFORD.......................... MO................... 41180 URBAN................ 0.9457 26 RURAL............... 0.7827 -17.2
HOWARD............................ MO................... 17860 URBAN................ 0.8349 26 RURAL............... 0.7827 -6.3
WASHINGTON........................ MO................... 41180 URBAN................ 0.9457 26 RURAL............... 0.7827 -17.2
ANSON............................. NC................... 16740 URBAN................ 0.9283 34 RURAL............... 0.7880 -15.1
GREENE............................ NC................... 24780 URBAN................ 0.9405 34 RURAL............... 0.7880 -16.2
ERIE.............................. OH................... 41780 URBAN................ 0.7792 36 RURAL............... 0.8338 7.0
OTTAWA............................ OH................... 45780 URBAN................ 0.9152 36 RURAL............... 0.8338 -8.9
PREBLE............................ OH................... 19380 URBAN................ 0.8918 36 RURAL............... 0.8338 -6.5
WASHINGTON........................ OH................... 37620 URBAN................ 0.8167 36 RURAL............... 0.8338 2.1
STEWART........................... TN................... 17300 URBAN................ 0.7554 44 RURAL............... 0.7297 -3.4
CALHOUN........................... TX................... 47020 URBAN................ 0.8504 45 RURAL............... 0.7909 -7.0
DELTA............................. TX................... 19124 URBAN................ 0.9751 45 RURAL............... 0.7909 -18.9
SAN JACINTO....................... TX................... 26420 URBAN................ 0.9881 45 RURAL............... 0.7909 -20.0
SUMMIT............................ UT................... 41620 URBAN................ 0.9548 46 RURAL............... 0.8993 -5.8
CUMBERLAND........................ VA................... 40060 URBAN................ 0.9556 49 RURAL............... 0.7573 -20.8
DANVILLE CITY..................... VA................... 19260 URBAN................ 0.7985 49 RURAL............... 0.7573 -5.2
KING AND QUEEN.................... VA................... 40060 URBAN................ 0.9556 49 RURAL............... 0.7573 -20.8
LOUISA............................ VA................... 40060 URBAN................ 0.9556 49 RURAL............... 0.7573 -20.8
PITTSYLVANIA...................... VA................... 19260 URBAN................ 0.7985 49 RURAL............... 0.7573 -5.2
SURRY............................. VA................... 47260 URBAN................ 0.9156 49 RURAL............... 0.7573 -17.3
MORGAN............................ WV................... 25180 URBAN................ 0.9113 51 RURAL............... 0.7249 -20.5
PLEASANTS......................... WV................... 37620 URBAN................ 0.8167 51 RURAL............... 0.7249 -11.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

We note that facilities in some urban CBSAs could experience a
change in their wage index values even though they remain urban because
an urban CBSA's boundaries and/or the counties included in that CBSA
could change. Table 12 (CY 2015 Proposed Urban to a Different Urban
CBSA Crosswalk) shows the CBSA delineations for CY 2014 and urban wage
index values for CY 2015 based on those delineations, compared with the
proposed CBSA delineations and urban wage index values for CY 2015
based on those delineations, and the percentage change in these values
for counties that would remain urban even though the CBSA boundaries
and/or counties included in that CBSA would change.

Table 12--CY 2015 Proposed Urban to a Different Urban CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESRD PPS CY 2014 CBSA delineations Proposed ESRD PPS CY 2015 CBSA
--------------------------------------------- delineations
--------------------------------------------- Change
County name State Wage Wage In value
CBSA Urban/Rural index CBSA Urban/Rural index (%)
value value
--------------------------------------------------------------------------------------------------------------------------------------------------------
MARIN............................... CA 41884 URBAN.................. 1.7049 42034 URBAN.................. 1.7317 1.6
FLAGLER............................. FL 37380 URBAN.................. 0.8494 19660 URBAN.................. 0.8407 -1.0
DE KALB............................. IL 16974 URBAN.................. 1.0368 20994 URBAN.................. 1.0347 -0.2
KANE................................ IL 16974 URBAN.................. 1.0368 20994 URBAN.................. 1.0347 -0.2
MADISON............................. IN 11300 URBAN.................. 1.0115 26900 URBAN.................. 1.0170 0.5
MEADE............................... KY 31140 URBAN.................. 0.8313 21060 URBAN.................. 0.7650 -8.0
ESSEX............................... MA 37764 URBAN.................. 1.0808 15764 URBAN.................. 1.1196 3.6
OTTAWA.............................. MI 26100 URBAN.................. 0.8167 24340 URBAN.................. 0.8832 8.1
JACKSON............................. MS 37700 URBAN.................. 0.7423 25060 URBAN.................. 0.7927 6.8
BERGEN.............................. NJ 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
HUDSON.............................. NJ 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
MIDDLESEX........................... NJ 20764 URBAN.................. 1.1085 35614 URBAN.................. 1.2887 16.3
MONMOUTH............................ NJ 20764 URBAN.................. 1.1085 35614 URBAN.................. 1.2887 16.3
OCEAN............................... NJ 20764 URBAN.................. 1.1085 35614 URBAN.................. 1.2887 16.3
PASSAIC............................. NJ 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
SOMERSET............................ NJ 20764 URBAN.................. 1.1085 35084 URBAN.................. 1.1520 3.9

[[Page 40230]]

BRONX............................... NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
DUTCHESS............................ NY 39100 URBAN.................. 1.1576 20524 URBAN.................. 1.1387 -1.6
KINGS............................... NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
NEW YORK............................ NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
ORANGE.............................. NY 39100 URBAN.................. 1.1576 35614 URBAN.................. 1.2887 11.3
PUTNAM.............................. NY 35644 URBAN.................. 1.3136 20524 URBAN.................. 1.1387 -13.3
QUEENS.............................. NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
RICHMOND............................ NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
ROCKLAND............................ NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
WESTCHESTER......................... NY 35644 URBAN.................. 1.3136 35614 URBAN.................. 1.2887 -1.9
BRUNSWICK........................... NC 48900 URBAN.................. 0.8899 34820 URBAN.................. 0.8641 -2.9
BUCKS............................... PA 37964 URBAN.................. 1.0934 33874 URBAN.................. 1.0236 -6.4
CHESTER............................. PA 37964 URBAN.................. 1.0934 33874 URBAN.................. 1.0236 -6.4
MONTGOMERY.......................... PA 37964 URBAN.................. 1.0934 33874 URBAN.................. 1.0236 -6.4
ARECIBO............................. PR 41980 URBAN.................. 0.4471 11640 URBAN.................. 0.4229 -5.4
CAMUY............................... PR 41980 URBAN.................. 0.4471 11640 URBAN.................. 0.4229 -5.4
CEIBA............................... PR 21940 URBAN.................. 0.4000 41980 URBAN.................. 0.4460 11.5
FAJARDO............................. PR 21940 URBAN.................. 0.4000 41980 URBAN.................. 0.4460 11.5
GUANICA............................. PR 49500 URBAN.................. 0.4000 38660 URBAN.................. 0.4169 4.2
GUAYANILLA.......................... PR 49500 URBAN.................. 0.4000 38660 URBAN.................. 0.4169 4.2
HATILLO............................. PR 41980 URBAN.................. 0.4471 11640 URBAN.................. 0.4229 -5.4
LUQUILLO............................ PR 21940 URBAN.................. 0.4000 41980 URBAN.................. 0.4460 11.5
PENUELAS............................ PR 49500 URBAN.................. 0.4000 38660 URBAN.................. 0.4169 4.2
QUEBRADILLAS........................ PR 41980 URBAN.................. 0.4471 11640 URBAN.................. 0.4229 -5.4
YAUCO............................... PR 49500 URBAN.................. 0.4000 38660 URBAN.................. 0.4169 4.2
ANDERSON............................ SC 11340 URBAN.................. 0.8775 24860 URBAN.................. 0.9025 2.8
GRAINGER............................ TN 34100 URBAN.................. 0.7002 28940 URBAN.................. 0.7039 0.5
LINCOLN............................. WV 16620 URBAN.................. 0.8017 26580 URBAN.................. 0.8773 9.4
PUTNAM.............................. WV 16620 URBAN.................. 0.8017 26580 URBAN.................. 0.8773 9.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

Likewise, ESRD facilities currently located in a rural area may
remain rural under the new CBSA delineations but experience a change in
their rural wage index value due to implementation of the new CBSA
delineations. Table 13 (CY 2015 Proposed Changes to the Statewide Rural
Wage Index Crosswalk) shows the CBSA numbers for CY 2014 and the
proposed rural statewide wage index values for CY 2015, compared with
the proposed statewide rural wage index values for CY 2015, and the
percentage change in these values.

Table 13--CY 2015 Proposed Changes to the Statewide Rural Wage Index Crosswalk
----------------------------------------------------------------------------------------------------------------
ESRD PPS CY 2014 CBSA delineations Proposed ESRD PPS CY 2015 CBSA
------------------------------------- delineations
------------------------------------- Change
State Wage Wage in value
CBSA Urban/Rural index CBSA Urban/Rural index (%)
value value
----------------------------------------------------------------------------------------------------------------
AL.......................... 01 RURAL.......... 0.6981 01 RURAL.......... 0.6930 -0.73
AZ.......................... 03 RURAL.......... 0.9159 03 RURAL.......... 0.9253 1.03
CT.......................... 07 RURAL.......... 1.1292 07 RURAL.......... 1.1337 0.40
FL.......................... 10 RURAL.......... 0.8010 10 RURAL.......... 0.8394 4.79
GA.......................... 11 RURAL.......... 0.7425 11 RURAL.......... 0.7439 0.19
HI.......................... 12 RURAL.......... 0.9953 12 RURAL.......... 1.0276 3.25
IL.......................... 14 RURAL.......... 0.8363 14 RURAL.......... 0.8365 0.02
KS.......................... 17 RURAL.......... 0.7838 17 RURAL.......... 0.7811 -0.34
KY.......................... 18 RURAL.......... 0.7770 18 RURAL.......... 0.7774 0.05
LA.......................... 19 RURAL.......... 0.7608 19 RURAL.......... 0.7135 -6.22
MD.......................... 21 RURAL.......... 0.8586 21 RURAL.......... 0.8778 2.24
MA.......................... 22 RURAL.......... 1.3971 22 RURAL.......... 1.1596 -17.00
MI.......................... 23 RURAL.......... 0.8232 23 RURAL.......... 0.8313 0.98
MS.......................... 25 RURAL.......... 0.7603 25 RURAL.......... 0.7584 -0.25
NE.......................... 28 RURAL.......... 0.8957 28 RURAL.......... 0.8909 -0.54
NY.......................... 33 RURAL.......... 0.8226 33 RURAL.......... 0.8208 -0.22
NC.......................... 34 RURAL.......... 0.7963 34 RURAL.......... 0.7880 -1.04
OH.......................... 36 RURAL.......... 0.8315 36 RURAL.......... 0.8338 0.28
OR.......................... 38 RURAL.......... 1.0120 38 RURAL.......... 0.9985 -1.33
PA.......................... 39 RURAL.......... 0.8730 39 RURAL.......... 0.8079 -7.46

[[Page 40231]]

SC.......................... 42 RURAL.......... 0.8381 42 RURAL.......... 0.8357 -0.29
TN.......................... 44 RURAL.......... 0.7387 44 RURAL.......... 0.7297 -1.22
TX.......................... 45 RURAL.......... 0.7917 45 RURAL.......... 0.7909 -0.10
UT.......................... 46 RURAL.......... 0.8877 46 RURAL.......... 0.8993 1.31
VA.......................... 49 RURAL.......... 0.7694 49 RURAL.......... 0.7573 -1.57
WA.......................... 50 RURAL.......... 1.0932 50 RURAL.......... 1.0917 -0.14
WV.......................... 51 RURAL.......... 0.7391 51 RURAL.......... 0.7249 -1.92
WI.......................... 52 RURAL.......... 0.9074 52 RURAL.......... 0.9120 0.51
----------------------------------------------------------------------------------------------------------------

While we believe that the new CBSA delineations would result in
wage index values that are more representative of the actual costs of
labor in a given area, we also recognize that use of the new CBSA
delineations would result in reduced payments to some facilities. In
particular, approximately 30 facilities would experience reduced
payments if we adopt the new CBSA delineations. At the same time, use
of the new CBSA delineations would result in increased payments for
approximately 100 facilities, while the majority of facilities would
experience no change in payments due to the implementation of the new
CBSA delineations. We are proposing to implement the new CBSA
delineations using a 2-year transition with a 50/50 blended wage index
value for all facilities in CY 2015 and 100% of the wage index based on
the new CBSA delineations in CY 2016.
c. Transition Period
We considered having no transition period and fully implementing
the proposed new CBSA delineations beginning in CY 2015, which would
mean that all facilities would have payments based on the new
delineations starting on January 1, 2015. However, because more
facilities would have increased rather than decreased payments
beginning in CY 2015, and because the overall amount of ESRD payments
would increase slightly due to the new CBSA delineations, the wage
index budget neutrality factor would be higher. This higher factor
would reduce the ESRD PPS per treatment base rate for all facilities
paid under the ESRD PPS, despite the fact that the majority of ESRD
facilities are unaffected by the new CBSA delineations. Thus, we
believe that it would be appropriate to provide for a transition period
to mitigate any resulting short-term instability of a lower ESRD PPS
base rate as well as any negative impacts to facilities that experience
reduced payments. In addition, we note that for CY 2015, section
1881(b)(14)(F)(i)(III), as added by section 217 of PAMA, requires a 0.0
payment update (for further discussion on this update please see
section II.B.1.a.ii of this rule), and thus, there is no possibility of
offsetting any reduction, even a slight reduction, to the ESRD PPS base
rate in CY 2015.
Therefore, we are proposing a two-year transition blended wage
index for all facilities. Facilities would receive 50 percent of their
CY 2015 wage index value based on the CBSA delineations for CY 2014 and
50 percent of their CY 2015 wage index value based on the proposed new
CBSA delineations. This results in an average of the two values. We
propose that facilities' CY 2016 wage index values would be based 100
percent on the new CBSA delineations. We believe a two-year transition
strikes an appropriate balance between ensuring that ESRD PPS payments
are as accurate and stable as possible while giving facilities time to
adjust to the new CBSA delineations.
In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized a
policy to use the labor-related share of 41.737 percent for the ESRD
PPS. For the CY 2015 ESRD PPS, we propose to use a labor-related share
of 50.673 percent, which we propose to transition over a 2-year period
with the labor-related share in CY 2015 based 50 percent on the old
labor-related share and 50 percent on the new labor-related share, and
the labor-related share in CY 2016 based 100 percent on the new labor-
related share. For a complete discussion of the proposed changes in the
CY 2015 ESRD PPS market basket and labor-related share, as well as the
transition of the labor-related share; please see sections II.B.2.e and
XII.B.1.a of this proposed rule.
4. Proposed Revisions to the Outlier Policy
Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS
include a payment adjustment for high cost outliers due to unusual
variations in the type or amount of medically necessary care, including
variability in the amount of erythropoiesis stimulating agents (ESAs)
necessary for anemia management. Our regulations at 42 CFR
413.237(a)(1) provide that ESRD outlier services are the following
items and services that are included in the ESRD PPS bundle: (i) ESRD-
related drugs and biologicals that were or would have been, prior to
January 1, 2011, separately billable under Medicare Part B; (ii) ESRD-
related laboratory tests that were or would have been, prior to January
1, 2011, separately billable under Medicare Part B; (iii) medical/
surgical supplies, including syringes, used to administer ESRD-related
drugs, that were or would have been, prior to January 1, 2011,
separately billable under Medicare Part B; and (iv) renal dialysis
service drugs that were or would have been, prior to January 1, 2011,
covered under Medicare Part D, excluding ESRD-related oral-only drugs.
In the CY 2011 ESRD PPS final rule (75 FR 49142), we stated that
for purposes of determining whether an ESRD facility would be eligible
for an outlier payment, it would be necessary for the facility to
identify the actual ESRD outlier services furnished to the patient by
line item on the monthly claim. The ESRD-related drugs, laboratory
tests, and medical/surgical supplies that we would recognize as outlier
services were specified in Attachment 3 of Change Request 7064,
Transmittal 2033 issued August 20, 2010, rescinded and replaced by
Transmittal 2094, dated November 17, 2010. With respect to the outlier
policy, Transmittal 2094 identified additional drugs and laboratory
tests that may be eligible for ESRD outlier payment.

[[Page 40232]]

Transmittal 2094 was rescinded and replaced by Transmittal 2134, dated
January 14, 2011, which was issued to correct the subject on the
Transmittal page and made no other changes.
In the CY 2012 ESRD PPS final rule (76 FR 70246), we eliminated the
issuance of a specific list of eligible outlier service drugs which
were or would have been separately billable under Medicare Part B prior
to January 1, 2011. However, we use separate guidance to continue to
identify renal dialysis service drugs which were or would have been
covered under Part D for outlier eligibility purposes in order to
provide unit prices for calculating imputed outlier services. We also
can identify, through our monitoring efforts, items and services that
are incorrectly being identified as eligible outlier services in the
claims data. Information about these items and services and any updates
to the list of renal dialysis items and services that qualify as
outlier services are made through administrative issuances, if
necessary.
Our regulations at 42 CFR 413.237 specify the methodology used to
calculate outlier payments. An ESRD facility is eligible for an outlier
payment if its actual or imputed Medicare Allowable Payment (MAP)
amount per treatment for ESRD outlier services exceeds a threshold. The
MAP amount represents the average incurred amount per treatment for
services that were or would have been considered separately billable
services prior to January 1, 2011. The threshold is equal to the ESRD
facility's predicted ESRD outlier services MAP amount per treatment
(which is case-mix adjusted) plus the fixed dollar loss amount. In
accordance with Sec. 413.237(c) of the regulations, facilities are
paid 80 percent of the per treatment amount by which the imputed MAP
amount for outlier services (that is, the actual incurred amount)
exceeds this threshold. ESRD facilities are eligible to receive outlier
payments for treating both adult and pediatric dialysis patients.
In the CY 2011 ESRD PPS final rule, using 2007 data, we established
the outlier percentage at 1.0 percent of total payments (75 FR 49142
through 49143). We also established the fixed dollar loss amounts that
are added to the predicted outlier services MAP amounts. The outlier
services MAP amounts and fixed dollar loss amounts are different for
adult and pediatric patients due to differences in the utilization of
separately billable services among adult and pediatric patients (75 FR
49140).
As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 and
49139), the predicted outlier services MAP amounts for a patient are
determined by multiplying the adjusted average outlier services MAP
amount by the product of the patient-specific case-mix adjusters
applicable using the outlier services payment multipliers developed
from the regression analysis to compute the payment adjustments. For CY
2014, the outlier services MAP amounts and fixed dollar loss amounts
were based on 2012 data (78FR 72180). Therefore, the outlier thresholds
for CY 2014 were based on utilization of ESRD-related items and
services furnished under the ESRD PPS. Because of the utilization of
epoetin and other outlier services has continued to decline under the
ESRD PPS, we lowered the MAP amounts and fixed dollar loss amounts for
CYs 2013 and 2014 to allow for an increase in payments for ESRD
beneficiaries requiring higher resources.
a. Proposed Changes to the Outlier Services MAP Amounts and Fixed
Dollar Loss Amounts
For CY 2015, we are not proposing any changes to the methodology
used to compute the MAP or fixed dollar loss amounts. Rather, in this
proposed rule, we are updating the outlier services MAP amounts and
fixed dollar loss amounts to reflect the utilization of outlier
services reported on the 2013 claims using the December 2013 claims
file. The impact of this update is shown in Table 14, which compares
the outlier services MAP amounts and fixed dollar loss amounts used for
the outlier policy in CY 2014 with the updated estimates for this
proposed rule. The estimates for the proposed outlier CY 2015 outlier
policy, which are included in Column II of Table 14, were inflation-
adjusted to reflect projected 2015 prices for outlier services.

Table 14--Outlierpolicy: Impact of Using Updated Data To Define the Outlier Policy
----------------------------------------------------------------------------------------------------------------
Column I Final outlier policy Column II Proposed outlier
for CY 2014 (based on 2012 policy for CY 2015 (based on
data price inflated to 2014) 2013 data price inflated to
* 2015) *
---------------------------------------------------------------
Age <18 Age >=18 Age <18 Age >=18
----------------------------------------------------------------------------------------------------------------
Average outlier services MAP amount per $37.29 $51.97 $40.05 $52.61
treatment \1\..................................
Adjustments.....................................
Standardization for outlier services \2\.... 1.1079 0.9866 1.1182 0.9899
MIPPA reduction............................. 0.98 0.98 0.98 0.98
Adjusted average outlier services MAP amount $40.49 $50.25 $43.89 $51.04
\3\........................................
Fixed dollar loss amount that is added to the $54.01 $98.67 $56.30 $85.24
predicted MAP to determine the outlier
threshold \4\..................................
Patient months qualifying for outlier payment... 6.7% 5.3% 6.2% 6.3%
----------------------------------------------------------------------------------------------------------------
* The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated
prices for outlier services (that is, 2014 prices in Column I and projected 2015 prices in Column II).
\1\ Excludes patients for whom not all data were available to calculate projected payments. The outlier services
MAP amounts are based on 2013 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg
for Aranesp that are in place under the ESA claims monitoring policy were applied.
\2\ Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing
case mix adjusters for adult and pediatric patient groups.
\3\ This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the
predicted outlier services MAP for each patient.
\4\ The fixed dollar loss amounts were calculated using 2013 data to yield total outlier payments that represent
1% of total projected payments for the ESRD PPS.

As seen in Table 14, the estimated fixed dollar loss amount that
determines the CY 2015 outlier threshold amount for adults (Column II)
is lower than that used for the CY 2014 outlier policy (Column I). The
threshold is lower in

[[Page 40233]]

spite of the fact that the average outlier services MAP per treatment
has increased. Between 2012 and 2013, the variation in outlier services
across patients declined among adults. The net result is an increase in
the percentage of patient-months qualifying for outlier payment (6.3
percent based on 2013 data versus 5.3 percent based on 2012 data) but a
decrease in the average outlier payment per case. The estimated fixed
dollar loss amount that determines the CY 2015 outlier threshold amount
for pediatric patients (Column II) is higher than that used for the CY
2014 outlier policy (Column I).
For pediatric patients, there was an increase in the overall
average outlier service MAP amount between 2012 ($37.29 per treatment
as shown in Column I) and 2013 ($40.05 per treatment, as shown in
Column II). In addition, there was a continuing tendency in 2013 for a
relatively small percentage of pediatric patients to account for a
disproportionate share of the total outlier service MAP amounts. The
one percent target for outlier payments is therefore expected to be
achieved based on a smaller percentage of pediatric outlier cases using
2013 data compared to 2012 data (6.2 percent of pediatric patient
months are expected to qualify for outlier payments rather than 6.7
percent). These patterns led to the estimated fixed dollar loss amount
for pediatric patients being higher for the outlier policy for CY 2015
compared to the outlier policy for CY 2014. Generally, there is a
relatively higher likelihood for pediatric patients that the outlier
threshold may be adjusted to reflect changes in the distribution of
outlier service MAP amounts. This is due to the much smaller overall
number of pediatric patients compared to adult patients, and therefore
to the fact that the outlier threshold for pediatric patients is
calculated based on data for a much smaller number of pediatric
patients compared to adult patients.
We propose to update the fixed dollar loss amounts that are added
to the predicted MAP amounts per treatment to determine the outlier
thresholds for CY 2015 from $98.67 to $85.24 for adult patients and
from $54.01 to $56.30 for pediatric patients compared with CY 2014
amounts. We estimate that the percentage of patient months qualifying
for outlier payments under the current policy will be 6.3 percent and
6.2 percent for adult and pediatric patients, respectively, based on
the 2013 data. The pediatric outlier MAP and fixed dollar loss amounts
continue to be lower for pediatric patients than adults due to the
continued lower use of outlier services (primarily reflecting lower use
of epoetin and other injectable drugs).
b. Outlier Policy Percentage
42 CFR 413.220(b)(4) stipulates that the per treatment base rate is
reduced by 1 percent to account for the proportion of the estimated
total payments under the ESRD PPS that are outlier payments. Based on
the 2013 claims, outlier payments represented approximately 0.5 percent
of total payments, again falling short of the 1 percent target due to
further declines in the use of outlier services. Use of 2013 data to
recalibrate the thresholds, which reflect lower utilization of EPO and
other outlier services and reduced variation in outlier services among
adults, is expected to result in aggregate outlier payments close to
the 1 percent target in CY 2015. We believe the proposed update to the
outlier MAP and fixed dollar loss amounts for CY 2015 will increase
payments for ESRD beneficiaries requiring higher resource utilization
and come closer to meeting our 1 percent outlier policy.
We note that recalibration of the fixed dollar loss amounts in this
proposed rule for CY 2015 outlier payments results in no change in
payments to ESRD facilities for beneficiaries with renal dialysis items
and services that are not eligible for outlier payments, but increases
payments to providers for beneficiaries with renal dialysis items and
services that are eligible for outlier payments. Therefore, beneficiary
co-insurance obligations would also increase for renal dialysis
services eligible for outlier payments.

C. Restatement of Policy Regarding Reporting and Payment for More Than
Three Dialysis Treatments per Week

1. Reporting More Than Three Dialysis Treatments per Week on Claims
Since the composite payment system was implemented in the 1980s,
CMS has reimbursed ESRD facilities based upon three hemodialysis
treatments per week and allowed for the payment of additional weekly
dialysis treatments with medical justification. When a dialysis
modality regimen requires more than three weekly dialysis treatments,
such as with short, frequent hemodialysis (HD) and peritoneal dialysis
(PD) modalities, we apply payment edits to ensure that Medicare payment
on the monthly claim is consistent with the three times-weekly dialysis
treatment payment limit, which translates to payment for 13 treatments
for a 30-day month and 14 treatments for a 31-day month.
Under section 1881(b)(14)(C) of the Act, the ESRD PPS may provide
for payment on the basis of renal dialysis services furnished during a
week, or month, or such other appropriate unit of payment as the
Secretary specifies. In the CY 2011 ESRD PPS final rule (75 FR 49064),
CMS finalized the per treatment basis of payment in which ESRD
facilities are paid for up to three treatments per week, unless there
is medical justification for more than three treatments per week. We
codified the per-treatment unit of payment under the ESRD PPS at 42 CFR
413.215(a). Also in the CY 2011 ESRD PPS final rule (75 FR 49078), we
explained how we converted patient weeks to HD-equivalent sessions for
PD patients. Specifically, we noted that one week of PD was considered
equivalent to three HD treatments. For example, a patient on PD for 21
days would have (21/7) x 3 or 9 HD-equivalent sessions. Our policy is
that ESRD facilities treating patients on PD or home HD will be paid
for up to three HD-equivalent sessions for each week of dialysis,
unless there is medical justification for furnishing additional
treatments.
Increasingly, some ESRD facilities have begun to offer dialysis
modalities where the standard treatment regimen is more than three
treatments per week. Also, we have observed a payment variance among
Medicare Administrative Contractors (MACs) in processing claims for
dialysis treatments for modalities that require more frequent dialysis,
resulting in payment of more than 14 treatments per month without
medical justification. Lastly, CMS has received several requests for
clarification regarding Medicare payment and billing policies for
dialysis treatments for modalities requiring more than three treatments
per week that are furnished in-facility or in the patient's home.
Specifically, ESRD facilities, renal physician groups, and MACs have
requested billing guidance regarding whether all of the dialysis
treatments furnished to the patient during the billing month should be
reported on the claim form, even though the Medicare benefit only
provides for payment of three dialysis treatments per week.
For these reasons, we are reiterating our policy with respect to
payment for more than three dialysis treatments per week. We note that
we are not changing our policy for reporting extra non-medically
necessary dialysis sessions. ESRD facility claims should continue to
include all dialysis treatments furnished during the month on claims,
but payment is limited to three dialysis treatments per week through
the payment edits of 13 treatments for a 30-

[[Page 40234]]

day month or 14 treatments for a 31-day month. For example, an ESRD
facility that furnishes dialysis services to patients who dialyze using
modalities requiring shorter, more frequent dialysis (for example, a
dialysis regimen of 4, 5, 6 or 7 days a week in-facility or at home),
should report all of the patient's dialysis treatments on the monthly
claim. However, payment for these services will reflect existing claims
processing system edits, and the monthly Medicare payment would mirror
the Medicare ESRD benefit of three dialysis treatments per week.
2. Medical Necessity for More Than Three Treatments per Week
Under the ESRD benefit, we have always recognized that some patient
conditions benefit from more than three dialysis sessions per week and
as such, the Medicare policy for medically necessary additional
dialysis treatments was developed. Under this policy, the MACs
determine whether additional treatments furnished during a month are
medically necessary. While Medicare does not define specific patient
conditions that meet the requirements of medical necessity, we do
furnish instructions to MACs to consider appropriate patient conditions
that would result in a patient's medical need for additional dialysis
treatments (for example, excess fluid of five or more pounds). When
such patient conditions are indicated with the claim requesting
payment, we instruct MACs to consider medical justification and the
appropriateness of payment for the additional sessions.
In section 50.A of the Medicare Benefit Policy Manual (Pub. 100-
02), we explained our policy regarding payment for hemodialysis-
equivalent PD and payment for more than three dialysis treatments per
week under the ESRD PPS. We restated that ESRD facilities are paid for
a maximum of 13 treatments during a 30 day month and 14 treatments
during a 31-day month unless there is medical justification for
additional treatments. The only time facilities should seek payment for
additional dialysis sessions, including payment for shorter, more
frequent modalities, is when the patient has a medical need for
additional dialysis and the facility has furnished supporting medical
justification for the extra treatments. Modality choice does not
constitute medical justification.

D. Delay of Payment for Oral-Only Drugs Under the ESRD PPS

As we discussed in the CY 2014 ESRD PPS final rule (78 FR 72185
through 72186), section 1881(b)(14)(A)(i) of the Act, as added by
section 153(b) of the Medicare Improvements for Patients and Providers
Act of 2008 (MIPPA), requires the Secretary to implement a payment
system under which a single payment is made to a provider of services
or a renal dialysis facility for ``renal dialysis services'' in lieu of
any other payment. Section 1881(b)(14)(B) of the Act defines renal
dialysis services, and subclause (iii) of that section states that
these services include ``other drugs and biologicals that are furnished
to individuals for the treatment of ESRD and for which payment was
(before the application of this paragraph) made separately under this
title, and any oral equivalent form of such drug or biological[.]''
We interpreted this provision as including not only injectable
drugs and biologicals used for the treatment of ESRD (other than ESAs,
which are included under clause (ii) of section 1881(b)(14)(B)), but
also all non-injectable oral drugs used for the treatment of ESRD
furnished under title XVIII of the Act. We also concluded that, to the
extent ESRD-related oral-only drugs do not fall within clause (iii) of
the statutory definition of renal dialysis services, such drugs would
fall under clause (iv), and constitute other items and services used
for the treatment of ESRD that are not described in clause (i) of
section 1881(b)(14)(B). As such, CMS finalized and promulgated the
payment policies for oral-only drugs used for the treatment of ESRD in
the CY 2011 ESRD PPS final rule (75 FR 49038 through 49053), and we
defined ``renal dialysis services'' at 42 CFR 413.171(3) as including,
among other things ``other drugs and biologicals that are furnished to
individuals for the treatment of ESRD and for which payment was (prior
to January 1, 2011) made separately under Title XVIII of the Act
(including drugs and biologicals with only an oral form).''
Although ESRD-related oral-only drugs are included in the
definition of renal dialysis services, in the CY 2011 ESRD PPS final
rule (75 FR 49044), we also finalized a policy to delay payment for
these drugs under the PPS until January 1, 2014. We stated that there
were certain advantages to delaying the implementation of payment for
oral-only drugs, including allowing ESRD facilities additional time to
make operational changes and logistical arrangements in order to
furnish oral-only ESRD-related drugs and biologicals to their patients.
Accordingly, 42 CFR 413.174(f)(6) provides that payment to an ESRD
facility for renal dialysis service drugs and biologicals with only an
oral form is incorporated into the PPS payment rates effective January
1, 2014.
On January 3, 2013, the Congress enacted ATRA. Section 632(b) of
ATRA states that the Secretary ``may not implement the policy under
section 413.176(f)(6) of title 42, Code of Federal Regulations
(relating to oral-only ESRD-related drugs in the ESRD prospective
payment system), prior to January 1, 2016.'' Accordingly, in the CY
2014 ESRD PPS final rule (78 FR 72185 through 72186), we delayed
payment for ESRD-related oral-only drugs under the ESRD PPS until
January 1, 2016, instead of on January 1, 2014, which is the original
date we finalized for payment of ESRD-related oral-only drugs under the
ESRD PPS. We implemented this delay by revising the effective date for
providing payment for oral-only ESRD-related drugs under the ESRD PPS
at 42 CFR 413.174(f)(6) from January 1, 2014 to January 1, 2016. In
addition, we also changed the date when oral-only drugs would be
eligible outlier services under the outlier policy described in 42 CFR
413.237(a)(1)(iv) from January 1, 2014 to January 1, 2016.
On April 1, 2014, PAMA was enacted. Section 217(a)(1) of PAMA
amended section 632(b)(1) of ATRA, which now provides that the
Secretary ``may not implement the policy under section 413.174(f)(6) of
title 42, Code of Federal Regulations (relating to oral-only ESRD drugs
in the ESRD prospective payment system), prior to January 1, 2024.''
Accordingly, payment for ESRD-related oral-only drugs will not be made
under the ESRD PPS prior to January 1, 2024 instead of on January 1,
2016, which is the date we finalized for payment of ESRD-related oral-
only drugs under the ESRD PPS in the CY 2014 ESRD PPS final rule (78 FR
72186).
We propose to implement this delay by modifying the effective date
for providing payment for oral-only ESRD-related drugs and biologicals
under the ESRD PPS at 42 CFR 413.174(f)(6) from January 1, 2016 to
January 1, 2024. We also propose to change the date in 42 CFR
413.237(a)(1)(iv) regarding outlier payments for oral-only ESRD-related
drugs made under the ESRD PPS from January 1, 2016 to January 1, 2024.
We continue to believe that oral-only drugs used for the treatment of
ESRD are an essential part of the ESRD PPS payment bundle and should be
paid for under the ESRD PPS as soon as possible, or beginning January
1, 2024.
In addition to the delay of payment for oral-only ESRD-related
drugs, section 217(a)(2) of PAMA further amends section 632(b)(1) of
ATRA by adding a new sentence that provides,

[[Page 40235]]

``[n]otwithstanding section 1881(b)(14)(A)(ii) of the Social Security
Act (42 U.S.C. 1395rr(b)(14)(A)(ii)), implementation of the policy
described in the previous sentence shall be based on data from the most
recent year available.'' We interpret this provision to mean that we
are not to use per patient utilization data from 2007, 2008, or 2009
(whichever has the lowest per patient utilization) as we were required
for the original ESRD PPS in implementing payment for oral-only ESRD
drugs under the ESRD PPS. We will make proposals consistent with
section 632(b)(1) of ATRA, as amended by section 217(a)(2) of PAMA, in
future rulemaking.
Section 217(c) of PAMA requires the Secretary, as part of the CY
2016 ESRD PPS rulemaking, to establish a process for ``(1) determining
when a product is no longer an oral-only drug; and (2) including new
injectable and intravenous products into the bundled payment under such
system.'' Consistent with this statutory requirement, we plan to
propose a drug designation process in our CY 2016 rulemaking cycle and
we are seeking industry and stakeholder comments on the components and
elements of such a process for our consideration next year.

E. ESRD Drug Categories Included in the ESRD PPS Base Rate

In the CY 2011 ESRD PPS final rule (75 FR 49050), we finalized
Table 4, (Renal Dialysis Service ESRD Drug Categories Included in the
Final ESRD PPS Base Rate), and have included Table 15 below for the
purpose of this discussion. In that rule, we noted that the categories
of drugs and biologicals used for access management, anemia management,
anti-infectives, bone and mineral metabolism and cellular management
would always be considered ESRD-related drugs when furnished to an ESRD
patient, and that payment for such drugs would be included in the ESRD
PPS payment bundle. As such, beginning January 1, 2011, Medicare no
longer makes a separate payment when a drug or biological (except for
oral-only ESRD-related drugs for which we are proposing to delay
payment under the ESRD PPS until January 1, 2024) identified in the
categories listed in the following table is furnished to a Medicare
ESRD beneficiary.

Table 15--Renal Dialysis Service ESRD Drug Categories Included in the
Final ESRD PPS Base Rate
------------------------------------------------------------------------
Drug category Rationale for inclusion
------------------------------------------------------------------------
Access Management................. Drugs used to ensure access by
removing clots from grafts, reverse
anticoagulation if too much
medication is given, and provide
anesthetic for access placement.
Anemia Management................. Drugs used to stimulate red blood
cell production and/or treat or
prevent anemia. This category
includes ESAs as well as iron.
Anti-infectives................... Vancomycin and daptomycin used to
treat access site infections.
Bone and Mineral Metabolism....... Drugs used to prevent/treat bone
disease secondary to dialysis. This
category includes phosphate binders
and calcimimetics.
Cellular Management............... Drugs used for deficiencies of
naturally occurring substances
needed for cellular management.
This category includes
levocarnitine.
------------------------------------------------------------------------

In the CY 2011 ESRD PPS final rule (75 FR 49050), we noted that we
included the anti-infective drugs of vancomycin and daptomycin because
these drugs were routinely furnished for the ESRD-related conditions of
access site infections and peritonitis. However, in the CY 2012 ESRD
PPS final rule (76 FR 70242 through 70243), we responded to public
comments that noted that vancomycin is a common anti-infective drug
appropriate for treating infections that are both ESRD- and non-ESRD-
related by modifying our policy to eliminate the payment restriction
for vancomycin when it is furnished for non-ESRD related conditions. In
addition, we finalized the use of CMS payment modifier AY (Item or
service furnished to an End Stage Renal Disease (ESRD) patient that is
not for the treatment of ESRD) and instructed facilities to append the
modifier to the claim reporting vancomycin to indicate that the drug
was furnished for reasons other than ESRD. The presence of the AY
modifier on the claim allows the MAC to make a separate payment for the
drug when it is furnished by the facility to a Medicare beneficiary for
reasons other than ESRD.
In the CY 2013 ESRD PPS final rule (77 FR 67461), we further
amended this policy to allow ESRD facilities to bill separately for
daptomycin when it is furnished to ESRD beneficiaries for reasons other
than ESRD. Once again, we instructed facilities to append claims
reporting daptomycin furnished for reasons other than ESRD with the AY
modifier so that MACs would be able to make a separate payment.
Because we have removed the payment limitation for both vancomycin
and daptomycin, and because we believe that anti-infectives are a drug
category that may be furnished for both ESRD- and non-ESRD-related
reasons, we have updated the list of drug categories that are always
considered ESRD-related under the ESRD PPS by removing the drug
category for anti-infectives. We have included Table 16 (Renal Dialysis
Service ESRD Drug Categories Included in the ESRD PPS Base Rate and Not
Separately Payable) below to appropriately recognize the drug
categories that are always considered ESRD-related and we confirm that
the revised table reflects policy changes made in the CY 2012 and CY
2013 ESRD PPS rulemaking cycles and does not constitute new policy.
Over the past few years, we have received payment and billing
inquiries requesting clarification for the payment for drugs
represented by one of the drug categories included in the ESRD PPS, but
not furnished for the treatment of ESRD. Therefore, we clarify that any
drug included in the drug categories of access management, anemia
management, bone and mineral metabolism and cellular management is not
separately paid by Medicare regardless of why the drug is being
furnished. In addition, the facility may not furnish a prescription for
such drugs with the expectation that a Medicare Part D payment would be
made, as the payment for the drug is included in the ESRD PPS payment
bundle.

[[Page 40236]]

Table 16--Renal Dialysis Service ESRD Drug Categories Included in the
ESRD PPS Base Rate and Not Separately Payable
------------------------------------------------------------------------
Drug category Rationale for inclusion
------------------------------------------------------------------------
Access Management................. Drugs used to ensure access by
removing clots from grafts, reverse
anticoagulation if too much
medication is given, and provide
anesthetic for access placement.
Anemia Management................. Drugs used to stimulate red blood
cell production and/or treat or
prevent anemia. This category
includes ESAs as well as iron.
Bone and Mineral Metabolism....... Drugs used to prevent/treat bone
disease secondary to dialysis. This
category includes phosphate binders
and calcimimetics.
Cellular Management............... Drugs used for deficiencies of
naturally occurring substances
needed for cellular management.
This category includes
levocarnitine.
------------------------------------------------------------------------

The drug categories that may be separately paid by Medicare when
furnished for non-ESRD patient conditions are included in Table 5 (ESRD
Drug Categories Included in the ESRD PPS Base Rate But May be Used for
Dialysis and non-Dialysis Purposes) (75 FR 49051). This table is
included below for the purpose of this discussion. When any drug
identified in the drug categories listed in Table 17 (antiemetic, anti-
infectives, antipruritic, anxiolytic, excess fluid management, fluid
and electrolyte management or pain management), is furnished for the
treatment of ESRD, payment for the drug is included in the ESRD PPS
payment and may not be paid separately. If a drug represented by a drug
category in Table 17 is furnished for reasons other than ESRD, a
separate Medicare payment is permitted when the AY modifier is
indicated on the claim line reporting the drug for payment.

Table 17--ESRD Drug Categories Included in the ESRD Base Rate but May Be
Used for Dialysis and Non-Dialysis Purposes
------------------------------------------------------------------------

------------------------------------------------------------------------
Antiemetic........................ Used to prevent or treat nausea and
vomiting secondary to dialysis.
Excludes antiemetics used in
conjunction with chemotherapy as
these are covered under a separate
benefit category.
Anti-infectives................... Used to treat infections. May
include antibacterial and
antifungal drugs.
Antipruritic...................... Drugs in this classification have
multiple clinical indications and
are included for their action to
treat itching secondary to
dialysis.
Anxiolytic........................ Drugs in this classification have
multiple actions but are included
for the treatment of restless leg
syndrome secondary to dialysis.
Excess Fluid Management........... Drug/fluids used to treat fluid
excess/overload.
Fluid and Electrolyte Management Intravenous drugs/fluids used to
Including Volume Expanders. treat fluid and electrolyte needs.
Pain Management................... Drugs used to treat graft site pain
and to treat pain medication
overdose.
------------------------------------------------------------------------

F. Low-Volume Payment Adjustment

1. Background
Section 1881(b)(14)(D)(iii) of the Act requires a payment
adjustment that ``reflects the extent to which costs incurred by low-
volume facilities (as defined by the Secretary) in furnishing renal
dialysis services exceed the costs incurred by other facilities in
furnishing such services, and for payment for renal dialysis services
furnished on or after January 1, 2011, and before January 1, 2014, such
payment adjustment shall not be less than 10 percent.'' As a result of
this provision and the regression analysis conducted for the ESRD PPS,
effective January 1, 2011, the ESRD PPS provides a facility-level
payment adjustment of 18.9 percent to ESRD facilities that meet the
definition of a low-volume facility.
Under 42 CFR 413.232(b), a low-volume facility is an ESRD facility
that: (1) Furnished less than 4,000 treatments in each of the 3 cost
reporting years (based on as-filed or final settled 12-consecutive
month cost reports, whichever is most recent) preceding the payment
year; and (2) Has not opened, closed, or received a new provider number
due to a change in ownership in the 3 cost reporting years (based on
as-filed or final settled 12-consecutive month cost reports, whichever
is most recent) preceding the payment year. Under Sec. 413.232(c), for
purposes of determining the number of treatments furnished by the ESRD
facility, the number of treatments equals the aggregate number of
treatments furnished by other ESRD facilities that are both under
common ownership and 25 road miles or less from the ESRD facility in
question. This geographic proximity criterion is only applicable to
ESRD facilities that were Medicare certified on or after January 1,
2011.
For purposes of determining eligibility for the low-volume payment
adjustment (LVPA), ``treatments'' means total hemodialysis (HD)
equivalent treatments (Medicare and non-Medicare). For peritoneal
dialysis (PD) patients, one week of PD is considered equivalent to 3 HD
treatments. In the CY 2012 ESRD PPS final rule (76 FR 70236), we
clarified that we base eligibility on the three years preceding the
payment year and those years are based on cost reporting periods. We
further clarified that the ESRD facility's cost reports for the cost
reporting periods ending in the three years preceding the payment year
must report costs for 12-consecutive months.
In order to receive the LVPA under the ESRD PPS, an ESRD facility
must submit a written attestation statement to its Medicare
Administrative Contractor (MAC) that it qualifies as a low-volume ESRD
facility and that it meets all of the requirements specified at 42 CFR
413.232. In the CY 2012 ESRD PPS final rule (76 FR 70236), we finalized
a yearly November 1 deadline for attestation submission and we revised
the regulation at Sec. 413.232(f) to reflect this date. We noted that
this timeframe provides 60 days for a MAC to verify that an ESRD
facility meets the LVPA eligibility criteria. Further information
regarding the administration of the LVPA is provided in CMS Pub. 100-
02, Medicare Benefit Policy Manual, chapter 11, section 60.B.1.

[[Page 40237]]

2. The United States Government Accountability Office Study on the LVPA
The Medicare Improvements for Patients and Providers Act of 2008
(MIPPA) required the United States Government Accountability Office
(the GAO) to study the LVPA. The GAO examined (1) the extent to which
the LVPA targeted low-volume, high-cost facilities that appeared
necessary for ensuring access to care; and (2) CMS's implementation of
the LVPA, including the extent to which CMS paid the 2011 LVPA to
facilities eligible to receive the adjustment. To do this work, the GAO
reviewed Medicare claims, facilities' annual cost reports, and data on
dialysis facilities' locations to identify and compare facilities that
were eligible for the LVPA with those that received the adjustment. The
GAO published a report 13-287 on March 1, 2013, entitled, ``End-Stage
Renal Disease: CMS Should Improve Design and Strengthen Monitoring of
Low-Volume Adjustment''. The report found multiple discrepancies in the
identification of low-volume facilities which are summarized below.
a. The GAO's Main Findings
The GAO found that many of the facilities eligible for the LVPA
were located near other facilities, indicating that they might not have
been necessary for ensuring access to care. They also identified
certain facilities with relatively low volume that were not eligible
for the LVPA but had above-average costs and appeared to be necessary
for ensuring access to care. Lastly, they stated the design of the LVPA
provides facilities with an adverse incentive to restrict their service
provision to avoid reaching the 4,000 treatment threshold. The GAO
calculated that Medicare overpaid an estimated $5.3 million for the
LVPA to dialysis facilities that did not meet the eligibility
requirements established by CMS. They indicated in their report that
the guidance that CMS issued for implementation of the regulatory
requirements was sometimes unclear and not always available when
needed, and the misunderstanding of LVPA eligibility likely was
exacerbated because CMS conducted limited monitoring of the Medicare
contractors' administration of LVPA payments.
b. The GAO's Recommendations
In the conclusion of their study, the GAO provided Congress with
the following recommendations: (1) To more effectively target
facilities necessary for ensuring access to care, the Administrator of
CMS should consider restricting the LVPA to low-volume facilities that
are isolated; (2) To reduce the incentive for facilities to restrict
their service provision to avoid reaching the LVPA treatment threshold,
the Administrator of CMS should consider revisions such as changing the
LVPA to a tiered adjustment; (3) To ensure that future LVPA payments
are made only to eligible facilities and to rectify past overpayments,
the Administrator of CMS should take the following four actions:
Require Medicare contractors to promptly recoup 2011 LVPA payments that
were made in error; investigate any errors that contributed to eligible
facilities not consistently receiving the 2011 LVPA and ensure that
such errors are corrected; take steps to ensure that CMS regulations
and guidance regarding the LVPA are clear, timely, and effectively
disseminated to both dialysis facilities and Medicare contractors; and
improve the timeliness and efficacy of CMS's monitoring regarding the
extent to which Medicare contractors are determining LVPA eligibility
correctly and promptly redetermining eligibility when all necessary
data become available.
In response to the GAO's recommendations, we concurred with the
need to ensure that the LVPA is targeted effectively at low-volume
high-cost facilities in areas where beneficiaries may lack other
dialysis care options. We also agreed to take action to ensure
appropriate payment is made in the following ways: (1) Evaluating our
policy guidance and contractor instructions to ensure appropriate
application of the LVPA; (2) using multiple methods of communication to
MACs and ESRD facilities to deliver clear and timely guidance; and (3)
improving our monitoring of MACs and considering measures that provide
specific expectations.
3. Clarification of the LVPA Policy
For CY 2015, we are not proposing to make changes to the
eligibility criteria for the adjustment or to the magnitude of the
adjustment value. In accordance with section 632(c) of ATRA, for CY
2016 we will assess and address other necessary LVPA policy changes
when we use updated data and reevaluate all of the patient- and
facility-level adjustments together in a regression analysis similar to
the analysis that is discussed in the CY 2011 ESRD PPS final rule (75
FR 49083). At this time, we are not proposing to change the criteria in
such a way that the number of low-volume facilities would deviate
substantially from the number of facilities originally modeled to
receive the adjustment in the first year of implementation. This is
because of the interaction of the LVPA with other payment adjustments
under the ESRD PPS. As discussed in the CY 2011 ESRD PPS final rule (75
FR 49081), we standardized the ESRD PPS base rate to account for the
payment variables and it would not be appropriate to make changes to
one variable in the regression when it could potentially affect the
other adjustments or the standardization factor. However, there are two
clarifications under the LVPA policy (discussed below) that we can
address in this year's rulemaking that we believe are responsive to
stakeholder's concerns and GAO's concern that the LVPA should
effectively target low-volume, high cost-facilities.
a. Hospital-Based ESRD Facilities
As stated above, for purposes of determining eligibility for the
LVPA, ``treatments'' means total hemodialysis (HD) equivalent
treatments (Medicare and non-Medicare) and for peritoneal dialysis (PD)
patients, one week of PD is considered equivalent to 3 HD treatments.
Once a MAC receives an attestation from an ESRD facility, it reviews
the ESRD facility's cost reports to verify that the facility meets the
low-volume criteria specified at 42 CFR 413.232(b). Specifically, the
ESRD facility cost report is used to verify the total treatment count
that an ESRD facility furnishes in its fiscal year, which includes
Medicare and non-Medicare treatments. For independent ESRD facilities,
this information is provided on Worksheet C of the Form CMS-265-11 form
(previously Form CMS-265-94) and for hospital-based ESRD facilities,
this information is on Worksheet I-4 of the Form CMS-2552-10.
After the LVPA was implemented, we began hearing concerns from
multiple stakeholders, including members of Congress and rural
hospital-based ESRD facilities, about the MACs' LVPA eligibility
determinations. The stakeholders indicated that because hospital-based
ESRD facilities are financially integrated with a hospital, their costs
and treatment data are aggregated in the I-series of the hospital's
cost report. This means that if there is more than one ESRD facility
that is affiliated with a hospital, the cost and treatment data for all
facilities are aggregated on Worksheet I-4, typically causing the
facilities' treatment counts to exceed the 4,000-treatment criterion.
We have learned that some MACs accepted treatment counts from

[[Page 40238]]

hospital-based ESRD facilities other than those provided on the
hospital's cost report and, as a result, certain hospital-based ESRD
facilities received the LVPA. Other MACs solely used the aggregated
treatment counts from the hospital's cost report to verify LVPA
eligibility, which resulted in denials for many hospital-based
facilities that would have qualified for the adjustment if the MACs had
considered other supporting documentation.
We agree with stakeholders that limiting the MAC review to the
hospital cost reports for verification of LVPA eligibility for
hospital-based ESRD facilities places these facilities at a
disadvantage and does not comport with the intent of our policy. We
believe it can be necessary for MACs to use other supporting data to
verify the treatment counts for individual hospital-based facilities
that would meet the eligibility criteria for the LVPA if their
treatment counts had not been aggregated with one or more other
facilities on their hospitals' cost reports. Because LVPA eligibility
is based on cost report information and the individual hospital-based
facility treatment counts is the source of the aggregated treatment
counts reported in the cost report, however, we continue to believe
that cost report data is an integral part of the process of verifying
whether a hospital-based facility meets the LVPA eligibility criteria.
For these reasons, we are clarifying that MACs may consider other
supporting data, such as a hospital-based facility's total treatment
count, along with the facility's cost reports and attestation, to
verify it meets the low-volume eligibility criteria provided at 42 CFR
413.232(b). The attestation should continue to be configured around the
parent hospital's cost reports, that is, it should be for the same
fiscal periods. The MAC can consider other supporting data in addition
to the total treatments reported in each of the 12-consecutive month
cost reports, such as the individual facility's total treatment counts,
rather than the hospital's cost report alone, to verify the number of
treatments that were furnished by the individual hospital-based
facility that is seeking the adjustment. Consistent with this policy
clarification, hospital-based ESRD facilities' eligibility for the LVPA
should be determined at an individual facility level and their total
treatment counts should not be aggregated with other ESRD facilities
that are affiliated with the hospital unless the affiliated facilities
are commonly owned and within 25 miles.
MACs have discretion as to the format of the attestation and any
supporting data, however, the facility must provide the total number of
Medicare and non-Medicare treatments for the three cost reporting years
preceding the payment year for all of the hospital-based facilities for
which treatment counts appear on the hospital's cost report. This will
allow MACs to determine which treatments on the cost report were
furnished by the individual hospital-based facility that is seeking the
LVPA and which treatments were furnished by other affiliated
facilities. Finally, we propose to amend the regulation text by adding
a new paragraph (h)(1) to Sec. 413.232 to reflect this clarification
of current policy under which MACs can verify hospital-based ESRD
facilities' eligibility for the LVPA using supporting data in addition
to hospital cost reports. We are soliciting comment on the proposed
changes at Sec. 413.232(h)(1).
b. Cost Reporting Periods Used for Eligibility
In the CY 2012 ESRD PPS final rule (76 FR 70236), we clarified that
for purposes of eligibility under 42 CFR 413.232(b), we base
eligibility on the three years preceding the payment year and those
years are based on cost reporting periods. We further clarified that
the ESRD facility's cost reports for the cost reporting periods ending
in the three years preceding the payment year must report costs for 12
consecutive months.
After the LVPA was implemented, we began hearing concerns from the
industry that there is a conflict within our policy. Currently, our
policy allows an ESRD facility to remain eligible for the LVPA when
they have a change of ownership (CHOW) that does not result in a new
Provider Transaction Access Number (PTAN). However, our regulations at
42 CFR 413.232(b) suggest that MACs must verify treatment counts using
cost reports for 12-consecutive month cost periods even though CHOWs
often result in costs reports that are nonstandard, that is, longer or
shorter than 12 months. In particular, the previous owner's final cost
report may not coincide with the ESRD facility's cost report fiscal
year end under its new ownership, resulting in two costs reports that
are not 12-consecutive month cost reports. For example, where a CHOW
occurs in the middle of the cost reporting period and the new owner
wishes to retain the established cost report fiscal year end, the
previous owner submits a final cost report covering their period of
ownership and the new owner submits a cost report covering the
remainder of the cost reporting period. Alternatively, a new owner
could also choose not to retain the previous owner's established cost
reporting fiscal year end, in which case the CHOW could result in a
cost reports that exceed twelve months when combined. Further details
regarding the policies for filing cost reports during a CHOW are
available in the Provider Reimbursement Manual--Part 1, chapter 15,
``Change of Ownership.''
We agree with the industry that there is a conflict in the policies
governing LVPA that may prevent an otherwise qualified ESRD facility
from receiving the adjustment. We have always intended that if an ESRD
facility has a CHOW where the new owner accepts the previous owner's
assets and liabilities by retaining the facility's PTAN, they should
continue to be eligible for the LVPA. However, some MACs used a strict
reading of the regulatory language and denied these providers the LVPA.
Other MACs added short cost reports together or prorated treatment
counts for cost reporting periods spanning greater than 12 months.
In order to ensure consistent verification of LVPA eligibility, we
are restating our intention that when there is a CHOW that does not
result in a new PTAN but creates two non-standard cost reporting
periods (that is, periods that are shorter or longer than 12 months)
the MAC is either to add the two non-standard cost reporting periods
together where combined they would equal 12 consecutive months or
prorate the data when they would exceed 12 consecutive months to
determine the total treatments furnished for a full cost reporting
period as if there had not been a CHOW.
For example, prior to a CHOW, Facility A had a cost reporting
period that spanned January 1 through December 31. Facility A had a
CHOW mid-year that did not result in a new PTAN but caused a break in
the cost reporting period. Consistent with the clarification of our
policy, the MAC would add Facility A's cost report that spanned January
1 through May 31 to its cost report that spanned June 1 through
December 31 to verify the total treatment count.
The other situation that could occur is when a CHOW results in a
change of the original fiscal period. For example, prior to a CHOW,
Facility B had a cost reporting period that spanned January 1 through
December 31 and, based on its cost reports for 2012 and 2013, it met
the LVPA eligibility criteria. Then, Facility B had a CHOW in the
beginning of 2014 that did not result in a new PTAN, but changed its
cost reporting period to that of its new owner, October

[[Page 40239]]

1, 2014 through September 30, 2015. This scenario would create a short
and a long cost report that would not total 12 months that the MAC
would need to review for verification. That is, Facility B would have a
cost report that spanned January 1, 2014 through July 31, 2014 (7
months) and a cost report that spanned August 1, 2014 through September
30, 2015 (14 months).
In this situation, the MAC should combine the two non-standard cost
reporting periods that in combination may exceed 12-consecutive months
and prorate the data to equal a full 12-consecutive month period.
Finally, we propose to amend the regulation text by adding a new
paragraph (h)(2) to Sec. 413.232 to clarify the verification process
for ESRD facilities that experience a CHOW with no change in the PTAN.
We are soliciting comments on the proposed changes at Sec.
413.232(h)(2).
Section 413.232(f) requires ESRD facilities to submit LVPA
attestations by November 1 of each year. However, the changes we are
proposing to the LVPA regulation text would not be finalized in enough
time to give the ESRD facilities the opportunity to learn about the
policy clarifications and provide an attestation to their MAC by
November 1, 2014. For these reasons, we are proposing to amend Sec.
413.232(f) to extend the deadline for CY 2015 LVPA attestations until
December 31, 2014. This timeframe would allow ESRD facilities to
reassess their eligibility and apply for the LVPA for CY 2015. It would
also give MACs an opportunity to verify any new attestations and
reassess LVPA eligibility verifications made since 2011. We will issue
guidance with additional detail regarding this policy clarification,
which will include details about the process ESRD facilities should
follow to seek the LVPA for past years.

G. Continued Use of ICD-9-CM Codes and Corrections to the ICD-10-CM
Codes Eligible for the Comorbidity Payment Adjustment

Section 1881(b)(14)(D)(i) of the Act requires that the ESRD PPS
include a payment adjustment based upon case mix that may take into
account, among other things, patient comorbidities. Comorbidities are
specific patient conditions that coexist with the patient's principal
diagnosis that necessitates dialysis. The comorbidity payment
adjustments recognize the increased costs associated with comorbidities
and provide additional payment for certain conditions that occur
concurrently with the need for dialysis. For a detailed discussion of
our approach to developing the comorbidity payment adjustment, see the
CY 2011 ESRD PPS final rule (75 FR 49094 through 49108).
In the CY 2011 ESRD PPS final rule, we finalized six comorbidity
categories that are eligible for a comorbidity payment adjustment, each
with associated International Classification of Diseases, 9th Revision,
Clinical Modification (ICD-9-CM) diagnosis codes (75 FR 49100). These
categories include three acute, short-term diagnostic categories
(pericarditis, bacterial pneumonia, and gastrointestinal tract bleeding
with hemorrhage) and three chronic diagnostic categories (hereditary
hemolytic sickle cell anemia, myelodysplastic syndrome, and monoclonal
gammopathy). The comorbidity categories eligible for an adjustment and
their associated ICD-9-CM codes were published in the Appendix of the
CY 2011 ESRD PPS final rule as Table E: ICD-9-CM--Codes Recognized for
the Comorbidity Payment Adjustment (75 FR 49211).
In the CY 2012 ESRD PPS final rule (76 FR 70252), we clarified that
the ICD-9-CM codes eligible for the comorbidity payment adjustment are
subject to the annual ICD-9-CM coding updates that occur in the
hospital IPPS final rule and are effective October 1st every year. We
explained that any updates to the ICD-9-CM codes that affect the
categories of comorbidities and the diagnoses within the comorbidity
categories that are eligible for a comorbidity payment adjustment would
be communicated to ESRD facilities through sub-regulatory guidance.
Together with the rest of the healthcare industry, CMS was
scheduled to implement the 10th revision of the ICD coding scheme--ICD-
10--on October 1, 2014. Hence, in the CY 2014 ESRD PPS (78 FR 72175
through 72179), we finalized a policy that ICD-10-CM codes will be
eligible for a comorbidity payment adjustment where they crosswalk from
ICD-9-CM codes that are eligible for a comorbidity payment adjustment
with two exceptions.
On April 1, 2014, PAMA was enacted. Section 212 of PAMA, titled
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides that
``[t]he Secretary of Health and Human Services may not, prior to
October 1, 2015, adopt ICD-10 code sets as the standard for code sets
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c))
and section 162.1002 of title 45, Code of Federal Regulations.'' On May
1, 2014, the Secretary announced that HHS expects to issue an interim
final rule that will require use of ICD-10 beginning October 1, 2015
and continue to require use of ICD-9-CM through September 30, 2015.
This announcement is available on the CMS Web site at https://cms.gov/Medicare/Coding/ICD10/. Before the passage of PAMA, our
policy required facilities to utilize ICD-10-CM codes to identify
comorbidities eligible for the comorbidity payment adjustment beginning
October 1, 2014. However, in light of section 212 of PAMA and the
Secretary's announcement of the new compliance date for ICD-10, we are
proposing to require use of ICD-10-CM to identify comorbidities
beginning on October 1, 2015. Until that time, we will continue to
require use of the ICD-9-CM codes to identify comorbidities eligible
for the comorbidity payment adjustment. The ICD-9-CM codes that are
eligible for the comorbidity payment adjustment are listed in the
crosswalk tables below.
Because facilities will begin using ICD-10 during the calendar year
to which this rule applies, we are correcting several typographical
errors and omissions in the Tables that appeared in the CY 2015 ESRD
PPS final rule. First, we are correcting one ICD-9-CM diagnosis code
that was incorrectly identified due to a typographical error in Table
1--ONE ICD-9-CM CODE CROSSWALKS TO ONE ICD-10-CM CODE (78 FR 72176). In
Table 2--ONE ICD-9-CM CODE CROSSWALKS TO MULTIPLE ICD-10-CM CODES (78
FR 72177), we are correcting two ICD-10-CM codes because of
typographical errors and proposing two additional ICD-10-CM codes that
were inadvertently omitted from the crosswalk. Lastly, in Table 3--
MULTIPLE ICD-9-CM CODES CROSSWALK TO ONE ICD-10-CM CODE (78 FR 72178),
we are proposing to include 9 additional ICD-10-CM crosswalk codes for
eligibility for the comorbidity payment adjustment. These codes were
omitted in error from the CY 2014 ESRD PPS final rule, and we have
furnished an updated Table 20 below reflecting the additional codes.
We note that the ICD-10-CM codes that facilities will be required
to use to identify eligible comorbidities when ICD-10 becomes the
required medical data code set on October 1, 2015 are those that were
finalized in the CY 2014 ESRD PPS final rule at 78 FR 72175 to 78 FR
72179 with the corrections and proposed additions included below.
Table 18-- ONE ICD-9-CM CODE CROSSWALKS TO ONE ICD-10-CM CODE (78
FR 72175 through 78 FR 72176).

[[Page 40240]]

Table 18 lists all the instances in which one ICD-9-CM code
crosswalks to one ICD-10-CM code. We finalized a policy in last year's
rule that all identified ICD-10-CM codes would receive a comorbidity
adjustment with the exception of K52.81 Eosinophilic gastritis or
gastroenteritis. We have since discovered that under the section titled
Myelodysplastic Syndrome, ICD-9-CM code 238.7 Essential thrombocythemia
was inaccurately identified. The table below has been amended to
accurately identify ICD-9-CM diagnostic code 238.71 Essential
thrombocythemia.

Table 18--One ICD-9-CM Code Crosswalks to One ICD-10-CM Code
------------------------------------------------------------------------
ICD-9 Descriptor ICD-10 Descriptor
------------------------------------------------------------------------
Gastrointestinal Bleeding
------------------------------------------------------------------------
530.21 Ulcer of esophagus with bleeding K22.11 Ulcer of esophagus with
bleeding.
535.71 Eosinophilic gastritis, with K52.81 Eosinophilic gastritis
hemorrhage. or gastroenteritis.
537.83 Angiodysplasia of stomach and K31.811 Angiodysplasia of
duodenum with hemorrhage. stomach and duodenum with
bleeding.
569.85 Angiodysplasia of intestine with K55.21 Angiodysplasia of colon
hemorrhage. with hemorrhage.
------------------------------------------------------------------------
Bacterial Pneumonia
------------------------------------------------------------------------
003.22 Salmonella pneumonia............ A02.22 Salmonella pneumonia.
482.0 Pneumonia due to Klebsiella J15.0 Pneumonia due to
pneumonia. Klebsiella pneumoniae.
482.1 Pneumonia due to Pseudomonas..... J15.1 Pneumonia due to
Pseudomonas.
482.2 Pneumonia due to Hemophilus J14 Pneumonia due to Hemophilus
influenzae [H. influenzae]. influenzae.
482.32 Pneumonia due to Streptococcus, J15.3 Pneumonia due to
group B. streptococcus, group B.
482.40 Pneumonia due to Staphylococcus, J15.20 Pneumonia due to
unspecified. staphylococcus, unspecified.
482.41 Methicillin susceptible J15.211 Pneumonia due to
pneumonia due to Staphylococcus aureus. Methicillin susceptible
Staphylococcus aureus.
482.42 Methicillin resistant pneumonia J15.212 Pneumonia due to
due to Staphylococcus aureus. Methicillin resistant
Staphylococcus aureus.
482.49 Other Staphylococcus pneumonia.. J15.29 Pneumonia due to other
staphylococcus.
482.82 Pneumonia due to escherichia J15.5 Pneumonia due to
coli [E. coli]. Escherichia coli.
482.83 Pneumonia due to other gram- J15.6 Pneumonia due to other
negative bacteria. aerobic Gram-negative
bacteria.
482.84 Pneumonia due to Legionnaires' A48.1 Legionnaires' disease.
disease.
507.0 Pneumonitis due to inhalation of J69.0 Pneumonitis due to
food or vomitus. inhalation of food and vomit.
507.8 Pneumonitis due to other solids J69.8 Pneumonitis due to
and liquids. inhalation of other solids and
liquids.
510.0 Empyema with fistula............. J86.0 Pyothorax with fistula.
510.9 Empyema without mention of J86.9 Pyothorax without
fistula. fistula.
------------------------------------------------------------------------
Pericarditis
------------------------------------------------------------------------
420.91 Acute idiopathic pericarditis... I30.0 Acute nonspecific
idiopathic pericarditis.
------------------------------------------------------------------------
Hereditary Hemolytic and Sickle Cell Anemia
------------------------------------------------------------------------
282.0 Hereditary spherocytosis......... D58.0 Hereditary spherocytosis.
282.1 Hereditary elliptocytosis........ D58.1 Hereditary
elliptocytosis.
282.41 Sickle-cell thalassemia without D57.40 Sickle-cell thalassemia
crisis. without crisis.
282.43 Alpha thalassemia............... D56.0 Alpha thalassemia.
282.44 Beta thalassemia................ D56.1 Beta thalassemia.
282.45 Delta-beta thalassemia.......... D56.2 Delta-beta thalassemia.
282.46 Thalassemia minor............... D56.3 Thalassemia minor.
282.47 Hemoglobin E-beta thalassemia... D56.5 Hemoglobin E-beta
thalassemia.
282.49 Other thalassemia............... D56.8 Other thalassemias.
282.61 Hb-SS disease without crisis.... D57.1 Sickle-cell disease
without crisis.
282.63 Sickle-cell/Hb-C disease without D57.20 Sickle-cell/Hb-C disease
crisis. without crisis.
282.68 Other sickle-cell disease D57.80 Other sickle-cell
without crisis. disorders without crisis.
------------------------------------------------------------------------
Myelodysplastic Syndrome
------------------------------------------------------------------------
238.71 Essential thrombocythemia....... D47.3 Essential (hemorrhagic)
thrombocythemia.
238.73 High grade myelodysplastic D46.22 Refractory anemia with
syndrome lesions. excess of blasts 2.
238.74 Myelodysplastic syndrome with 5q D46.C Myelodysplastic syndrome
deletion. with isolated del(5q)
chromosomal abnormality.
238.76 Myelofibrosis with myeloid D47.1 Chronic
metaplasia. myeloproliferative disease.
------------------------------------------------------------------------

Table 19--ONE ICD-9-CM CODE CROSSWALKS TO MULIPLE ICD-10-CM CODES
(78 FR 72177 through 78 FR 72178).
Table 19 lists all of the instances in which one ICD-9-CM code
crosswalks to multiple ICD-10-CM codes. We finalized a policy in last
year's rule that all identified ICD-10-CM codes would receive a
comorbidity adjustment with the exception of D89.2
Hypergammaglobulinemia, unspecified. Under the section titled
Gastrointestinal Bleeding, ICD-9-CM code 562 Diverticulosis of small
intestine with hemorrhage was inaccurately identified, as the complete
code number is 562.02. The table below has been amended to accurately
identify ICD-9-CM diagnostic code 562.02 Diverticulosis of small
intestine with hemorrhage.

[[Page 40241]]

Also under the section titled Gastrointestinal Bleeding, ICD-9-CM
diagnostic code 562.13 Diverticulitis of colon with hemorrhage did not
include a complete crosswalk to ICD-10-CM diagnostic codes. Therefore,
we propose to include ICD-10-CM diagnostic codes K57.81 Diverticulitis
of intestine, part unspecified, with perforation and abscess with
bleeding and K57.93 Diverticulitis of intestine, part unspecified,
without perforation or abscess with bleeding, in addition to the ICD-
10-CM diagnostic codes K57.21, K57.33, K57.41, and K57.53, as eligible
for the comorbidity payment adjustment when the use of ICD-10-CM is
required, on October 1, 2015.
Under the section titled Pericarditis, ICD-10-CM code 130.1
Infective pericarditis was inaccurately identified. The table below has
been amended to accurately identify the ICD-10-CM diagnostic code I30.1
Infective pericarditis as eligible for a comorbidity payment adjustment
when the use of ICD-10-CM is required, on October 1, 2015.

Table 19--One ICD-9-CM Code Crosswalks to Multiple ICD-10-CM Codes
------------------------------------------------------------------------
ICD-9 Descriptor ICD-10 Descriptor
------------------------------------------------------------------------
Gastrointestinal Bleeding
------------------------------------------------------------------------
562.02 Diverticulosis of small K57.11 Diverticulosis of small
intestine with hemorrhage. intestine without perforation
or abscess with bleeding.
K57.51 Diverticulosis of both
small and large intestine
without perforation or abscess
with bleeding.
562.03 Diverticulitis of small K57.01 Diverticulitis of small
intestine with hemorrhage. intestine with perforation and
abscess with bleeding.
K57.13 Diverticulitis of small
intestine without perforation
or abscess with bleeding.
K57.41 Diverticulitis of both
small and large intestine with
perforation and abscess with
bleeding.
K57.53 Diverticulitis of both
small and large intestine
without perforation or abscess
with bleeding.
562.12 Diverticulosis of colon with K57.31 Diverticulosis of large
hemorrhage. intestine without perforation
or abscess with bleeding.
K57.91 Diverticulosis of
intestine, part unspecified,
without perforation or abscess
with bleeding.
K57.51 Diverticulosis of both
small and large intestine
without perforation or abscess
with bleeding.
562.13 Diverticulitis of colon with K57.21 Diverticulitis of large
hemorrhage. intestine with perforation and
abscess with bleeding.
K57.33 Diverticulitis of large
intestine without perforation
or abscess with bleeding.
K57.41 Diverticulitis of both
small and large intestine with
perforation and abscess with
bleeding.
K57.53 Diverticulitis of both
small and large intestine
without perforation or abscess
with bleeding.
K57.81 Diverticulitis of
intestine, part unspecified,
with perforation and abscess
with bleeding.
K57.93 Diverticulitis of intestine,
part unspecified, without perforation
or abscess with bleeding.
------------------------------------------------------------------------
Bacterial Pneumonia
------------------------------------------------------------------------
513.0 Abscess of lung.................. J85.0 Gangrene and necrosis of
lung.
J85.1 Abscess of lung with
pneumonia.
J85.2 Abscess of lung without
pneumonia.
------------------------------------------------------------------------
Pericarditis
------------------------------------------------------------------------
420.0 Acute pericarditis in diseases A18.84 Tuberculosis of heart.
classified elsewhere. I32 Pericarditis in diseases
classified elsewhere.
M32.12 Pericarditis in systemic
lupus erythematosus.
420.90 Acute pericarditis, unspecified. I30.1 Infective pericarditis.
I30.9 Acute pericarditis,
unspecified.
420.99 Other acute pericarditis........ I30.8 Other forms of acute
pericarditis.
I30.9 Acute pericarditis,
unspecified.
------------------------------------------------------------------------
Hereditary Hemolytic and sickle cell anemia
------------------------------------------------------------------------
282.2 Anemias due to disorders of D55.0 Anemia due to glucose-6-
glutathione metabolism. phosphate dehydrogenase [G6PD]
deficiency.
D55.1 Anemia due to other
disorders of glutathione
metabolism.
282.3 Other hemolytic anemias due to D55.2 Anemia due to disorders
enzyme deficiency. of glycolytic enzymes.
D55.3 Anemia due to disorders
of nucleotide metabolism.
D55.8 Other anemias due to
enzyme disorders.
D55.9 Anemia due to enzyme
disorder, unspecified.
282.42 Sickle-cell thalassemia with D57.411 Sickle-cell thalassemia
crisis. with acute chest syndrome.
D57.412 Sickle-cell thalassemia
with splenic sequestration.

[[Page 40242]]

D57.419 Sickle-cell thalassemia
with crisis, unspecified.
282.62 Hb-SS disease with crisis....... D57.00 Hb-SS disease with
crisis, unspecified.
D57.01 Hb-SS disease with acute
chest syndrome.
D57.02 Hb-SS disease with
splenic sequestration.
282.64 Sickle-cell/Hb-C disease with D57.211 Sickle-cell/Hb-C
crisis. disease with acute chest
syndrome.
D57.212 Sickle-cell/Hb-C
disease with splenic
sequestration.
D57.219 Sickle-cell/Hb-C
disease with crisis,
unspecified.
282.69 Other sickle-cell disease with D57.811 Other sickle-cell
crisis. disorders with acute chest
syndrome.
D57.812 Other sickle-cell
disorders with splenic
sequestration.
D57.819 Other sickle-cell
disorders with crisis,
unspecified.
------------------------------------------------------------------------
Monoclonal Gammopathy
------------------------------------------------------------------------
273.1 Monoclonal paraproteinemia....... D47.2 Monoclonal gammopathy.
D89.2 Hypergammaglobulinemia,
unspecified.
------------------------------------------------------------------------
Myelodysplastic Syndrome
------------------------------------------------------------------------
238.72 Low grade myelodysplastic D46.0 Refractory anemia without
syndrome lesions. ring sideroblasts, so stated.
D46.1 Refractory anemia with
ring sideroblasts.
D46.20 Refractory anemia with
excess of blasts, unspecified.
D46.21 Refractory anemia with
excess of blasts 1.
D46.4 Refractory anemia,
unspecified.
D46.A Refractory cytopenia with
multilineage dysplasia.
D46.B Refractory cytopenia with
multilineage dysplasia and
ring sideroblasts.
238.75 Myelodysplastic syndrome, D46.9 Myelodysplastic syndrome,
unspecified. unspecified.
D46.Z Other myelodysplastic
syndromes.
------------------------------------------------------------------------

Table 20--MULTIPLE ICD-9-CM CODES CROSSWALK TO ONE ICD-10-CM CODE
(78 FR 72178).
Table 20 displays the crosswalk where multiple ICD-9-CM codes
crosswalk to one ICD-10-CM code. We finalized a policy in last year's
rule that all of the ICD-10-CM codes listed in Table 3 would be
eligible for the comorbidity payment adjustment. Under the section
titled Gastrointestinal Bleeding, nine ICD-10-CM codes (K25.0 Acute
gastric ulcer with hemorrhage, K25.2 Acute gastric ulcer with both
hemorrhage and perforation, K25.4 Chronic or unspecified gastric ulcer
with hemorrhage, K25.6 Chronic or unspecified gastric ulcer with both
hemorrhage and perforation, K26.0 Acute duodenal ulcer with hemorrhage,
K26.2 Acute duodenal ulcer with both hemorrhage and perforation, K26.4
Chronic or unspecified duodenal ulcer with hemorrhage, K26.6 Chronic or
unspecified duodenal ulcer with both hemorrhage and perforation, and
K27.0 Acute peptic ulcer, site unspecified, with hemorrhage) and the
corresponding ICD-9-CM codes were inadvertently omitted from the
crosswalk. We propose that these ICD-10-CM diagnostic codes--K25.0,
K25.2 K25.4, K25.6, K26.0, K26.2, K26.4, K26.6, K27.0--will be eligible
for the comorbidity payment adjustment beginning October 1, 2015. We
also propose that the corresponding ICD-9-CM codes will be eligible for
the comorbidity adjustment through September 30, 2015.

Table 20--Multiple ICD-9-CM Codes Crosswalk to One ICD-10-CM Code
------------------------------------------------------------------------
ICD-9 Descriptor ICD-10 Descriptor
------------------------------------------------------------------------
Gastrointestinal Bleeding
------------------------------------------------------------------------
531.00 Acute gastric ulcer with K25.0 Acute gastric ulcer with
hemorrhage, without mention of hemorrhage.
obstruction.
531.01 Acute gastric ulcer with
hemorrhage, with obstruction.
531.20 Acute gastric ulcer with K25.2 Acute gastric ulcer with
hemorrhage and perforation, without both hemorrhage and
mention of obstruction. perforation.
531.21 Acute gastric ulcer with
hemorrhage and perforation, with
obstruction.
531.40 Chronic or unspecified gastric K25.4 Chronic or unspecified
ulcer with hemorrhage, without mention gastric ulcer with hemorrhage.
of obstruction.
531.41 Chronic or unspecified gastric
ulcer with hemorrhage, with
obstruction.
531.60 Chronic or unspecified gastric K25.6 Chronic or unspecified
ulcer with hemorrhage and perforation, gastric ulcer with both
without mention of obstruction. hemorrhage and perforation.
531.61 Chronic or unspecified gastric
ulcer with hemorrhage and perforation,
with obstruction.
532.00 Acute duodenal ulcer with K26.0 Acute duodenal ulcer with
hemorrhage, without mention of hemorrhage.
obstruction.
532.01 Acute duodenal ulcer with
hemorrhage, with obstruction.
532.20 Acute duodenal ulcer with K26.2 Acute duodenal ulcer with
hemorrhage and perforation, without both hemorrhage and
mention of obstruction. perforation.

[[Page 40243]]

532.21 Acute duodenal ulcer with
hemorrhage and perforation, with
obstruction.
532.40 Chronic or unspecified duodenal K26.4 Chronic or unspecified
ulcer with hemorrhage, without mention duodenal ulcer with
of obstruction. hemorrhage.
532.41 Chronic or unspecified duodenal
ulcer with hemorrhage, with
obstruction.
532.60 Chronic or unspecified duodenal K26.6 Chronic or unspecified
ulcer with hemorrhage and perforation, duodenal ulcer with both
without mention of obstruction. hemorrhage and perforation.
532.61 Chronic or unspecified duodenal
ulcer with hemorrhage and perforation,
with obstruction.
533.00 Acute peptic ulcer of K27.0 Acute peptic ulcer, site
unspecified site with hemorrhage, unspecified, with hemorrhage.
without mention of obstruction.
533.01 Acute peptic ulcer of
unspecified site with hemorrhage, with
obstruction.
533.20 Acute peptic ulcer of K27.2 Acute peptic ulcer, site
unspecified site with hemorrhage and unspecified, with both
perforation, without mention of hemorrhage and perforation.
obstruction.
533.21 Acute peptic ulcer of
unspecified site with hemorrhage and
perforation, with obstruction.
533.40 Chronic or unspecified peptic K27.4 Chronic or unspecified
ulcer of unspecified site with peptic ulcer, site
hemorrhage, without mention of unspecified, with hemorrhage.
obstruction.
533.41 Chronic or unspecified peptic
ulcer of unspecified site with
hemorrhage, with obstruction.
533.60 Chronic or unspecified peptic K27.6 Chronic or unspecified
ulcer of unspecified site with peptic ulcer, site
hemorrhage and perforation, without unspecified, with both
mention of obstruction. hemorrhage and perforation.
533.61 Chronic or unspecified peptic
ulcer of unspecified site with
hemorrhage and perforation, with
obstruction.
534.00 Acute gastrojejunal ulcer with K28.0 Acute gastrojejunal ulcer
hemorrhage, without mention of with hemorrhage.
obstruction.
534.01 Acute gastrojejunal ulcer, with
hemorrhage, with obstruction.
534.20 Acute gastrojejunal ulcer with K28.2 Acute gastrojejunal ulcer
hemorrhage and perforation, without with both hemorrhage and
mention of obstruction. perforation.
534.21 Acute gastrojejunal ulcer with
hemorrhage and perforation, with
obstruction.
534.40 Chronic or unspecified K28.4 Chronic or unspecified
gastrojejunal ulcer with hemorrhage, gastrojejunal ulcer with
without mention of obstruction. hemorrhage.
534.41 Chronic or unspecified
gastrojejunal ulcer, with hemorrhage,
with obstruction.
534.60 Chronic or unspecified K28.6 Chronic or unspecified
gastrojejunal ulcer with hemorrhage gastrojejunal ulcer with both
and perforation, without mention of hemorrhage and perforation.
obstruction.
534.61 Chronic or unspecified
gastrojejunal ulcer with hemorrhage
and perforation, with obstruction.
------------------------------------------------------------------------
Bacterial Pneumonia
------------------------------------------------------------------------
482.30 Pneumonia due to Streptococcus, J15.4 Pneumonia due to other
unspecified. streptococci.
482.31 Pneumonia due to Streptococcus,
group A.
482.39 Pneumonia due to other
Streptococcus.
482.81 Pneumonia due to anaerobes...... J15.8 Pneumonia due to other
specified bacteria.
482.89 Pneumonia due to other specified
bacteria.
------------------------------------------------------------------------

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

A. Background

For more than 30 years, monitoring the quality of care provided by
dialysis facilities to patients with end-stage renal disease (ESRD) has
been an important component of the Medicare ESRD payment system. The
ESRD Quality Incentive Program (QIP) is the most recent step in
fostering improved patient outcomes by establishing incentives for
dialysis facilities to meet or exceed performance standards established
by CMS. The ESRD QIP is authorized by section 1881(h) of the Social
Security Act (the Act), which was added by section 153(c) of the
Medicare Improvements for Patients and Providers Act (MIPPA).
Specifically, section 1881(h) requires the Secretary to establish
an ESRD QIP by (i) selecting measures; (ii) establishing the
performance standards that apply to the individual measures; (iii)
specifying a performance period with respect to a year; (iv) developing
a methodology for assessing the total performance of each facility
based on the performance standards with respect to the measures for a
performance period; and (v) applying an appropriate payment reduction
to facilities that do not meet or exceed the established Total
Performance Score (TPS). This proposed rule discusses each of these
elements and our proposals for their application to the ESRD QIP,
including for PYs 2017 and 2018.

B. Considerations in Updating and Expanding Quality Measures Under the
ESRD QIP

Throughout the past decade, Medicare has been transitioning from a
program that pays for healthcare based on particular services furnished
to a beneficiary to a program that bases payments to providers and
suppliers on the quality of services they furnish. By paying for the
quality of care rather than simply the quantity of care, and by
focusing on better care and lower costs through improvement, prevention
and population health, expanded healthcare coverage, and enterprise
excellence, we are strengthening the healthcare system

[[Page 40244]]

while also advancing the National Strategy for Quality Improvement in
Health Care (that is, the National Quality Strategy (NQS)). We are also
working to update a set of domains and specific quality measures for
our VBP programs, and to link the aims of the NQS with our payment
policies on a national scale. We are working in partnership with
beneficiaries, providers, advocacy groups, the National Quality Forum
(NQF), the Measures Application Partnership, operating divisions within
the Department of Health and Human Services (HHS), and other
stakeholders to develop new measures where gaps exist, refine measures
where necessary, and remove measures when appropriate. We are also
collaborating with stakeholders to ensure that the ESRD QIP serves the
needs of our beneficiaries and also advances the goals of the NQS to
improve the overall quality of care, improve the health of the U.S.
population, and reduce the cost of quality healthcare.\2\
---------------------------------------------------------------------------

\2\ 2013 Annual Progress Report to Congress: National Strategy
for Quality Improvement in Health Care, https://www.ahrq.gov/workingforquality/nqs/nqs2013annlrpt.htm.
---------------------------------------------------------------------------

We believe that the development of an ESRD QIP that is successful
in supporting the delivery of high-quality healthcare services in
dialysis facilities is paramount. We seek to adopt measures for the
ESRD QIP that promote better, safer, and more coordinated care. Our
measure development and selection activities for the ESRD QIP take into
account national priorities such as those established by the HHS
Strategic Plan (https://www.hhs.gov/strategic-plan/priorities.html), the
NQS (https://www.ahrq.gov/workingforquality/nqs/nqs2013annlrpt.htm), and
the HHS National Action Plan to Prevent Healthcare Associated
Infections (HAIs) (https://www.hhs.gov/ash/initiatives/hai/esrd.html).
To the extent feasible and practicable, we have sought to adopt
measures that have been endorsed by a national consensus organization;
recommended by multi-stakeholder organizations; and developed with the
input of providers, beneficiaries, health advocacy organizations, and
other stakeholders.

C. Web Sites for Measure Specifications

In an effort to ensure that facilities and the general public are
able to continue accessing the specifications for the measures that are
being proposed for and have been adopted in the ESRD QIP, we are now
posting these measure specifications on a CMS Web site, instead of
posting them on www.dialysisreports.org as we have in the past. Measure
specifications from previous years, as well as those proposed for the
PY 2017 and PY 2018 programs, can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.

D. Updating the NHSN Bloodstream Infection in Hemodialysis Outpatients
Clinical Measure for the PY 2016 ESRD QIP and Future Payment Years

The NHSN Bloodstream Infection in Hemodialysis Outpatients clinical
measure (that is, NHSN Bloodstream Infection clinical measure) that we
adopted beginning with the PY 2016 ESRD QIP is based on NQF
1460. At the time we adopted it, the measure included a risk
adjustment for patients' vascular access type but did not include any
reliability adjustments to account for differences in the amount of
exposure or opportunity for healthcare associated infections (HAIs)
among patients. On April 4, 2014, in response to a measure update
proposal submitted by CDC, NQF endorsed a reliability adjustment for
volume of exposure and unmeasured variation across facilities to NQF
1460. This reliability adjustment is called the Reliability-
Adjusted Standardized Infection Ratio or Adjusted Ranking Metric (ARM).
As a result of this change to the NQF-endorsed measure specifications,
a facility's performance on NQF 1460 will be adjusted towards
the mean (that is, facilities with low exposure volume will be adjusted
more than facilities with high exposure volume, and the performance
rate will be adjusted up or down depending on the facility estimate and
mean) to account for the differences in the reliability of the
infection estimates based on the number of patient-months at a facility
and any unmeasured variation across facilities. Because the adjustment
is based on the volume of exposure, facility scores will be adjusted
more if there are fewer patient-months in the denominator, and facility
scores will be adjusted less if there are many patient-months in the
denominator.
We propose to adopt the same reliability adjustment for purposes of
calculating facility performance on the NHSN Bloodstream Infection
clinical measure, beginning with the PY 2016 ESRD QIP. We believe that
the inclusion of this reliability adjustment, in addition to the risk
factor adjustment, will enable us to better differentiate among
facility performance on this measure, because it accounts not only for
the variation in patient risk by vascular access type, but also for
variation in the number of patients a facility treats in a given month.
The ARM will be incorporated into the existing risk-adjustment
methodology, which will also continue to include a risk adjustment for
patient vascular access type. Further information about the reliability
adjustment, and the NHSN Bloodstream Infection measure specifications
can be found at https://www.cdc.gov/nhsn/PDFs/dialysis/NHSN-ARM.pdf,
https://www.cdc.gov/nhsn/dialysis/dialysis-event.html, and https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.

E. Oral-Only Drugs Measures in the ESRD QIP

Section 217(d) of the Protecting Access to Medicare Act of 2014
(Pub. L. 113-93), enacted on April 1, 2014, amends section 1881(h)(2)
of the Act to require the Secretary, for PY 2016 and subsequent years,
to adopt measures (outcome-based, to the extent feasible) in the ESRD
QIP that are specific to the conditions treated with oral-only drugs.
We believe that the Hypercalcemia clinical measure adopted beginning
with the PY 2016 program (78 FR 72200 through 72203) meets this new
statutory requirement because hypercalcemia is a condition that is
treated with oral-only drugs. The Hypercalcemia clinical measure is not
an outcome-based measure, and we have considered the possibility of
adopting outcomes-based measures that pertain to conditions treated
with oral-only drugs. However, we have determined that it is not
feasible to propose to adopt an outcome-based measure on this topic at
this time because we are not aware of any outcome measures developed on
this topic.

F. Proposed Requirements for the PY 2017 ESRD QIP

1. Proposed Revision to the Expanded ICH CAHPS Reporting Measure
For the ICH CAHPS reporting measure, we are proposing one change to
the reporting requirements finalized in the CY 2014 ESRD PPS Final Rule
for PY 2017. In the CY 2014 ESRD PPS final rule, we finalized that
facilities would be eligible to receive a score on the measure if they
treated 30 or more survey-eligible patients during the performance
period (78 FR 72220 through 72221). Subsequently, we were made aware
that facilities may not know whether they will have enough survey-
eligible patients during the performance period to be eligible for the
ICH CAHPS

[[Page 40245]]

measure when they are making decisions about whether or not they will
contract with a vendor to administer the survey. We agree that it would
be preferable if facilities knew at the beginning of the performance
period if they will be eligible to receive a score on the ICH CAHPS
measure, because this would allow facilities to make informed decisions
about whether they should contract with a vendor to administer the
survey. For this reason, we propose that beginning with the PY 2017
program, facilities will be eligible to receive a score on the ICH
CAHPS measure if they treat 30 or more survey-eligible patients during
the ``eligibility period,'' which we define as the CY before the
performance period. However, even if a facility is eligible to receive
a score on the measure because it has treated at least 30 survey-
eligible patients according to the ICH CAHPS Survey measure
specifications during the calendar year prior to the performance
period, we are proposing that the facility will still not receive a
score for performance during the performance period if it cannot
collect 30 survey completes during the performance period. We believe
that facilities should be able to determine quickly the number of
survey-eligible patients that they treated during the eligibility
period, and that reaching this determination should not impact
facilities' ability to contract with a vender in time to meet the
semiannual survey administration requirements. Technical specifications
for the ICH CAHPS reporting measure can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on this proposal.
2. Proposed Measures for the PY 2017 ESRD QIP
a. PY 2016 Measures Continuing in PY 2017 and Future Payment Years
We previously finalized 11 measures in the CY 2014 ESRD PPS Final
Rule for the PY 2016 ESRD QIP, and these measures are summarized in
Table 21 below. In accordance with our policy to continue using
measures unless we propose to remove or replace them (77 FR 67477), we
will continue to use 10 of these 11 measures in the PY 2017 ESRD QIP.
As we discuss in more detail below, we are proposing to remove one
measure, Hemoglobin Greater than 12 g/dL, beginning with the PY 2017
measure set (see Table 22 below).

Table 21--PY 2016 ESRD QIP Measures Being Continued in PY 2017
------------------------------------------------------------------------
NQF Measure title and description
------------------------------------------------------------------------
0249......................... Hemodialysis Adequacy: Minimum delivered
hemodialysis dose.
Percent of hemodialysis patient-months
with spKt/V greater than or equal to
1.2.
0318......................... Peritoneal Dialysis Adequacy: Delivered
dose above minimum.
Percent of peritoneal dialysis patient-
months with spKt/V greater than or equal
to 1.7 (dialytic + residual) during the
four month study period.
1423......................... Pediatric Hemodialysis Adequacy: Minimum
spKt/V.
Percent of pediatric in-center
hemodialysis patient-months with spKt/V
greater than or equal to 1.2.
0257......................... Vascular Access Type: AV Fistula.
Percentage of patient-months on
hemodialysis during the last
hemodialysis treatment of the month
using an autogenous AV fistula with two
needles.
0256......................... Vascular Access Type: Catheter 90 days.
Percentage of patient-months for patients
on hemodialysis during the last
hemodialysis treatment of month with a
catheter continuously for 90 days or
longer prior to the last hemodialysis
session.
N/A \1\...................... National Healthcare Safety Network (NHSN)
Bloodstream Infection in Hemodialysis
Patients.
Number of hemodialysis outpatients with
positive blood cultures per 100
hemodialysis patient-months.\2\
1454......................... Hypercalcemia.
Proportion of patient-months with 3-month
rolling average of total uncorrected
serum calcium greater than 10.2 mg/dL.
N/A \3\...................... In-Center Hemodialysis Consumer
Assessment of Healthcare Providers and
Systems (ICH CAHPS) Survey
Administration.
Facility administers, using a third-party
CMS-approved vendor, the ICH CAHPS
survey in accordance with survey
specifications and submits survey
results to CMS.
N/A \4\...................... Mineral Metabolism Reporting.
Number of months for which facility
reports serum phosphorus for each
Medicare patient.
N/A.......................... Anemia Management Reporting.
Number of months for which facility
reports ESA dosage (as applicable) and
hemoglobin/hematocrit for each Medicare
patient.
------------------------------------------------------------------------
\1\ We note that this measure is based on a current NQF-endorsed
bloodstream infection measure (NQF1460).
\2\ We are proposing a new method of calculating performance on this
measure using the ARM methodology. If we decide to finalize this
proposal based on public comments, the NHSN Bloodstream Infection
clinical measure description will be updated to read: ``ARM of
Bloodstream Infection will be calculated among inpatients receiving
hemodialysis at outpatient hemodialysis centers.''
\3\ We note that a related measure utilizing the results of this survey
has been NQF-endorsed (0258). We are proposing to adopt NQF
0258 in the PY 2018 program.
\4\ We note that this measure is based upon a current NQF-endorsed serum
phosphorus measure (NQF 0255).

[[Page 40246]]

Table 22--Measure Proposed for Removal Beginning With the PY 2017 ESRD
QIP
------------------------------------------------------------------------
NQF Measure title
------------------------------------------------------------------------
N/A....................................... Anemia Management: Hgb >12.
Percentage of Medicare
patients with a mean
hemoglobin value greater
than 12 g/dL.
------------------------------------------------------------------------

b. Proposal To Determine When a Measure is ``Topped-Out'' in the ESRD
QIP, and Proposal To Remove a Topped-Out Measure From the ESRD QIP,
Beginning With PY 2017
In the CY 2013 ESRD PPS final rule (77 FR 67475), we finalized a
list of seven criteria we would consider when making determinations
about whether to remove or replace a measure: ``(1) Measure performance
among the majority of ESRD facilities is so high and unvarying that
meaningful distinctions in improvements or performance can no longer be
made; (2) performance or improvement on a measure does not result in
better or the intended patient outcomes; (3) a measure no longer aligns
with current clinical guidelines or practice; (4) a more broadly
applicable (across settings, populations, or conditions) measure for
the topic becomes available; (5) a measure that is more proximal in
time to desired patient outcomes for the particular topic becomes
available; (6) a measure that is more strongly associated with desired
patient outcomes for the particular topic becomes available; or (7)
collection or public reporting of a measure leads to negative
unintended consequences.''
In the CY 2014 ESRD PPS final rule (78 FR 72192), we stated that we
were in the process of evaluating all of the ESRD QIP measures against
the criteria. Subsequent to the publication of the CY 2014 ESRD PPS
final rule, we completed our evaluation and determined that none of the
measures finalized in the PY 2016 ESRD QIP met criteria 2 through 7, as
listed above. With respect to the first criterion, we are proposing to
more specifically define when performance on a clinical measure is so
high and unvarying that the measure no longer reflects meaningful
distinctions in improvements or performance. The statistical
definitions that we are proposing to adopt will align our methodology
with that used by the Hospital VBP program to determine when a measure
is topped out (76 FR 26496 through 26497). Under this methodology, a
clinical measure is considered to be topped out if national measure
data show (1) statistically indistinguishable performance levels at the
75th and 90th percentiles; and (2) a truncated coefficient of variation
(CV) of less than or equal to 0.1.
To determine whether a clinical measure is topped out, we initially
focused on the top distribution of facility performance on each measure
and noted if their 75th and 90th percentiles were statistically
indistinguishable. Then, to ensure that we properly accounted for the
entire distribution of scores, we analyzed the truncated coefficient of
variation (CV) for each of the clinical measures.
The CV is a common statistic that expresses the standard deviation
as a percentage of the sample mean in a way that is independent of the
units of observation. Applied to this analysis, a large CV would
indicate a broad distribution of individual facility scores, with large
and presumably meaningful differences between hospitals in relative
performance. A small CV would indicate that the distribution of
individual facility scores is clustered tightly around the mean value,
suggesting that it is not useful to draw distinctions between
individual facility performance scores. We used a modified version of
the CV, namely a truncated CV, for each clinical measure, in which the
5 percent of facilities with the lowest scores, and the 5 percent of
facilities with the highest scores were first truncated (set aside)
before calculating the CV. This was done to avoid undue effects of the
highest and lowest outlier facilities; if included, they would tend to
greatly widen the dispersion of the distribution and make the clinical
measure appear to be more reliable or discerning. For example, a
clinical measure for which most facility scores are tightly clustered
around the mean value (a small CV) might actually reflect a more robust
dispersion if there were also a number of facilities with extreme
outlier values, which would greatly increase the perceived variance in
the measure. Accordingly, the truncated CV of less than or equal to
0.10 was added as a criterion for determining whether a clinical
measure is topped out.
We seek comments on this proposal.
We evaluated each of the clinical measures finalized in the PY 2016
ESRD QIP against these proposed statistical conditions. The full
analysis is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. The results of that analysis appear below
in Table 23.

Table 23--PY 2016 Clinical Measures Using CROWNWeb and Medicare Claims Data From January 2013-December 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
75th 90th Statistically indistin- Truncated
Measure N percentile percentile Std. error guishable CV TCV <0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult HD Kt/V..................... 5665 96.1 97.4 0.13 No.......................... 0.04 Yes.
Adult PD Kt/V..................... 1176 92.9 94.8 0.55 No.......................... 0.15 No.
Pediatric HD Kt/V................. 10 94.5 97.1 2.71 Yes......................... 0.08 Yes.
Hgb > 12.......................... 5521 0.0 0.0 0.02 Yes......................... < 0.01 Yes.
Fistula Use....................... 5561 72.3 77.0 0.16 No.......................... 0.14 No.
Catheter Use...................... 5586 5.9 2.8 0.10 No.......................... <= 0.01 Yes.
Hypercalcemia..................... 5685 0.3 0.0 0.04 No.......................... <= 0.01 Yes.
--------------------------------------------------------------------------------------------------------------------------------------------------------

As the information presented in Table 23 suggests, the Hemoglobin
Greater than 12 g/dL measure meets the proposed criteria for
determining when a clinical measure is topped-out in the ESRD QIP.
Accordingly, we propose to remove the Hemoglobin Greater than 12 g/dL
measure from the ESRD QIP, beginning with the PY 2017 program. We
recognize that the Pediatric Hemodialysis Adequacy measure also meets
the conditions for being a topped-out clinical measure in the ESRD QIP.
However, we are not proposing to remove the Pediatric Hemodialysis
Adequacy measure from the ESRD QIP because we have determined that
removing the measure will not be useful for dialysis facilities. There
are currently very few measures available that focus on the care
furnished to

[[Page 40247]]

pediatric patients with ESRD, and we are reticent to remove a measure
that addresses the unique needs of this population. In addition,
although only 10 facilities were eligible to receive a score on the
Pediatric Hemodialysis Adequacy measure (based on CY 2013 data), we
believe that the publicly reported performance of these facilities can
influence the standard of care furnished by other facilities that treat
pediatric patients, even if a facility does not treat a sufficient
number of pediatric patients to be eligible to be scored on the
measure.
For these reasons, we believe that the drawbacks of removing a
topped out clinical measure could be outweighed by the other benefits
to retaining the measure. Accordingly, we propose that even if we
determine that a clinical measure is topped out according to the
statistical criteria we apply, we will not remove or replace it if we
determine that its continued inclusion in the ESRD QIP measure set will
continue to set a high standard of care for dialysis facilities.
We seek comments on these proposals.
c. New Measures Proposed for PY 2017 and Future Payment Years
As the program evolves, we believe it is important to continue to
evaluate and expand the measures selected for the ESRD QIP. Therefore,
for the PY 2017 ESRD QIP and future payment years, we are proposing to
adopt one new clinical measure that addresses care coordination (see
Table 24).

Table 24--New Measure Proposed for the PY 2017 ESRD QIP
------------------------------------------------------------------------
NQF Measure title
------------------------------------------------------------------------
N/A \1\................................... Standardized Readmission
Ratio, a clinical measure.
Risk-adjusted standardized
hospital readmissions
ratio.
------------------------------------------------------------------------
\1\ We note that this measure is currently under review at NQF.

i. Proposed Standardized Readmission Ratio (SRR) Clinical Measure
Background
At the end of 2011, 615,899 patients were being dialyzed, 115,643
of whom were new (incident) patients with ESRD.\3\ The SRR measure
assesses the rate of unplanned readmissions of ESRD patients to an
acute care hospital within 30 days of an index discharge from an acute
care hospital, thereby identifying potentially poor or incomplete
quality of care in the dialysis facility. In addition, the SRR reflects
an aspect of ESRD care that is especially resource-intensive. In 2011,
the total amount paid by Medicare for the ESRD program was
approximately $34.3 billion, a 5.4 percent increase from 2010.\2\ In
particular, Medicare paid more than $10.5 billion for costs associated
with hospitalized ESRD patients in 2011. In 2011, ESRD dialysis
patients were admitted to the hospital twice on average, and spent an
average of 12 total days in the hospital over the year, accounting for
approximately 38 percent of Medicare expenditures for patients with
ESRD.\2\ Furthermore, a substantial percentage (30 percent) of ESRD
patients discharged from the hospital have an unplanned readmission
within 30 days.\2\ In the non-ESRD population, clinical studies have
demonstrated that improved care coordination and discharge planning may
reduce readmission rates. The literature also reports a wide range of
estimates of the percentage of readmissions that may be preventable.
One literature review of more than 30 studies found the median
proportion of readmissions that may be preventable was 27%, with a
range of 5% to 79%.\4\ Preventability varied widely across diagnoses.
Readmissions were more likely to be preventable in patients with more
severe conditions. Therefore, a systematic measure on unplanned
readmissions is essential for controlling escalating medical costs; it
can identify where readmission rates are unusually high, and help
facilities to provide cost-effective healthcare.
---------------------------------------------------------------------------

\3\ United States Renal Data System, USRDS 2013 Annual Data
Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease
in the United States, National Institutes of Health, National
Institute of Diabetes and Digestive and Kidney Diseases, Bethesda,
MD, 2013.
\4\ van Walraven C, Bennett C, Jennings A, Austin PC, Forster
AJ. Proportion of hospital readmissions deemed avoidable: a
systematic review. CMAJ. 2011;183(7):E391-E402.
---------------------------------------------------------------------------

Overview of Measure
The SRR is a one-year risk-standardized measure of a facility's 30-
day, all-cause rate of unplanned hospital readmissions among Medicare-
covered ESRD dialysis patients. The number of expected readmissions is
determined by a risk-adjustment model that accounts for the hospital
where the index discharge took place, certain patient characteristics
(including age, sex, and comorbidities), and the national median
expected performance for all dialysis facilities, given the same
patient case mix.
We are proposing to adopt the SRR measure currently under review by
NQF (NQF 2496). Section 1881(h)(2)(B)(i) of the Act requires
that, unless the exception set forth in section 1881(h)(2)(B)(ii) of
the Act applies, the measures specified for the ESRD QIP under section
1881(h)(2)(A)(iv) of the Act must have been endorsed by the entity with
a contract under section 1890(a) of the Act (that entity currently is
NQF). Under the exception set forth in section 1881(h)(2)(B)(ii) of the
Act, in the case of a specified area or medical topic determined
appropriate by the Secretary for which a feasible and practical measure
has not been endorsed by the entity with a contract under section
1890(a) of the Act, the Secretary may specify a measure that is not so
endorsed, so long as due consideration is given to measures that have
been endorsed or adopted by a consensus organization identified by the
Secretary.
We have given due consideration to endorsed measures, as well as
those adopted by a consensus organization, and we are proposing this
measure under the authority of 1881(h)(2)(B)(ii) of the Act. Although
the NQF has endorsed an all-cause hospital readmission measure (NQF
1789), we do not believe it is feasible to adopt this measure
in the ESRD QIP because NQF 1789 is specified for use in
hospitals, not dialysis facilities. In addition, NQF 1789 is
intended to evaluate readmissions across all patient types, whereas the
proposed SRR measure is specified for the unique population of ESRD
dialysis patients, which have a different risk profile than the general
population captured in NQF 1789. Because the proposed SRR
measure has been developed specifically for the dialysis-facility
setting, and because the measure has the potential to improve clinical
practice and decrease healthcare costs, we believe it is appropriate to
adopt the SRR in the ESRD QIP at this time.
We have analyzed the measure's reliability, the results of which
are provided below and in greater detail in the SRR Measure Methodology
report, available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. The Inter-Unit Reliability (IUR) was
calculated for the proposed SRR using data from 2012 and a
``bootstrap'' approach, which uses a resampling scheme to estimate the
within-facility variation that cannot be directly estimated by the
analysis of variance (ANOVA). The SRRs that we calculated for purposes
of this analysis were for dialysis facilities that had at least 11
patients who had been discharged from a hospital during 2012. A small
IUR (near 0) reveals that most of the variation of the measures between

[[Page 40248]]

facilities is driven by ``random noise,'' indicating the measure would
not be a reliable characterization of the differences among facilities,
whereas a large IUR (near 1) indicates that most of the variation
between facilities is due to the real differences between facilities.
The IUR for the proposed SRR measure was found to be 0.49, indicating
that about one-half of the variation in the SRR can be attributed to
between-facility differences, and about half to within-facility
variation. This value of IUR indicates that an average-size facility
would achieve a moderate degree of reliability for this measure. This
level of reliability is consistent with the reliability of other
outcome measures in CMS quality-reporting and VBP programs, such as the
30-day Risk-Standardized All-Cause Acute Myocardial Infarction, Heart
Failure, and Pneumonia Readmission and Mortality measures used in the
Hospital IQR and VBP Programs. We therefore believe that facilities can
be reliably scored on the proposed SRR measure.
We convened a technical expert panel (TEP) in May 2012 for the
purpose of evaluating this measure, but the TEP did not reach a final
consensus and declined to support the measure. Some members of the TEP
were concerned that we did not risk-adjust for the nephrologist
treating the patients, because actions taken by nephrologists can
impact readmission rates. After reviewing the TEP's arguments, we
determined that the suggested risk adjustment for nephrologist care
would constitute a reversal of CMS policy not to risk adjust for
factors related to care for which the provider is responsible. We do
not think that it is appropriate to risk-adjust the measure for the
nephrologist because the nephrologist is part of the facility's multi-
disciplinary team, and medical directors, as employees of the dialysis
facilities, are responsible for ensuring that appropriate care is
provided by a multi-disciplinary team. The Measures Application
Partnership reviewed this measure in February 2013 and supported the
direction of the measure, advising CMS that the measure would require
additional development prior to implementation. Subsequently, we
released draft specifications for the measure to the public for a 30-
day comment period and, based on comments received, finalized measure
specifications in September 2013. We also, on a voluntary basis,
provided individual dialysis facilities with a facility-specific report
that calculated their SRR measure results and compared those results to
SRR measure results at the state and national level, as well as
discharge-level data upon request. Facilities also had an opportunity
to submit questions to CMS regarding the measure and their reports. We
therefore believe that the proposed SRR measure risk-adjusts
appropriately for patient condition and comorbidities at the start of
care for which the facility is not responsible. We also believe that
the measure is ready for adoption because, as explained above, it
achieves a moderate degree of reliability.
Data Sources
The data we will use to calculate the proposed SRR measure come
from various CMS-maintained data sources for ESRD patients including
the CROWNWeb database, the CMS Annual Facility Survey (Form CMS-2744),
Medicare claims, the CMS Medical Evidence Form (Form CMS-2728),
transplant data from the Organ Procurement and Transplant Network
(OPTN), the Death Notification Form (Form CMS-2746), the Nursing Home
Minimum Dataset, and the Social Security Death Master File. These data
sources include all Medicare-covered patients with ESRD. Information on
hospitalizations is obtained from Medicare Inpatient Claims Standard
Analysis Files (SAFs) and past-year comorbidity is obtained from
Medicare Claims SAFs (inpatient, outpatient, physician/supplier, home
health, hospice, and skilled nursing facility claims).
Outcome
The outcome for this measure is 30-day all-cause, unplanned
readmission defined as a hospital readmission for any cause beginning
within 30 days of the discharge date of an index discharge, with the
exclusion of planned readmissions. This 30-day readmission period is
consistent with other publicly reported readmission measures endorsed
by NQF and currently implemented in the Hospital Inpatient Quality
Reporting Program and Hospital Readmission Reduction Program, and
reflects an industry standard.
Cohort
All discharges of Medicare ESRD dialysis patients from an acute
care hospital in a calendar year are considered eligible for this
measure, with the exception of the exclusions listed in the next
section.
Inclusion and Exclusion Criteria
The proposed SRR measure excludes from the measure cohort
hospitalizations: (1) Where the patient died during the index
hospitalization; (2) where the patient dies within 30 days of the index
discharge with no readmission; (3) where the patient is discharged
against medical advice; (4) where the patient was admitted with a
primary diagnosis of certain conditions related to cancers, mental
health conditions, or rehabilitation procedures (because these patients
possess radically different risk profiles, and therefore cannot
reasonably be compared to other patients discharged from hospitals);
(5) where the patient is discharged from a PPS-exempt cancer hospital
(because these hospitals care for a unique population of patients that
cannot reasonably be compared to the patients admitted to other
hospitals); (6) where the patient is transferred to another acute care
hospital; and (7) where the patient has already been discharged 12
times during the same calendar year (to respond to concerns raised by
the TEP that patients who are hospitalized this frequently during a
calendar year could unduly skew the measure rates for small
facilities).
Risk Adjustment
The measure adjusts for differences across facilities with regard
to their patient case mix. Consistent with NQF guidelines, the model
does not adjust for socioeconomic status or race, because risk
adjusting for these characteristics would hold facilities with a large
proportion of patients who are minorities and/or who have low
socioeconomic status to a different standard of care than other
facilities. One goal of this measure is to illuminate quality
differences that such risk adjustment would obscure. As with the
Hospital-Wide Readmission measure employed by the Hospital Readmissions
Reduction program, the SRR employs a hierarchical logistic regression
model to estimate the expected number of readmissions to an acute care
hospital, taking into account the performance of all dialysis
facilities, the discharging hospital, and the facility's patient case-
mix.
Although the SRR risk-adjustment model is generally aligned with
the Hospital-Wide Readmission measure risk-adjustment methodology, we
are proposing to modify it to account for comorbidities and patient
characteristics relevant to the ESRD population. The proposed SRR
measure includes the following patient characteristics as risk
adjustors, which are obtained from the following data sources:

[[Page 40249]]

------------------------------------------------------------------------
Risk adjustor Data source
------------------------------------------------------------------------
Sex.................................... CMS Form 2728.
Age.................................... REMIS database.
Years on ESRD.......................... CMS Form 2728.
Diabetes as cause of ESRD.............. CMS Form 2728.
BMI at incidence of ESRD............... CMS Form 2728.
Days hospitalized during index Part A Medicare Inpatient
admission. Claims SAFs.
23 past-year comorbidities (e.g., Medicare Claims SAFs: Part A
cardiorespiratory failure/shock; drug Inpatient, home health,
and alcohol disorders). hospice, and skilled nursing
facility; and Part B
Outpatient.
Discharged with any of 11 high-risk Part A Medicare Inpatient
conditions (for example, cystic Claims SAFs.
fibrosis, and hepatitis).
------------------------------------------------------------------------

More details on the risk-adjustment calculations, and the rationale
for selecting these risk adjustors and not others, can be found at:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. We are proposing
to risk adjust the proposed SRR measure based on sex, because we have
determined that patients' sex affects the measure in ways that are
beyond the control of dialysis facilities. We reached this
determination by examining the effects of the risk adjusters, both
independently and in combination, on rates of unplanned readmissions.
This analysis yielded two conclusions. First, the analysis indicated
that females are generally more likely than males to experience an
unplanned readmission, even when accounting for the other risk
adjustors. Second, the disparate effects of gender were substantially
impacted by the effects of age: Females aged 15 to 45 were much more
likely to experience an unplanned readmission than males of the same
age, but this disparity was significantly reduced for men and women
younger than 15 and older than 45. Based on these two conclusions, we
believe that women in the 15-45 age range face a greater risk of
experiencing an unplanned readmission, as compared to men of the same
age with similar risk profiles. This does not appear to be a
consequence of facility performance, however, because the disparity is
not generally applicable to women, but only to a limited age group. We
therefore believe it is essential to risk-adjust for sex to ensure that
facilities with larger numbers of women aged 15 to 45 are not
inappropriately disadvantaged, because not risk-adjusting for sex would
potentially incentivize facilities to deny access to these individuals.
As indicated in the table above, the measure is risk-adjusted, in
part, based on 23 comorbidities that develop in the year prior to the
index hospitalization, as well as 11 high-risk conditions that are
present at the time of the index discharge. These data are taken from
Medicare claims submitted by hospitals, dialysis facilities, and other
types of long-term and post-acute care facilities.
We believe that this proposed approach to risk-adjusting the SRR
measure is consistent with NQF guidelines for measure developers. NQF
evaluates measures on the basis of four criteria: Importance,
scientific acceptability, feasibility, and usability. The validity and
reliability of a measure's risk-adjustment calculations fall under the
``scientific acceptability'' criterion, and Measure Evaluation
Criterion 2b4 specifies NQF's preferred approach for risk-adjusting
outcome measures (https://www.qualityforum.org/docs/measure_evaluation_criteria.aspx#scientific). This criterion states that
patient comorbidities should only be included in risk-adjustment
calculations if they are (1) present at the start of care and (2) not
indicative of disparities or deficiencies in the quality of care
provided. As indicated in the ``Inclusion and Exclusion Criteria''
subsection above, as well as the measure specifications that are
currently under review at NQF, the start of care is defined as the
index hospitalization. Accordingly, we believe that NQF Measure
Evaluation Criterion 2b4 supports risk adjusting the proposed SRR
measure on the basis of patient comorbidity data collected in the year
prior to the index hospitalization, because these comorbidities are
likely present at the start of care (that is, the date(s) that the
patient spends in the hospital during the index hospitalization). For
these reasons, we believe that the risk-adjustment methodology for the
proposed SRR measure is consistent with NQF guidelines for measure
developers and is appropriate for this measure.
Full documentation of the SRR risk-adjustment methodology is
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
Calculating the SRR Measure
The SRR measure is calculated as the ratio of the number of
observed unplanned readmissions to the number of expected unplanned
readmissions. Facilities that have more unplanned readmissions than
would be expected for an average facility with a similar case-mix would
have a ratio greater than one. Facilities having fewer unplanned
readmissions than would be expected for an average facility with a
similar case-mix would have a ratio less than one. This ratio
calculation is consistent with that employed by one NQF-endorsed
outcome measure for ESRD, the Standardized Hospitalization Ratio (NQF
1463).
Hospitalizations are counted as events in the numerator if they
meet the definition of unplanned readmission--which is that they (a)
occurred within 30 days of the index discharge and (b) are not preceded
by a ``planned'' readmission that also occurred within 30 days of the
index discharge. Planned readmissions are defined as readmissions that
do not bear on the quality of care furnished by the dialysis facility,
that occur as a part of ongoing appropriate care of patients, or that
involve elective care. Building on the algorithm developed for the
Hospital-Wide Readmission measure (NQF 1789), the proposed
planned readmission list incorporates minor changes appropriate to the
ESRD population as suggested by technical experts. The full planned
readmission list and algorithm are available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. In general, a readmission is
considered ``planned'' under two scenarios.
1. The patient undergoes a procedure that is always considered
planned (example, bone marrow transplant) or has a primary diagnosis
that always indicates the hospitalization is planned (for example,
maintenance chemotherapy).
2. The patient undergoes a procedure that may be considered planned
if it is not accompanied by an acute diagnosis. For example, a
hospitalization involving a heart-valve procedure accompanied by

[[Page 40250]]

a primary diagnosis of acute myocardial infarction would be considered
unplanned, whereas a hospitalization involving a heart-valve procedure
accompanied by a primary diagnosis of diabetes would be considered
planned (because acute myocardial infarction is a plausible alternative
acute indication for hospitalization).
The expected number of readmissions is calculated using
hierarchical logistic modeling (HLM). This approach accounts for the
hospital from which the patient was discharged and the patient case mix
(as defined by factors such as age, sex, and patient comorbidities), as
well as the national median performance of all dialysis facilities. The
HLM is an appropriate statistical approach to measuring quality based
on patient outcomes when patients are clustered within facilities (and
therefore the patients' outcomes are not statistically independent),
and when the number of qualifying patients for the measure varies from
facility to facility. The HLM approach is also currently used to
calculate readmission and mortality measures that are used in several
quality-reporting and VBP programs by CMS, such as the Heart Failure
and Pneumonia Mortality measures in the Hospital IQR and Hospital VBP
Programs.
The proposed SRR measure is a point estimate--the best estimate of
a facility's readmission rate based on the facility's case mix. For
more information on the proposed calculation methodology, please refer
to our Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
[GRAPHIC] [TIFF OMITTED] TP11JY14.000

3. Proposed Performance Period for the PY 2017 ESRD QIP
Section 1881(h)(4)(D) of the Act requires the Secretary to
establish the performance period with respect to a payment year, and
that the performance period occur prior to the beginning of such year.
In the CY 2013 ESRD PPS Final Rule (77 FR 67500), we stated our belief
that, for most measures, a 12-month performance period is the most
appropriate for the program because this period accounts for any
potential seasonal variations that might affect a facility's score on
some of these measures, and also provides adequate incentive and
feedback for facilities and Medicare beneficiaries. CY 2015 is the
latest period of time during which we can collect a full 12 months of
data and still implement the PY 2017 payment reductions. Therefore, we
propose to establish CY 2015 as the performance period for PY 2017 ESRD
QIP.
We seek comments on this proposal.
4. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the PY 2017 ESRD QIP
We are proposing to adopt performance standards for the PY 2017
ESRD QIP measures similar to those we finalized for PY 2016 (78 FR
72211 through 72213). Section 1881(h)(4)(A) of the Act provides that
``the Secretary shall establish performance standards with respect to
measures selected . . . for a performance period with respect to a
year.'' Section 1881(h)(4)(B) of the Act further provides that the
``performance standards . . . shall include levels of achievement and
improvement, as determined appropriate by the Secretary.'' We use the
performance standards to establish the minimum score a facility must
achieve to avoid a Medicare payment reduction. We use achievement
thresholds and benchmarks to calculate scores on the clinical measures.

[[Page 40251]]

a. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures in the PY 2017 ESRD QIP
With the exception of the NHSN Bloodstream Infection clinical
measure, we propose to set the performance standards, achievement
thresholds, and benchmarks for the PY 2017 clinical measures at the
50th, 15th, and 90th percentile, respectively, of national performance
in CY 2013, because this will give us enough time to calculate and
assign numerical values to the proposed performance standards for the
PY 2017 program prior to the beginning of the performance period. We
continue to believe that these standards will provide an incentive for
facilities to continuously improve their performance, while not
reducing incentives to facilities that score at or above the national
performance rate for the clinical measures. As stated in the CY 2014
ESRD PPS Final Rule (78 FR 72213 through 72215), CY 2014 is the first
year for which we will have data for the NHSN Bloodstream Infection
clinical measure. Accordingly, we propose to set the performance
standard, achievement threshold, and benchmark for the NHSN Bloodstream
Infection clinical measure based on the 50th, 15th, and 90th
percentiles, respectively, of national performance in CY 2014.
We seek comments on these proposals.
b. Estimated Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures Proposed for the PY 2017 ESRD QIP
At this time, we do not have the necessary data to assign numerical
values to the proposed performance standards, achievement thresholds,
and benchmarks for the clinical measures, because we do not yet have
complete data from CY 2013. Nevertheless, we are able to estimate these
numerical values based on the most recent data available. For all of
the proposed clinical measures except the proposed SRR measure, this
partial data comes from the period of January through December 2013.
For the proposed SRR measure, this partial data comes from the period
of January through December 2012. In Table 25, we have provided the
estimated numerical values for all of the proposed PY 2017 ESRD QIP
clinical measures except the NHSN Bloodstream Infection clinical
measure. We will publish updated values for the clinical measures,
using data from the first part of CY 2014, in the CY 2015 ESRD PPS
final rule.

Table 25--Estimated Numerical Values for the Performance Standards for the PY 2017 ESRD QIP Clinical Measures
Using the Most Recently Available Data
----------------------------------------------------------------------------------------------------------------
Measure Performance standard Achievement threshold Benchmark
----------------------------------------------------------------------------------------------------------------
Vascular Access Type:
%Fistula......................... 64.49%................. 52.43%................. 78.64%
%Catheter........................ 9.9%................... 18.36%................. 3.21%
Kt/V:
Adult Hemodialysis............... 93.65%................. 86.97%................. 97.55%
Adult Peritoneal Dialysis........ 87.50%................. 70.42%................. 95.74%
Pediatric Hemodialysis........... 92.48%................. 79.55%................. 97.98%
Hypercalcemia........................ 1.32%.................. 4.78%.................. 0.00%
NHSN Bloodstream Infection........... 50th percentile of 15th percentile of 90th percentile of
eligible facilities' eligible facilities' eligible facilities'
performance during CY performance during CY performance during CY
2014. 2014. 2014.
Standardized Readmission Ratio....... 0.996.................. 1.242.................. 0.658
----------------------------------------------------------------------------------------------------------------

We believe that the ESRD QIP should not have lower performance
standards than in previous years. In accordance with our statements in
the CY 2012 ESRD PPS final rule (76 FR 70273), if the final numerical
value for a performance standard, achievement threshold, and/or
benchmark is worse than it was for that measure in the PY 2016 ESRD
QIP, then we propose to substitute the PY 2016 performance standard,
achievement threshold, and/or benchmark for that measure.
We seek comments on this proposal.
c. Proposed Performance Standards for the PY 2017 Reporting Measures
In the CY 2014 ESRD PPS Final Rule, we finalized performance
standards for the Anemia Management, Mineral Metabolism, and ICH CAHPS
reporting measures (78 FR 72213). We are proposing to continue to use
these performance standards for these measures in the PY 2017 ESRD QIP.
We seek comments on this proposal.
5. Proposal for Scoring the PY 2017 ESRD QIP Measures
a. Scoring Facility Performance on Clinical Measures Based on
Achievement
In the CY 2014 ESRD PPS Final Rule, we finalized a policy for
scoring performance on clinical measures based on achievement (78 FR
72215). In determining a facility's achievement score for each measure
under the PY 2017 ESRD QIP, we propose to continue using this
methodology for all clinical measures. Under this methodology,
facilities receive points along an achievement range based on their
performance during the proposed performance period for each measure,
which we define as a scale between the achievement threshold and the
benchmark.
b. Scoring Facility Performance on Clinical Measures Based on
Improvement
In the CY 2014 ESRD PPS Final Rule, we finalized a policy for
scoring performance on clinical measures based on improvement (78 FR
72215 through 72216). In determining a facility's improvement score for
each measure under the PY 2017 ESRD QIP, we propose to continue using
this methodology for all clinical measures. Under this methodology,
facilities receive points along an improvement range, defined as a
scale running between the improvement threshold and the benchmark. We
propose to define the improvement threshold as the facility's
performance on the measure during CY 2014. The facility's improvement
score would be calculated by comparing its performance on the measure
during CY 2015 (the proposed performance period) to its performance
rate on the measure during CY 2014.
6. Weighting the Total Performance Score
We continue to believe that while the reporting measures are
valuable, the clinical measures evaluate actual patient care and
therefore justify a higher

[[Page 40252]]

combined weight (78 FR 72217). We are therefore not proposing to change
our policy, finalized most recently in the CY 2014 ESRD PPS (78 FR
72217), to weight clinical measures as 75 percent and reporting
measures as 25 percent of the TPS. We are also not proposing any
changes to the policy that facilities must be eligible to receive a
score on at least one reporting measure and at least one clinical
measure to be eligible to receive a TPS, or the policy that a
facility's TPS will be rounded to the nearest integer, with half of an
integer being rounded up.
7. Proposed Minimum Data for Scoring Measures for the PY 2017 ESRD QIP
and Proposal for Changing Attestation Process for Patient Minimums
For the same reasons described in the CY 2013 ESRD PPS final rule
(77 FR 67510 through 67512), for PY 2017 we propose to only score
facilities on clinical and reporting measures for which they have a
minimum number of qualifying patients during the performance period.
Our current policy is that a facility must treat at least 11 qualifying
patients during the performance period in order to be scored on a
clinical measure (77 FR 67510 through 67511). We are not proposing any
changes to this policy.
However, with respect to the proposed SRR measure, we propose that
facilities with fewer than 11 index discharges will not be eligible to
receive a score on that measure. We considered proposing to adopt the
11 qualifying patient minimum that we use for the other clinical
measures. We decided, however, to base facility eligibility for the
measure on the number of index discharges attributed to a facility,
because the measure calculations are determined by the number of index
discharges, adjusted for patient case-mix. We decided to set the
minimum number of index discharges at 11 because this is consistent
with reporting for the proposed SRR measure during the dry run
conducted earlier this year, as well as with the implementation of
outcome measures in the Hospital Readmission Reduction Program, which
base case minimums on the number of index discharges attributable to
the facility.
Additionally, for the proposed SRR measure, we propose to apply the
small-facility adjuster to facilities that treat 41 or fewer index
discharges because we determined that this was the minimum number of
index discharges needed to achieve an IUR of 0.4 (that is, moderate
reliability) for the proposed SRR measure. Because the small-facility
adjuster gives facilities the benefit of the doubt when measure scores
can be unduly influenced by a few outlier patients, we believe that
setting the threshold at 41 index discharges will not unduly penalize
facilities that treat small numbers of patients.
In the CY 2014 ESRD PPS Final Rule, we finalized that the case
minimum for the Mineral Metabolism and Anemia Management reporting
measures is one, and that facilities that treat one qualifying patient
could attest to this in CROWNWeb in order to avoid being scored on the
measures (78 FR 72197 through 72199 and 72220 through 72221). In the
process of responding to questions from facilities about the
attestation requirements for the PY 2015 program, however, we found
that facilities were confused by this requirement. For this reason, we
propose to remove the option for facilities to attest that they did not
meet the case minimum for these measures. Accordingly, facilities that
meet the case minimum of one qualifying patient would be scored on
these measures, facilities with between 2 and 11 qualifying patients
would be required to report data for all but one qualifying patient,
and facilities with 11 or more qualifying patients would be required to
report data for all patients. Due to facility confusion with the
attestation process, we also propose to remove the option for
facilities to attest that they did not meet the case minimum for the
ICH CAHPS survey reporting measure. As we stated above, we are not
proposing any further changes to the 30 survey-eligible case minimum
for this measure. We are proposing that the ESRD QIP program will
determine facility eligibility for these measures based on available
data submitted to CROWNWeb, in Medicare claims, and to other CMS
administrative data sources.
We seek comments on this proposal.
We are proposing to continue our policies that govern when a newly
opened facility would be eligible to be scored on measures as follows.
Facilities with a CCN open date on or after July 1 of the
performance period (for PY 2017, this would be July 1, 2015) are not
eligible to be scored on any reporting measures except the ICH CAHPS
reporting measure.
Facilities with a CCN open date on or after January 1 of
the performance period (for PY 2017, this would be January 1, 2015) are
not eligible to receive a score on the ICH CAHPS reporting measure in
the PY 2017 program, due to the time it takes to contract with a CMS-
approved third-party vendor to administer the survey.
Facilities are eligible to receive a score on all of the
clinical measures except the NHSN Bloodstream Infection clinical
measure if they have a CCN open date at any time before the end of the
performance period.
Facilities with a CCN open date after January 1 of the
performance period (for PY 2017, this would be January 1, 2015) are not
eligible to receive a score on the NHSN Bloodstream Infection clinical
measure, due to the need to collect 12 months of data to accurately
score the measure.
We are also proposing to continue our policy that a facility will
not receive a TPS unless it receives a score on at least one clinical
measure and at least one reporting measure. We note that as a result,
facilities will not be eligible for a payment reduction under the PY
2017 ESRD QIP if they have a CCN open date on or after July 1, 2015.
We seek comments on these proposals.
Table 26 displays the proposed patient minimum requirements for
each of the reporting measures, as well as the CCN open dates after
which a facility will not be eligible to receive a score on a reporting
measure.

Table 26--Proposed Minimum Data Requirements for the PY 2017 ESRD QIP
----------------------------------------------------------------------------------------------------------------
Small facility
Measure Minimum data requirements CCN Open date adjuster
----------------------------------------------------------------------------------------------------------------
Adult Hemodialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Adult Peritoneal Dialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Pediatric Hemodialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).

[[Page 40253]]

Vascular Access Type: Catheter 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Vascular Access Type: Fistula 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Hypercalcemia (Clinical)........... 11 qualifying patients..... N/A................... 11-25 patients.
NHSN Bloodstream Infection 11 qualifying patients..... On or before January 11-25 patients.
(Clinical). 1, 2015.
SRR (Clinical)..................... 11 index discharges........ N/A................... 11-41 index
discharges.
ICH CAHPS (Reporting).............. Facilities with 30 or more Before January 1, 2015 N/A.
survey-eligible patients
during the calendar year
preceding the performance
period must submit survey
results. Facilities will
not receive a score if
they do not obtain a total
of at least 30 completed
surveys during the
performance period.
Anemia Management (Reporting)...... Facilities with 11 or more Before July 1, 2015... N/A.
qualifying patients must
report data for all
patients. Facilities with
between 2 and 11
qualifying patients must
report data on all but 1
qualifying patient.
Facilities with 1
qualifying patient must
report for that patient.
Mineral Metabolism (Reporting)..... Facilities with 11 or more Before July 1, 2015... N/A.
qualifying patients must
report data for all
patients. Facilities with
between 2 and 11
qualifying patients must
report data on all but 1
qualifying patient.
Facilities with 1
qualifying patient must
report for that patient.
----------------------------------------------------------------------------------------------------------------

8. Proposed Payment Reductions for the PY 2017 ESRD QIP
Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to
ensure that the application of the scoring methodology results in an
appropriate distribution of payment reductions across facilities, such
that facilities achieving the lowest TPSs receive the largest payment
reductions. For PY 2017, we are proposing that a facility will not
receive a payment reduction if it achieves a minimum TPS that is equal
to or greater than the total of the points it would have received if:
It performed at the performance standard for each clinical
measure;
It received zero points for each clinical measure that
does not have a numerical value for the performance standard
established through the rulemaking process before the beginning of the
PY 2017 performance period; and
It received 10 points (which is the 50th percentile of
facility performance on the PY 2015 reporting measures) for each
reporting measure.
We recognize that these conditions are more stringent than the
conditions used to establish the minimum TPS in the PY 2016 ESRD QIP,
because this proposal increases the number of points a facility would
have to receive on each reporting measure from 5 to 10. The PY 2015
program is the most recent year for which we will have calculated final
measure scores before the beginning of the proposed performance period
for PY 2017 (i.e., CY 2015). We note that facility performance on the
Anemia Management, Mineral Metabolism, NHSN Dialysis Event, and ICH
CAHPS reporting measures in the PY 2015 program is so high that the
median score on each of the measures was 10 points. We are proposing to
increase the number of points a facility would have to achieve for each
reporting measure to the 50th percentile of facility performance on the
PY 2015 reporting measures (i.e., the average of the median scores for
each reporting measure), because a score of 5 on each of these
reporting measures is indicative of a below-average performance, and we
want to incentivize facilities to provide above-average care.
We seek comments on this proposal.
Section 1881(h)(3)(A)(ii) of the Act requires that facilities
achieving the lowest TPSs receive the largest payment reductions. In
the CY 2014 ESRD PPS Final Rule (78 FR 72223 through 72224), we
finalized a payment reduction scale for PY 2016 and future payment
years, such that for every 10 points a facility falls below the minimum
TPS, the facility would receive an additional 0.5 percent reduction on
its ESRD PPS payments, with a maximum reduction of 2.0 percent. We are
not proposing any changes to this policy at this time.
Because we are not yet able to calculate the performance standards
for each of the clinical measures, we are likewise not able to
calculate the minimum TPS at this time. Based on the estimated
performance standards listed above, we estimate that a facility must
meet or exceed a minimum TPS of 58 for PY 2017. For all of the clinical
measures except the NHSN Bloodstream Infection clinical measure, these
data come from CY 2013. For the NHSN Bloodstream Infection clinical
measure, we set the performance standard to zero for purposes of this
estimate, because we are not able to establish a numerical value for
the performance standard through the rulemaking process before the
beginning of the PY 2017 performance period. We are proposing that
facilities failing to meet the minimum TPS, as established in the CY
2015 ESRD PPS Final Rule, will receive payment reductions based on the
estimated TPS ranges indicated in Table 27 below.

Table 27--Estimated Payment Reduction Scale for PY 2017 Based on the
Most Recently Available Data From CY 2013
------------------------------------------------------------------------
Reduction
Total performance score (%)
------------------------------------------------------------------------
100--58.................................................... 0
57--48..................................................... 0.5
47--38..................................................... 1.0
37--28..................................................... 1.5
27--0...................................................... 2.0
------------------------------------------------------------------------

9. Proposal for Data Validation
One of the critical elements of the ESRD QIP's success is ensuring
that the data submitted to calculate measure scores and TPSs are
accurate. We began a pilot data-validation program in CY 2013 for the
ESRD QIP, and we have

[[Page 40254]]

procured the services of a data-validation contractor that is tasked
with validating a national sample of facilities' records as they report
CY 2014 data to CROWNWeb. Our first priority was to develop a
methodology for validating data submitted to CROWNWeb under the pilot
data-validation program, and this continues to be our goal. Once this
methodology has been fully developed, we will propose to adopt it
through the rulemaking process. For the PY 2016 ESRD QIP (78 FR 72223
through 72224), we finalized a requirement to sample approximately 10
records from 300 randomly selected facilities; these facilities will
have 60 days to comply once they receive requests for records. We are
proposing to continue this pilot for the PY 2017 ESRD QIP. Under this
continued validation study, we will sample the same number of records
(approximately 10 per facility) from the same number of facilities
(that is, 300) during CY 2015. If a facility is randomly selected to
participate in the pilot validation study but does not provide CMS with
the requisite medical records within 60 days of receiving a request,
then we propose to deduct 10 points from the facility's TPS. Once we
have developed and adopted a methodology for validating the CROWNWeb
data, we intend to consider whether payment reductions under the ESRD
QIP should be based, in part, on whether a facility has met our
standards for data validation.
We seek comments on this proposal.
We are also proposing a feasibility study for validating data
reported to CDC's NHSN Dialysis Event Module for the NHSN Bloodstream
Infection clinical measure. HAIs are relatively rare, and we are
proposing that the feasibility study would target records with a higher
probability of including a dialysis event, because this would enrich
the validation sample while reducing the burden on facilities. The
methodology for this proposed feasibility study would resemble the
methodology used by the Hospital Inpatient Quality Reporting Program to
validate the central line-associated bloodstream infection measure, the
catheter-associated urinary tract infection measure, and the surgical
site infection measure (77 FR 53539 through 535553).
Specifically, we propose to randomly select nine facilities to
participate in the feasibility study. A CMS contractor will send these
facilities quarterly requests for lists of all positive blood cultures
drawn from its patients during the quarter, including any positive
blood cultures that were collected from the facility's patients on the
day of, or the day following, their admission to a hospital. Facilities
will have 60 days to respond to quarterly requests for lists of
positive blood cultures. A CMS contractor will then develop a
methodology for determining when a positive blood culture qualifies as
a ``candidate dialysis event,'' and is therefore appropriate for
further validation. Once the contractor determines a methodology for
identifying candidate dialysis events, the contractor will analyze the
records of patients who had a positive blood culture in order to
determine if the facility reported dialysis events for those patients
in accordance with the NHSN Dialysis Event Protocol. If the contractor
determines that additional medical records are needed from a facility
to validate whether the facility accurately reported the dialysis
events, then the contractor will send a request for additional
information to the facility, and the facility will have 60 days from
the date of the letter to respond to the request. Overall, we estimate
that, on average, quarterly lists will include two positive blood
cultures per facility, but we recognize these estimates may vary
considerably from facility to facility. If a facility is randomly
selected to participate in the feasibility study but does not provide
CMS with the requisite lists of positive blood cultures or the
requisite medical records within 60 days of receiving a request, then
we propose to deduct 10 points from the facility's TPS.
The goals of the proposed feasibility study will be five-fold: (1)
To estimate the burden and associated costs to facilities of validating
the NHSN Bloodstream Infection clinical measure; (2) to assess the
costs to CMS to validate this measure; (3) to develop a methodology for
identifying candidate dialysis events from lists of positive blood
cultures; (4) to develop a methodology for determining whether a
facility accurately reported dialysis events under the NHSN Bloodstream
Infection clinical measure; and (5) to reach some preliminary
conclusions about whether facilities are accurately reporting data
under the NHSN Bloodstream Infection clinical measure. Based on the
results of this study, we will consider the feasibility of proposing in
future rulemaking to validate the NHSN Bloodstream Infection clinical
measure for all facilities.
We seek comments on this proposal.
10. Proposal To Monitor Access to Dialysis Facilities
Public comments on the proposal to adopt the Standardized
Hospitalization Ratio measure in the PY 2014 ESRD QIP (76 FR 70267)
expressed concerns that ``the measure may lead to `cherry-picking' of
patients based on their risk of hospitalizations, causing access to
care issues for patients with more severe illness.'' We share
commenters' concerns about the SHR measure, and we believe that these
concerns equally apply to other outcome measures proposed for the ESRD
QIP. We recognize that, in general, inadequate risk adjustment in
outcome measure calculations can create an incentive for facilities to
deny services to sicker patients, because these patients' illnesses
would not be properly accounted for in the risk-adjustment
calculations. We believe that outcome measures proposed and adopted for
the ESRD QIP properly risk adjust for patients with severe illnesses,
but we remain concerned that misperceptions to the contrary might
negatively impact access to dialysis therapy.
Since we are proposing to adopt the SRR clinical measure for the PY
2017 program, and below we are proposing to adopt the STrR clinical
measure for the PY 2018 program, we propose to initiate a monitoring
program focused on access to dialysis therapy. This program would
compare dialysis data before and after the adoption of an outcome
measure, looking for changes in admission and discharge practices, as
well as changes in rates and patterns of involuntary discharges.
Specifically, this program would assess and analyze the characteristics
of beneficiaries admitted to dialysis centers (stratified by location,
size, and setting) in order to determine when and if selective
admission and discharge practices are coupled with negative patient
attributes and trends over time. We believe this program will enable us
to identify patterns that are indicative of diminished access to
dialysis therapy.
We seek comments on this proposal.
11. Proposed Extraordinary Circumstances Exception
Many comments on the CY 2014 ESRD PPS proposed rule included the
recommendation to exempt a facility from all the requirements of the
ESRD QIP clinical and reporting measures during the time the facility
was forced to close temporarily due to a natural disaster or other
extraordinary circumstances. In response to these comments, we agreed
that ``there are times when facilities are unable to submit required
quality data due to extraordinary circumstances that are not within
their control, and we do not wish to penalize facilities for such
circumstances or unduly increase their

[[Page 40255]]

burden during these times'' (78 FR 72209).
Section 1881(h)(3)(A)(i) of the Act states, ``[T]he Secretary shall
develop a methodology for assessing the total performance of each
provider of services and renal dialysis facility based on performance
standards with respect to the measures selected under paragraph (2) for
a performance period established under paragraph (4)(D).'' Given the
possibility that facilities could be unfairly penalized for
circumstances that are beyond their control, we believe the best way to
implement an extraordinary circumstances exception is under the
authority of this section. We are therefore proposing to interpret
section 1881(h)(3)(A)(i) of the Act to enable us to configure the
methodology for assessing facilities' total performance such that we
will not require a facility to submit, nor penalize a facility for
failing to submit, data on any ESRD QIP quality measure data from any
month in which a facility is granted an extraordinary circumstances
exception.
Under this policy, we propose that, in the event of extraordinary
circumstances not within the control of the facility (such as a natural
disaster), for the facility to receive consideration for an exception
from all ESRD QIP requirements during the period in which the facility
was closed, the facility would need to submit a CMS Disaster Extension/
Exception Request Form through www.qualitynet.org within 90 calendar
days of the date of the disaster or extraordinary circumstance. We are
proposing that the facility would need to provide the following
information on the form:
Facility CCN;
Facility name;
CEO name and contact information;
Additional contact name and contact information;
Reason for requesting an exception;
Dates affected;
Date facility will start submitting data again, with
justification for this date; and
Evidence of the impact of the extraordinary circumstances,
including but not limited to photographs, newspaper, and other media
articles.
Incomplete forms will be returned to the facility without further
review of their content. We will evaluate the request and provide the
facility with a response. If we determine that the facility was, in
fact, closed for a period of time due to extraordinary circumstances,
then we will exempt the facility from the ESRD QIP requirements for any
month during which the facility was closed due to the extraordinary
circumstances. As such, a facility granted a temporary exception will
be scored on each measure only for the months during a performance
period not covered by the exception. For example, if a facility is
granted an extraordinary circumstances exception for the time period
between January 15 and February 15, 2015, then the facility will not be
required to report, and will not be penalized for not reporting, data
on any ESRD QIP measure data for January and February of CY 2015. The
effect of this proposal is that if a facility, because it has been
granted an exception, cannot meet the reporting requirements that apply
to a measure, the facility will not receive a score on the measure. For
example, if a facility is granted an extraordinary circumstances
exception for February 2015, then that facility would not be scored on
the NHSN Bloodstream Infection clinical measure for the applicable
payment year, because this measure requires facilities to submit 12
months of data in order to avoid receiving zero points on the measure.
This policy does not preclude us from granting exceptions to
facilities that have not requested them when we determine that an
extraordinary circumstance (for example, a hurricane or other act of
nature) affects an entire region or locale. If we make the
determination to grant an exception to facilities in a region or
locale, then we propose to communicate this decision through routine
communication channels to facilities, vendors, and Networks, including
but not limited to issuing memoranda, emails, and notices on a CMS-
approved Web site.
We seek comments on this proposal.

G. Proposed Requirements for the PY 2018 ESRD QIP

1. Proposal To Modify the Mineral Metabolism Reporting Measure
Beginning in PY 2018
In the CY 2013 ESRD QIP, we adopted a reporting measure focused on
mineral metabolism, which was based in part on NQF 0255 (77 FR
67487 through 67487). In the CY 2014 ESRD PPS, we finalized two
revisions to the Mineral Metabolism reporting measure: (1) To include
home peritoneal dialysis patients in the measure; and (2) to remove
serum calcium reporting from the measure because of its reporting under
the Hypercalcemia clinical measure (78 FR 72197 through 72198).
Accordingly, in order to meet the requirements for the Mineral
Metabolism reporting measure, facilities currently must report serum
phosphorus values for each qualifying patient treated at the facility
on a monthly basis.
Since the publication of the CY 2014 ESRD PPS final rule, members
of the renal community requested an ad hoc NQF review of measure
0255, focusing in particular on whether the measure should be
updated to allow for the reporting of plasma phosphorus data. The NQF
Consensus Standards Approval Committee (CSAC) reviewed the measure and
recommended that the phosphorus reporting measure (NQF 0255)
be modified to allow for the reporting of plasma phosphorus data as an
alternative to serum phosphorus data. Although our TEP reviewed this
issue and concluded that measure 0255 should remain unchanged,
we concur with the CSAC's recommendation due to the CSAC's ad hoc
review of lab data demonstrating the equivalency of plasma and serum
measurements of phosphorus, as well as an additional concurrent
internal review of the data by CMS and our measure development
contractor. We are in agreement with the CSAC that readings of
phosphorus using either plasma or serum are appropriate for the
measure. As the measure developer for NQF 255, we are also in
the process of revising the specifications for that measure and plan to
submit the revised measure specifications to the NQF for endorsement.
We believe the change to these specifications is non-substantive
because plasma readings are an alternative method of reporting on
phosphorus data and, as we state above, are roughly equivalent to serum
phosphorus readings.
We considered proposing to allow facilities to report plasma
phosphorus data for the Mineral Metabolism reporting measure in the PY
2017 program, but we have determined that it is not operationally
feasible to configure the relevant data fields in CROWNWeb to accept
plasma phosphorus readings prior to January 1, 2015, the beginning of
the performance period for that program year. For this reason, we
propose to modify the measure specifications for the Mineral Metabolism
reporting measure to allow facilities to report either serum phosphorus
data or plasma phosphorus data, beginning with the PY 2018 program. We
further clarify that we are not proposing any other changes to the
measure specifications for the Mineral Metabolism reporting measure.
2. Proposed New Measures for the PY 2018 ESRD QIP and Future Payment
Years
For the PY 2018 ESRD QIP, we are proposing to continue to use all
of the

[[Page 40256]]

measures proposed for the PY 2017 ESRD QIP, with the exception of the
ICH CAHPS reporting measure, which we are proposing to convert to a
clinical measure. We are also proposing to adopt five new measures. The
proposed new measures include one new outcome measure evaluating
transfusions in the ESRD population, one measure on pediatric
peritoneal dialysis adequacy, one measure on pain assessment, one
measure on clinical depression screening, and one measure on healthcare
personnel influenza vaccination (see Table 28).

Table 28--New Measures Proposed for the PY 2018 ESRD QIP
------------------------------------------------------------------------
NQF Measure title
------------------------------------------------------------------------
N/A.......................... Pediatric Peritoneal Dialysis Adequacy, a
clinical measure.
Percentage of pediatric peritoneal
dialysis patient-months with spKt/V
greater than or equal to 1.8 (dialytic +
residual).
0258......................... In-Center Hemodialysis Consumer
Assessment of Providers and Systems
Survey,\1\ a clinical measure.
Proportion of responses to rating items
grouped into three composite measures
and three global ratings.
N/A.......................... Standardized Transfusion Ratio, a
clinical measure.
Risk-adjusted standardized transfusion
ratio for dialysis facility patients.
N/A\2\....................... Pain Assessment and Follow-Up, a
reporting measure.
Percentage of adult patients with
documentation of pain assessment through
discussion with the patient including
the use of a standardized tool(s) on
each visit and documentation of a follow-
up place when pain is present.
N/A\3\....................... Depression Screening and Follow-Up, a
reporting measure.
Percentage of adult patients screened for
clinical depression using a standardized
tool and follow-up plan is documented.
N/A\4\....................... NHSN Healthcare Personnel Influenza
Vaccination, a reporting measure.
------------------------------------------------------------------------
\1\ The proposed dimensions of the ICH CAHPS survey for use in the PY
2018 ESRD QIP are: Nephrologists' Communication and Caring, Quality of
Dialysis Center Care and Operations, Providing Information to
Patients, Overall Rating of the Nephrologists, Overall Rating of the
Dialysis Center Staff, and Overall Rating of the Dialysis Facility.
\2\ We note that the NQF has previously endorsed a pain measure (NQF
0420) upon which this measure is based.
\3\ We note that the NQF has previously endorsed a depression measure
(NQF 0418) upon which this measure is based.
\4\ We note that the NQF has previously endorsed a vaccination measure
(NQF 0431) upon which this measure is based.

a. Proposed Standardized Transfusion Ratio (STrR) Clinical Measure
Background
We are concerned that the inclusion of erythropoiesis-stimulating
agents (ESAs) in the ESRD PPS and the removal of the Hemoglobin Less
than 10 g/dL clinical measure from the ESRD QIP measure set could
result in the underutilization of ESAs to manage anemia in ESRD
patients, with the result that these patients have lower achieved
hemoglobin levels and more frequently need red-blood-cell transfusions.
In addition, patients with ESRD who are eligible to receive a
kidney transplant and are transfused risk becoming sensitized to the
donor pool, thereby making it less likely that a transplant will be
successful. Blood transfusions also carry a small risk of transmitting
blood-borne infections to the patient, and the patient could
additionally develop a transfusion reaction. Furthermore, using
infusion centers or hospitals to transfuse patients is expensive,
inconvenient, and could compromise future vascular access.
Overview of Measure
The Standardized Transfusion Ratio (STrR) for all adult Medicare
ESRD patients is a ratio of the number of observed eligible blood
transfusion events occurring in patients dialyzing at a facility to the
number of eligible transfusions that would be expected from a
predictive model that accounts for patient characteristics within each
facility. Eligible transfusions are those that do not have any claims
pertaining to the comorbidities identified for exclusion in the 12
months immediately prior to the transfusion date.
We plan to submit the STrR measure to NQF for review at the next
available call for measures. Section 1881(h)(2)(B)(i) of the Act
requires that, unless the exception set forth in section
1881(h)(2)(B)(ii) of the Act applies, the measures specified for the
ESRD QIP under section 1881(h)(2)(A)(iv) of the Act must have been
endorsed by the entity with a contract under section 1890(a) of the Act
(which is currently NQF). Under the exception set forth in section
1881(h)(2)(B)(ii) of the Act, in the case of a specified area or
medical topic determined appropriate by the Secretary for which a
feasible and practical measure has not been endorsed by the entity with
a contract under section 1890(a) of the Act, the Secretary may specify
a measure that is not so endorsed, so long as due consideration is
given to measures that have been endorsed or adopted by a consensus
organization identified by the Secretary.
We have given due consideration to endorsed measures, as well as
those adopted by a consensus organization, and we are proposing this
measure under the authority of 1881(h)(2)(B)(ii) of the Act. NQF has
not endorsed and a consensus organization has not adopted a measure on
transfusions. Because the proposed STrR measure has the potential to
decrease transfusions resulting from underutilization of anemia
medications, we believe it is appropriate to adopt the STrR in the PY
2018 ESRD QIP. We considered proposing to adopt the measure for the PY
2017, but we recognized that this is a new measure, and wanted to give
facilities more time to familiarize themselves with it. The Measure
Application Partnership, in its February 1, 2013 Pre-Rulemaking Report,
supported the direction of the measure, stating that it ``addresses an
important concept, but the establishment of guidelines for hemoglobin
range is needed.'' We have received public comments and input from a
TEP that we convened on a prototype STrR measure, and finalized
development of the proposed STrR measure in September 2013. The
resulting measure specifications did not include hemoglobin thresholds,
as no input from the TEP or public comments supported moving forward
with thresholds included in the measure. We therefore believe these
efforts meet the requirements for further development of the STrR prior
to implementation in the ESRD QIP.
In the process of preparing to submit the measure for NQF review,
we conducted analyses on the reliability of the STrR measure. The full
analysis is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. The STrR is not a simple average;
instead, we estimate the IUR using a bootstrap approach, which uses a
resampling

[[Page 40257]]

scheme to estimate the within facility variation that cannot be
directly estimated by ANOVA. A small IUR (near 0) reveals that most of
the variation of the measures between facilities is driven by ``random
noise,'' indicating the measure would not be a reliable
characterization of the differences among facilities, whereas a large
IUR (near 1) indicates that most of the variation between facilities is
due to the real difference between facilities. We have determined that
the average IUR for the STrR measure is 0.54, meaning that about half
of the variation in the measure can be attributed to between-facility
differences, and about half to within-facility variation. This value of
IUR indicates a moderate degree of reliability and is consistent with
the reliability of other outcome measures in CMS quality reporting and
VBP programs. We therefore believe that facilities can be reliably
scored on the proposed STrR measure.
Data Sources
Data for the measure come from various CMS-maintained data sources
for ESRD patients including Program Medical Management and Information
System (PMMIS/REMIS), Medicare claims, the CROWNWeb database, the CMS
Annual Facility Survey (Form CMS-2744), Medicare dialysis and hospital
payment records, the CMS Medical Evidence Form (Form CMS-2728),
transplant data from the OPTN, the Death Notification Form (Form CMS-
2746), the Nursing Home Minimum Dataset, and the Social Security Death
Master File. These data sources include all Medicare patients.
Information on transfusions is obtained from Medicare Inpatient and
Outpatient Claims SAFs.
Outcome
The outcome of interest for the STrR is blood transfusion events
(defined as the transfer of one or more units of blood or blood
products into the recipient's blood stream) among Medicare ESRD
patients dialyzing at the facility during the inclusion time periods.
Cohort
The cohort for the STrR includes all adult Medicare ESRD dialysis
patients who have been documented as having had ESRD for at least 90
days.
Inclusion and Exclusion Criteria
Patients will not be included in the STrR during the first 90 days
of ESRD dialysis treatment. Starting with day 91 after onset of ESRD, a
patient is attributed to a facility once he or she has been receiving
dialysis there for 60 days. When a patient transfers from one facility
to another, we are proposing that the patient would continue to be
attributed to the original facility for 60 days from the date of the
transfer. Starting on day 61, the patient would be attributed to the
transferee facility. Patients would be excluded from the measure for
three days prior to the date they receive a transplant to avoid
including transfusions associated with the transplant hospitalization.
We are also proposing to require that patients reach a certain
level of Medicare-paid dialysis bills to be included in the STrR, or
that patients have Medicare-paid inpatient claims during the period.
This requirement is intended to assure completeness of transfusion
information for all patients included in the measure calculation by
excluding non-Medicare patients and patients for whom Medicare is a
secondary payer, because they are not expected to have complete
information on transfusion available in the claims data. For each
patient, a month is included as a month at risk for transfusion if that
month in the period is considered ``eligible.'' A month is considered
eligible if it is within two months of a month in which a patient has
$900 of Medicare-paid claims or at least one Medicare-paid inpatient
claim. The $900 amount represents approximately the tenth percentile of
monthly dialysis claims per patient.
In addition, a transfusion event is eligible for inclusion in the
STrR measure if the patient did not present with certain comorbid
conditions during the 12 month period immediately prior to the date of
the transfusion event. We are proposing to exclude these transfusion
events because the identified comorbid conditions are associated with a
higher risk of transfusion and require different anemia management
practices that the measure is not intended to address. Specifically, we
are proposing that a transfusion event will be excluded from the
measure if the patient, during the 12 month look back period, had a
Medicare claim for: hemolytic and aplastic anemia; solid organ cancer
(breast, prostate, lung, digestive tract and others); lymphoma;
carcinoma in situ; coagulation disorders; multiple myeloma;
myelodysplastic syndrome and myelofibrosis; leukemia; head and neck
cancer; other cancers (connective tissue, skin, and others); metastatic
cancer; or sickle cell anemia. The specific diagnoses used to identify
each of these conditions are listed in the proposed measure
specifications, which are available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
Risk Adjustment
The denominator of the STrR uses expected transfusions calculated
from a Cox model that is extended to handle repeated events. For
computational purposes, the proposed STrR measure adopts a model with
piecewise-constant baseline rates. A stage 1 model is fitted to the
national data with piecewise-constant baseline rates across facilities.
Transfusion rates are adjusted for: patient age; diabetes as a cause of
ESRD; duration of ESRD; nursing home status; BMI at incidence;
comorbidity index at incidence; and calendar year. This model allows
baseline transfusion rates to vary between facilities, and applies the
regression coefficients for the risk-adjustment model to each facility
identically. This approach is robust to possible differences between
facilities in the patient mix being treated. The second stage uses the
risk-adjustment factor from the first stage as an offset. The stage 2
model then calculates the national baseline transfusion rate.
The STrR measure includes the following risk adjustors, which are
obtained from the following data sources:

----------------------------------------------------------------------------------------------------------------
Risk adjustor Data source
----------------------------------------------------------------------------------------------------------------
Age........................................... REMIS database.
Diabetes as cause of ESRD..................... CMS Form 2728.
BMI at incidence of ESRD...................... CMS Form 2728.
Comorbidity index............................. CMS Form 2728.
Nursing home status........................... Nursing Home Minimum Dataset.
Duration of ESRD.............................. CMS Form 2728.
----------------------------------------------------------------------------------------------------------------

[[Page 40258]]

More details on the risk-adjustment calculations, and the rationale
for selecting these risk adjustors and not others, can be found at:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
As indicated in the table above, the proposed STrR measure risk
adjusts predominantly on the basis of patient characteristics collected
on CMS Form 2728, and we believe that this risk-adjustment methodology
is reliable and valid.
NQF evaluates measures on the basis of four criteria: importance,
scientific acceptability, feasibility, and usability. The validity and
reliability of a measure's risk-adjustment calculations fall under the
``scientific acceptability'' criterion, and Measure Evaluation
Criterion 2b4 specifies NQF's preferred approach for risk adjusting
outcome measures (https://www.qualityforum.org/docs/measure_evaluation_criteria.aspx#scientific). This criterion states that
patient comorbidities should only be included in risk-adjustment
calculations if they are (1) present at the start of care and (2) not
indicative of disparities or deficiencies in the quality of care
provided. As indicated in the ``Inclusion and Exclusion Criteria''
subsection above, the proposed STrR clinical measure includes Medicare
patients who have been documented as having had ESRD for at least 90
days and are not excluded for other reasons. Accordingly, we believe
that NQF Measure Evaluation Criterion 2b4 supports risk-adjusting the
proposed STrR measure on the basis of incident patient comorbidity data
collected on CMS Form 2728, because these comorbidities are likely
present at the start of care. Moreover, comorbidities that develop
after the 90th day of chronic dialysis treatment, and are statistically
associated with transfusions, can be reflective of the quality of care
provided by the facility. Therefore, we do not believe that NQF Measure
Evaluation Criterion 2b4 supports risk adjusting the proposed STrR
measure on the basis of updated comorbidity data, because doing so may
mask disparities or deficiencies in the quality of care provided,
thereby obscuring assessments of facility performance. For these
reasons, we believe that the risk-adjustment methodology for the
proposed STrR measure is consistent with NQF guidelines for measure
developers. Testing that we have undertaken has confirmed the validity
and reliability of the proposed STrR measure using these data. We
anticipate submitting the measure to the NQF for endorsement in CY
2015.
Full documentation of the STrR risk-adjustment methodology is
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
Calculating the STrR Measure
The STrR measure is calculated as the ratio of the number of
observed transfusions to the number of expected transfusions. The ratio
is greater than one for facilities that have more transfusions than
would be expected for an average facility with similar cases, and less
than one if the facility has fewer transfusions than would be expected
for an average facility with similar cases. This ratio is calculated in
terms of patient-years at risk. ``Patient-year at risk'' means that the
denominator of the rate calculation is obtained by adding exposure
times of all patients until a censoring event (that is, death,
transplant, or end of the time period) because each patient's time at
risk varies based on these censoring events. Time at risk is the time
period in which each patient is eligible to have the transfusion event
occur for the purposes of the measure calculation, exclusive of all
days that have claims pertaining to the exclusionary comorbidities
identified within the previous 12 months.
The predicted value from stage 1 of the model and the baseline rate
from stage 2 of the model, as described above, are then used to
calculate the expected number of transfusion events for each patient
over the period during which the patient is seen to be at risk for a
transfusion event.
The STrR is a point estimate--the best estimate of a facility's
transfusion rate based on the facility's case mix. For more detailed
information on the calculation methodology, please refer to our Web
site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on this proposal to adopt the proposed STrR
clinical measure.
b. Proposal To Adopt the Pediatric Peritoneal Dialysis Adequacy
Clinical Measure and Add the Proposed Measure to the Dialysis Adequacy
Measure Topic
Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate
facilities based on measures of dialysis adequacy. Beginning with the
PY 2018 ESRD QIP, we propose to add a new measure of pediatric
peritoneal dialysis adequacy to the Dialysis Adequacy measure topic. If
this proposal is finalized, then the modified Dialysis Adequacy measure
topic would include four clinical measures on dialysis adequacy--(1)
Adult Hemodialysis Adequacy; (2) Adult Peritoneal Dialysis Adequacy;
and (3) Pediatric Hemodialysis Adequacy; and (4) Pediatric Peritoneal
Dialysis Adequacy.
Approximately 900 pediatric patients in the United States receive
peritoneal dialysis.\5\ Although recent studies suggest improvement in
mortality rates among pediatric patients receiving maintenance dialysis
over time, mortality in this patient population remains high.\6\
Despite a lack of long-term outcome studies on pediatric peritoneal
dialysis patients, outcome studies performed in the adult ESRD
population have shown an association between the dose of peritoneal
dialysis and clinical outcomes,\7\ which could suggest that improved
quality of dialysis care in the fragile pediatric patient population
may further improve survival in those patients.
---------------------------------------------------------------------------

\5\ U.S. Renal Data System, USRDS 2012 Annual Data report: Atlas
of Chronic Kidney Disease and End-stage Renal Disease in the United
States, National Institutes of Health, National Institute of
Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2012.
\6\ U.S. Renal Data System, USRDS 2012 Annual Data report: Atlas
of Chronic Kidney Disease and End-stage Renal Disease in the United
States, National Institutes of Health, National Institute of
Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2012.
\7\ Paniagua R, Amato D, Vonesh E, et al. ``Effects of increased
peritoneal clearance on mortality rates in peritoneal dialysis:
ADEMEX, a prospective, randomized, controlled trial.'' Journal of
the American Society of Nephrology: JASN (2002) 13:1307-1320. PMID:
11961019; See also Lo WK, Lui SL, Chan TM, et al. ``Minimal and
optimal peritoneal Kt/V targets: Results of anuric peritoneal
dialysis patient's survival analysis.'' Kidney international (2005)
67:2032-2038. PMID: 15840054.
---------------------------------------------------------------------------

Section 1881(h)(2)(A)(iv) gives the Secretary authority to adopt
measures for the ESRD QIP that cover a wide variety of topics. Section
1881(h)(2)(B)(ii) of the Act states that ``In the case of a specified
area or medical topic determined appropriate by the Secretary for which
a feasible and practical measure has not been endorsed by the entity
with a contract under section 1890(a) of Act [in this case NQF], the
Secretary may specify a measure that is not so endorsed so long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary.'' We have
given due consideration to endorsed measures, as well as those adopted
by a consensus organization. Because no NQF-endorsed measures or
measures adopted by a consensus organization on

[[Page 40259]]

pediatric peritoneal dialysis adequacy currently exist, we are
proposing to adopt the Pediatric Peritoneal Dialysis Adequacy clinical
measure under the authority of section 1881(h)(2)(B)(ii) of the Act.
The Measure Application Partnership expressed conditional support
for measure XCBMM, ``Pediatric Peritoneal Dialysis Adequacy:
Achievement of Target Kt/V'' in its January 2014 Pre-Rulemaking Report,
noting it would ``consider this measure for inclusion in the program
once it has been reviewed for endorsement.'' However, we believe the
measure is ready for adoption in the ESRD QIP because it has been fully
tested for reliability and has received consensus support from the TEP
that was tasked with developing it. We intend to submit this measure to
the NQF for endorsement in late 2014 or early 2015.
For PY 2018 and future payment years, we propose to adopt the
Pediatric Peritoneal Dialysis Adequacy clinical measure, which assesses
the percentage of eligible pediatric peritoneal dialysis patient-months
in which a Kt/V of greater than or equal to 1.8 was achieved during the
performance period. Qualifying patient-months are defined as months in
which a peritoneal dialysis patient is under the age of 18 and has been
receiving peritoneal dialysis treatment for 90 days or longer.
Performance on this measure will be expressed as a proportion of
patient-months meeting the measure threshold of 1.8, and the measure
will be scored based on Kt/V data entered on Medicare 72x claims. The
measure is a complement to the existing Kt/V dialysis adequacy measures
previously adopted in the ESRD QIP. Technical specifications for the
proposed pediatric peritoneal dialysis adequacy clinical measure can be
found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on this proposal to adopt the Pediatric Peritoneal
Dialysis Adequacy measure.
c. Proposed ICH CAHPS Clinical Measure
Section 1881(h)(2)(A)(ii) of the Act states that the Secretary
shall specify, to the extent feasible, measures of patient
satisfaction. Patients with ESRD are an extremely vulnerable
population: They are completely reliant on ESRD providers for life-
saving care, and they are often reluctant to express concerns about the
care they receive from an array of staff, both professional and non-
professional. Patient-centered experience is an important measure of
the quality of patient care, and it is a component of the 2013 NQS,
which emphasizes patient-centered care by rating patient experience as
a means for empowering patients and improving the quality of their
care.
Following a rigorous process, the ICH CAHPS Survey was developed to
capture the experience of in-center hemodialysis patients. The NQF
endorsed and the Measures Application Partnership supported this
quality measure (NQF 0258: CAHPS In-Center Hemodialysis
Survey). The ICH CAHPS Survey captures the experience of in-center
hemodialysis patients on three dimensions: ``nephrologists'
communication and caring;'' ``quality of dialysis center care and
operations;'' and ``providing information to patients.'' Three global
ratings are also part of the standardized ICH CAHPS Survey: Rating of
the nephrologist; rating of the staff; and rating of the facility.
We believe that this measure enables patients to rate their
experience of in-center dialysis treatment without fear of retribution.
Public reporting of results from the ICH CAHPS survey, once enough data
are available, will satisfy requests to provide consumers (patients and
family members alike) with desired information on viewpoints from
patients. In addition, collecting and reporting ICH CAHPS survey
results assists facilities with their internal quality improvement
efforts and external benchmarking with other facilities, and it
provides CMS with information that can be used to monitor the
experience of patients with ESRD.
Starting with the PY 2014 program, we have taken steps to develop
the baseline data necessary to propose and implement NQF 0258
as a clinical measure in PY 2018. In the PY 2014 and PY 2015 programs,
we adopted a reporting measure related to the ICH CAHPS survey, which
required that facilities attest they had administered the survey
according to the specifications set by the Agency for Healthcare
Research and Quality (AHRQ). In the CY 2014 ESRD PPS final rule, we:
(1) Expanded the ICH CAHPS reporting measure to require facilities to
submit (via CMS-approved vendors) their survey results to CMS; (2)
increased the patient minimum for the measure from 11 to 30 survey-
eligible patients; (3) required that facilities (via CMS-approved
vendors) administer the survey according to specifications set by CMS;
and (4) required facilities (via CMS-approved vendors) to administer
the survey twice during each performance period, and to report both
sets of survey results by the date specified on https://ichcahps.org,
starting in PY 2017 (78 FR 72193 through 72196).
By CY 2016 (the proposed performance period for the PY 2018 ESRD
QIP), we will have worked with dialysis facilities for four years to
help them become familiar with the ICH CAHPS survey. By that time, we
believe that facilities will be sufficiently versed in the survey
administration process to be reliably evaluated on the NQF-endorsed ICH
CAHPS measure (NQF 0258). Because facilities (and CMS-approved
vendors) will be familiar enough with the ICH CAHPS survey instrument
to be reliably scored on the basis of their survey results, we believe
it is reasonable to expand the ICH CAHPS reporting measure into a
clinical measure for the PY 2018 ESRD QIP.
For these reasons, and because a clinical measure would have a
greater impact on clinical practice by holding facilities accountable
for their actual performance, we propose to replace the ICH CAHPS
reporting measure that we adopted in the CY 2014 ESRD PPS Final Rule
with a new clinical measure for PY 2018 and future payment years. This
proposed ICH CAHPS clinical measure is NQF 0258: CAHPS In-
Center Hemodialysis Survey. We are not proposing to change the
semiannual survey administration and reporting requirements. The
proposed scoring methodology for the ICH CAHPS clinical measure is
discussed below in section III.G.4.c. Technical specifications for the
ICH CAHPS clinical measure can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on this proposal.
d. Proposed Screening for Clinical Depression and Follow-Up Reporting
Measure
Depression is the most common psychological disorder in patients
with ESRD. Depression causes suffering, a decrease in quality of life,
and impairment in social and occupational functions; it is also
associated with increased health care costs. Current estimates put the
depression prevalence rate as high as 20 percent to 25 percent in
patients with ESRD.\8\ Studies have also shown that depression and
anxiety are the most common comorbid

[[Page 40260]]

illnesses in patients with ESRD.\9\ Moreover, depressive affect and
decreased perception of social support have been associated with higher
rates of mortality in the ESRD population, and some studies suggest
that this association is as strong as that between medical risk factors
and mortality.\10\ Nevertheless, depression and anxiety remain under-
recognized and under-treated, despite the availability of reliable
screening instruments.\11\ Therefore, a measure that assesses whether
facilities screen patients for depression, and develop follow-up plans
when appropriate, offers an opportunity to improve the health of
patients with ESRD.
---------------------------------------------------------------------------

\8\ Kimmel PL, Cuckor D, Cohen SD, Peterson RA. Depression in
end-stage renal disease patients: a critical review. Advances in
Chronic Kidney Disease. 2007:14(4):328-34.
\9\ Feroze, U., Martin, D., Reina-Patton, A., Kalantar-Zadeh,
K., & Kopple, J. D. (2010). Mental health, depression, and anxiety
in patients on maintenance dialysis. Iranian Journal of Kidney
Diseases, 4(3), 173-80.
\10\ Cukor, D., Cohen, S. D., Peterson, R. A., & Kimmel, P. L.
(2007). Psychosocial aspects of chronic disease: ESRD as a
paradigmatic illness. Journal of the American Society of Nephrology,
18(12), 3042-3055; and Kimmel, P. L., Peterson, R. A., Weihs, K. L.,
Simmens, S. J., Alleyne, S., Cruz, I., & Veis, J. H. (2000).
Multiple measurements of depression predict mortality in a
longitudinal study of chronic hemodialysis outpatients. Kidney
International, 57(5), 2093-2098.
\11\ Preljevic, V. T., [Oslash]sthus, T. B. H., Sandvik, L.,
Opjordsmoen, S., Nordhus, I. H., Os, I., & Dammen, T. (2012).
Screening for anxiety and depression in dialysis patients:
Comparison of the Hospital Anxiety and Depression Scale and the Beck
Depression Inventory. Journal of Psychosomatic Research, 73(2), 139-
144.
---------------------------------------------------------------------------

We are proposing to adopt a depression measure that is based on an
NQF-endorsed measure (NQF 0418: Screening for Clinical
Depression). NQF 0418 assesses the percentage of patients
screened for clinical depression using an age-appropriate standardized
tool and documentation of a follow-up plan where necessary. The
Measures Application Partnership supported the use of NQF 0418
in the ESRD QIP in its January 2014 Pre-Rulemaking Report, because the
measure ``addresses a National Quality Strategy [NQS] aim not
adequately addressed in the program measure set'' and promotes person-
and family-centered care. We are proposing to adopt a reporting measure
based on this NQF-endorsed measure so that we can collect data that we
can use in the future to calculate both achievement and improvement
scores, should we propose to adopt the clinical version of this measure
in future rulemaking. Although we recognize that we recently adopted
the NHSN Bloodstream Infection clinical measure despite a lack of
baseline data to calculate achievement and improvement scores, we
believe that measure warranted special treatment in light of the fact
that it addresses patient safety. Because the proposed screening for
clinical depression measure addresses quality of life and patient well-
being, and not patient safety, we think it is appropriate to adopt it
as a reporting measure until such time that we can collect the baseline
data needed to score it as a clinical measure.
Section 1881(h)(2)(B)(ii) of the Act states that ``In the case of a
specified area or medical topic determined appropriate by the Secretary
for which a feasible and practical measure has not been endorsed by the
entity with a contract under section 1890(a) [in this case NQF], the
Secretary may specify a measure that is not so endorsed as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary.'' Because we
have given due consideration to endorsed measures as well as those
adopted by a consensus organization and determined it is not practical
or feasible to adopt NQF 0418 as a clinical measure in the
ESRD QIP at this time, we are proposing to adopt the Screening for
Clinical Depression and Follow-Up Plan reporting measure under the
authority of section 1881(h)(2)(B)(ii) of the Act.
For PY 2018 and future payment years, we propose that facilities
must report one of the following conditions in CROWNWeb, at least once
per performance period, for each qualifying patient (defined below):
1. Screening for clinical depression is documented as being
positive, and a follow-up plan is documented.
2. Screening for clinical depression documented as positive, and a
follow-up plan not documented, and the facility possess documentation
stating the patient is not eligible.
3. Screening for clinical depression documented as positive, the
facility possesses no documentation of a follow-up plan, and no reason
is given.
4. Screening for clinical depression is documented as negative, and
a follow-up plan is not required.
5. Screening for clinical depression not documented, but the
facility possesses documentation stating the patient is not eligible.
6. Clinical depression screening not documented, and no reason is
given.
For this proposed measure, qualifying patients are defined as
patients 12 years or older who have been treated at the facility for 90
days or longer. This proposed measure will collect the same data
described in NQF 0418, but we are proposing to score
facilities based on whether they successfully report the data, and not
the measure results. More specifically, facilities will be scored on
whether they report one of the above conditions for each qualifying
patient once before February 1 of the year directly following the
performance period. Technical specifications for the Screening for
Clinical Depression and Follow-Up reporting measure can be found at:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on these proposals.
e. Proposed Pain Assessment and Follow-Up Reporting Measure
Pain is one of the most common symptoms in patients with ESRD.\12\
Studies have shown that pain is a significant problem for more than 50
percent of patients with ESRD, and up to 82 percent of those patients
report moderate to severe chronic pain.\13\ Pain is commonly associated
with quality of life in early- and late-stage chronic kidney disease
patients, but it is not effectively managed in the ESRD patient
population and chronic pain often goes untreated.\14\ Observational
studies suggest that under-managed pain has the potential to induce or
exacerbate comorbid conditions in ESRD, which may in turn adversely
affect dialysis treatment.\15\ Patients with ESRD frequently experience
pain that has a debilitating impact on their daily lives, and research
has shown a lack of effective pain management strategies currently in
place in dialysis facilities.\16\ Therefore, a measure that assesses
whether facilities regularly assess their patients' pain, and develop
follow-up plans as necessary, offers the possibility

[[Page 40261]]

of improving the health and well-being of patients with ESRD.
---------------------------------------------------------------------------

\12\ Cohen, S. D., Patel, S. S., Khetpal, P., Peterson, R. A., &
Kimmel, P. L. (2007). Pain, sleep disturbance, and quality of life
in patients with chronic kidney disease. Clinical Journal of the
American Society of Nephrology, 2(5), 919-925.
\13\ Davison SN. Pain in hemodialysis patients: prevalence,
cause, severity, and management. American Journal of Kidney Disease.
2003; 42:1239-1247
\14\ Davison, S. N. (2007). The prevalence and management of
chronic pain in end-stage renal disease. Journal of Palliative
Medicine, 10(6), 1277-1287.
\15\ De Castro C. (2013). Pain assessment and management in
hemodialysis patients. CANNT Journal; 23(3):29-32; Weisbord SD,
Fried LF, Arnold RM, Fine MJ, Levenson DJ, et al. Prevalence,
severity, and importance of physical and emotional symptoms in
chronic hemodialysis patients. (2005) Journal of the American
Society of Nephrology; 16(8):2487-2494.
\16\ De Castro C. (2013). Pain assessment and management in
hemodialysis patients. CANNT Journal; 23(3):29-32; Wyne A, Rai R,
Cuerden M, Clark WF, Suri RS. (2011). Opioid and benzodiazepine use
in end-stage renal disease: a systematic review. Clinical Journal of
the American Society of Nephrology. 6(2):326-333.
---------------------------------------------------------------------------

We are proposing to adopt a pain measure that is based on an NQF-
endorsed measure (NQF 0420: Pain Assessment and Follow-Up).
NQF 0420 assesses the percentage of patients with
documentation of a pain assessment using a standardized tool, and
documentation of a follow-up plan when pain is present. The Measures
Application Partnership supported the use of NQF 0420 in the
ESRD QIP in its January 2014 Pre-Rulemaking Report, because the measure
``addresses a National Quality Strategy [NQS] aim not adequately
addressed in the program measure set'' and promotes person- and family-
centered care. We are proposing to adopt a reporting measure based on
this NQF-endorsed measure so that we can collect data that we can use
in the future to calculate both achievement and improvement scores,
should we propose to adopt the clinical version of this measure in
future rulemaking. Although we recognize that we recently adopted the
NHSN Bloodstream Infection clinical measure despite a lack of baseline
data to calculate achievement and improvement scores, we believe that
measure warranted special treatment in light of the fact that it
addresses patient safety. Because the proposed screening for pain
measure addresses quality of life and patient well-being, and not
patient safety, we think it is appropriate to adopt it as a reporting
measure until such time that we can collect the baseline data needed to
score it as a clinical measure.
Section 1881(h)(2)(B)(ii) of the Act states that ``In the case of a
specified area or medical topic determined appropriate by the Secretary
for which a feasible and practical measure has not been endorsed by the
entity with a contract under section 1890(a) of the Act [in this case
NQF], the Secretary may specify a measure that is not so endorsed so
long as due consideration is given to measures that have been endorsed
or adopted by a consensus organization identified by the Secretary.''
Because we have given due consideration to endorsed measures, as well
as those adopted by a consensus organization, and determined it is not
practical or feasible to adopt those measures in the ESRD QIP, we are
proposing to adopt the Pain Assessment and Follow-Up reporting measure
under the authority of section1881(h)(2)(B)(ii) of the Act.
For PY 2018 and future payment years, we propose that facilities
must report one of the following conditions in CROWNWeb, once every six
months per performance period, for each qualifying patient (defined
below):
1. Pain assessment using a standardized tool is documented as
positive, and a follow-up plan is documented.
2. Pain assessment documented as positive, a follow-up plan is not
documented, and the facility possesses documentation that the patient
is not eligible.
3. Pain assessment documented as positive using a standardized
tool, a follow-up plan is not documented, and no reason is given.
4. Pain assessment using a standardized tool is documented as
negative, and no follow-up plan required.
5. No documentation of pain assessment, and the facility possesses
documentation the patient is not eligible for a pain assessment using a
standardized tool.
6. No documentation of pain assessment, and no reason is given.
For this measure, a qualifying patient is defined as a patient aged
18 years or older who has been treated at the facility for 90 days or
longer. This proposed measure will collect the same data described in
NQF 0420, but we are proposing a few modifications to the NQF-
endorsed version. First, we are proposing that facilities must report
data for each patient once every six months, whereas NQF 0420
requires facilities to report the data based on each visit. We are
proposing this modification because we agree with public comments
reflected on the Measures Application Partnership's January 2014 Pre-
Rulemaking Report, which stated that conducting a pain assessment every
time a patient receives dialysis would be unduly burdensome for
facilities. Second, we are proposing that conditions covering the first
six months of the performance period must be reported in CROWNWeb
before August 1 of the performance period, and that conditions covering
the second six months of the performance period must be reported in
CROWNWeb before February 1 of the year directly following the
performance period. We believe this reporting schedule will ensure
regular monitoring and follow-up of patients' pain without imposing an
undue burden on facilities. Third, we are proposing to score facilities
based on whether they successfully report the data, and not based on
the measure results. Technical specifications for the Pain Assessment
and Follow-Up reporting measure can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We seek comments on this proposal.
f. Proposed NHSN Healthcare Personnel Influenza Vaccination Reporting
Measure
Infection is the second most common cause of death in patients with
ESRD, following cardiovascular causes,\17\ and influenza accounts for
significant morbidity and mortality in patients receiving
hemodialysis.\18\ Healthcare personnel (HCP) can acquire influenza from
patients and transmit influenza to patients and other HCP; decreasing
transmission of influenza from HCP to persons at high risk likely
reduces influenza-related deaths among persons at high risk for
complications from influenza, including patients with ESRD.\19\
Vaccination is an effective preventive measure against influenza that
can prevent many illnesses, deaths, and losses in productivity.\20\ In
addition, HCP are considered high priorities for vaccine use. Achieving
and sustaining high influenza vaccination coverage among HCP is
intended to help protect HCP and their patients, and to reduce disease
burden and healthcare costs. Results of studies in post-acute care
settings similar to the ESRD facility setting indicate that higher
vaccination coverage among HCP is associated with lower all-cause
mortality.\21\ We therefore propose to adopt an NHSN HCP Influenza
Vaccination reporting measure for PY 2018 and future payment years.
---------------------------------------------------------------------------

\17\ Soni R, Horowitz B, Unruh M. Immunization in end-stage
renal disease: Opportunity to improve outcomes. Semin, Dial. 2013
Jul-Aug;26(4):416-26.
\18\ Fiore AE, Shay DK, Haber P, et al. Prevention and control
of influenza. Recommendations of the Advisory Committee on
Immunization Practices (ACIP). MMWR Recomm Rep. 2007;56:1-54.
\19\ Pearson ML, Bridges CM, Harper SA. Influenza vaccination of
health-care personnel: Recommendations of the Healthcare Infection
Control Practices Advisory Committee (HICPAC) and the Advisory
Committee on Immunization Practices (ACIP). MMWR. 2006:55:1-16.
\20\ Talbot TR, Bradley SE., Cosgrove SE., et al. Influenza
vaccination of healthcare workers and vaccine allocation for
healthcare workers during vaccine shortages. Infect Control Hosp
Epidemiol. 2005;26(11):882-90.
\21\ Carman WF, Elder AG, Wallace LA, et al. Effects of
influenza vaccination of health-care workers on mortality of elderly
people in long-term care: a randomized controlled trial. Lancet.
2000;355(9198):93-7; see also Potter J, Stott DJ, Roberts MA, et al.
Influenza vaccination of health care workers in long-term-care
hospitals reduces the mortality of elderly patients. J infect Dis.
1997;175(1):1-6.
---------------------------------------------------------------------------

We are proposing to use a measure that is based on an NQF-endorsed
measure (NQF 0431: Influenza Vaccination Coverage Among
Healthcare Personnel) of the percentage of qualifying HCP who (a)
received an influenza vaccination; (b) were determined to have a
medical

[[Page 40262]]

contraindication; (c) declined influenza vaccination; or (d) were of an
unknown vaccination status. A ``qualifying HCP'' is defined as an
employee, licensed independent practitioner, or adult student/trainee/
volunteer who works in a facility for at least one day between October
1 and March 31. The Measures Application Partnership supported the use
of NQF 0431 in the ESRD QIP in its January 2014 Pre-Rulemaking
Report because the measure is NQF-endorsed for use in the dialysis
facility care setting. We are proposing to adopt a reporting measure
based on this NQF-endorsed measure so that we can collect data that we
can use in the future to calculate both achievement and improvement
scores, should we propose to adopt the clinical version of this measure
in future rulemaking. Although we recognize that we recently adopted
the NHSN Bloodstream Infection clinical measure despite a lack of
baseline data to calculate achievement and improvement scores, we
believe that measure warranted special treatment in light of the fact
that it addresses patient safety. Because the proposed NHSN HCP
Influenza Vaccination reporting measure addresses population health,
and not patient safety, we think it is appropriate to adopt it as a
reporting measure until such time that we can collect the baseline data
needed to score it as a clinical measure.
Section 1881(h)(2)(B)(ii) of the Act states that ``In the case of a
specified area or medical topic determined appropriate by the Secretary
for which a feasible and practical measure has not been endorsed by the
entity with a contract under section 1890(a) [in this case, NQF], the
Secretary may specify a measure that is not so endorsed as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary.'' Because we
have given due consideration to endorsed measures as well as those
adopted by a consensus organization, and determined it is not practical
or feasible to adopt this measure in the ESRD QIP, we are proposing to
adopt the NHSN Healthcare Personnel Influenza Vaccination reporting
measure under the authority of section 1881(h)(2)(B)(ii) of the Act.
For PY 2018 and future payment years, we propose that facilities
must submit, on an annual basis, an HCP Influenza Vaccination Summary
Form to CDC's NHSN system, according to the specifications available in
the NHSN Healthcare Personnel Safety Component Protocol (https://www.cdc.gov/nhsn/PDFs/HPS-manual/vaccination/HPS-flu-vaccine-protocol.pdf). This proposed measure differs from NQF 0431 in
that we are proposing to collect the same data but will score
facilities on the basis of whether they submit this data, rather than
on the percentage of HCP vaccinated. We propose that the deadline for
reporting this information to NHSN be May 15th of each year. This date
is consistent with the reporting deadline established by CMS for other
provider types reporting HCP vaccination data to NHSN. Because the flu
season typically spans from October to April, NHSN protocols submitted
by May 15 would document vaccinations received during the preceding flu
season. For example, NHSN HCP Influenza Vaccination Summary Forms
submitted by May 15, 2016, would contain data from October 1, 2015 to
March 31, 2016, and would be used for the PY 2018 ESRD QIP; NHSN
protocols submitted by May 15, 2017, would contain data from October 1,
2016 to March 31, 2017, and would be used for the PY 2019 ESRD QIP, and
so on. Technical specifications for this measure can be found at:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html.
We request comments on this proposal.

[[Page 40263]]

[GRAPHIC] [TIFF OMITTED] TP11JY14.001

2. Proposed Performance Period for the PY 2018 ESRD QIP
Section 1881(h)(4)(D) of the Act requires the Secretary to
establish the performance period with respect to a year, and that the
performance period occur prior to the beginning of such year. In
accordance with our proposal to adopt CY 2015 as the performance period
for the PY 2017 ESRD QIP, as well as our policy goal to collect 12
months of data on each measure when feasible, we are proposing to adopt
CY 2016 as the performance period for the PY 2018 ESRD QIP. With
respect to the NHSN Healthcare Personnel Influenza Vaccination
Reporting measure, we are proposing that the performance period will be
from October 1, 2015 through March 31, 2016, which is consistent with
the length of the 2015-2016 influenza season.
We seek comments on these proposals.
3. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the PY 2018 ESRD QIP
a. Proposed Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures in the PY 2018 ESRD QIP
For the same reasons stated in the CY 2013 ESRD PPS final rule (77
FR 67500 through 76502), we are proposing for PY 2018 to set the
performance standards, achievement thresholds, and benchmarks based on
the 50th, 15th, and 90th percentile, respectively, of national
performance in CY 2014 for all the clinical measures except for the
proposed ICH CAHPS clinical measure. As finalized in the CY 2014 ESRD
PPS Final Rule (78 FR 72213), facilities are not required to administer
the ICH CAHPS survey (via a CMS-approved third-party vendor) on a
semiannual basis until CY 2015, the proposed performance period for the
PY 2017 ESRD QIP. We believe that ICH CAHPS data collected during CY
2014 will not be reliable enough to use for the purposes of
establishing performance standards, achievement thresholds, and
benchmarks, because facilities are only required to administer the
survey once in CY 2014. Therefore, we propose to set the performance
standards, achievement thresholds, and benchmarks based on the 50th,
15th, and 90th percentile, respectively, of national performance in CY
2015 for the proposed ICH CAHPS clinical measure.
We seek comments on these proposals.
b. Estimated Performance Standards, Achievement Thresholds, and
Benchmarks for the Clinical Measures Proposed for the PY 2018 ESRD QIP
At this time, we do not have the necessary data to assign numerical
values to the proposed performance standards for the clinical measures,
because we do not yet have data from CY 2014 or the first portion of CY
2015. We will publish values for the clinical measures, using data from
CY 2014 and the first portion of CY 2015, in the CY 2016 ESRD PPS Final
Rule.
c. Proposed Performance Standards for the PY 2018 Reporting Measures
In the CY 2014 ESRD PPS Final Rule, we finalized performance
standards for the Anemia Management and Mineral Metabolism reporting
measures (78 FR 72213). We are not proposing any changes to this policy
beyond the proposal to modify the reporting requirements for the
Mineral Metabolism reporting measure, which appears above in Section
III.G.1.
For the Screening for Clinical Depression and Follow-Up reporting
measure, we propose to set the performance standard as successfully
reporting one of the above-listed clinical depression and follow-up
screening conditions for each qualifying patient in CROWNWeb before the
February 1st

[[Page 40264]]

directly following the performance period.
For the Pain Assessment and Follow-Up reporting measure, we propose
to set the performance standard as successfully reporting one of the
above-listed pain assessment and follow-up conditions for each
qualifying patient in CROWNWeb twice annually: once before August 1st
for the first 6 months of the performance period, and once before the
February 1st directly following the performance period for the last six
months of the performance period.
For the NHSN Healthcare Provider Influenza Vaccination reporting
measure, we propose to set the performance standard as successfully
submitting the HCP Influenza Vaccination Summary Form to CDC's NHSN
system by May 15, 2017.
We seek comments on these proposals.
4. Proposal for Scoring the PY 2018 ESRD QIP Measures
a. Scoring Facility Performance on Clinical Measures Based on
Achievement
In the CY 2014 ESRD PPS Final Rule, we finalized a policy for
scoring performance on clinical measures based on achievement (78 FR
72215). In determining a facility's achievement score for each measure
under the PY 2018 ESRD QIP, we propose to continue using this
methodology for all clinical measures except the ICH CAHPS clinical
measure. Under this methodology, facilities receive points along an
achievement range based on their performance during the proposed
performance period for each measure, which we define as a scale between
the achievement threshold and the benchmark.
b. Scoring Facility Performance on Clinical Measures Based on
Improvement
In the CY 2014 ESRD PPS Final Rule, we finalized a policy for
scoring performance on clinical measures based on improvement (78 FR
72215 through 72216). In determining a facility's improvement score for
each measure under the PY 2018 ESRD QIP, we propose to continue using
this methodology for all clinical measures except the ICH CAHPS
clinical measure. Under this methodology, facilities receive points
along an improvement range, defined as a scale running between the
improvement threshold and the benchmark. We propose to define the
improvement threshold as the facility's performance on the measure
during CY 2015. The facility's improvement score would be calculated by
comparing its performance on the measure during CY 2016 (the proposed
performance period) to its performance rate on the measure during CY
2015.
c. Proposal for Scoring the ICH CAHPS Clinical Measure
For PY 2018 and future payment years, we propose the following
scoring methodology for the ICH CAHPS clinical measure. We propose to
score the measure on the basis of three composite measures and three
global ratings.
Composite Measures:
Nephrologists' Communication and Caring;
Quality of Dialysis Center Care and Operations; and
Providing Information to Patients.
Global Ratings:
Overall rating of the nephrologists (Question 8)
Overall rating of the dialysis center staff (Question 32)
Overall rating of the dialysis facility (Question 35)

The composite measures are groupings of questions that measure the same
dimension of healthcare. (Groupings of questions and composite measures
can be found at https://ichcahps.org/Portals/0/ICH_Composites_English.pdf.) Global ratings questions employ a scale of 0 to 10, worst
to best; each of the questions within a composite measure use either
``Yes'' or ``No'' responses, or response categories ranging from
``Never'' to ``Always,'' to assess the patient's experience of care at
a facility. Facility performance on each composite measure will be
determined by the percent of patients who choose ``top-box'' responses
(i.e., most positive or ``Always'') to the ICH CAHPS survey questions
in each domain. Examples of questions and top-box responses are
displayed below:

Q11: In the last 3 months, how often did the dialysis center
staff explain things in a way that was easy for you to understand?
Top-box response: ``Always''
Q19: The dialysis center staff can connect you to the dialysis
machine through a graft, fistula, or catheter. Do you know how to
take care of your graft, fistula or catheter?
Top-box response: ``Yes''

We propose that a facility will receive an achievement score and an
improvement score for each of the composite measures and global ratings
in the ICH CAHPS survey instrument. For purposes of calculating
achievement scores for the ICH CAHPS clinical measure, we propose to
base the score on where a facility's performance rate falls relative to
the achievement threshold and the benchmark for that measure. We
propose that facilities will earn between 0 to 10 points for
achievement based on where its performance for the measure falls
relative to the achievement threshold. If a facility's performance rate
during the performance period is:
Equal to or greater than the benchmark, then the facility
would receive 10 points for achievement;
Less than the achievement threshold, then the facility
would receive 0 points for achievement; or
Equal to or greater than the achievement threshold, but
below the benchmark, then the following formula would be used to derive
the achievement score: [9 * ((Facility's performance period rate -
achievement threshold)/(benchmark - achievement threshold))] + .5, with
all scores rounded to the nearest integer, with half rounded up.
For the purposes of calculating improvement scores for the ICH
CAHPS clinical measure, we propose that the improvement threshold will
be defined as facility performance in CY 2015, and further propose to
base the score on where a facility's performance rate falls relative to
the improvement threshold and the benchmark for that measure. We
propose that a facility can earn between 0 to 9 points based on how
much its performance on the measure during the performance period
improves from its performance on the measure during the baseline
period. If a facility's performance rate during the performance period
is:
Less than the improvement threshold, then the facility
would receive 0 points for improvement; or
Equal to or greater than the improvement threshold, but
below the benchmark, then the following formula would be used to derive
the improvement score: [10 * ((Facility performance period rate -
Improvement threshold)/(Benchmark - Improvement threshold))] - .5, with
all scores rounded to the nearest integer, with half rounded up.
We further propose that a facility's ICH CAHPS score will be based
on the higher of the facility's achievement or improvement score for
each of the composite measures and global ratings. Additionally, we
propose that achievement and/or improvement scores on the three
composite measures and the three global ratings will be averaged
together to yield an overall score on the ICH CAHPS clinical measure.
The timing and frequency of administering the ICH CAHPS survey is
critical to obtaining reliable results. For

[[Page 40265]]

example, if a facility did not conduct two semiannual surveys during a
given performance period, then patient experiences during the 6-month
period(s) covered by the missed survey(s) would not be captured.
Additionally, if facilities (via CMS-approved vendors) do not report
their ICH CAHPS survey results to CMS, then these results cannot be
taken into account when establishing national performance standards for
the measure, thereby diminishing the measure's reliability. Because
timely survey administration and data reporting is critical to reliably
scoring ICH CAHPS as a clinical measure in the ESRD QIP, we propose
that a facility will receive a score of 0 on the measure if it does not
meet the survey administration and reporting requirements finalized in
the CY 2014 ESRD PPS Final Rule (78 FR 72193 through 72196).
We seek comments on these proposals to score the ICH CAHPS clinical
measure.
d. Proposals for Calculating Facility Performance on Reporting Measures
In the CY 2014 ESRD PPS Final Rule, we finalized policies for
scoring performance on the Anemia Management and Mineral Metabolism
reporting measures in the ESRD QIP (78 FR 72216). We are not proposing
any changes to these policies beyond the proposals that were made
beginning with the PY 2017 program, which appear in section III.F.7
above.
With respect to the Screening for Clinical Depression and Follow-
up, Pain Assessment and Follow-Up, and NHSN Healthcare Provider
Influenza Vaccination reporting measures, we propose that facilities
will receive a score of 10 on the measures if they meet the proposed
performance standards for the measures, and a score of 0 on the measure
if they do not. We are proposing to score these reporting measures
differently than the Anemia Management and Mineral Metabolism reporting
measures because they require annual or semiannual reporting, and
therefore scoring based on monthly reporting rates is not feasible.
We seek comments on these proposals.
5. Proposed Minimum Data for Scoring Measures for the PY 2018 ESRD QIP
With the following exceptions discussed below, we are not proposing
to change the minimum data policies for the PY 2018 ESRD QIP from that
proposed above for the PY 2017 ESRD QIP. We are also proposing that the
30 survey-eligible patient minimum during the eligibility period and 30
survey complete minimum during the performance period that we proposed
to adopt for the ICH CAHPS reporting measure will also apply to the ICH
CAHPS clinical measure. We have determined that the ICH CAHPS survey is
satisfactorily reliable when a facility obtains a total of at least 30
completed surveys during the performance period. Therefore, even if a
facility meets the 30 survey-eligible patient minimum during the
eligibility period and the survey administration and reporting
requirements, if the facility is only able to obtain 29 or fewer survey
completes during the performance period, the facility will not be
eligible to receive a score on the ICH CAHPS clinical measure.
We further propose the facilities with fewer than 10 patient-years
at risk will not be eligible to receive a score on the proposed STrR
clinical measure. We considered adopting the 11-patient minimum
requirement that we use for the other clinical measures. We decided,
however, to base facilities' eligibility for the measure in terms of
the number of patient-years at risk, because facility performance rates
are based on the number of patient-years at risk, not the number of
patients. Additionally, we decided to set the minimum data requirements
at 10 patient-years at risk because, based on national average event
rates, this is the time required to achieve an average of 5 transfusion
events. The 5 expected transfusion events requirement translates to a
standard deviation of approximately 0.45 if the facility has rates
exactly corresponding to the national average. In addition, 10 patient-
years at risk is the threshold used in the Dialysis Facility Compare
program, and we believe that public-reporting and VBP programs for ESRD
should adopt consistent measure specifications where feasible.
For the proposed STrR measure, we propose to apply the small-
facility adjuster to facilities with 21 or fewer patient-years at risk.
We decided to base the threshold for applying the small-facility
adjuster on the number of patient-years at risk, because facility
performance rates are based on the number of patient-years at risk, not
the number of patients. We are proposing to set the threshold at 21
patient-years at risk, because we determined that this was the minimum
number of patient-years at risk needed to achieve an IUR of 0.4 (that
is, moderate reliability) for the proposed STrR measure. Because the
small-facility adjuster gives facilities the benefit of the doubt when
measure scores can be unduly influenced by a few outlier patients, we
believe that setting the threshold at 21 qualifying patient-years at
risk will not unduly penalize facilities that treat small numbers of
patients on the proposed STrR clinical measure.
With these exceptions, we are not proposing to change the policy,
finalized most recently in the CY 2014 ESRD PPS Final Rule (78 FR 72220
through 72221), that facilities must have at least 11 qualifying
patients for the entire performance period in order to be scored on a
clinical measure.
We currently have a policy, most recently finalized in the CY 2014
ESRD PPS final rule (78 FR 72197 through 72198 and 72220 through
72221), to score facilities on reporting measures only if they have a
minimum number of qualifying patients during the performance period. As
discussed in Section III.F.7 above, we are proposing to modify the case
minimum requirements for the Anemia Management and Mineral Metabolism
reporting measures beginning with the PY 2017 ESRD QIP. We are not
proposing any additional changes in the patient minimum requirements
for the Anemia Management and Mineral Metabolism reporting measures in
the PY 2018 program.
For the Screening for Clinical Depression and Follow-Up and the
Pain Assessment and Follow-Up reporting measures, we propose a case
minimum of one qualifying patient. We believe this patient minimum
requirement will enable us to gather a sufficient amount of data to
calculate future performance standards, benchmarks, and achievement
thresholds, should we propose to adopt clinical versions of these
measures in the future.
As discussed in Section III.G.2.f, we are not proposing that a
facility will have to meet a patient minimum in order to receive a
score on the NHSN Healthcare Provider Influenza Vaccination reporting
measure. We believe it is standard practice for all HCP to receive
influenza vaccinations and, as discussed above, HCP vaccination is
likely to reduce influenza-related deaths and complications among the
ESRD population. Accordingly, we are proposing that all facilities,
regardless of patient population size, will be scored on the influenza
vaccination measure.
Under our current policy, we begin counting the number of months
for which a facility is open on the first day of the month after the
facility's CCN open date. Only facilities with a CCN open date before
July 1, 2016, are eligible to be scored on the Anemia Management and
Mineral Metabolism reporting measures in the PY 2018

[[Page 40266]]

program. We are proposing to apply this finalized policy to the
proposed Screening for Depression and Follow-Up and the Pain Assessment
and Follow-Up reporting measures. We further propose that facilities
with a CCN open date after January 1, 2016, will not be eligible to
receive a score on the NHSN Healthcare Personnel Influenza Vaccination
reporting measure in the PY 2018 program. Due to the time it takes for
facilities to register with NHSN and become familiar with the NHSN
Healthcare Personnel Safety Component Protocol, we do not believe it is
reasonable to expect facilities with CCN open dates after January 1,
2016, to submit an HCP Influenza Vaccination Summary Form to CDC's NHSN
system before the May 15, 2016, deadline.
As finalized in the CY 2014 ESRD PPS Final Rule (78 FR 72220),
facilities are generally eligible to receive a score on the clinical
measures if their CCN open date occurs before the end of the
performance period. However, facilities with a CCN open date after
January 1 of the performance period are not eligible to receive a score
on the NHSN Bloodstream Infection clinical measure, due to the need to
collect 12 months of data to accurately score the measure. We are now
proposing that facilities with a CCN open date after January 1, 2016,
will also not be eligible to receive a score on the ICH CAHPS clinical
measure in the PY 2018 program. Due to the additional time needed to
arrange to contract with CMS-approved third-party vendors, and for
vendors to administer the survey twice and report the results to CMS,
we do not believe facilities with CCN open dates after January 1, 2016,
can reasonably be expected to meet the requirements associated with the
proposed ICH CAHPS clinical measure for that performance period.
As discussed in the Section III.G.7 below, we are continuing our
policy that a facility will not receive a TPS unless it receives a
score on at least one clinical measure and at least one reporting
measure. We note that finalizing the above proposals would result in
facilities not being eligible for a payment reduction for the PY 2018
ESRD QIP if they have a CCN open date on or after July 1, 2016.
We seek comments on these proposals.
Table 29 displays the proposed patient minimum requirements for
each of the measures, as well as the proposed CCN open dates after
which a facility will not be eligible to receive a score on a reporting
measure.

Table 29--Proposed Minimum Data Requirements for the PY 2018 ESRD QIP
----------------------------------------------------------------------------------------------------------------
Small facility
Measure Minimum data requirements CCN Open date adjuster
----------------------------------------------------------------------------------------------------------------
Adult Hemodialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Adult Peritoneal Dialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Pediatric Hemodialysis Adequacy 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Pediatric Peritoneal Dialysis 11 qualifying patients..... N/A................... 11-25 patients.
Adequacy (Clinical).
Vascular Access Type: Catheter 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Vascular Access Type: Fistula 11 qualifying patients..... N/A................... 11-25 patients.
(Clinical).
Hypercalcemia (Clinical)........... 11 qualifying patients..... N/A................... 11-25 patients.
NHSN Bloodstream Infection 11 qualifying patients..... Before January 1, 2016 11-25 patients.
(Clinical).
SRR (Clinical)..................... 11 index discharges........ N/A................... 11-41 index
discharges.
STrR (Clinical).................... 10 patient-years at risk... N/A................... 10-21 patient-years at
risk.
ICH CAHPS (Clinical)............... Facilities with 30 or more Before January 1, 2016 N/A.
survey-eligible patients
during the calendar year
preceding the performance
period must submit survey
results. Facilities will
not receive a score if
they do not obtain a total
of at least 30 completed
surveys during the
performance period.
Anemia Management (Reporting)...... Facilities with 11 or more Before July 1, 2016... N/A.
qualifying patients must
report data for all
patients. Facilities with
between 2 and 11
qualifying patients must
report data on all but 1
qualifying patient.
Facilities with 1
qualifying patient must
report for that patient.
Mineral Metabolism (Reporting)..... Facilities with 11 or more Before July 1, 2016... N/A.
qualifying patients must
report data for all
patients. Facilities with
between 2 and 11
qualifying patients must
report data on all but 1
qualifying patient.
Facilities with 1
qualifying patient must
report for that patient.
Depression Screening and Follow-Up One qualifying patient..... Before July 1, 2016... N/A.
(Reporting).
Pain Assessment and Follow-Up One qualifying patient..... Before July 1, 2016... N/A.
(Reporting).
NHSN HCP Influenza Vaccination N/A........................ Before January 1, 2016 N/A.
(Reporting).
----------------------------------------------------------------------------------------------------------------

[[Page 40267]]

6. Proposal for Calculating the Clinical Measure Domain Score
As the ESRD QIP evolves and we continue to adopt new clinical
measures that track the goals of the NQS, we do not believe that the
current scoring methodology provides the program with enough
flexibility to strengthen incentives for quality improvement in areas
where quality gaps continue to exist. Therefore, under the authority of
Section 1881(h)(3)(A)(i) of the Act, we are proposing to revise the
scoring methodology beginning with the PY 2018 ESRD QIP so that we
assign measure scores on the basis of two domains: a Clinical Measure
Domain and a Reporting Measure Domain.
First, we propose to establish a Clinical Measure Domain, which we
define as an aggregated metric of facility performance on the clinical
measures and measure topics in the ESRD QIP. Under this proposed
approach, we would score individual clinical measures and measure
topics using the methodology we finalize for that measure or measure
topic. Clinical measures and measure topics would then be grouped into
subdomains within the Clinical Measure Domain, according to quality
categories. Within these subdomains, measure scores would be multiplied
by a weighting coefficient, weighted measure scores would be summed
together to determine subdomain scores, and then subdomain scores would
be summed together to determine a facility's Clinical Measure Domain
score. This scoring methodology provides more flexibility to focus on
quality improvement efforts, because it makes it possible to group
measures according to quality categories and to weight each category
according to opportunities for quality improvement.
We further propose to divide the clinical measure domain into three
subdomains for the purposes of calculating the Clinical Measure Domain
score:

Safety
Patient and Family Engagement/Care Coordination
Clinical Care

We took several considerations into account when selecting these
particular subdomains. First, safety, patient engagement, care
coordination, and clinical care are all NQS goals for which the ESRD
QIP has proposed and/or finalized measures. We are attempting to align
all CMS quality improvement efforts with the NQS because its patient-
centered approach prioritizes measures across our quality reporting and
pay-for-performance programs to ensure that the measurement approaches
in these programs, as a whole, can make meaningful improvements in the
quality of care furnished in a variety of settings. We also believe
that adopting an NQS-based subdomain structure for the clinical
measures in the ESRD QIP is responsive to stakeholder requests that we
align our measurement approaches across HHS programs.
Second, we are proposing to combine the NQS goals of Care
Coordination and Patient- and Caregiver-Centered Experience of Care
into one subdomain because we believe the two goals complement each
other. ``Care Coordination'' refers to the NQS goal of promoting
effective communication and coordination of care. ``Patient- and
Caregiver-Centered Experience of Care'' refers to the NQS goal of
ensuring that each patient and family is engaged as a partner in care.
In order to engage patients and families as partners, we believe that
effective communication and coordination of care must coexist, and that
patient and family engagement cannot occur independently of effective
communication and care coordination. We therefore believe that it is
appropriate to combine measures of care coordination with those of
patient and family engagement for the purposes of calculating a
facility's clinical measure domain score.
For PY 2018 and future payment years, we propose to include the
following measures in the following subdomains of the proposed clinical
measure domain (see Table 30):

Table 30--Proposed Subdomains in the Clinical Measure Domain
----------------------------------------------------------------------------------------------------------------
Subdomain Measures and measure topics
----------------------------------------------------------------------------------------------------------------
Safety Subdomain.......................... NHSN Bloodstream Infection measure.
Patient and Family Engagement/Care ICH CAHPS measure.
Coordination Subdomain.
SRR measure.
Clinical Care Subdomain................... STrR measure.
Dialysis Adequacy measure topic.
Vascular Access Type measure topic.
Hypercalcemia measure.
----------------------------------------------------------------------------------------------------------------

We seek comments on these proposals to adopt a Clinical Measure
Domain that includes three subdomains (safety, patient and family
engagement/care coordination, and clinical care) for the purpose of
calculating a facility's clinical measure domain score for PY 2018.
In deciding how to weight the proposed subdomains that comprise the
clinical measure domain score, we took the following considerations
into account: (1) the number of measures and measure topics in a
proposed subdomain; (2) how much experience facilities have had with
the measures and measure topics in a proposed subdomain; and (3) how
well the measures align with CMS's highest priorities for quality
improvement for patients with ESRD. Because the proposed Clinical Care
subdomain contains the largest number of measures, and facilities have
the most experience with the measures in this subdomain, we are
proposing to weight the Clinical Care subdomain significantly higher
than the other subdomains. Facilities have more experience with the
NHSN Bloodstream Infection measure in the proposed Safety subdomain
than they do with the SRR measure in the proposed Patient and Family
Engagement/Care Coordination subdomain, but we are proposing to include
a larger number of measures in the Patient and Family Engagement/Care
Coordination subdomain. We are proposing to give the Patient and Family
Engagement/Care Coordination subdomain slightly more weight than the
Safety subdomain, because it includes two measures, whereas only one
measure appears in the proposed Safety subdomain. In future rulemaking,
we will consider revising these weights based on facility experience
with the measures contained within these proposed subdomains.
For these reasons, we propose the following weights for the three
subdomains in the clinical measure domain score for PY 2018:

[[Page 40268]]

------------------------------------------------------------------------
Weight in the
clinical
Subdomain measure domain
score (%)
------------------------------------------------------------------------
Safety.................................................. 20
Patient and Family Engagement/Care Coordination......... 30
Clinical Care........................................... 50
------------------------------------------------------------------------

We seek comments on this proposal.

In deciding how to weight measures and measure topics within a
proposed subdomain, we took into account the same considerations we
considered when deciding how to weight the proposed subdomains. Because
the NHSN Bloodstream Infection clinical measure is the only measure in
the proposed Safety subdomain, we are proposing to assign the entire
subdomain weight to that measure. We additionally note that improving
patient safety and reducing bloodstream infections in patients with
ESRD is one of our highest priorities for quality improvement, so we
believe it is appropriate to weight the NHSN Bloodstream Infection
clinical measure at 20 percent of a facility's Clinical Measure Domain
Score. Because facilities have substantially more experience with the
ICH CAHPS clinical measure, as compared with the SRR clinical measure,
we are proposing to give the proposed ICH CAHPS measure twice as much
weight as the proposed SRR measure. Additionally, we note that
improving patients' experience of care is as high a priority for CMS
quality improvement efforts as improving patient safety, so we believe
it is appropriate to assign the ICH CAHPS clinical measure the same
weight as the NHSN Bloodstream Infection clinical measure. We are
proposing to give the Dialysis Adequacy and Vascular Access Type
measure topics the most weight in the Clinical Care subdomain because
facilities have substantially more experience with these measure
topics, as compared to the other measures in the Clinical Care
subdomain. We are proposing to assign equal weights to the STrR and
Hypercalcemia measures because PY 2018 would be the first program year
in which facilities are measured on the STrR measure, and because the
clinical significance of the Hypercalcemia measure is diminished in the
absence of other information about mineral metabolism (for example, a
patient's phosphorus and plasma parathyroid hormone levels), which
would provide a more comprehensive assessment of mineral metabolism (78
FR 72217). For these reasons, we propose to use the following weighting
system for calculating a facility's Clinical Measure domain score:

------------------------------------------------------------------------
Measure weight in
the clinical
Measures/measure topics by subdomain measure domain
score (%)
------------------------------------------------------------------------
Safety Subdomain..................................... 20
NHSN Bloodstream Infection measure............... 20
Patient and Family Engagement/Care Coordination 30
Subdomain...........................................
ICH CAHPS measure................................ 20
SRR measure...................................... 10
Clinical Care Subdomain.......................... 50
STrR measure..................................... 7
Dialysis Adequacy measure topic.................. 18
Vascular Access Type measure topic............... 18
Hypercalcemia measure............................ 7
------------------------------------------------------------------------

We seek comments on this proposal for weighting individual measures
within the Clinical Measure Domain.
7. Proposal for Calculating the Reporting Measure Domain Score, the
Reporting Measure Adjuster, and the TPS for the PY 2018 ESRD QIP
Starting with the PY 2014 program, the ESRD QIP has used a scoring
methodology in which the clinical measures receive substantially more
weight than the reporting measures in the TPS, and the weighting
coefficients for the two types of measures total 100 percent of the
TPS. We continue to believe it is appropriate to incorporate reporting
measure scores in the TPS calculations because ``reporting is an
important component in quality improvement'' (76 FR 70274); we also
continue to believe that clinical measures should carry substantially
more weight than reporting measures because clinical measures ``score
providers/facilities based upon actual outcomes'' (76 FR 70275). These
statements reflect the fact that clinical and reporting measures serve
different functions in the ESRD QIP. Clinical measures provide a direct
assessment of the quality of care a facility provides, relative to
either the facility's past performance or standards of care nationwide.
Reporting measures create an incentive for facilities to monitor
significant indicators of health and illness, and they help facilities
become familiar with CMS data systems. In addition, they allow the ESRD
QIP to collect the robust clinical data needed to establish performance
standards for clinical measures.
As we continue to add reporting measures to the ESRD QIP measure
set, it becomes increasingly challenging to not weight them so heavily
that they dilute the significance of the clinical measures, while still
ensuring that we do not weight the reporting measures so lightly that
facilities are not incentivized to meet the reporting measure
requirements.
Although we considered the possibility of abandoning the use of
reporting measures, we determined that this is not feasible because
doing so would make it impossible to calculate performance standards
for many clinical measures that promise to promote high-quality care.
We also considered the possibility of weighting the reporting measures
such that each reporting measure comprised a smaller percentage of the
TPS. We believe, however, that doing so would result in the reporting
measures not carrying enough weight to provide facilities with an
incentive to meet the reporting requirements, particularly if
additional reporting measures were added to the program. For example,
if 5 reporting measures were adopted in the ESRD QIP, and the reporting
measures collectively were weighted at 5 percent of a facility's TPS
(in order to preserve the significance of the clinical measures), then
each reporting measure would only comprise 1 percent of a facility's
TPS. Under such conditions, we believe that facilities

[[Page 40269]]

may choose not to meet the reporting measure requirements, because not
doing so would have a negligible impact on their overall TPS. If enough
facilities reached this determination, then we would not be able to
establish reliable baselines, should we propose to adopt clinical
measure versions of the reporting measures. For these reasons, we are
proposing the following scoring methodology for determining the impact
of reporting measure scores on a facility's payment reductions.
For PY 2018 and future payment years, we propose to establish a new
Reporting Measure Domain. We further propose that a facility's
reporting measure domain score will be the sum of all the reporting
measure scores that the facility receives. We strive to expand
reporting measures into clinical measures in the ESRD QIP as quickly as
measure development and administrative processes permit. Therefore,
unlike the case with clinical measures in the Clinical Domain Score, we
do not intend to continue to use any particular reporting measure in
the ESRD QIP for an indefinite period of time. For this reason, we
believe that it would be unnecessarily opaque and confusing to group
reporting measures into subdomains, as we are proposing for the
clinical measures in the Clinical Measure Domain.
Additionally, we propose to establish a Reporting Measure Adjuster
(RMA), which will provide the ESRD QIP with an index of facility
performance on reporting measures within the Reporting Measure Domain.
We propose to use the following general formula to determine a
facility's RMA, based on its reporting measure domain score:
[GRAPHIC] [TIFF OMITTED] TP11JY14.002

This formula is constructed such that a high RMA is indicative of low
performance on the reporting measures, and a low RMA is indicative of
high performance. A facility's Reporting Measure Domain score (that is,
the sum of its scores on the reporting measures) is subtracted from the
total number of points a facility could earn on the reporting measures
for which it was eligible. This result is then multiplied by ``C,''
which is a coefficient used to translate reporting measure points into
TPS points. As C increases, so too does the TPS ``value'' of a
reporting measure point. For example, if C is set to 2, then 1
reporting measure point is worth 2 TPS points. If C is set to 0.5, then
1 reporting measure point is worth one-half of a TPS point. The value
of C is in not tied to the number of reporting measures in the ESRD
QIP; rather, it represents how much value we place on the reporting
measures' contribution to the quality goals of the ESRD QIP. We will
use the rulemaking process to set the value for C for each program
year.
For the PY 2018 ESRD QIP, we propose to use the following formula
to determine a facility's RMA:
[GRAPHIC] [TIFF OMITTED] TP11JY14.003

We set coefficient C at five-sixths for the PY 2018 program because
each reporting measure point in the PY 2016 program, and the proposed
PY 2017 program, is equivalent to five-sixths of a TPS point (that is,
30 points for three reporting measures comprised 25 TPS points). We
believe it is important to maintain as much consistency as possible in
the transition to the proposed scoring methodology. Therefore, we are
proposing that the ``value'' of a reporting measure point in the TPS,
as finalized in the PY 2016 program and proposed for the PY 2017
program, will remain constant in PY 2018.
For the reasons described above, we continue to believe that the
clinical measures are considerably more important than the reporting
measures in the ESRD QIP. We therefore believe that a facility's TPS
should be predominantly determined by its Clinical Measure Domain
score, and that a facility's TPS should be downwardly adjusted in the
case of noncompliance with the reporting measure requirements. The RMA,
as described above, is constructed such that a high RMA value indicates
low reporting measure scores and a low RMA value indicate high
reporting measure scores. As a result, a facility's TPS would be
entirely determined by its Clinical Measure Domain score if it receives
full credit on the reporting measures; the TPS would be slightly
decreased if the facility received high (but not perfect) scores on the
reporting measures; and the TPS would be significantly decreased if it
performed poorly on the reporting measures. For these reasons, we
propose to calculate a facility's TPS by subtracting the facility's RMA
from its Clinical Measure Domain score. Additionally, we propose to
continue our policy to require a facility to be eligible for a score on
at least one reporting and one clinical measure in order to receive a
TPS (78 FR 72217).
In an effort to estimate the impact of this proposed change for the
ESRD QIP's scoring methodology, we conducted an analysis of how the
proposed scoring methodology affected payment reduction distributions,
based on data from CY 2012 and CY 2013. This analysis compared the
scoring methodology proposed in this section and the previous section
to the scoring methodology finalized for the PY 2016 program. In order
to ensure that the analysis reliably estimated the impact on
facilities' payment reductions, the proposed scoring methodology and
the methodology finalized for the PY 2016 program were each applied to
the PY 2016 measure set. The full analysis is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications.html. The results of
this analysis are presented below in Table 31.

[[Page 40270]]

Table 31--Expected Impact of Proposed Scoring Methodology on the Distribution of Payment Reductions, Using
Measures and Measure Weights Finalized for the PY 2016 ESRD QIP and Data From CY 2012 and CY 2013
----------------------------------------------------------------------------------------------------------------
Finalized scoring methodology Proposed scoring methodology
for PY 2016, applied to for PY 2018, applied to
measures and measure weights measures and measure weights
finalized in the PY 2016 finalized in the PY 2016
Payment reduction (%) program program
---------------------------------------------------------------
Number of Number of
facilities Percent facilities Percent
----------------------------------------------------------------------------------------------------------------
0............................................... 4,828 79.4 4,606 75.7
0.5............................................. 884 14.5 739 12.2
1.0............................................. 242 4.0 306 5.0
1.5............................................. 69 1.1 108 1.8
2.0............................................. 59 1.0 323 5.3
----------------------------------------------------------------------------------------------------------------

As illustrated in Table 31, we expect that 4.3 percent more facilities
(222 overall) would receive a payment reduction under the proposed
methodology for PY 2018, as compared with the scoring methodology that
we will use for the PY 2016 program. We therefore believe that adopting
the scoring methodology proposed in this section and the previous
section will not appreciably change the distribution of facility
payment reductions, as is our intention.
We seek comments on these proposals for calculating a facility's
reporting measure domain score, to calculate the RMA, and to determine
the TPS.
Although we believe advantages are afforded by adopting the scoring
methodology proposed in this section and the previous section, we also
recognize that there may be advantages associated with maintaining
consistency with previous years' scoring methodology. Accordingly, as
an alternative to the scoring methodology proposed in this section and
the previous section, we are also seeking public comments on whether we
should continue to use the same methodology we currently use to weight
measures in the ESRD QIP and calculate a facility's TPS, with the
exception that the clinical and reporting measures would be weighted at
90 percent and 10 percent, respectively, of a facility's TPS.
8. Example of the Proposed PY 2018 ESRD QIP Scoring Methodology
In this section, we provide an example to illustrate the proposed
scoring methodology for PY 2018 and future payment years. Figures 3-7
illustrate how to calculate the clinical measure domain score, the
reporting measure domain score, the RMA, and the TPS. Note that for
this example, Facility A, a hypothetical facility, has performed very
well. Figure 1 illustrates the general methodology used to calculate
domain scores for the clinical measure domain, as well as the example
calculations for Facility A.

[[Page 40271]]

[GRAPHIC] [TIFF OMITTED] TP11JY14.004

Figure 2 illustrates the general methodology for weighting subdomains
in the clinical measure domain, as well as the example calculations for
Facility A's clinical measure domain score.

[[Page 40272]]

[GRAPHIC] [TIFF OMITTED] TP11JY14.005

Figure 3 illustrates the general methodology for calculating a
facility's reporting measure domain score, as well as the example
calculations for Facility A.
[GRAPHIC] [TIFF OMITTED] TP11JY14.006

Figure 4 illustrates the general methodology for calculating a
facility's RMA, as well as the example calculations for Facility A.

[[Page 40273]]

[GRAPHIC] [TIFF OMITTED] TP11JY14.007

Figure 5 illustrates the general methodology for calculating a
facility's TPS, as well as the example calculations for Facility A.
[GRAPHIC] [TIFF OMITTED] TP11JY14.008

9. Proposed Payment Reductions for the PY 2018 ESRD QIP
Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to
ensure that the application of the scoring methodology results in an
appropriate distribution of payment reductions across facilities, such
that facilities achieving the lowest TPSs receive the largest payment
reductions. For the same reasons described in Section III.F.8 above, we
propose that a facility would not receive a payment reduction for PY
2018 if it achieves a minimum TPS that is equal to or greater than the
total of the points it would have received if:
It performed at the performance standard for each clinical
measure;
It received the number of points for each reporting
measure that corresponds to the 50th percentile of facility performance
on each of the PY 2016 reporting measures.
The PY 2016 program is the most recent year for which we will have
calculated final measure scores before the beginning of the proposed
performance period for PY 2018 (i.e., CY 2016). Because we have not yet
calculated final measure scores, we are unable to determine the 50th
percentile of facility performance on the PY 2016 reporting measures.
We will publish that value in the CY 2016 ESRD PPS final rule once we
have calculated final measure scores for the PY 2016 program.
We seek comments on this proposal.
Section 1881(h)(3)(A)(ii) of the Act requires that facilities
achieving the lowest TPSs receive the largest payment reductions. In
the CY 2014 ESRD PPS Final Rule (78 FR 72223 through 72224), we
finalized a payment reduction scale for PY 2016 and future payment
years: For every 10 points a facility falls below the minimum TPS, the
facility would receive an additional 0.5 percent reduction on its ESRD
PPS payments for PY 2016 and future payment years, with a maximum
reduction of 2.0 percent. We are not proposing any changes to this
policy at this point.
Because we are not yet able to calculate the performance standards
for each of the clinical measures, we are also not able to calculate a
proposed minimum TPS at this time. We will publish the minimum TPS,
based on data from CY 2014 and the first part of

[[Page 40274]]

CY 2015, in the CY 2016 ESRD PPS Final Rule.
We seek comments on this proposal.

H. Future Considerations for Stratifying ESRD QIP Measures for Dual-
Eligible Beneficiaries

CMS recognizes that individuals with both Medicare and Medicaid
(also known as ``dual-eligible beneficiaries''), comprise a relatively
large proportion of Medicare enrollees with ESRD. Because ESRD programs
have a long history of performance measurement linked with public
reporting, and because there are a large number of dual-eligible
beneficiaries receiving ESRD care, we are considering stratifying ESRD
QIP measures for Medicare-Medicaid enrollees.
Measure reporting under the ESRD QIP does not currently allow us to
separately review results for dual-eligible beneficiaries or compare
those results with results achieved by other patients with ESRD, so it
is not currently known if their experiences are better, worse, or the
same as other patients. Even the basic demographics of dual-eligible
beneficiaries receiving ESRD care are not well understood. After
discussion of the pros and cons that included input from the ESRD
provider community, the Measures Application Partnership's dual-
eligible workgroup recommended that CMS take the first step in
exploring the feasibility of requiring facilities to separately report
ESRD QIP measures for Medicare-Medicaid enrollees by analyzing the
composition of the dual-eligible beneficiary population receiving ESRD
care and determining potential ways in which stratified reporting may
further quality improvement efforts. Furthermore, the Measures
Application Partnership recommended, in the context of measure
development, that CMS explore whether other risk factors unique to the
dual-eligible population receiving ESRD care would present significant
hurdles to measure stratification along these lines. We are therefore
seeking comments on whether it would be feasible to stratify ESRD QIP
measures based on whether the beneficiary is a dual eligible. We are
interested in whether stakeholders recommend stratification and, if so,
for what specific measures stakeholders would find stratification most
compelling.
We are particularly interested in public comments on whether
Medicare-Medicaid stratified quality measures under the ESRD QIP should
be reported publicly, and how we should factor those measures into our
scoring methodology. We seek comments on the meaningfulness of
stratifying measures, and the feasibility and burden associated with
reporting stratified measures.

IV. Technical Corrections for 42 Part 405

In the April 15, 2008, final rule ``Conditions for Coverage for
End-Stage Renal Disease Facilities,'' (73 FR 20370) we revised the
health and safety standards for Medicare-participating End-Stage Renal
Disease (ESRD) facilities. This rule made the first comprehensive
revisions to the ESRD Conditions for Coverage (CfCs) since they were
adopted in 1976. The original ESRD CfCs at 42 CFR Part 405 Subpart U
were deleted and new conditions were issued at 42 CFR Part 494. Subpart
U now only addresses certain requirements for ESRD networks.
As a part of these revisions, we intended to delete most of the
terms and definitions set out in Part 405 Subpart U, and create new
definitions in Part 494. This is discussed in the 2008 final rule and
in the corresponding proposed rule (70 FR 6184), and is laid out in the
final rule crosswalk (comparing the old CfCs with the new ones) at 73
FR 20451.
While we intended to delete most of the definitions at Part 405
Subpart U, we inadvertently omitted the regulations text that would
have made those changes. Subpart U, at Sec. 405.2102, still has 32
definitions, most of them unnecessary and several of them obsolete.
This creates confusion for ESRD stakeholders, patients, and suppliers.
We propose to make a technical correction that deletes the outdated
terms and definitions at Sec. 405.2102. Specifically, we propose to
delete these terms and definitions: agreement, arrangement, dialysis,
end-stage renal disease (ESRD), ESRD facility, renal dialysis center,
renal dialysis facility, self-dialysis unit, special purpose renal
dialysis facility, ESRD service, dialysis service, inpatient dialysis,
outpatient dialysis, staff-assisted dialysis, self-dialysis, home
dialysis, self-dialysis and home dialysis training, furnishes directly,
furnishes on the premises, medical care criteria, medical care norms,
medical care standards, medical care evaluation study (MCE), qualified
personnel, chief executive officer, dietitian, medical record
practitioner, nurse responsible for nursing service, physician-
director, and social worker. We also propose to delete the term and
definition for ``ESRD network organization,'' as it is duplicated
within Sec. 405.2102 as ``network organization.'' We would retain the
terms and definitions for ``network, ESRD,'' and ``network
organization.'' These changes are also outlined in Table 32 below.''

Table 32--Technical Corrections to Sec. 405.2102
------------------------------------------------------------------------
Term Proposed action Other FR location
------------------------------------------------------------------------
Agreement....................... Delete
Arrangement..................... Delete
Dialysis........................ Delete
End-Stage Renal Disease (ESRD).. Delete............. 406.13(b).
ESRD facility introductory text. Delete
1Renal dialysis center...... Delete
1Renal dialysis facility.... Delete............. 494.10.
Self-dialysis unit.......... Delete
Special purpose renal Delete............. 494.120.
dialysis facility.
ESRD Network organization....... Delete
ESRD service introductory text.. Delete
Dialysis service............ Delete
1Inpatient dialysis......... Delete
Outpatient dialysis......... Delete
Staff-assisted dialysis..... Delete
Self-dialysis............... Delete............. 494.10.
Home dialysis............... Delete............. 494.10.
Self-dialysis and home Delete
dialysis training.

[[Page 40275]]

Furnishes directly.............. Delete............. 494.10.
Furnishes on the premises....... Delete............. 494.180(d)
Medical care criteria........... Delete
Medical care norms.............. Delete
Medical care standards.......... Delete
Medical care evaluation study Delete
(MCE).
Network, ESRD................... Retain............. N/A.
Network organization............ Retain............. N/A.
Qualified personnel............. Delete
Chief executive officer..... Delete
Dietitian................... Delete............. 494.140(c).
Medical record practitioner. Delete
Nurse responsible for Delete............. 494.140(b).
nursing service.
Physician-director.......... Delete............. 494.140(a).
Social worker............... Delete............. 494.140(d).
------------------------------------------------------------------------

V. Methodology for Adjusting DMEPOS Payment Amounts Using Information
From Competitive Bidding Programs

A. Background

1. Payment Basis for Certain DMEPOS
Section 1834(a) of the Act governs payment for durable medical
equipment (DME) covered under Part B and under Part A for a home health
agency and provides for the implementation of a fee schedule payment
methodology for DME furnished on or after January 1, 1989. Sections
1834(a)(2) through (a)(7) of the Act set forth separate payment
categories of DME and describe how the fee schedule for each of the
following categories is established:
Inexpensive or other routinely purchased items,
Items requiring frequent and substantial servicing,
Customized items,
Oxygen and oxygen equipment,
Other covered items (other than DME), and
Other items of DME (capped rental items).
Section 1834(h) of the Act governs payment for prosthetic devices,
prosthetics, and orthotics (P&O) and sets forth fee schedule payment
rules for P&O. Effective for items furnished on or after January 1,
2002, payment is also made on a national fee schedule basis for
parenteral and enteral nutrition (PEN) in accordance with the authority
under section 1842(s) of the Act. The term ``enteral nutrition'' will
be used throughout this document to describe enteral nutrients supplies
and equipment covered as prosthetic devices in accordance with section
1861(s)(8) of the Act and paid for on a fee schedule basis and enteral
nutrients under DMEPOS Competitive Bidding Program (CBP), as authorized
under section 1847(a)(2)(B) of the Act. Section 1842(o)(1)(D) of the
Act mandates that payment for infusion drugs furnished through a
covered item of DME on or after January 1, 2004, is equal to 95 percent
of the average wholesale price for such drug in effect on October 1,
2003.
For DMEPOS items subject to payment under 1834 of the Act (not
subject to the CBP), the Medicare's allowed payment amount is equal to
the lesser of the actual charge for the item or the fee schedule amount
for the item. The fee schedule amounts are based on average payments
made under the previous payment methodology of reasonable charges,
which utilized supplier charges for furnishing items and services in
local areas throughout the nation to establish the Medicare allowed
payment amounts for the items and services. The reasonable charge data
used is from a specific period of time that varies slightly by payment
class (for example, July 1986 through June 1987 for inexpensive DME).
The fee schedule amounts for most items are updated on an annual basis
by covered item update factors provided in the statute for DME under
section 1834(a)(14) of the Act, for P&O under section 1834(h)(4)(A) of
the Act, and for enteral nutrition under section 1842(s)(1)(B) of the
Act.
The rules pertaining to the calculation of reasonable charges are
located at 42 CFR Part 405, Subpart E of our regulations. Under this
general methodology, several factors were taken into consideration in
determining the reasonable charge for an item. Each supplier's
``customary charge'' for an item, or the 50th percentile of charges for
an item over a 12-month period, was one factor used in determining the
reasonable charge. The ``prevailing charge'' in a local area, or the
75th percentile of suppliers' customary charges for the item in the
locality, was also used in determining the reasonable charge. For PEN
items and services only, the ``lowest charge level (LCL)'' was also
taken into consideration and was based on the 25th percentile of all
charges for an item. For the purpose of calculating prevailing charges,
a ``locality'' is defined at 42 CFR 405.505 and ``may be a State
(including the District of Columbia, a territory, or a Commonwealth), a
political or economic subdivision of a state, or a group of states.''
The regulation further specifies that the locality ``should include a
cross section of the population with respect to economic and other
characteristics.'' For PEN items and services only, the entire nation
was used as the locality for the purpose of calculating the LCL and
prevailing charges.
Effective for items furnished on or after October 1, 1985, an
additional factor, the inflation-indexed charge (IIC) as cited at 42
CFR 405.509, was added to the factors taken into consideration in
determining the reasonable charge for an item. The IIC is equal to the
lowest of the customary charge, prevailing charge, LCL (if applicable),
and IIC from the previous year updated by an inflation adjustment
factor. To summarize, the reasonable charges for each item that were
used to calculate the fee schedule amounts are equal to the lower of:
the supplier's actual charge on the claim;
the supplier's customary charge for the item;
the prevailing charge in the locality for the item;
the LCL in the locality for the item, if applicable; or
the IIC.
Under the reasonable charge payment methodology, it is assumed that
suppliers took all of their costs of

[[Page 40276]]

furnishing various items and services in various localities throughout
the nation into account in setting the prices they charge for covered
items and services.
We implemented the fee schedule payment methodologies for PENs at
42 CFR Part 414, Subparts C, and for DME prosthetic devices,
prosthetics, orthotics, and surgical dressings at 42 CFR Part 414,
Subpart D of our regulations. In accordance with section 1834(a)(10) of
the Act, the Secretary may adjust DMEPOS fee schedule amounts in
situations where it is determined that the amounts are not inherently
reasonable. This ``inherent reasonableness'' authority for adjusting
fee schedule payment amounts is governed by paragraphs (8) and (9) of
section 1842(b) of the Act and implemented at 42 CFR Part 405, Subpart
E of our regulations. Finally, in the case of DMEPOS furnished on or
after January 1, 2011, under section 1834(a)(1)(F)(ii) of the Act, the
Secretary may (in beginning January 1, 2016, must) use information on
the payment determined under the CBP in accordance with section 1847 of
the Act to adjust the fee schedule payment amounts for DME that are not
in a competitive bidding area (CBA), and the inherent reasonableness
authority does not apply. Adjustment of fee schedule amounts based on
CBP payment information (and the limitation on using inherent
reasonableness) is also authorized under section 1834(h)(1)(H)(ii) of
the Act for certain orthotics and section 1842(s)(3)(B) of the Act for
enteral nutrition in non-competitive bid areas.
2. Fee Schedule Payment Methodologies
Section 4062(b) of the Omnibus Budget Reconciliation Act of 1987
(OBRA 87), Public Law 100-203, added section 1834(a) of the Act and
mandated the implementation of local fee schedule amounts in 1989 for
DME and P&O based on the average of reasonable charges for items and
services furnished in carrier service areas throughout the United
States. The carriers were (now Medicare administrative contractors)
responsible for processing claims for Part B items and services in
accordance with section 1842(a) of the Act. The carrier service areas
used in establishing the fee schedule amounts could not exceed an
entire state. A few states were made up of two carrier service areas
and the State of New York had three carrier service areas. A carrier
service area is not to be confused with a locality established for the
purpose of calculating reasonable charges as described above. For
example, although claims for items furnished in the State of Texas were
processed by a single carrier, for reasonable charge calculation
purposes, Texas was divided into more than 50 different localities. In
1993, the local fee schedule amounts for states with more than one
carrier service areas were transitioned to statewide fee schedule
amounts. The reasonable charge data used to calculate the statewide fee
schedule amounts therefore reflected the average payment made under the
supplier charge based reasonable charge payment methodology for items
and services furnished throughout the state, including both rural and
urban areas of the state.
Section 4062(b) of OBRA 87 mandated that local fee schedule amounts
for both DME and P&O be transitioned to regional fee schedule amounts
as part of a multi-year phase in ending in 1993. Section 4152(b) of the
Omnibus Budget Reconciliation Act of 1990 (OBRA 90), Public Law 101-
508, eliminated the regional fee schedule transition for DME and
amended section 1834(a) of the Act to mandate that the local
(statewide) fee schedule amounts be limited by a national ceiling
(upper) limit, based on the median of the statewide fee schedule
amounts, and a national floor (lower limit), based on 85 percent of the
median of the statewide fee schedule amounts. The fee schedule ceiling
and floor limits for DME were phased in from 1991 through 1993. The
conversion to regional fee schedule amounts therefore never took place
for DME and instead the statewide fee schedule amounts were limited so
that they could not vary by more than 15 percent from the national
ceiling to the national floor. The fee schedule amounts for areas
outside the contiguous United States are not subject to the national
ceiling and floor limits. The transition to regional fee schedule
amounts was retained for P&O, although OBRA 90 changed the phase in
schedule so that the regional fee schedule amounts were not fully
phased in until January 1, 1994, rather than January 1, 1993. As
explained in more detail below, the regional fee schedule methodology
allows for regional geographic variation in fee schedule payment
amounts and a wider range in fees across the nation than the fee
schedule methodology used for DME which caps the local, statewide fee
schedule amounts at the national median. That being said, we have not
seen any problems associated with access to either P&O or DME in rural
areas or any areas of the country since payments have been made based
on these fee schedule methodologies. This has been the case even though
the average reasonable charges used to compute the statewide fee
schedule amounts include a comingling of reasonable charge data for
items and services furnished in both urban and rural areas. In
addition, we have not seen any problems with access to PEN in rural
areas or any areas of the country since payments have been made based
on national fee schedule amounts.
3. Regional Fee Schedule Payment Methodology for P&O
The regional fee schedules for P&O are mandated by section
1834(h)(2)(B) of the Act. The regional fee schedule amounts only apply
to areas within the contiguous United States. The regional fee schedule
amounts are calculated based on the weighted average (weighted by total
Part B claims volume) of statewide fee schedule amounts for states in
each of the ten CMS Regional Office boundaries identified below. The
statewide fee schedule amounts are based on average reasonable charges
(statewide fees) for items furnished from July 1, 1986 through June 30,
1987.
The ten CMS Regional Office boundaries are:
Boston (Region One), including the six states of
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and
Vermont;
New York (Region Two), including the two states of New
Jersey and New York;
Philadelphia (Region Three), including the five states of
Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the
District of Columbia;
Atlanta (Region Four), including the eight states of
Alabama, North Carolina, South Carolina, Florida, Georgia, Kentucky,
Mississippi, and Tennessee;
Chicago (Region Five), including the six states of
Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin;
Dallas (Region Six), including the five states of
Arkansas, Louisiana, New Mexico, Oklahoma and Texas;
Kansas City (Region Seven), including the four states of
Iowa, Kansas, Missouri and Nebraska;
Denver (Region Eight), including the six states of
Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming;
San Francisco (Region Nine), including the three states of
Arizona, California and Nevada; and
Seattle (Region Ten), including the three states of Idaho,
Oregon and Washington.
As an example, the regional fee schedule amounts for Region Nine
are based on the weighted average of the

[[Page 40277]]

statewide fees for Arizona, California, and Nevada. Since California
accounts for the largest volume of Part B claims in the region, the
California statewide fees are weighted more heavily in determining the
regional fee schedule amounts than the statewide fees for Arizona or
Nevada. Once all of the regional fee schedule amounts are established,
the regional fee schedule amounts are further limited by a national
ceiling equal to 120 percent of the average of the regional fee
schedule amounts for all the states and a national floor equal to 90
percent of the average of the regional fee schedule amounts for all the
states.
The national ceiling and floor limits for DME and P&O set national
parameters on how much the statewide or regional fee schedule amounts
can vary. For DME, the upper payment limit or ceiling is based on the
national median of the statewide fees, essentially bringing half of the
state fees down to the national median. The lower limit or floor is
based on 85 percent of the national median and brings those state fees
below the floor amount up to the floor amount. In contrast, the
national ceiling and floor parameters for P&O are based on 120 percent
and 90 percent, respectively, of the average of the various regional
fee schedule amounts. Differences in reasonable charge based fees in
various geographic regions of the country are maintained within the
parameters of the national ceilings and floors for P&O.
4. DMEPOS Competitive Bidding Programs Payment Rules
Section 1847(a) of the Act, as amended by section 302(b)(1) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) (Pub. L. 108-173), requires the Secretary to establish and
implement CBPs in CBAs throughout the United States for contract award
purposes for the furnishing of certain competitively priced DMEPOS
items and services. The programs mandated by section 1847(a) of the Act
are collectively referred to as the ``Medicare DMEPOS Competitive
Bidding Program.'' Section 1847(a)(2) of the Act provides that the
items and services to which competitive bidding applies are:
Off-the-shelf (OTS) orthotics for which payment would
otherwise be made under section 1834(h) of the Act;
Enteral nutrients, equipment and supplies described in
section 1842(s)(2)(D) of the Act; and
Certain DME and medical supplies, which are covered items
(as defined in section 1834(a)(13) of the Act) for which payment would
otherwise be made under section 1834(a) of the Act.
The DME and medical supplies category includes items used in
infusion and drugs (other than inhalation drugs) and supplies used in
conjunction with DME, but excludes class III devices under the Federal
Food, Drug, and Cosmetics Act and Group 3 or higher complex
rehabilitative power wheelchairs and related accessories when furnished
with such wheelchairs. Sections 1847(a) and (b) of the Act specify
certain requirements and conditions for implementation of the Medicare
DMEPOS CBP.
On July 15, 2008, the Medicare Improvements for Patients and
Providers Act (MIPPA) was enacted. Section 154 of the MIPPA amended
section 1847 of the Act to make certain limited changes to the Medicare
DMEPOS CBP, including a revised timeframe for phasing in the programs.
On March 23, 2010, the Affordable Care Act was enacted. Section
6410(a) of the Affordable Care Act amended section 1847(a)(1) of the
Act, mandating the phase in of 21 additional Metropolitan Statistical
Areas (MSAs).
Section 1847(a) of the Act requires that the DMEPOS CBP be phased
in so that competition under the programs occurs in 9 of the largest
Metropolitan Statistical Areas (MSAs) in 2009, 91 additional large MSAs
in 2011, and additional areas after 2011 (or, in the case of national
mail order for items and services, after 2010). Section
1847(a)(1)(D)(ii) of the Act provides discretion to subdivide MSAs and
through notice and comment rulemaking we subdivided the New York-
Northern New Jersey-Long Island, NY-NJ-PA; Los Angeles-Long Beach-Santa
Ana, CA; and Chicago-Naperville-Joliet, IL-IN-WI MSAs. The final rule
was published in the Federal Register on November 29, 2010 (75 FR
73454) and divided the New York-Northern New Jersey-Long Island, NY-NJ-
PA MSA into six CBAs. In addition, the Los Angeles-Long Beach-Santa
Ana, CA MSA was divided into two CBAs and the Chicago-Naperville-
Joliet, IL-IN-WI MSA was divided into four CBAs (75 FR 73460).
Altogether this created a total of 100 CBAs for the competitions
occurring in the 91 MSAs in 2011, or a total of 109 CBAs for the
competitions occurring in 100 MSAs in 2009 and 2011.
Finally, section 1847(a)(1)(D)(iii) of the Act specifies that
competitions occurring before 2015 for items and services other than
national mail order, may not include rural areas or MSAs with a
population of less than 250,000.
In addition to the national mail order program for diabetic
supplies, the product categories (PCs) that have been phased in thus
far in 100 Round 2 CBAs and 9 Round 1 CBAs include the following:
Round 2 CBAs (Contract Period July 1, 2013, Thru June 30, 2016)
Oxygen, oxygen equipment, and supplies
Standard (Power and Manual) wheelchairs, scooters, and related
accessories
Enteral nutrients, equipment, and supplies
Continuous Positive Airway Pressure (CPAP) devices and
Respiratory Assist Devices (RADs) and related supplies and accessories
Hospital beds and related accessories
Walkers and related accessories
Negative Pressure Wound Therapy pumps and related supplies and
accessories
Support surfaces (Group 2 mattresses and overlays)
Round 1 CBAs (Contract Period January 1, 2014, Thru December 31, 2016)
Respiratory Equipment and Related Supplies and Accessories
[cir] includes oxygen, oxygen equipment, and supplies; CPAP devices and
RADs and related supplies and accessories; and standard nebulizers
Standard Mobility Equipment and Related Accessories
[cir] includes walkers, standard power and manual wheelchairs,
scooters, and related accessories
General Home Equipment and Related Supplies and Accessories
[cir] includes hospital beds and related accessories, group 1 and 2
support surfaces, transcutaneous electrical nerve stimulation (TENS)
devices, commode chairs, patient lifts, and seat lifts
Enteral Nutrients, Equipment and Supplies
Negative Pressure Wound Therapy Pumps and Related Supplies and
Accessories
External Infusion Pumps and Supplies
In addition, contracts and SPAs were in effect in the 9 Round 1 CBAs
from January, 1 2011 thru December 31, 2013, for the items listed below
which are not included in current Round 1 or 2 PCs:
Complex Rehabilitative Power Wheelchairs and Related
Accessories (Group 2)
Adjustable Wheelchair Seat Cushions

[[Page 40278]]

5. Adjusting Payment Amounts Using Information From the DMEPOS
Competitive Bidding Program
Section 1834(a)(1)(F)(ii) of the Act provides authority for using
information from the DMEPOS CBPs to adjust the DME payment amounts for
covered items furnished on or after January 1, 2011, in areas where
competitive bidding is not implemented for the items. Similar authority
exists at section 1834(h)(1)(H)(ii) of the Act for OTS orthotics, and
at section 1842(s)(3)(B) of the Act for enteral nutrition. Section
1834(a)(1)(F) also requires adjustments to the payment amounts for all
DME items subject to competitive bidding furnished in areas where CBPs
have not been implemented on or after January 1, 2016.
For items furnished on or after January 1, 2016, section
1834(a)(1)(F)(iii) requires us to continue to make such adjustments to
DME payment amounts where CBPs have not been implemented, as additional
covered items are phased in or information is updated as contracts are
recompeted.
Section 1834(a)(1)(G) of the Act requires that the methodology used
to adjust payment amounts for DME and OTS orthotics using information
from the CBPs be promulgated through notice and comment rulemaking,
which is the purpose of this proposed rule. Section 1834(a)(1)(G) of
the Act also requires that we consider the ``costs of items and
services in areas in which such provisions [sections 1834(a)(1)(F)(ii)
and 1834(h)(1)(H)(ii)] would be applied compared to the payment rates
for such items and services in competitive acquisition [competitive
bidding] areas.'' We are proposing to apply the same methodology for
making adjustments to the payment amounts for enteral nutrition as
authorized by section 1842(s)(3)(B) of the Act.
6. Diversity of Costs
As mentioned above, under section 1834(a)(1)(G) of the Act we must
consider the costs of furnishing items and services in areas where
prices will be adjusted compared to the payment rates for the items and
services furnished in CBAs. We believe that the methodology for using
the single payment amounts (SPAs) as a basis for adjusting payment
rates in other areas needs to ensure that adjusted payment amounts in
an area are adequate to cover the unique costs of furnishing the items
and services in those areas.
The SPAs are based on the median of successful bids for furnishing
items and services in MSAs, which are mainly urban areas, from
suppliers with costs and characteristics that may or may not be similar
to suppliers in other areas. In addition, under the DMEPOS CBP, many
low population density areas within MSAs were excluded from the CBAs as
authorized by statute, making the geographic bidding areas smaller and
more densely populated than they would have been if the initial MSA
boundaries had been retained for bidding purposes.
Regarding the size of suppliers submitting the bids used to
generate the SPAs compared to the size of suppliers in areas where
price adjustments based on the SPAs would occur, it is important to
note that small suppliers are given special considerations under the
CBP and that a majority of contracts are offered to small suppliers.
Section 1847(b)(6)(D) of the Act requires that, in developing
procedures relating to bidding and the awarding of contracts, CMS
``take appropriate steps to ensure that small suppliers of items and
services have an opportunity to be considered for participation in the
program.'' We have established a number of provisions to ensure that
small suppliers are given an opportunity to participate in the DMEPOS
CBP. For example, under 42 CFR 414.414(g)(1)(i), we have established a
30 percent target for small supplier participation; thereby, ensuring
efforts are made to award at least 30 percent of contracts to small
suppliers. Also, CMS worked in coordination with the Small Business
Administration (SBA) to develop an appropriate definition of a ``small
supplier'' for this program. Under 42 CFR 414.402, a small supplier is
one that generates gross revenues of $3.5 million or less in annual
receipts, including Medicare and non-Medicare revenue. Under 42 CFR
414.418, small suppliers may join together in ``networks'' in order to
submit bids that meet the various program requirements. For contracts
taking effect on July 1, 2013 in Round 2, in 100 CBAs throughout the
country, 63 percent of all contract suppliers are small suppliers, with
only 10 percent of contract suppliers being new to the areas. In
addition, for contracts taking effect on January 1, 2014 in the Round 1
Recompete, in the 9 initial CBAs, 58 percent of all contract suppliers
are small suppliers, with only 3 percent of contract suppliers being
new to the areas. Therefore, the majority of bids used in establishing
the SPAs come from small suppliers with a history of furnishing the
items in the CBAs.
Prior to awarding contracts, each supplier is carefully screened to
ensure that it is accredited under applicable Medicare quality
standards and meets rigid financial standards, specific Medicare
supplier enrollment requirements, and applicable state licensing
standards. Each bid is screened to ensure that it is a bona fide bid,
and those that fail are excluded from the competition. Approximately 94
percent of bids screened as part of the Round 2 and Round 1 Recompete
competitions were determined to be bona fide. The invoices and purchase
orders submitted by bidding suppliers to support their bids reflected
prices already paid by the supplier (that is, prior to becoming a
contract supplier) and for the most part did not reflect large volume
purchasing discounts. Once non-bona fide bids are excluded, suppliers
are ranked in order based on bid amounts, and the median of bids from
the number of suppliers determined to be necessary to meet projected
demand are used to establish the SPAs. The projected demand for items
and services in a CBA is intentionally overstated for the purpose of
ensuring that contracts are awarded to more than a sufficient number of
suppliers to serve the beneficiaries in the area. The establishment of
the demand level is explained in detail in the competitive bidding
final rule (Medicare Program; Competitive Acquisition for Certain
DMEPOS and Other issue) published April 10, 2007 (72 FR 18039). Thus,
the SPAs are higher than they would otherwise be if demand was not
overstated because the high demand generally results in an increase in
the number of contract suppliers which in most cases increases the
median bid amount. CMS also conducts its review of supplier capacity
and expansion plans during the bid evaluation process. If a supplier is
new to an area, new to a PC, or submits estimated capacity that
represents substantial growth over current levels, CMS may conduct a
more detailed evaluation of that supplier's expansion plan to verify
the supplier's ability to provide items and services in the CBA on day
one of the contract period. If a bidder's financial data and expansion
plan do not support the supplier's estimated capacity, CMS will adjust
the capacity to the supplier's historic level, which would be zero for
a new supplier. CMS uses the estimated capacity information and the bid
amounts to determine the array of winning suppliers in a CBA.
Under Round 2 and the Round 1 Recompete competitions, 92 percent of
suppliers accepted contract offers at the SPAs set through the
competitions. In addition, CMS reviewed all contract

[[Page 40279]]

suppliers based on financial standards when evaluating their bids. This
process includes review of tax records, credit reports, and other
financial data, which leads to the calculation of a score, similar to
processes used by lenders when evaluating the viability of a company.
All contract suppliers met the financial standards established for the
program.
From January 1, 2011, when the initial Round 1 contracts and SPAs
took effect, to present, we have seen no indication that beneficiaries
have been denied access to necessary items and services subject to the
programs in CBAs as a result of the SPAs. In addition, we have been
closely monitoring inquiries as well as real time claims and health
outcomes data and have seen no negative impacts on access to items and
services under the program. Therefore, the SPAs appear to be sufficient
to cover the costs of the suppliers furnishing items in the 109 CBAs.
In previous legislation, which we will discuss below, the Congress
mandated that the costs of furnishing DME in different geographic
regions of the country be studied. Section 135 of the Social Security
Act Amendments of 1994, Public Law 103-432, required an examination of
the geographic variations in DME supplier costs in order to determine
whether the fee schedules are reasonably adjusted to account for any
geographic differences. Jing Xing Health and Safety Resources, Inc.
provided assistance to the Health Care Financing Administration, now
CMS, in conducting this study. The project entitled ``Durable Medical
Equipment Supplier Product and Service Cost Study'', was completed
under Contract Number HCFA 500-95-0044 and submitted to the agency in
June 1996. As part of the study, a Federal Advisory Panel was convened,
a formal meeting with representatives of the DME industry was held, and
a literature review was conducted. The general consensus among industry
representatives and government agencies that participated in the study
was that there is no conclusive evidence that urban and rural costs
differed significantly or that the costs of furnishing DME items and
services were higher in urban areas versus rural areas or vice versa.
The 109 CBAs where competitive bidding has been phased in include a
wide range of different size urban areas with surrounding counties, and
suppliers take the costs of furnishing items and services in these
different areas into account when submitting bids under the programs.
They include one CBA (Honolulu, HI) that is not within the contiguous
Unites States and CBAs that range in population size from approximately
300 thousand to 10 million (See Table 33). There are 7 CBAs with a
population of less than 500,000, 42 CBAs with a population of more than
500,000, but less than 1 million, 27 CBAs with a population of more
than 1 million, but less than 2 million, 19 CBAs with a population of 2
to 4 million, and 14 CBAs with a population of over 4 million.

Table 33--CBA Population Size
------------------------------------------------------------------------
CBA Population
------------------------------------------------------------------------
Los Angeles County CBA.................................. 9,453,357
Nassau-Brooklyn-Queens-Richmond County Metro CBA........ 6,630,278
Dallas-Fort Worth-Arlington, TX......................... 6,554,334
Central-Chicago Metro CBA............................... 6,179,455
Houston-Sugar Land-Baytown, TX.......................... 6,152,650
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD............. 5,995,992
Washington-Arlington-Alexandria, DC-VA-MD-WV............ 5,662,358
Miami-Fort Lauderdale-Pompano Beach, FL................. 5,604,979
Atlanta-Sandy Springs-Marietta, GA...................... 5,293,136
Boston-Cambridge-Quincy, MA-NH.......................... 4,595,431
San Francisco-Oakland-Fremont, CA....................... 4,407,286
Detroit-Warren-Livonia, MI.............................. 4,256,579
Phoenix-Mesa-Glendale, AZ............................... 4,251,146
Riverside-San Bernardino-Ontario, CA.................... 4,157,332
Seattle-Tacoma-Bellevue, WA............................. 3,522,509
Northern NJ Metro CBA................................... 3,473,815
Minneapolis-St. Paul-Bloomington, MN-WI................. 3,326,864
San Diego-Carlsbad-San Marcos, CA....................... 3,118,844
Orange County CBA....................................... 3,067,829
Southern NY Metro CBA................................... 3,015,460
Bronx-Manhattan NY CBA.................................. 2,983,009
St. Louis, MO-IL........................................ 2,844,160
Tampa-St. Petersburg-Clearwater, FL..................... 2,810,479
Baltimore-Towson, MD.................................... 2,751,529
Denver-Aurora-Broomfield, CO............................ 2,568,221
Pittsburgh, PA.......................................... 2,361,317
Portland-Vancouver-Hillsboro, OR-WA..................... 2,259,089
San Antonio-New Braunfels, TX........................... 2,223,779
Orlando-Kissimmee-Sanford, FL........................... 2,176,846
Sacramento-Arden-Arcade-Roseville, CA................... 2,174,556
Cincinnati-Middletown, OH-KY-IN......................... 2,121,660
Cleveland-Elyria-Mentor, OH............................. 2,074,790
Kansas City, MO-KS...................................... 2,050,306
Las Vegas-Paradise, NV.................................. 1,967,341
San Jose-Sunnyvale-Santa Clara, CA...................... 1,898,173
Columbus, OH............................................ 1,844,571
Charlotte-Gastonia-Rock Hill, NC-SC..................... 1,832,391
Austin-Round Rock-San Marcos, TX........................ 1,813,495
Indianapolis-Carmel, IN................................. 1,764,136
Virginia Beach-Norfolk-Newport News, VA-NC.............. 1,673,547
Nashville-Davidson-Murfreesboro-Franklin, TN............ 1,607,708

[[Page 40280]]

Providence-New Bedford-Fall River, RI-MA................ 1,603,029
Milwaukee-Waukesha-West Allis, WI....................... 1,570,548
Suffolk County CBA...................................... 1,488,017
South-West-Chicago-Metro CBA............................ 1,464,818
Jacksonville, FL........................................ 1,371,407
North East NY CBA Metro................................. 1,363,882
Memphis, TN-MS-AR....................................... 1,309,806
Louisville/Jefferson County, KY-IN...................... 1,277,282
Oklahoma City, OK....................................... 1,276,642
Richmond, VA............................................ 1,262,088
Hartford-West Hartford-East Hartford, CT................ 1,214,313
Raleigh-Cary, NC........................................ 1,190,534
Northern-Chicago Metro CBA.............................. 1,187,661
New Orleans-Metairie-Kenner, LA......................... 1,182,382
Salt Lake City, UT...................................... 1,158,617
Buffalo-Niagara Falls, NY............................... 1,133,325
Birmingham-Hoover, AL................................... 1,121,219
Rochester, NY........................................... 1,062,561
Tucson, AZ.............................................. 1,004,374
Honolulu, HI............................................ 962,112
Fresno, CA.............................................. 949,093
Tulsa, OK............................................... 945,366
Bridgeport-Stamford-Norwalk, CT......................... 922,063
Albuquerque, NM......................................... 896,202
Omaha-Council Bluffs, NE-IA............................. 883,233
Albany-Schenectady-Troy, NY............................. 866,077
New Haven-Milford, CT................................... 862,551
Dayton, OH.............................................. 839,984
Oxnard-Thousand Oaks-Ventura, CA........................ 830,680
Allentown-Bethlehem-Easton, PA-NJ....................... 826,740
El Paso, TX............................................. 826,163
Baton Rouge, LA......................................... 811,243
Bakersfield-Delano, CA.................................. 810,348
Worcester, MA........................................... 800,404
McAllen-Edinburg-Mission, TX............................ 799,023
Grand Rapids-Wyoming, MI................................ 783,733
Columbia, SC............................................ 767,793
Greensboro-High Point, NC............................... 746,685
Little Rock-North Little Rock-Conway, AR................ 710,371
North Port-Bradenton-Sarasota, FL....................... 708,687
Indiana-Chicago Metro CBA............................... 706,110
Knoxville, TN........................................... 705,446
Springfield, MA......................................... 698,926
Akron, OH............................................... 687,788
Stockton, CA............................................ 685,542
Greenville-Mauldin-Easley, SC........................... 683,793
Charleston-North Charleston-Summerville, SC............. 682,539
Syracuse, NY............................................ 671,076
Poughkeepsie-Newburgh-Middletown, NY.................... 665,524
Colorado Springs, CO.................................... 665,484
Toledo, OH.............................................. 649,956
Wichita, KS............................................. 634,116
Boise City-Nampa, ID.................................... 634,037
Cape Coral-Fort Myers, FL............................... 631,611
Lakeland-Winter Haven, FL............................... 602,671
Augusta-Richmond County, GA-SC.......................... 570,656
Scranton-Wilkes-Barre, PA............................... 556,282
Youngstown-Warren-Boardman, OH-PA....................... 553,382
Palm Bay-Melbourne-Titusville, FL....................... 550,416
Jackson, MS............................................. 544,285
Chattanooga, TN-GA...................................... 533,309
Deltona-Daytona Beach-Ormond Beach, FL.................. 501,906
Visalia-Porterville, CA................................. 439,968
Flint, MI............................................... 435,877
Asheville, NC........................................... 434,665
Beaumont-Port Arthur, TX................................ 397,872
Ocala, FL............................................... 323,229
Huntington-Ashland, WV-KY-OH............................ 289,474
------------------------------------------------------------------------
Source: U.S. Census Bureau, Population Division, 2012 Population
Estimates. Population estimates for MSAs and counties were adjusted to
reflect CBA boundaries.

[[Page 40281]]

7. Advanced Notice of Proposed Rulemaking
CMS issued an Advance Notice of Proposed Rulemaking (ANPRM):
Medicare Program; Methodology for Adjusting Payment Amounts for Certain
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) using Information From Competitive Bidding Programs. The ANPRM
was published in the Federal Register on February 26, 2014 (79 FR
10754) and solicited comments on several aspects to consider in
developing the proposed methodology to adjust DMEPOS fee schedule
amounts or other payment amounts in non-competitive areas based on
DMEPOS competitive bidding payment information. Specific questions
related to this topic were presented in the notice, including:
Do the costs of furnishing various DMEPOS items and
services vary based on the geographic area in which they are furnished?
Do the costs of furnishing various DMEPOS items and
services vary based on the size of the market served in terms of
population and/or distance covered or other logistical or demographic
reasons?
Should an interim or different methodology be used to
adjust payment amounts for items that have not yet been included in all
CBPs (for example, items such as TENS devices that have only been
phased into the nine Round 1 areas thus far)?
The comment period for the ANPRM ended on March 28, 2014, and CMS
received approximately 185 comments from suppliers, manufacturers,
professional, state and national trade associations, physicians,
physical therapists, beneficiaries and their caregivers, and one state
government office.
Commenters generally agreed that costs do vary by geographic region
and that costs in rural and non-contiguous areas are higher than costs
in urban areas. However, few commenters offered specific proposals or
suggestions for addressing these costs differences and the suggestions
that were provided were vague (for example, use the 75th percentile of
SPAs rather than the national median SPA). Several commenters stated
that the costs of furnishing DMEPOS items and services in different
regions of the country do vary. One commenter representing many
suppliers said that there exists no reliable cost data. Another
commenter representing many manufacturers and suppliers listed several
key variables or factors that influence the cost of furnishing items
and services in different areas that should be considered, but the
commenter did not provide information on how valid and reliable
information related to these factors could be obtained. This commenter
stated that information of all bids submitted under the programs should
also be considered and not just the bids of winning suppliers. Some
commenters expressed concern that the SPAs assume a significant
increase in volume to offset lower payment amounts. Some commenters
suggested that the price adjustments be phased in rather than making
full, one-time adjustments.

B. Proposed Provisions

We propose establishing three methodologies for adjusting DMEPOS
fee schedule amounts in areas where CBPs have not been established for
these items and services based on SPAs established in accordance with
the payment rules at Sec. 414.408. Use of SPAs that may be established
in accordance with the special payment rules proposed in section V to
adjust DMEPOS fee schedule amounts in areas where CBPs have not been
established for these items and services would be addressed in future
notice and comment rulemaking. One proposed methodology is described in
subsection 1 below and would utilize regional adjustments limited by
national parameters for items bid in more than 10 CBAs throughout the
country. A second proposed methodology is described in subsection 2
below and would be used for lower volume items or other items that were
bid in no more than 10 CBAs for various reasons. A third proposed
methodology is described in subsection 5 and would be used for mail
order items furnished in the Northern Mariana Islands. We are also
proposing rules that would apply to all of these proposed
methodologies.
1. Proposed Regional Adjustments Limited by National Parameters
CBPs are currently in place in 100 of the largest MSAs in the
country for items and services that make up over 80 percent of the
total allowed charges for items subject to the DMEPOS CBP. SPAs are
currently used in 109 CBAs that include areas in every state throughout
the country except for Alaska, Maine, Montana, North Dakota, South
Dakota, Vermont, and Wyoming. The number of CBAs, as listed in Table 33
that are fully or partially located within a given state range from one
to twelve. The Honolulu CBA was phased in under Round 2 of the program.
Suppliers submitting bids for furnishing items and services in these
areas have received extensive education that they should factor all
costs of furnishing items and services in an area as well as overhead
and profit into their bids.
For items and services that are subject to competitive bidding and
have been included in more than 10 CBAs throughout the country, we
propose to adjust the fee schedule payment amounts for these items and
services using a methodology that is modeled closely after the regional
fee schedule payment methodology in effect for P&O to allow for
variations in payment based on bids for furnishing items and services
in different parts of the country. Under the proposed methodology,
adjusted fee schedule amounts for areas within the contiguous United
States would be determined based on regional SPAs or RSPAs limited by a
national floor and ceiling. The RSPA would be established using the
average of the SPAs for an item from all CBAs that are fully or
partially located in the region. The adjusted payment amount for the
item would be equal to its RSPA but not less than 90 percent and not
more than 110 percent of the national average, which is the average of
the RSPAs weighted by the number of states in the region.
We believe modeling the proposed methodology on the regional fee
schedule payment methodology for P&O is appropriate because the
regional fee schedule payment methodology for P&O allows for variations
in Medicare fee schedule amounts based on supplier charges for
furnishing items and services in different regions of the country. The
regional fee schedule payment methodology for P&O adjusts the Medicare
allowed payments for entire regions of the country, including low
population density or rural areas, based primarily on supplier
information for furnishing items and services in urban areas. The
regional fee schedule payment methodology for P&O has been fully phased
in since 1994 in the contiguous United States and has not resulted in
any barriers to access since then in any specific region of the country
in which it has been applied. The DME and P&O fee schedule amounts are
based in a part on statewide average reasonable charges calculated
using supplier charges for furnishing items and services in localities
throughout each state. Supplier charges for furnishing items in rural
areas of the state are combined with charges for furnishing items in
urban areas of the state, which represents the bulk of the charges
since the vast majority of beneficiaries in each state reside in urban
areas rather than rural areas. Although the fee schedule

[[Page 40282]]

payments are based heavily on charges for furnishing items and services
in urban areas, this has not affected access to items and services in
rural areas that are paid based on these fee schedule amounts.
We considered modeling the proposed methodology on the fee schedule
payment methodology for DME which establishes an upper limit on all fee
schedule amounts based on the median of the state fee schedule amounts;
however, this methodology does not allow for regional variations in fee
schedule amounts, allows for 0 percent variations in state fee schedule
amounts above the national median amount, and only allows for up to 15
percent variation in state fee schedule amounts below the national
median amount. The statewide average reasonable charges for DME are
updated by an annual covered item update factor and are then limited by
a national ceiling and floor based on the median of the statewide
amounts and 85 percent of the median of the statewide amounts. The DME
fee schedule methodology allows for no variation in payment whatsoever
above the national median statewide amount. The maximum variation in
fee schedule amounts that is allowed is 15 percent below the national
median statewide amount. By contrast, the regional fee schedule
methodology for P&O allows for regional variation in fee schedule
payment amounts by as much as 10 percent below the national average
amount and 20 percent above the national average amount. Similarly, the
fee schedules for enteral nutrition are based on national average
reasonable charges, and therefore, do not allow for any regional
variation in fee schedule amounts. We believe that the model whereby
regional fee schedule amounts for P&O are based on supplier charges for
furnishing items and services within each region should be adopted when
using SPAs to adjust fee schedule payment amounts in a way that
reflects bidding in different regions of the country. The regional
adjusted amounts are based on supplier bids for furnishing items and
services within each region, as explained below.
a. Regional Payment Adjustments
Rather than adjusting state, regional, or national fee schedule
amounts or infusion drug payment amounts based on all bids for an item
in all CBAs across the country or based on all bids for an item in all
CBAs within each state, we propose to adjust the payment amounts based
on the average of bids for an item in CBAs that are fully or partially
located in different regions of the country. In the first step of the
proposed methodology we propose to calculate RSPAs or the average of
the SPAs for an item and service in different regions of the country.
In keeping with the example established by the P&O regional fee
schedule payment methodology, this would allow variation in payment
amounts for different regions of the country. For the purpose of
establishing the boundaries for the regions, we propose using 8 regions
developed for economic analysis purposes by the Bureau of Economic
Analysis (BEA) within the Department of Commerce. These regions are
proposed based on research and analysis conducted by the BEA indicating
that the states in each region share economic ties. Further information
can be obtained at https://www.bea.gov/regional/definitions/nextpage.cfm?key=Regions.
The information provided at this link states that:

BEA Regions are a set of Geographic Areas that are aggregations
of the states. The following eight regions are defined: Far West,
Great Lakes, Mideast, New England, Plains, Rocky Mountain,
Southeast, and Southwest. The regional classifications, which were
developed in the mid-1950s, are based on the homogeneity of the
states in terms of economic characteristics, such as the industrial
composition of the labor force, and in terms of demographic, social,
and cultural characteristics. For a brief description of the
regional classification of states used by BEA, see U.S. Department
of Commerce, Census Bureau, Geographic Areas Reference Manual,
Washington, DC, U.S. Government Printing Office, November 1994, pp.
6-18;6-19.

Therefore, we propose to revise the definition of region in Sec.
414.202 to mean a region developed for economic analysis purposes by
the Bureau of Economic Analysis (BEA) within the Department of Commerce
for the purpose of calculating regional single payment amounts (RSPAs);
the definition of region for the purposes of the P&O regional fee
schedule would also continue to apply for those items and services not
adjusted based on prices in competitively bid areas. According to the
BEA, the regional classifications are based on the homogeneity of the
states in terms of economic characteristics, such as the industrial
composition of the labor force, and in terms of demographic, social,
and cultural characteristics. The contiguous areas of the United States
that fall under the 8 BEA regions under our proposal are listed in
Table 34 below. Further information can be obtained at https://www.bea.gov/.

Table 34--Bureau of Economic Analysis Regions
------------------------------------------------------------------------
Region Name States/Areas (count)
------------------------------------------------------------------------
1................ New England................ Connecticut, Maine,
Massachusetts, New
Hampshire, Rhode
Island, and Vermont
(6).
2................ Mideast.................... Delaware, District of
Columbia, Maryland, New
Jersey, New York, and
Pennsylvania (6).
3................ Great Lakes................ Illinois, Indiana,
Michigan, Ohio, and
Wisconsin (5).
4................ Plains..................... Iowa, Kansas, Minnesota,
Missouri, Nebraska,
North Dakota, and South
Dakota (7).
5................ Southeast.................. Alabama, Arkansas,
Florida, Georgia,
Kentucky, Louisiana,
Mississippi, North
Carolina, South
Carolina, Tennessee,
Virginia, and West
Virginia (12).
6................ Southwest.................. Arizona, New Mexico,
Oklahoma, and Texas
(4).
7................ Rocky Mountain............. Colorado, Idaho,
Montana, Utah, and
Wyoming (5).
8................ Far West................... California, Nevada,
Oregon, and Washington
(4).
------------------------------------------------------------------------

We are soliciting public comments on whether different regional
boundaries (e.g. CMS regions or Census Divisions) should be considered
that would better reflect potential regional differences in the costs
of furnishing items and services subject to the DMEPOS CBP. In addition
to the CMS regions listed in section A.3 above, other established
regional boundaries include those defined by the United States Census
Bureau in the Department of Commerce for the purpose of reporting and
analyzing census data. The Census Bureau uses 4 regions that are
further divided into 9 divisions. The Census divisions are as follows:
New England (Division 1); including the 6 states
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and
Vermont.

[[Page 40283]]

Middle Atlantic (Division 2); including the 3 states New
Jersey, New York and Pennsylvania.
East North Central (Division 3); including the 5 states
Illinois, Indiana, Michigan, Ohio and Wisconsin.
West North Central (Division 4); including the 7 states
Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South
Dakota.
South Atlantic (Division 5); including the 9 states
Delaware, District of Columbia, Florida, Georgia, Maryland, North
Carolina, South Carolina, Virginia and West Virginia.
East South Central (Division 6); including the 4 states
Alabama, Kentucky, Mississippi and Tennessee.
West South Central (Division 7); including the 4 states
Arkansas, Louisiana, Oklahoma, and Texas.
Mountain (Division 8); including the 8 states Arizona,
Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming.
Pacific (Division 9); including the 5 states Alaska,
California, Hawaii, Oregon and Washington.

Table 35 below lists the states and number of CBAs located in each
of the CMS regions, BEA regions, and census divisions.

Table 35--States and Number of Current CBAs per CMS Region, BEA Region, and Census Division
--------------------------------------------------------------------------------------------------------------------------------------------------------
10 CMS Regions 9 Census Divisions 8 BEA Regions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Region States CBAs Division States CBAs Region States CBAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Boston......................... CT, ME, MA, NH, 7 New England....... CT, ME, MA, NH, 7 New England...... CT, ME, MA, NH, 7
RI, VT. RI, VT. RI, VT.
New York....................... NJ, NY............ 13 Middle Atlantic... NJ, NY, PA....... 15 Mideast.......... DE, DC, MD, NJ, 17
NY, PA.
Phila.......................... DE, DC, MD, PA, 9
VA, WV.
Atlanta........................ AL, FL, GA, KY, 28 South Atlantic.... DE, DC, FL, GA, 30 Southeast........ AL, AR, FL, GA, 34
MS, NC, SC, TN. MD, NC, SC, VA, KY, LA, MS, NC,
WV. SC, TN, VA, WV.
East South Central AL, KY, MS, TN... 7
Chicago........................ IL, IN, MI, MN, 19 East North Central IN, IL, MI, OH, 19 Great Lakes...... IL, IN, MI, OH, 19
OH, WI. WI. WI.
Dallas......................... AR, LA, NM, OK, TX 14 West South Central AR, LA, OK, TX... 13 Southwest........ AZ, NM, OK, TX... 11
Kansas City.................... IA, KS, MO, NE.... 4 West North Central IA, KS, MN, MO, 5 Plains........... IA, KS, MN, MO, 5
NE, ND, SD. NE, ND, SD.
Denver......................... CO, MT, ND, SD, 3 Mountain.......... AZ, CO, ID, NM, 8 Rocky Mountain... CO, ID, MT, UT, 4
UT, WY. MT, UT, NV, WY. WY.
San Fran....................... AZ, CA, NV........ 16 Pacific........... CA, OR, WA....... 15 Far West......... CA, NV, OR, WA... 16
Seattle........................ ID, OR, WA........ 3
--------------------------------------------------------------------------------------------------------------------------------------------------------

The regional fee schedule amounts for P&O are based on the average
of the statewide fees for P&O, weighted by total Part B claims for paid
claims with dates of service from July 1, 1991, thru June 30, 1992,
which results in fees for states with a greater volume of Part B claims
having more influence on the regional fee schedule amounts than states
with a smaller volume of Part B claims. We believe this aspect of the
regional fee schedule payment methodology for P&O tends to favor more
heavily populated states. The statewide fees for larger, more urban
states where the most Medicare claims are processed, for example,
Massachusetts for Region 1, play a larger role in determining the
regional price than the statewide fees for smaller, more rural states
in the region, for example, Vermont. Table 36 below shows the relative
weighs applied to the statewide fees used in calculating the regional
P&O fees for the CMS Boston Region or Region 1.

Table 36--P&O Regional Fee Weights--CMS Region 1 (Boston) (Weighted by
Total Paid Claims for Dates of Service From July 1, 1991, Thru June 30,
1992)
------------------------------------------------------------------------
Percent of
State Total part B total for
claims Region
------------------------------------------------------------------------
MA...................................... 11,710,121 48%
CT...................................... 6,288,638 26%
RI...................................... 2,251,892 9%
ME...................................... 2,012,385 8%
NH...................................... 1,571,936 6%
VT...................................... 759,242 3%
Region.................................. 24,594,214 ..............
------------------------------------------------------------------------

As can be seen in this table, the regional P&O fees for the Boston
Region are weighted heavily in favor of the statewide fees and average
reasonable charges from 1986/87 for the more heavily populated urban
states of Massachusetts and Connecticut with a greater utilization of
Part B items and services, whereas the fees for more rural States like
Vermont and Maine have a very minor impact in determining the regional
fees. In contrast, we are proposing that the RSPAs be calculated based
on a simple average of the SPAs for CBAs in each region, without
weighting in favor of larger, more heavily populated CBAs. Using the
New England BEA Region that is comprised of the same 6 states that make
up the CMS Boston Region as an example, the proposed RSPA for this
region would be based on the average of the SPAs for the following 7
CBAs, with estimated 2012 population in parentheses:
Boston-Cambridge-Quincy, MA-NH (4,640,802)
Providence-New Bedford-Fall River, RI-MA (1,601,374)
Hartford-West Hartford-East Hartford, CT (1,214,400)
Bridgeport-Stamford-Norwalk, CT (933,835)
Worcester, MA (923,762)
New Haven-Milford, CT (862,813)
Springfield, MA (625,718)
Therefore, rather than weighting the average of the SPAs in favor
of more

[[Page 40284]]

heavily populated CBAs, we propose that the RSPA be based on the simple
average of the SPAs for the CBAs in the region, with the SPA for the
much smaller Springfield, MA CBA and the SPA for the much larger
Boston-Cambridge-Quincy, MA-NH Springfield, MA CBA contributing equally
toward calculation of the RSPA. We believe this approach would result
in adjustments that factor in the regional costs associated with
furnishing items and services in the New England region of the country,
while not giving undue weight to the costs of furnishing items and
services in larger markets.
b. National Parameters
As explained above, the regional fee schedule amounts for P&O are
limited by a national ceiling equal to 120 percent of the average of
the regional fee schedule amounts for all the states and a national
floor equal to 90 percent of the average of the regional fee schedule
amounts for all the states. This limits the range in the regional fee
schedule amounts from highest to lowest to no more than 30 percent, 20
percent above the national average and 10 percent below the national
average. By contrast, the fee schedule payment methodology for DME only
allows for a variation in statewide fees of 15 percent below the median
of statewide fees for all the states. The national limits to the fee
schedule amounts for P&O and DME have not resulted in a barrier to
access to items and services in any part of the country. We believe
this reflects the fact that the costs of furnishing DMEPOS items and
services do not vary significantly from one part of the country to
another and that national limits on regional prices is warranted. We
therefore propose to limit the variation in the RSPAs using a national
ceiling and floor in order to prevent unnecessarily high or low
regional amounts that vary significantly from the national average
prices for the items and services. The national ceiling and floor
limits would be based on 110 percent and 90 percent, respectively, of
the average of the RSPAs applicable to each of the 48 contiguous states
and the District of Columbia (that is, the average of RSPAs is weighted
by the number of contiguous states including the District of Columbia
per region). We propose that any RSPA above the national ceiling would
be brought down to the ceiling and any RSPA below the national floor
would be brought up to the floor. We propose that the national ceiling
would exceed the average of the RSPAs by the same percentage that the
national floor would be under the average of the RSPAs. This allows for
a maximum variation of 20 percent from the lowest RSPA to the highest
RSPA. We believe that a variation in payment amounts both above and
below the national average price should be allowed, and we believe that
allowing for the same degree of variation (10 percent) above and below
the national average price is more equitable and less arbitrary than
allowing a higher degree of variation (20 percent) above the national
average price than below (10 percent), as in the case of the national
ceiling and floor for the P&O fee schedule, or allowing for only 15
percent variation below the national average price, as in the case of
the national ceiling and floor for the DME fee schedule.
c. Rural and Frontier State Adjustments
Under the DMEPOS CBP, the statute prohibits competitions before
2015 in new CBAs that are rural areas or MSAs with a population of less
than 250,000. Even if competitions were to begin in these areas in
2015, it is very unlikely that the SPAs from these areas would be
computed and finalized by January 1, 2016. Therefore, we propose that
the proposed RSPAs initially be based solely on information from
existing programs implemented in 100 MSAs, which are generally
comprised of more densely populated, urban areas than areas outside
MSAs. We therefore believe that the initial RSPAs would not directly
account for unique costs that may be associated with furnishing DMEPOS
in states that have few MSAs and are predominantly rural or cover large
geographic areas and are sparsely populated. However, in keeping with
the discussion above, we do not believe that the cost of furnishing
DMEPOS in these areas should deviate significantly from the national
average price established based on supplier bids for furnishing items
and services in different areas throughout the country.
As explained above, the DMEPOS fee schedule amounts are based
primarily on supplier charges for furnishing items and services in
urban areas and this has not resulted in problems associated with
access to these items and services in rural areas or large, sparsely
populated areas. Nonetheless, for the purpose of ensuring access to
necessary items and services in states that are more rural or sparsely
populated than others, we propose that the adjusted fee schedule
amounts for states that are more rural than urban and defined as
``rural states'' or states where a majority of the counties are
sparsely populated and defined as ``frontier states'' would be no lower
than the national ceiling amount discussed in section b above.
We propose in Sec. 414.202 that a rural state be defined as a
state where more than 50 percent of the population lives in rural areas
within the state as determined through census data, since a majority of
the general population of the state lives in rural areas, it is likely
that a majority of DMEPOS items and services are furnished in rural
settings in the state. This is in contrast to other states where the
majority of the general population of the state lives in urban areas,
making it more likely that a majority of DMEPOS items and services are
furnished in urban settings or in MSAs. We believe that for states
where a majority of the general population lives in rural areas,
adjustments to the fee schedule amounts should be based on the national
ceiling amount if the RSPA is lower than the national ceiling amount.
This higher level of payment would provide more assurance that access
to items and services in states within a region that are more rural
than urban is preserved in the event that costs of furnishing DMEPOS
items and services in rural areas is higher than the costs of
furnishing DMEPOS items and services in urban areas.
We propose in Sec. 414.202 that a frontier state, would be defined
as a state where at least 50 percent of counties in the state have a
population density of 6 people or less per square mile. In such states,
the majority of counties where DMEPOS items and services may be needed
are very sparsely populated and suppliers may therefore have to drive
considerably longer distances in furnishing these items and services as
opposed to other states where the beneficiaries live closer to one
another. The designation of states as frontier states or frontier areas
is currently used under Medicare Part A to make adjustments to the wage
index for hospitals in these remote areas in order to ensure access to
services in these areas. The definition of frontier state that is
proposed above for the purpose of implementing section 1834(a)(1)(F)
and (G) of the Act is consistent with the current definition in section
1886(d)(3)(E)(iii)(II) and (III) of the Act and 42 CFR 412.64(m) of the
regulations related to implementation of the hospital wage index
adjustments and prospective payment system for hospitals under Part A.
We believe that states designated as frontier states have a significant
amount of area that is sparsely populated and are more likely to be
geographically removed from (that is, a considerable driving distance
from) areas where population is more concentrated. However, we solicit

[[Page 40285]]

comments on alternative definitions of frontier states.
Based on the 2010 Census data, states designated as rural would
include Vermont, Maine, West Virginia, and Mississippi. Other than one
CBA that is fully located in Mississippi, one CBA that is partially
located in Mississippi, and two CBAs that are partially located in West
Virginia, the RSPAs would not include SPAs that reflect the costs of
furnishing items and services in these states based on where the CBAs
are currently located. Current frontier states include North Dakota,
South Dakota, Montana, and Wyoming, and the RSPAs would not include
SPAs that reflect the costs of furnishing items and services in any of
these states based on where the CBAs are currently located. We propose
that the designation of rural and frontier states could change as the
U.S. Census information changes. We propose that when a state that is
not designated as a rural state or frontier becomes a rural state or
frontier state based on new, updated information from the U.S. Census
Bureau, that adjustments to the fee schedule amounts in accordance with
the proposed provision of this section would take effect as soon as
such changes can be implemented. Likewise, we propose that at any time
a state that is designated as a rural state or frontier no longer meets
the proposed definition in this section for rural state or frontier
state based on new, updated information from the U.S. Census Bureau,
that adjustments to the fee schedule amounts in accordance with the
proposed provision of this section would take effect as soon as such
changes can be implemented. We propose that the changes to the state
designation would occur based on the decennial Census. The decennial
Census uses total population of the state to determine whether the
state is predominately rural or frontier. The U.S. Census Bureau also
uses current population estimates every 1, 3, and 5 years through the
American Community Survey but only samples a small percentage of the
population every year, not the total population. Therefore, we propose
that the designation of a rural or frontier state occur approximately
every 10 years when the total population data is available. For the
current proposed fee schedule adjustments, we propose to use the 2010
Census Data. The next update would reflect the 2020 Census Data and any
changes in the designation of a rural or frontier state and
corresponding fee schedule changes would be implemented after the 2020
Census Data becomes available. For this and subsequent updates, we
propose to include a listing of the qualifying rural and frontier
States in program guidance that is issued quarterly and to provide at
least 6 months advance notice of any adjustments.
Some of the comments received on the ANPRM indicated that the costs
of furnishing DMEPOS items and services in rural areas is significantly
higher than the costs of furnishing DMEPOS items and services in urban
areas. Other commenters suggested that the adjustments to the payment
amounts based on information from CBPs be phased in to give suppliers
time to adjust to the new payment levels. Although we believe that the
costs of furnishing items and services in rural areas are different
than the costs of furnishing items and services in urban areas, there
is no evidence to support a statement that the difference in costs is
significant. However, in order to proceed cautiously on this matter in
the interest of ensuring access to covered DMEPOS items and services,
we are proposing to phase in the price adjustments, as explained below,
so that we can monitor the impact of the adjustments as they are
gradually phased in.
In summary, we propose that adjustments to payment amounts for
areas within different regions of the contiguous United States would be
based on the un-weighted average of SPAs from CBAs that are fully or
partially located within these regions. The regional amounts would be
limited by a national ceiling and floor and the adjusted payment
amounts for all states designated as rural or frontier states would be
equal to the national ceiling. In addition, we are soliciting public
comments on whether payment in rural areas of states that are not
designated as rural or frontier states should be set differently.
d. Areas Outside the Contiguous United States
Given the unique costs of furnishing DMEPOS items and services in
remote, isolated areas outside the contiguous United States such as
Alaska, Guam, Hawaii, Puerto Rico, the United States Virgin Islands and
other areas, we propose that any SPAs from programs in these areas be
excluded from the calculation of the RSPAs in section a. In addition,
we propose that the adjustments to the fee schedule amounts for areas
outside the contiguous United States would not be based on the RSPAs.
Rather, we propose that the adjustments to the fee schedule amounts for
these areas be based on the higher of the average of SPAs for CBAs in
areas outside the contiguous United States (for example, Honolulu) or
the national ceiling limit applied to the payment adjustments for areas
within the contiguous United States. We believe that, to the extent
that SPAs from non-contiguous areas are available, these amounts should
be used in making adjustments to the payment amounts for other areas
outside the contiguous United States since the challenges and costs of
furnishing DMEPOS items and services in all remote, isolated areas is
similar. We also believe that the payment adjustments for these areas,
like those for the proposed rural and frontier states, should not be
lower than the national ceiling established for items and services
furnished in the contiguous United States. Areas outside the contiguous
United States generally have higher shipping fees and other costs. We
believe the SPAs in Honolulu and other areas outside the contiguous
United States reflect these costs and could be used to adjust the fee
schedule amounts for these areas without limiting access to DMEPOS
items and services. However, in the event that the national ceiling
limit described in section b above is greater than the average of the
SPAs for CBPs in areas outside the contiguous United States, we propose
that the higher national ceiling amount be used in adjusting the fee
schedule amounts for areas outside the contiguous United States in
order to better ensure access to DMEPOS items and services.
We are soliciting comments on these proposals.
2. Methodology for Items and Services Included in Limited Number of
Competitive Bidding Programs
In some cases, there may not be a sufficient number of CBAs and
SPAs available for use in computing RSPAs, and therefore, a different
methodology for implementing section 1834(a)(1)(F)(ii) of the Act would
be necessary. For items and services that are subject to competitive
bidding and have been included in CBP in no more than 10 CBAs, we
propose that payment amounts for these items in all non-competitive
bidding areas be adjusted based on 110 percent of the average of the
SPAs for the areas where CBPs are implemented. Using a straight average
of the SPAs rather than a weighted average of the SPAs gives SPAs for
the various CBAs equal weight regardless of the size of the CBA. We
believe this avoids giving undo weight to SPAs for more heavily
populated areas. We are proposing the additional 10 percent adjustment
to the average of the SPAs to account for unique costs such as

[[Page 40286]]

delivering items in remote, isolated locations, but would make this a
uniform adjustment for program simplification purposes. This issue is
discussed in more detail below.
Under the DMEPOS CBP, there may be items and services for which
implementation of CBPs could generate significant savings for the
beneficiary and/or program, but which are furnished infrequently in
most MSAs. In some cases, such items and services could be combined
with other items and services under larger PCs or included in mail
order competitions, to the extent that these are feasible options. For
example, combining infrequently used traction equipment and frequently
used hospital beds in the same product for bidding purposes would
ensure that any beneficiary that needs traction equipment in the CBA
would have access to the item from the suppliers also contracted to
furnish hospital beds in the area. This would make it feasible to
include traction equipment in numerous MSAs throughout the country and
would allow use of the RSPA methodology described above. However, if a
PC was established just for traction equipment for bidding purposes,
the volume of items furnished in certain MSAs may not be sufficient to
generate viable competitions under the program because there may be a
limited number of suppliers interested in competing to furnish the
items in local areas. Nonetheless, if significant savings for the
beneficiary and/or program are possible for the equipment, we are
mandated to phase the items in under the DMEPOS CBP.
In addition, for lower volume items within large PCs, such as
wheelchair accessories, we propose to include these items in a limited
number of local competitions rather than in all CBAs to reduce the
burden for suppliers submitting bids under the programs as a whole. In
these cases, for the purposes of implementing section 1834(a)(1)(G) of
the Act, we propose that payment amounts for these items in all areas
where CBPs are not implemented be adjusted based on 110 percent of the
average of the SPAs for the areas where CBPs are implemented. We are
proposing the additional 10 percent adjustment to the national average
price to account for unique costs in certain areas of the country such
as delivering items in remote, isolated locations. For example, the PC
for standard mobility in the 9Round 1 CBAs includes 25 HCPCS codes for
low volume wheelchair accessories that are not included in the PC for
standard wheelchairs, scooters, and related accessories in the 100
Round 2 CBAs. We propose that payment amounts for these items in areas
where CBPs are not implemented be adjusted based on 110 percent of the
average of the SPAs for the 9Round 1 areas where CBPs are implemented.
Alternatively, we could include these low volume items in all PCs in
all 109 CBAs and suppliers would need to develop bid amounts and enter
bids for these 25 codes for low volume items such as toe loop holders,
shock absorbers and IV hangers. Including these 25 Healthcare Common
Procedure Coding System (HCPCS) codes for low volume wheelchair
accessories in the PCs under the 9 Round 1CBAs means that suppliers
submitting bids for wheelchairs have 25 bid amounts to develop and
enter per CBA for these items, or a total of 225 bid amounts to develop
and enter for these low volume items if bidding for wheelchairs in all
9 Round 1 CBAs. In contrast, including these codes in the PCs under all
109CBAs means that suppliers submitting bids for wheelchairs have 2,725
bid amounts to develop and enter for these low volume items, if bidding
for wheelchairs in all 109 CBAs. We believe that adjusting fee schedule
amounts based on SPAs from 10 or fewer CBAs achieve the savings
mandated by the statute for these items while greatly reducing the
burden on suppliers and the program in holding competitions for these
items in all 109 CBAs across the country.
Finally, if contracts and SPAs for low volume items included in a
limited number of CBAs expire and the items are not included in future
CBPs, we propose to use the information from the past competitions to
adjust the payment amounts for these items nationally based on 110
percent of the average of the SPAs for the areas where CBPs were
implemented. Even though the SPAs may no longer be in effect, we
believe it is reasonable to use the information to reduce excessive
payment amounts for items and services as long as the SPAs did not
result in a negative impact on access to quality items and services
while they were in effect and as long as the amounts are adjusted to
account for increases in costs over time. For example, 4 codes for
adjustable wheelchair seat cushions were included in the Round 1 Rebid,
with SPAs that were approximately 25 percent below the fee schedule
amounts being in effect in 9 CBAs from January 2011 thru December 2013.
These items were not bid in future rounds due to the low volume of use
relative to other wheelchair seat cushions. During the course of the 3-
year contract period when the SPAs were in effect in the 9 areas, there
were no reports of access problems and there were no negative health
outcomes as a result of including these items under CBPs. For the
future, savings for these items could be achieved by including them in
future competitions or by using the previous SPAs, updated by an
economic update factor to account for increases in costs. If the
decision is made not to include these items in future competitions, we
believe savings can and should still be obtained based on information
from the previous competitions.
We are soliciting comments on these proposals.
3. Adjusted Payment Amounts for Accessories Used With Different Types
of Base Equipment
There may be situations where the same accessory or supply
identified by a HCPCS code is used with different types of base
equipment, and the item (HCPCS code) is included in one or more PCs
under competitive bidding for use with some, but not all of the
different types of base equipment it is used with. For these
situations, we propose to use the weighted average of the SPAs from
CBPs and PCs where the item is included for use in adjusting the
payment amounts for the item (HCPCS code). We believe that it would be
unnecessarily burdensome to have different fee schedule amounts for the
same item (HCPCS code) when it is used with similar, but different
types of base equipment. We believe that the costs of furnishing the
accessory or supply should not vary significantly based on the type of
base equipment it is used with.
Therefore, we seek public comments on addressing situations where
an accessory or supply identified by a HCPCS code is included in one or
more PCs under competitive bidding for use with more than one type of
base equipment. In these situations, we propose to calculate the SPA
for each CBA by weighting the SPAs from each PC in that CBA by national
allowed services. This would result in the calculation of a single SPA
for the item for each CBA. The single SPA per code per CBA would then
be used in applying the payment adjustment methodologies proposed
above. For example, HCPCS code Exxx1 describes a tray used on a
wheelchair. Exxx1 was included in a PC for manual wheelchairs in all
CBAs and in a separate, second PC for power wheelchairs in all CBAs.
SPAs for Exxx1 under the manual wheelchair PC are different than the
SPAs for Exxx1 under the power wheelchair PC.

[[Page 40287]]

Under the proposal, national allowed services would be used to
compute a weighted average of the SPAs for Exxx1 in each of the CBAs.
So, rather than having 2 different SPAs for the same code in the same
CBA, we would have 1 SPA for the code for the CBA. If the item is
included in only one PC, we propose to use the SPAs for the item from
that PC in applying the payment adjustment methodologies proposed
above.
We are soliciting comments on these proposals.
4. Adjustments to Single Payment Amounts That Result From Unbalanced
Bidding
Within the HCPCS there are instances where there are multiple codes
for an item that are distinguished by the addition of a hierarchal
feature(s). For example, one code may describe an enteral nutrition
infusion pump with an alarm and another code may describe a less
sophisticated pump without an alarm. Under competitive bidding, the
code with the higher utilization would receive a higher weight and the
bid for this item would have a greater impact on the composite bid and
competitiveness of the supplier's overall bid for the PC within the CBP
than the bid for the less frequently used alternative. This can result
in unbalanced bidding where the bids and SPAs for the item without the
additional features is higher than the bids and SPAs for the item with
the additional features due to the fact that the item with the features
is utilized more than the item without the features and therefore
receives a higher weight. We believe that it is not inherently
reasonable for payment amounts for equipment with fewer features or
functionality to be higher than payment amounts for equipment with
additional features or functionality.
For example, HCPCS code B9000 describes an enteral nutrition
infusion pump without alarm, whereas code B9002 describes an enteral
nutrition infusion pump with alarm. Both codes have identical fee
schedule amounts. Based on paid claims data, only 176 Medicare
beneficiaries received the pump without the alarm in 2012, whereas
52,531 Medicare beneficiaries received the pump with the alarm in 2012.
Both pumps are included in the PC for enteral nutrients, supplies, and
equipment. As a result of the significantly higher utilization of code
B9002, this code received a much higher item weight under the CBP than
code B9000, and, as a result, a supplier could submit a much higher bid
for B9000 than for B9002 with virtually no impact on their composite
bid. Under Round 2, unbalanced bidding resulted in SPAs for code B9000
without the alarm being 6 percent higher on average than the SPAs for
code B9002 with alarm. Unbalanced bidding also occurred under Round 2
in the case of standard power wheelchairs, with SPAs for infrequently
used Group 1, standard weight power wheelchairs (codes K0815 and K0816)
being 16 percent higher on average than the SPAs for the much more
frequently used Group 2 versions (codes K0822 and K0823). Based on paid
claims data, only 474 Medicare beneficiaries received Group 1 power
wheelchairs described by codes K0815 and K0816 in 2012, whereas 196,968
Medicare beneficiaries received higher performing Group 2 power
wheelchairs described by codes K0822 and K0823 in 2012. The long term
solution for avoiding cases of unbalanced bidding is to eliminate
duplicate codes in the HCPCS. For the purpose of implementing section
1834(a)(1)(G) of the Act, and in making adjustments to payment amounts
under sections 1834(a)(1)(F)(ii), 1834(h)(1)(H)(ii), and 1842(s)(3)(B)
of the Act, we propose that the payment amounts for infrequently used
codes that describe items and services with fewer features than codes
with more features be adjusted so that they are no higher than the
payment amounts for the more frequently used codes with more features.
For example, the adjusted fee schedule amounts for code B9000 would be
set so that they are no higher than the adjusted fee schedule amounts
for code B9002. We believe that without this provision, unbalanced
bidding could result in fee schedule amounts for items that essentially
represent lower levels of service being higher than fee schedule
amounts for items representing higher levels of service, based on bids
being higher for infrequently used items with lower weights and less
features than bids for frequently used items with higher weights and
more features. This could result in beneficiaries receiving the item
with fewer features and functionality simply because the supplier has a
financial incentive to furnish that item. This is especially important
in light of the fact that use of the inherent reasonableness authority
provided by section 1842(b)(8) and (9) of the Act cannot be used to
further adjust payment amounts that are adjusted based on the mandate
of section 1834(a)(1)(F)(ii) and the authority provided by sections
1834(h)(1)(H)(ii) and 1842(s)(3)(B) of the Act.
We seek public comments on this issue and our proposed provision to
address this issue.
5. National Mail Order Program--Northern Mariana Islands
While Section 1847(a)(1)(A) of the Act provides that CPBs be
established throughout the United States, the definition of United
States at section 210(i) of the Act does not include the Northern
Mariana Islands. We therefore previously determined that the Northern
Mariana Islands are not considered an area eligible for inclusion under
a national mail order CBP. For the purpose of implementing the
requirements of section 1834(a)(1)(F)(ii) of the Act, we are proposing
that the payment amounts established under a national mail order CBP
would be used to adjust the fee schedule amounts for mail order items
furnished to beneficiaries in the Northern Mariana Islands. We propose
that the adjusted fee schedule amounts would be equal to 100 percent of
the amounts established under the national mail order CBP.
We are soliciting comments on these proposals.
6. Updating Adjusted Payment Amounts
In accordance with section 1834(a)(1)(F)(iii) of the Act, the
adjusted payment amounts for DME must be updated as additional items
are phased in or information is updated. We propose to add regulation
text indicating that we would revise the adjusted payment amounts for
DME, enteral nutrients, supplies, and equipment, and OTS orthotics each
time a SPA is updated following one or more new competitions, which may
occur at the end of a contract period, as additional items are phased
in, or as new programs in new areas are phased in. This is required by
section 1834(a)(1)(F)(iii) for DME. Since we believe it is reasonable
to assume that updated information from CBPs would better reflect
current costs for furnishing items and services, we are proposing
regulations to require similar updates for enteral nutrients, supplies,
and equipment, and OTS orthotics.
As we indicated above, if the only SPAs available for an item are
those that were established under CBP that are no longer in effect, we
propose to use these SPAs to adjust payment amounts using the
methodologies described above and we propose to do so following
application of inflation adjustment factors. We propose that the
inflation adjustment factor would be based on the percentage change in
the Consumer Price Index for all Urban Consumers (CPI-U) from the mid-
point of the last

[[Page 40288]]

year the SPAs were in effect to the month ending 6 months prior to the
date the initial payment adjustments would go into effect. The adjusted
payment amounts would continue to be updated every 12 months using the
percentage change in the CPI-U for the 12-month period ending 6 months
prior to the date the updated payment adjustments would go into effect.
Use of the CPI-U as the update factor is consistent with how pricing
amounts for DMEPOS have been updated since October 1, 1985, when the
CPI-U was used in calculating the IIC for use in calculating reasonable
charges. The CPI-U was used in updating reasonable charge data for use
in calculating the initial fee schedule amounts and is used in
determining the covered item update factors at sections 1834(a)(14),
1834(h)(4)(A), 1834(i)(1)(B), 1842(s)(1)(B) of the Act. If CBPs are
subsequently established for the item, we propose that the SPAs
established under these programs would be used in applying the payment
adjustment methodologies described above.
If finalized, the payment amounts that would be adjusted in
accordance with sections 1834(a)(1)(F)(ii) and (iii) of the Act for
DME, section 1834(h)(2)(H)(ii) of the Act for orthotics, and section
1842(s)(2)(B) of the Act for enteral nutrients, supplies, and equipment
shall be used to limit bids submitted under future competitions of the
DMEPOS CBP in accordance with regulations at Sec. 414.414(f). Section
1847(b)(2)(A)(iii) prohibits the awarding of contracts under a CBP
unless we are sure that total payments made to contract suppliers in
the CBA are less than the payment amounts that would otherwise be made.
In order to assure savings under a CBP, the fee schedule amount that
would otherwise be paid is used to limit the amount a supplier may
submit as their bid for furnishing the item in the CBA. If finalized,
the payment amounts that would be adjusted in accordance with sections
1834(a)(1)(F)(ii) and (iii) of the Act for DME, section
1834(h)(2)(H)(ii) of the Act for orthotics, and section 1842(s)(2)(B)
of the Act for enteral nutrients, supplies, and equipment would be the
payment amounts that would otherwise be made if payments for the items
and services were not made through implementation of a CBP. Therefore,
the adjusted fee schedule amounts would become the new bid limits.
We are soliciting comments on these proposals.
7. Summary of Proposed Methodologies
To summarize, under the proposed methodology in subsection 1 above
which applies to items and services included in more than 10 CBAs,
adjusted fee schedule amounts would be determined based on RSPAs
limited by a national floor and ceiling. The RSPA would be established
using the average of the SPAs for an item from all CBAs that are fully
or partially located in the region. The payment amount for the item,
with limited exceptions for areas outside the contiguous United States,
would be equal to its RSPA but not less than 90 percent and not more
than 110 percent of the national average, which is the average of the
RSPAs weighted by the number of states in the region. The proposed
methodology is modeled closely after the regional fee schedule payment
methodology in effect today for P&O. For the purpose of establishing
the regional boundaries, we propose to use 8 regions developed by the
Bureau of Economic Analysis (BEA) within the Department of Commerce:
New England, Mideast, Great Lakes, Plains, Southeast, Southwest, Rocky
Mountain, and Far West. For rural and frontier states, we propose that
the payment amount would be 110 percent of the national average. For
areas outside the contiguous United States, the payment amount would be
the greater of the average of the SPAs in the non-contiguous areas or
110 percent of the national average. As described in subsection 2
above, we propose a different methodology for low volume items with a
limited number of SPAs. In addition, we propose to apply update factors
to SPAs no longer in effect to adjust fee schedule amounts if no other
data is available. Finally, we propose that adjustments would be made
to account for SPAs for lower levels of service that are higher than
SPAs for higher levels of service.
A summary of the proposed methodologies is provided in Table 37
below.

Table 37--Summary of Proposed Methodologies for Adjusting Payment in Non-
Bid Areas
------------------------------------------------------------------------
Proposed methodology Calculations
------------------------------------------------------------------------
1) Adjustments for Items
Included in More than 10
CBAs*
Regional Adjustments Adjusted payment equal to the RSPA
Limited by National (calculated using the un-weighted
Parameters for Items average of SPAs from CBAs that are fully
Furnished Within the or partially located with a BEA region)
Contiguous United States. limited by a national floor and ceiling.
The national ceiling and floor would be
set at 110 percent and 90 percent,
respectively, of the national weighted
RSPA average (average of the RSPAs
applicable to each of the 48 contiguous
states and DC).
Adjustments for Rural and Adjusted payment for designated States
Frontier States. based on 110 percent of the national
weighted RSPA average.
Adjustments for Items Adjusted payment for non-contiguous areas
Furnished Outside the (e.g., Alaska, Guam, Hawaii) based on
Contiguous United States. the higher of the average of SPAs for
CBAs in areas outside the contiguous
U.S. or 110 percent of the national
weighted RSPA average applied to
adjustments within the contiguous U.S.
2) Adjustments for Lower Adjusted payment based on 110 percent of
Volume or Other Items the un-weighted average of the SPAs for
Included in 10 or Fewer the areas where CBPs are implemented for
CBAs*. contiguous and non-contiguous areas of
the United States.
3) Adjustments for Items Payment based on adjusted payment
Where the Only Available SPA determined under 1) or 2) above and
is from a CBP No Longer in adjusted on an annual basis based on the
Effect. CPI-U update factors from the mid-point
of the last year the SPAs were in effect
to the month ending 6 months prior to
the date the initial payment adjustments
would go into effect.
4) Adjustments for
Accessories Used with
Different Types of Base
Equipment
Adjustments for SPAs for the item from that one Product
Accessories Included in Category would be used in determining
One CBP Product Category. the adjusted payment amounts under
methodologies 1) or 2).
Adjustments for A weighted average of the SPAs for the
Accessories Included in item in each CBA where the item is
One or More CBP Product included in more than one Product
Category. Category would be used to determine the
adjusted payment amounts under
methodologies 1) or 2).

[[Page 40289]]

5) Payment Adjustments to Fee schedule amounts adjusted to equal
Northern Mariana Islands the SPAs under the national mail order
Using the National Mail CBP.
Order SPAs.
------------------------------------------------------------------------
* Note: We are also proposing to adjust the SPAs for a lower level of
service item to not exceed the SPAs of a higher level of service item
prior to applying the methodologies in 1) and 2) above in instances
where the SPA for the lower level of service item exceeds the higher
level of service item.

VI. Proposed Payment Methodologies and Payment Rules for Durable
Medical Equipment and Enteral Nutrition Furnished Under the Competitive
Bidding Program

A. Background

The payment rules for DME have changed significantly over the years
since 1965, resulting in the replacement of the original monthly rental
payment methodology with lump sum purchase and capped rental payment
rules, as well as separate payment for repairs, maintenance and
servicing, and replacement of expensive accessories for beneficiary-
owned equipment. In our experience, these payment rules have been
burdensome to administer and have added program costs associated with
expensive wheelchair repairs and payment for loaner equipment, and have
significantly increased costs associated with frequent replacement of
expensive accessories at regular intervals for items such as CPAP
devices. We estimate that separate payments for CPAP accessories have
increased annual expenditures by approximately $200 million. In some
cases, the costs associated with maintaining DME owned by beneficiaries
equals or exceeds any savings that might be generated from capping
rental payments. In the case of repairs, suppliers are not mandated to
service the equipment they furnish once title transfers to the
beneficiary--any supplier can provide these services. This could create
a hardship for the beneficiary since they must find a supplier willing
to repair the equipment and their separate coinsurance payments could
be substantial if the repair services are extensive. According to Sec.
414.408(h)(3) of our regulations, payment on a capped rental basis also
results in the restart of periods of continuous use for capped rental
items, and according to Sec. 414.408(i)(2) of our regulations, an
extension in the rental cap periods for oxygen equipment when a
beneficiary transitions from a non-contract supplier to a contract
supplier at the start of a new CBP. These issues were discussed in the
February 26, 2014, ANPRM noted above (79 FR 10758). It is not clear,
however, the extent to which the capped rental requirement, combined
with separate payments for supplies, accessories, repairs, and program
administration, overall results in net savings or net costs to the
Medicare program, particularly if we examine the effects of the policy
on specific DME items and services.
Under the Social Security Amendments of 1965 (Pub. L. 89-97)
enacted on July 30, 1965, Medicare Part B covered only rental of DME
items. The Social Security Amendments of 1967 (Pub. L. 90-248),
approved January 2, 1968, revised the statute to provide authority for
making payment for DME on a purchase basis as well as on a rental
basis. On May 12, 1972, the Government Accountability Office (GAO)
issued a report to the Congress entitled ``Need for Legislation to
Authorize More Economical Ways of Providing Durable Medical Equipment
under Medicare'' (B-164031(4), May 12, 1972) that led to Social
Security Amendment (section 245) in 1972. Section 245 of the Social
Security Amendments of 1972 (Pub. L. 92-603) enacted on October 30,
1972, modified the payment provisions for specific equipment items to
LCL of reasonable charges to contain the costs of DME. This law allowed
the Department of Health and Human Services (HHS) to experiment with
reimbursement approaches and implement any purchase approach found to
be feasible and economical in order to avoid prolonged rental payments
for expensive DME. Furthermore, section 16 of the Medicare-Medicaid
Anti-Fraud and Abuse Amendments (Pub. L. 95-142), enacted on October
25, 1977, amended section 1833(f) of the Act to read as follows:

In the case of durable medical equipment to be furnished an
individual as described in section 1861(s)(6), the Secretary shall
determine, on the basis of such medical and other evidence as he
finds appropriate (including certification by the attending
physician with respect to expected duration of need), whether the
expected duration of the medical need for the equipment warrants a
presumption that purchase of the equipment would be less costly or
more practical than rental. If the Secretary determines that such a
presumption does exist, he shall require that the equipment be
purchased, on a lease-purchase basis or otherwise, and shall make
payment in accordance with the lease-purchase agreement (or in a
lump sum amount if the equipment is purchased other than on a lease-
purchase basis); except that the Secretary may authorize the rental
of the equipment notwithstanding such determination if he determines
that the purchase of the equipment would be inconsistent with the
purposes of this title or would create an undue financial hardship
on the individual who will use it.

This law required HHS to make lease-purchase decisions on a case-
by-case basis based on whether purchase would be less costly or more
practical than rental and reimburse on the basis of a lump-sum purchase
or a lease/purchase arrangement. To implement the change in the law,
HHS issued final regulations (45 FR 44287) on July 1, 1980. This
regulation provided that the purpose of the lease purchase payment
arrangement for new and used DME was to reduce program costs caused by
long and costly rentals of the equipment and reduce beneficiary
expenses for annual deductibles and coinsurance for unnecessarily long
rentals. However, the regulations were not implemented until 1985
because of uncertainty as to whether they would result in program
savings. During the same time period, amidst growing concerns by the
agency about prolonged and excessive rentals, Williams College under a
grant administered by HCFA (now CMS) issued a report entitled
``Determinants of Current and Future Expenditures on Durable Medical
Equipment by Medicare and its Program Beneficiaries'' on April 1983.
This report estimated the excess rentals at about 14 percent of rental
payments. Following this report, a GAO report titled ``Procedures for
avoiding excess rental payments for durable medical equipment should be
modified'' issued on July 30, 1985, showed that excess rentals
represented about 54 percent of the amounts allowed for lower cost
items ($120 or less) and 34 percent for higher cost items. In the GAO
report, excess rental payments represented the difference between total
Medicare rental payments for an item of equipment and Medicare
reimbursement for the item if it had been purchased. GAO data showed
substantially fewer short-term rentals

[[Page 40290]]

than Williams' data (22 percent versus 64 percent for episodes lasting
1 or 2 months) and substantially more long-term rentals (33 percent.
versus 8 percent for episodes lasting more than 12 months).
GAO concluded that savings would result for reimbursing low-cost
items on a purchase basis because about two-thirds of the rented items
in its study costing $100 or less would have been cheaper to buy. GAO
also found that sufficient data was not available to reliably predict
when purchasing a high cost item would be less costly than renting it.
The report indicated that purchase price was reached by about month 7,
with additional monthly rental payments beyond month 7 resulting in
excess rental payments cost thereafter. Because of the uncertainty with
respect to the high-cost items, GAO recommended alternative
reimbursement approaches such as adjustment of the rental rate and
requirements that suppliers accept whatever percentage is adopted.
The report further discussed HHS and supplier comments on the GAO
report draft. HHS also commented that the cap proposal did not address
the issues associated with ownership of DME after the maximum amount of
the cap had been reached. The supplier comments included
recommendations from National Association of Medical Equipment
Suppliers (NAMES) proposal for considering alternative methods that
limited rental payments after a specified number of months such as 24
months for non-oxygen-related DME items (wheelchairs and hospital
beds). At the end of the 2-year period, any item still being rented
would be subject to a monthly maintenance fee in lieu of rental based
on 30 percent of the latest allowable rental charge. Title to the items
would remain with the supplier, and the item would be returned when no
longer needed.
Section 4062 of the Omnibus Budget Reconciliation (OBRA) Act of
1987 (Pub. L. 100-203), was enacted on December 22, 1987. This
legislation added section 1834(a) to the Act, which mandated payment
categories and rules for DME that dictated whether payment would be
made on a rental and/or purchase basis for items in each category.
These changes were intended to align payment rates and achieve savings
in the Medicare program. The new payment categories mandated by section
1834(a) of the Act were promulgated via regulation at Sec. 414.210.
Sections 1834(a)(2) through (a)(5) and 1834(a)(7) of the Act set forth
separate payment categories of DME and describe how the fee schedule
for each of the following categories is established: Inexpensive or
other routinely purchased items; Items requiring frequent and
substantial servicing; Customized items; Oxygen and oxygen equipment;
and Other items of DME or capped rental items.
Section 13543 of the Omnibus Budget Reconciliation Act (OBRA) of
1993 (Pub. L. 103-66), was enacted on August 10, 1993, and amended
section 1834(a) to reclassify nebulizers, CPAP devices, aspirators or
suction pumps, and intermittent assist or respiratory assist devices
from the category of items requiring frequent and substantial servicing
to the capped rental payment category. It also mandated separate
payment for accessories used in conjunction with these items. Section
4315 of the Balanced Budget Act of 1997 (Pub. L. 105-33), enacted on
August 5, 1997, added section 1842(s) to the Act, to authorize a fee
schedule for PEN, which was promulgated via regulations at Sec.
414.100 (66 FR 45173, August 28, 2001). In 42 CFR Part 414, Subpart C
of the regulations, govern payment on a fee schedule basis for PEN
nutrients, equipment and supplies. Payment for PEN items and services
is made in a lump sum for nutrients and supplies that are purchased and
on a monthly basis for equipment that is rented.
Section 1847 of the Act establishes the Medicare DMEPOS Competitive
Bidding Program (CBP) (``Competitive Bidding Program''). Under the CBP,
Medicare sets payment amounts for selected DMEPOS items and services
furnished to beneficiaries in CBAs based on bids submitted by qualified
suppliers and accepted by Medicare. For competitively bid items, these
new payment amounts, referred to as ``single payment amounts,'' replace
the fee schedule payment amounts. Section 1847(b)(5) of the Act
provides that Medicare payment for competitively bid items and services
is made on an assignment-related basis equal to 80 percent of the
applicable SPA amount, less any unmet Part B deductible.
Payment errors and increased costs can occur as a result of paying
separately for equipment, repairs, accessories, and routine maintenance
and servicing associated with beneficiary ownership of DME after the
13-month capped rental period or initial lump sum purchase, which have
increased the risk for improper payments. The findings published in the
August 2010 OIG report (OEI-07-08-00550) titled ``A review of claims
for capped rental durable medical equipment'' reveal that from 2006 to
2008, Medicare erroneously paid separately for these services. Medicare
paid $2.2 million for routine maintenance and servicing of capped
rental DME; from 2006 to 2008, Medicare erroneously allowed nearly $4.4
million for repairs for beneficiary-owned capped rental DME that failed
to meet payment requirements; and in 2007, Medicare allowed nearly $27
million for repair claims of beneficiary-owned capped rental DME that
failed to meet payment requirements.
Based upon our experience, the ownership of equipment by
beneficiary after lump sum purchase or after the end of 13 months
capped rental period leads to complicated administrative procedures.
The program must keep track of separate payment, coverage, medical
necessity, and other rules for a number of related codes for
replacement supplies and accessories used with the base equipment as
well as labor and parts associated with repairing patient-owned
equipment. In addition, claims processing systems must count rental
months and contractors must identify when legitimate breaks in
continuous use occur and can result in the start of new capped rental
periods. This leads to costly and complicated claims processing systems
edits for processing millions of claims for these items and services.
Payment on a purchase or capped rental basis results in the need to
process and pay separately for numerous items that are not DME but are
related to furnishing DME such as repair of equipment or replacement of
supplies and accessories used with patient-owned equipment necessary
for the effective use of DME.

B. Proposed Provisions

We believe that we have general authority under section 1847(a) and
(b) of the Act to establish payment rules for DME and enteral nutrition
equipment that are different than the rules established under section
1834(a) of the Act for DME, section 1842(s) for enteral nutrients,
supplies, and equipment, and, section 6112(b) of Omnibus Budget
Reconciliation (OBRA) Act of 1989 (Pub. L. 101-239) for enteral pumps.
We believe that lump sum purchase and capping rentals for certain DME
and enteral nutrition may no longer be necessary to achieve savings
under the program when competitive bidding can be used to establish a
reasonable monthly payment. We also believe that payment on a
continuous rental basis--that is, ongoing monthly payments not subject
to a cap--could help to ensure that medically necessary DME and enteral
nutrition equipment is kept in good working order for the entire
duration of medial need and would make it easier for beneficiaries to
change

[[Page 40291]]

from one supplier to another since the new supplier would not be faced
with a finite number of rental payments. Currently, there is no
requirement that a supplier take responsibility for repairing equipment
once it is owned by a beneficiary, which may cause difficulties for the
beneficiary to find a supplier to undertake such services. We believe
that continuous rental payment would eliminate such issues because the
supplier of the rented equipment would always be responsible for
keeping the equipment in good working order. We do not believe that
continuous monthly rental payments for DME and enteral nutrition would
negatively impact access to items and services and could potentially be
implemented in a manner that does not increase program expenditures
since suppliers would be paid based on bids for furnishing the same
general items and services they would otherwise provide. In addition,
since Medicare payment for rental of DME and enteral nutrition
equipment include payment for maintenance and servicing of the rented
equipment, the suppliers would be directly responsible for meeting the
monthly needs of the beneficiary in terms of keeping the rented
equipment in good working order.
As indicated in section IV above, CMS issued an ANPRM: Medicare
Program; Methodology for Adjusting Payment Amounts for Certain Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) using
Information From Competitive Bidding Programs on February 26, 2014 (79
FR 10754). As part of this ANPRM, comments were solicited on whether
payment on a bundled, continuous rental basis for DME and enteral
nutrition should be adopted under the DMEPOS CBP. Some commenters were
concerned that services such as replacement of CPAP masks and equipment
repairs would not be provided if they were not paid for separately.
Some commenters supported bundling payments for oxygen and enteral
nutrition. Some commenters suggested that the bundling methodology be
tested first before it is utilized on a wide scale basis. Thirteen
commenters that included beneficiaries, beneficiary advocacy
organizations, occupational therapists, and physical therapists raised
concerns that access to items such as highly configured wheelchairs and
speech generated devices might be disrupted under a continuous monthly
bundled rental payment that includes equipment rental, replacement
accessories and repairs. They felt that payment on a rental basis would
result in patients losing access to these devices when they entered
institutions such as hospitals and skilled nursing facilities where
separate payment for DME is prohibited by section 1861(n) of the Act.
For items that continue to be paid for on a lump sum purchase basis
or a capped rental basis where ownership of equipment transfers to the
beneficiary following the capped rental period, we solicited comments
on whether the supplier of the equipment should be responsible for
repairing the equipment following transfer of title. Some commenters
were opposed to the idea of making contract suppliers of purchased
equipment responsible for ongoing repairs of equipment following
transfer of title to the beneficiary. They stated that it would be a
significant burden on suppliers to provide ongoing maintenance of
equipment they furnished on a purchase basis, especially if the
beneficiary moved out of the area.
After carefully considering comments received in response to the
ANPRM, we are proposing to update the regulations to include proposed
special payment rules described below that would be utilized in paying
claims for certain DME or enteral nutrition under a limited number of
CBPs. As explained in more detail in the sections that follow below, we
propose to revise the regulation by adding a new section at 42 CFR
414.409 with special payment rules to replace specific payment rules at
Sec. 414.408 for these items and services in these CBPs. We also
propose to revise Sec. 414.412 regarding submission of bids for
furnishing items and services paid in accordance with these special
payment rules. We seek comments on these proposals.
We propose to phase-in the special payment rules described in
sections 1 and 2 below in a limited number of areas for a limited
number of items initially to determine whether it is in the best
interest of the Medicare program and its beneficiaries to phase these
rules in on a larger scale based on evaluation of the rules' effects on
Medicare program costs, and quality of/access to care. In order to
monitor the impact of phasing in the special payment rules in no more
than 12 CBAs, we propose that, at a minimum, we would utilize
evaluation criteria that are consistent with the current evaluation
criteria for monitoring the impact of the CBP on utilizers of items and
services in CBAs. To evaluate the quality of care for beneficiaries
affected by the special payment rules, we propose that, at a minimum,
we would utilize health status outcomes based criteria that would
measure specific indicators such as mortality, morbidity,
hospitalizations, emergency room and other applicable indicators unique
to each product category. To evaluate beneficiary access to necessary
items and services we propose that, at a minimum, we would monitor
utilization trends for each product category and track beneficiary
complaints related to access issues. To evaluate the cost of the
program, we propose that, at a minimum, we would analyze the claims
data for allowed services and allowed cost for each product category
and the associated accessories, supplies and repair cost in the 12 CBAs
and the comparator CBAs. We propose to analyze the effect of the
proposed payment rules on beneficiary cost sharing.
We propose that in any competition where these rules are applied,
suppliers and beneficiaries would receive advance notice about the
rules at the time the competitions that utilize the rules are
announced. The combined, total number of CBAs where the proposed rules
in either section 1 or 2 would apply would be limited to twelve. In
other words, it would not be twelve CBAs for the rules in section 1 and
an additional twelve CBAs for the rules in section 2, but 12 CBAs
total. In addition, we propose that the PCs listed below would be
phased in to include one or more of the CBAs that would number no more
than twelve total. In addition, if a determination is made to phase-in
these rules on a larger scale in additional areas and for additional
items based on program evaluation results regarding cost, quality, and
access, the process for phasing in the rules and the criteria for
determining when the rules would be applied would be addressed in
future notice and comment rulemaking. This rulemaking would also
address how the methodology for using these SPAs to adjust fee schedule
amounts would need to be revised.
The Affordable Care Act (Patient Protection and Affordable Care Act
of 2010, Pub. L. 111-148 (March 23, 2010), Sec. 3021) establishes the
Center for Medicare and Medicaid Innovations (CMMI) which is authorized
to test models to reduce Medicare and Medicaid expenditures while
preserving or improving quality for beneficiaries of those two
programs. The provision includes appropriations of $10 billion for
fiscal years 2011 through 2019. We solicit comments on the option for
testing the above special payment rules for DME and enteral nutrition
using the CMMI demonstration authority in no more than 12 CBAs that
would allow us to test and evaluate the special payment rules on a
wider scale and determine

[[Page 40292]]

whether the special payment rules reduce Medicare expenditure while
preserving or improving the quality for Medicare beneficiaries.
Regardless of the authority used to phase in or test these special
payment rules, we would undertake rigorous evaluation to determine the
rules' effects on program costs, quality, and access.
We seek comments on the specific proposals below.
1. Payment on a Continuous Rental Basis for Select Items
We propose to revise the regulation at 42 CFR 414.409 to allow for
payment on a continuous monthly rental basis under future competitions
in no more than 12 CBAs for one or more of the following categories of
items and services: enteral nutrition, oxygen and oxygen equipment,
standard manual wheelchairs, standard power wheelchairs, CPAP and
respiratory assist devices, and hospital beds. We believe that 12 CBAs
represents a limited number of CBAs yet would allow testing in
different regions of the country. We propose that the SPAs established
under the special payment rules would be based on bids submitted and
accepted for furnishing rented DME and enteral nutrition on a monthly
basis. We propose that the SPAs would represent a monthly payment for
each month that rented DME or enteral nutrition is medically necessary.
The SPA for the monthly rental of DME would include payment for each
item and service associated with the rental equipment including the
ongoing maintenance and servicing of the rental equipment, and
replacement of supplies and accessories that are necessary for the
effective use of the equipment. In the case of enteral nutrition, we
propose that the monthly SPA would include payment for all nutrients,
supplies and equipment. Suppliers would be responsible for furnishing
all items and services in the applicable CBA needed each month based on
the physician's order. For example, in addition to furnishing the CPAP
device, the supplier would be responsible for furnishing the
accessories used with the device such as masks, tubing, headgear,
humidifiers, etc., as well as all maintenance and servicing of the
equipment. For wheelchairs, the supplier would be responsible for
furnishing the type of wheelchair and all options and accessories used
with the wheelchair that are needed by the patient, as well as well as
all maintenance and servicing of the equipment. For hospital beds, the
supplier would be responsible for furnishing the type of hospital bed
and all accessories used with the hospital bed (for example,
mattresses, side rails, trapeze bars, etc.) needed by the patient, as
well as all maintenance and servicing of the equipment. As discussed in
more detail below, phasing in these rules would help us determine the
impact on Medicare expenditures as well as beneficiary access to items
and services and other possible costs and benefits.
We seek comments on this proposal.
a. Enteral Nutrition
We propose to implement future competitions for enteral nutrition
in no more than 12 CBAs, where payment would be based on bids submitted
for furnishing all enteral nutrients, supplies, and equipment needed on
a monthly basis. We propose that the suppliers would submit a single
bid for each CBA for furnishing all items and services related to
furnishing such enteral nutrients, supplies, and equipment in the
applicable CBA needed by a beneficiary on a monthly basis. We are
soliciting comments on whether alternatives to submitting a single bid
for enteral nutrition should be considered, such as having separate
categories based on mode of delivery (syringe fed, pump fed, or gravity
fed) or separate categories based on the type of nutrients delivered.
We selected the category of enteral nutrition because we believe that
payment on a separate, piecemeal basis for daily supplies, calories of
nutrients furnished, and monthly rental of equipment the pumps is
unnecessary and overly complex. For example, for a pump-fed patient,
the beneficiary must choose whether they wish to rent the pump or
purchase the pump. If the beneficiary chooses to rent the pump, the
supplier is required to continue furnishing the pump until the capped
rental period is over, but then is allowed to bill for maintenance and
servicing of the pump once every 6 month, but only if maintenance and
servicing is needed and furnished. The supplier must also submit claims
for daily supply kits as well as feeding tubes furnished in addition to
billing for every 100 calories of enteral nutrient furnished. Finally,
the supplier must bill for the pole used to hold the pump; however, the
monthly rental payments for the pole are not subject to the cap on
rentals that the statute specifically requires for the pump and this is
confusing. In addition, issues have been raised regarding replacement
parts and supplies for beneficiary-owned enteral nutrition infusion
pumps when the manufacturer elects to discontinue the brand and model
of pump owned by the beneficiary. Neither the beneficiary nor the
supplier is able to obtain supplies that the manufacturer no longer
sells and the Medicare rules would generally not allow for the purchase
of a new pump since this would be duplicate equipment. We seek comments
on this proposal.
b. Oxygen and Oxygen Equipment
We propose to implement future competitions for oxygen and oxygen
equipment in no more than 12 CBAs, where payment would be based on bids
submitted for furnishing all oxygen and oxygen equipment needed on a
monthly basis. We propose that the suppliers would submit a single bid
for each CBA for furnishing all items and services needed on a monthly
basis, including all rented equipment and related accessories such as
regulators, flowmeters, nasal cannulas, masks, tubing, humidifier
bottles, tank stands and carts, and transtracheal catheters, as well as
all maintenance and servicing of the equipment and delivery of oxygen
contents. We selected the category of oxygen and oxygen equipment
because we believe the rental cap for oxygen equipment generates very
little savings under CBPs. A small percentage of beneficiaries,
approximately 25 percent based on our review of Medicare claims, reach
the 36-month cap, which is extended by as much as 9 months at the start
of a CBP, and the SPAs for oxygen contents furnished after the cap are
roughly the same as the SPAs for furnishing oxygen and oxygen equipment
during the 36-month rental cap period. In addition, recent issues
related to suppliers abandoning beneficiaries after the rental cap has
resulted in the need to pay for lost oxygen and oxygen equipment,
eliminating any savings the rental cap might have achieved. Although
section 1834(a)(5)(F)(ii)(I) of the Act mandates that the supplier
receiving payment for the 36th month of continuous use must continue to
furnish the oxygen and oxygen equipment for any period of medical need
for the duration of the reasonable useful lifetime of the equipment,
certain suppliers have failed to continue providing oxygen and oxygen
equipment despite this requirement.
Section 414.226 provides that for oxygen and oxygen equipment,
Medicare payments are modality neutral, with the exception that the
portable oxygen equipment add-on payment for oxygen generating portable
equipment (OGPE) is higher than the add-on payment for liquid and
gaseous portable oxygen equipment. The Medicare monthly payment for
oxygen and oxygen equipment includes payment for stationary equipment

[[Page 40293]]

(concentrators, liquid, or gaseous stationary equipment) as well as
payment for oxygen contents (stationary and portable). The add-on
payment is only for the portable oxygen equipment and does not include
payment for the portable oxygen contents. This fact is often confused
and the portable oxygen add-on payment is erroneously viewed as a
payment for portable oxygen contents as well as portable oxygen
equipment. In a majority of cases, beneficiaries receive both
stationary oxygen and oxygen equipment and portable oxygen and oxygen
equipment, so having a separate add-on payment for portable oxygen
equipment only seems unnecessary. Under our proposal, for oxygen and
oxygen equipment payment under the select CBPs, we propose to eliminate
the 36-month cap on equipment payments and eliminate separate add-on
payments for portable equipment and separate payment for oxygen
contents. Under our proposal, the contract suppliers would continue to
be responsible for furnishing equipment consistent with the
requirements in Sec. 414.420.
We seek comments on this proposal.
c. Standard Manual Wheelchairs
We propose to implement future competitions for standard manual
wheelchairs in no more than 12 CBAs, where payment would be based on
bids submitted for furnishing standard manual wheelchairs and all
accessories used in conjunction with the wheelchairs on a monthly
basis. We propose that the suppliers would submit a single bid for each
HCPCS code describing the wheelchair for each CBA for furnishing the
wheelchair and all accessories and services needed on a monthly basis.
We are soliciting on this proposal as well as comments on whether all
standard manual wheelchairs should be described under one HCPCS code in
order to simplify bidding and claims processing procedures. The current
HCPCS codes for standard manual wheelchairs include standard, hemi (low
seat), lightweight, high strength lightweight, heavy duty, and extra
heavy duty wheelchairs described by codes K0001 thru K0004, K0006, and
K0007 in the HCPCS. In view of comments to the ANPRM expressing concern
regarding beneficiary impact of bundled arrangements for users of
highly configured manual wheelchairs, we are requesting comment on what
safeguards and monitoring approaches we should use to ensure that
access to these items is not disrupted for individuals transitioning
between settings and/or residing in remote areas. We seek comments on
this proposal.
d. Standard Power Wheelchairs
We propose to implement future competitions for standard power
wheelchairs in no more than 12 CBAs, where payment would be based on
bids submitted for furnishing standard power wheelchairs and all
accessories used in conjunction with the wheelchairs on a monthly
basis. We propose that the suppliers would submit a single bid for each
HCPCS code describing the wheelchair for each CBA for furnishing the
wheelchair and all accessories (including batteries) and services
needed on a monthly basis. We are soliciting comments on whether all
standard power wheelchairs should be described under one HCPCS code in
order to simplify bidding and claims processing procedures. The current
HCPCS codes for standard power wheelchairs include all group 1 and
group 2 power wheelchairs that cannot accommodate rehabilitative
accessories and features described by codes K0813 thru K0829 in the
HCPCS. In view of comments to the ANPRM expressing concern regarding
beneficiary impact of bundled arrangements for users of highly
configured manual wheelchairs, we are requesting comment on what
safeguards and monitoring approaches we should use to ensure that
access to these items is not disrupted for individuals transitioning
between settings and/or residing in remote areas.
We selected the categories of standard manual and power wheelchairs
because we believe that payment on a separate, piecemeal basis for
hundreds of various wheelchair options and accessories is unnecessary
and overly complex. In addition, issues have been raised regarding
access to repair of beneficiary-owned wheelchairs following the 13-
month capped rental period. For example, there are hundreds of codes
for various wheelchair accessories and separate payment for each of
these items in addition to the payment for the wheelchair. The separate
billing, processing and payment of these claims would not be necessary
given that the supplier can factor the costs of accessories into their
bid for furnishing the rented equipment. In addition, the beneficiary's
needs may change such that the beneficiary needs a different type of
accessory from the one that was initially furnished by the supplier.
Under the current rules, the accessory may not be covered if it is
similar to the one that was already paid for by Medicare. If payments
for all types of accessories are included in an ongoing, monthly rental
amount for the wheelchair, the beneficiary can receive other
accessories included in the program, provided such accessories are
medically necessary.
We seek comments on this proposal.
e. CPAP and Respiratory Assist Devices
We propose to implement future competitions for CPAP and
respiratory assist devices in no more than 12 CBAs, where payment would
be based on bids submitted for furnishing the CPAP or respiratory
assist device and supplies, accessories, and services needed on a
monthly basis. We propose that the suppliers would submit a single bid
for each device for each CBA for furnishing all items and services
needed on a monthly basis. We are soliciting comments on our proposal
as well as whether all CPAP and respiratory assist devices should be
described under one HCPCS code in order to simplify bidding and claims
processing procedures. We selected the category of CPAP and respiratory
assist devices because we believe the cost of paying separately for the
expensive accessories used with these devices may exceed the amount of
savings achieved from capping the rental payments for the equipment. We
seek comments on this proposal.
f. Hospital Beds
We propose to implement future competitions for hospital beds in no
more than 12 CBAs, where payment would be based on bids submitted for
furnishing hospital beds and all accessories used in conjunction with
the hospital beds on a monthly basis. We propose that the suppliers
would submit a single bid for each HCPCS code describing the hospital
bed for each CBA for furnishing the hospital bed and all accessories
and services needed on a monthly basis. We are soliciting comments on
whether all hospital beds should be described under one HCPCS code in
order to simplify bidding and claims processing procedures. We selected
the category of hospital beds to allow us to determine the impact of
the continuous monthly rental payment rule under CBP on beneficiary
access, utilization rate and cost for an item that currently does not
have beneficiary access issues or issues related to excessive cost for
repair and accessories. We seek comments on this proposal.
g. Transition Rules
We propose to revise the regulation at 42 CFR 414.409 to include
supplier transition rules for enteral nutrition, oxygen and oxygen
equipment, standard manual wheelchairs, standard power wheelchairs,
CPAP and respiratory

[[Page 40294]]

assist devices, and hospital beds that would be paid in accordance with
the rules proposed in this section. We also propose to revise the
regulation at 42 CFR 414.408 to provide a cross reference to proposed
Sec. 414.409. We propose that changes in suppliers from a non-contract
supplier to a contract supplier at the beginning of the CBP where the
proposed payment rules would apply would simply result in the contract
supplier taking on responsibility for meeting all of the beneficiary's
monthly needs while receiving payment for each month of service. We
developed these proposed rules based on that fact that for capped
rented DME and oxygen and oxygen equipment, since rental caps would not
apply under the proposed rules, there would be no need to restart or
extend capped rental periods when a beneficiary transitions from a non-
contract supplier to a contract supplier. We propose that supply
arrangements for oxygen and oxygen equipment, and rental agreements for
standard manual wheelchairs, standard power wheelchairs, CPAP devices,
respiratory assist devices, and hospital beds entered into before the
start of a CBP and application of the payment rules proposed in this
section would be allowed to continue so long as the supplier agrees to
furnish all necessary supplies and accessories used in conjunction with
the rented equipment and needed on a monthly basis. We propose that
non-contract suppliers in these cases would have the option to continue
rental agreements; however, we propose that as part of the process of
allowing the rental agreements to continue, the grandfathered supplier
would be paid based on the payment rules proposed in this section and
based on the SPAs established under the CBPs incorporating the proposed
rules.
We solicit comments on this proposed process.
We propose that in the event that a beneficiary relocates from a
CBA where the rules proposed in this section apply to an area where
rental cap rules apply, that a new period of continuous use would begin
for the capped rental item, enteral nutrition equipment, or oxygen
equipment as long as the item is determined to be medically necessary.
We believe these rules that would result in a new period of continuous
use are necessary to safeguard beneficiary access to covered items and
services and plan to closely monitor the impact these rules have on
beneficiary cost sharing before phasing in these rules in more than a
limited number of CBAs.
We seek comments on these proposals.
h. Beneficiary-Owned Equipment
We propose that separate payment for all repairs, maintenance and
servicing, and replacement of supplies and accessories for beneficiary-
owned DME or enteral nutrition equipment would cease in the CBAs where
the payment rules proposed under this section are in effect. We propose
that if the beneficiary has a medical need for the equipment, the
contract supplier would be responsible for furnishing new equipment and
servicing that equipment. This option would ensure that beneficiaries
continue to receive medically necessary equipment, including the
supplies, accessories, maintenance and servicing that may be needed for
such equipment. Please note that this would not apply to items which
are not paid on a bundled, continuous rental basis. We propose to
revise the regulations at Sec. 414.409 to specify that any beneficiary
who owns DME or enteral nutrition equipment and continues to have a
medical need for the items should these rules take effect in a CBA
where they reside, would have the option to obtain new equipment, if
medically necessary, and related servicing from a contract supplier. We
are requesting comment as to whether a transitional process should be
considered when claims are selected for review to determine whether
they are reasonable and necessary and other safeguards are required to
ensure timely delivery of the replacement DME so that individuals'
mobility and ability to live independently is not adversely impacted by
delays. While this could potentially increase beneficiary cost sharing,
it would eliminate issues associated with repair of beneficiary-owned
equipment. We plan to closely monitor the impact of this proposed
provision, should it be finalized.
We seek comments on this proposal, including issues related to the
ability of low income beneficiaries to afford additional cost sharing,
and how best to monitor beneficiary impact within the 12 CBAs in which
these new rules would be phased in.
2. Responsibility for Repair of Beneficiary-Owned Power Wheelchairs
Furnished Under CBPs
We propose to revise the regulation at 42 CFR 414.409 to add a new
payment rule that would apply to future competitions for standard power
wheelchairs in no more than 12 CBAs where payment is made on a capped
rental basis and not on the basis of the rules proposed under Sec. 1
above. In these CBPs, we propose that contract suppliers for power
wheelchairs would be responsible for all necessary repairs and
maintenance and servicing of any power wheelchairs they furnish during
the contract period under the CBP, including repairs and maintenance
and servicing of power wheelchairs after they have transferred title to
the equipment to the beneficiary. We propose that this responsibility
would end when the reasonable useful lifetime established for the power
wheelchair expires, medical necessity for the power wheelchair ends,
the contract period ends, or the beneficiary relocates outside the CBA.
We propose that the contract supplier would not receive separate
payment for these services and would factor the costs of these services
into their bids. We believe that based on existing maintenance and
servicing requirements, suppliers could project the cost of continuing
to repair and service equipment of various ages once title to the
equipment has transferred to the beneficiary. As indicated above, under
existing rules, the supplier that transfers title to the equipment to
the beneficiary after the 13 month period of continuous use is not held
responsible for repairing the equipment they furnish after the
beneficiary takes over ownership of the equipment. Therefore, we
believe the propose rule would safeguard the beneficiary and better
ensure that the beneficiary continues to have equipment in good working
order to meet their needs. We propose that the contract supplier would
not be responsible for repairing power wheelchairs they did not
furnish. We propose that services to repair beneficiary-owned equipment
furnished prior to the start of the contract period would be paid in
accordance with the standard payment rules at Sec. 414.210(e).
We seek comments on this proposal.
3. Phasing in the Proposed Payment Rules in CBAs
We propose that the CBAs where the proposed rules in Sec. Sec. 1
or 2 above would be applied would be for MSAs with a general population
of at least 250,000 and a Medicare Part B enrollment population of at
least 20,000 that are not already included in Round 1 or 2. Based on
2012 population estimates from the Census Bureau and 2011 Medicare
enrollment data, there are approximately 80 MSAs that would satisfy
this criteria. Selecting MSAs not already included in Round 1 or 2
would allow competitions and rules associated with these competitions
to begin after the final rule would take effect in areas that are
comparable to existing CBAs. We propose that the boundaries of the CBAs
would be established in accordance with the rules set forth at

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Sec. Sec. 414.406 and 414.410. We propose that additional CBPs for the
items identified in Sec. Sec. 1 and 2 above be established in
``comparator'' CBAs concurrent with CBPs where the proposed rules would
be applied. Payment for items and services in the comparator CBAs would
be made in accordance with the existing payment rules in Sec. 414.408.
We propose that these additional comparator CBAs and CBPs be
established to facilitate our analysis of the effect of the payment
rules proposed in sections 1 and 2 above compared to the effect of the
existing payment rules in Sec. 414.408. We propose that for each CBP
where either the rules in section 1 or 2 above are implemented, a
comparator CBA and CBP would be established. We propose that the
comparator CBAs be selected so that they are located in the same state
as the CBA where the special payment rules would apply and are similar
to the CBAs in which the proposed payment rules would be implemented
based on a combination of factors that could include geographic
location (region of the country), general population, beneficiary
population, patient mix, and utilization of items. We are proposing to
establish the comparator CBAs and CBPs to enable us to review the
impact of the proposed payment rules on expenditures, quality, and
access to items and services in order to determine whether to pursue
future rulemaking to expand the proposed payment rules to additional
areas and or items.
We seek comments on this proposal.
4. Submitting Bids for Items Paid on a Continuous Rental Basis
In accordance with section 1847(b)(2)(A)(iii) of the Act, before
contracts can be awarded, a determination must be made that the total
amounts to be paid to contract suppliers under a CBP are expected to be
less than the total amounts that would otherwise be paid. In accordance
with Sec. 414.414(f) of the regulations, under the DMEPOS CBP, bids
amounts for an item or service are limited to the fee schedule amount
that would otherwise be paid for the item or service. We propose that
in order to apply the proposed rental payment rules, we would establish
the bid limits for enteral nutrition, oxygen and oxygen equipment,
standard manual wheelchairs, standard power wheelchairs, and hospital
beds that would be paid in accordance with the proposed payment rules
in sections 1 and 2 above based on average monthly expenditures per
beneficiary in an area for the items and services related to furnishing
the DME. For example, the bid limit for the continuous monthly rental
of a standard manual wheelchair in a CBA would be based on the total
payment amounts per month in the area for the wheelchair, repair,
maintenance and servicing of the wheelchair, and accessories used with
the wheelchair, divided by the unduplicated number of beneficiaries
receiving these items and services. We propose to revise Sec. 414.412
to specify that the supplier's bid for furnishing enteral nutrition,
oxygen and oxygen equipment, standard manual wheelchairs, standard
power wheelchairs, and hospital beds on a continuous monthly rental
basis could not be higher than the average monthly payment made in the
area for the items and services prior to the start of the competition.
In the case of CPAP devices and respiratory assist devices, these items
were paid on a bundled, continuous rental fee schedule basis from 1989
thru 1993, based on the rules mandated by section 4062(b) of OBRA 87,
prior to the change by section 13543 of OBRA 93 that moved them from
the payment class for items requiring frequent and substantial
servicing to the payment class for capped rental items. Payment on a
bundled, continuous rental fee schedule basis was mandated by OBRA 87
from 1989 thru 1993. The fee schedule for 1993 is the most current fee
schedule where payment was based on a bundled, continuous rental basis.
We propose to revise Sec. 414.412 to specify that the supplier's bid
for furnishing CPAP devices and respiratory assist devices on a
continuous monthly rental basis could not be higher than the 1993 fee
schedule amounts for these items, increased by the covered item update
factors provided for these items in section 1834(a)(14) of the Act. We
seek comments on this proposal.
We seek public comments on phasing in the proposed rules described
in section 1 through 4 above.

VII. Scope of Hearing Aid Coverage Exclusion

A. Background

Section 1862(a)(7) of the Act states notwithstanding any other
provision of title XVIII, no payment may be made under part A or part B
for any expenses incurred for items or services ``where such expenses
are for . . . hearing aids or examinations therefor. . . .'' This
policy is codified in the regulation at 42 CFR 411.15(d), which
specifically states that hearing aids or examination for the purpose of
prescribing, fitting, or changing hearing aids are excluded from
Medicare coverage. At the time of passage of the Social Security
Amendments of 1965 (Pub. L. 97, 89th Congress), which added the
Medicare coverage exclusion for hearing aids at section 1862(a)(7) of
the Act, all hearing aids utilized functional air and/or bone
conduction pathways to facilitate hearing.
In general, to be covered by Medicare, an item or service must fall
within one or more benefit categories contained within Part A or Part
B, and must not be otherwise excluded from coverage. With regard to
section 1862(a)(7) of the Act, we consider that a hearing aid provides
assistance or ``aid'' to hearing that already exists via a functioning
ear. Cochlear implants were the first hearing device that was not
considered a hearing aid and met the benefit category of a prosthetic
device. Prosthetic devices are a Medicare benefit category defined at
section 1861(s)(8) of the Act which, in part, states a ``prosthetic
devices (other than dental) which replace all or part of an internal
body organ.'' A cochlear implant is considered a prosthetic device
primarily because it replaces the function of the cochlea. A cochlear
implant device differs from a hearing aid in that it is an electronic
instrument, part of which is implanted surgically to directly stimulate
auditory nerve fibers, and part of which is worn or carried by the
individual to capture, analyze and code sound. Both cochlear devices
and brain stem implants, which function in a similar manner, create the
perception of sound rather than aid hearing that already exists. We
interpret the statute as excluding devices that provide aid to extant
hearing (or hearing aids) rather than devices that create the
perception of sound and hearing, given that devices with technology
that utilize either air or bone conduction via mechanical stimulation
to aid extant hearing were primarily utilized when the statute was
written. Moreover, we believe that prosthetic hearing devices are not
``hearing aids'' given that such devices do more than ``aid'' in
hearing and instead replace the function of an internal body organ
(i.e., a part of the ear).
Historically, CMS has periodically addressed the scope of the
Medicare hearing aid coverage exclusion through program instructions
and national coverage policies or determinations. We briefly discuss
the relevant changes that have occurred over time with regard to
Medicare coverage and payment of hearing devices.
Cochlear implants were the first device covered for Medicare
payment for adult beneficiaries in October 1986, when no other hearing
device was being covered under Medicare, and such

[[Page 40296]]

coverage was supported by the Office of Health Technology Assessment's
``Public Health Service Assessment of Cochlear Implant Devices for the
Profoundly Hearing Impaired'', dated June 30, 1986 found at https://archive.org/stream/cochlearimplantd00feig/cochlearimplantd00feig_djvu.txt. Medicare coverage was restricted to cochlear implants that
treated patients with post lingual, profound, bilateral, sensorineural
deafness who are stimulable and who lack the unaided residual auditory
ability to detect sound.
Effective January 1, 2003, we clarified that the hearing aid
exclusion broadly applied to all hearing aids that utilized functional
air and/or bone conduction pathways to facilitate hearing (see section
15903, Hearing Aid Exclusion, Medicare Carriers Manual, Part 3--Claims
Process (HCFA-Pub. 14-3), which was later moved to section 100, Hearing
Aids and Cochlear Implants, of Chapter 16, of the Medicare Benefit
Policy Manual, CMS-Pub. 100-02). Any device that does not produce at
its output an electrical signal that directly stimulates the auditory
nerve is a hearing aid for purposes of coverage under Medicare. Devices
that produce air conduction sound into the external auditory canal,
devices that produce sound by mechanically vibrating bone, or devices
that produce sound by vibrating the cochlear fluid through stimulation
of the round window are considered hearing aids and excluded from
Medicare coverage.
Effective April 4, 2005, Medicare's national coverage policy for
cochlear implants was modified through the NCD process (see section 65-
14 of the Medicare Coverage Issues Manual (HCFA-Pub. 6), which was
later moved to section 50.3, Cochlear Implantation, of Chapter 1, Part
1 of the Medicare National Coverage Determinations Manual (CMS-Pub.
100-03)). Our findings under the NCD, in part, state that ``CMS has
determined that cochlear implants fall within the benefit category of
prosthetic devices under section 1861(s)(8) of the Social Security
Act.'' Medicare is a defined benefit program. An item or device must
not be statutorily excluded and fall within a benefit category as a
prerequisite to Medicare coverage. We believe that prosthetic hearing
devices are not ``hearing aids'' given that such devices do more than
``aid'' in hearing and instead replace the function of an internal body
organ (i.e., a part of the ear). Additional changes, regarding coverage
criteria, have been made to NCD 50.3 over time, however, the NCD
decision regarding benefit category and Medicare coverage for cochlear
implantation has remained consistent. The NCD states that a cochlear
implant device is an electronic instrument, part of which is implanted
surgically to stimulate auditory nerve fibers, and part of which is
worn or carried by the individual to capture, analyze, and code sound.
Cochlear implant devices are available in single-channel and multi-
channel models. The purpose of implanting the device is to provide
awareness and identification of sounds and to facilitate communication
for persons who are moderately to profoundly hearing impaired.
The regulations at 42 CFR 419.66 were revised to add new
requirements, effective January 1, 2006, for transitional pass-through
payments for medical devices. The auditory osseointegrated device,
referred to as a bone anchored hearing aid (BAHA), was determined to be
a new device category according to the new requirements for
transitional pass-through payment. Medicare coverage was also expanded
to cover auditory osseointegrated and auditory brainstem devices as
prosthetic devices. Currently, section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS Pub. 100-02) reads as follows:

Hearing aids are amplifying devices that compensate for impaired
hearing. Hearing aids include air conduction devices that provide
acoustic energy to the cochlea via stimulation of the tympanic
membrane with amplified sound. They also include bone conduction
devices that provide mechanical energy to the cochlea via
stimulation of the scalp with amplified mechanical vibration or by
direct contact with the tympanic membrane or middle ear ossicles.
Certain devices that produce perception of sound by replacing
the function of the middle ear, cochlea, or auditory nerve are
payable by Medicare as prosthetic devices. These devices are
indicated only when hearing aids are medically inappropriate or
cannot be utilized due to congenital malformations, chronic disease,
severe sensorineural hearing loss or surgery.
The following are considered prosthetic devices:
Cochlear implants and auditory brainstem implants, that
is, devices that replace the function of cochlear structures or
auditory nerve and provide electrical energy to auditory nerve
fibers and other neural tissue via implanted electrode arrays.
Osseointegrated implants, that is, devices implanted in
the skull that replace the function of the middle ear and provide
mechanical energy to the cochlea via a mechanical transducer.

B. Current Issues

We have received several benefit category determination requests in
recent years for the consideration of non-implanted, bone conduction
hearing aid devices for single-sided deafness, as prosthetic devices
under the Medicare benefit. We have received similar requests for
several other types of implanted and non-implanted devices as well. In
response to these requests, we have re-examined the scope of the
statutory hearing aid exclusion. Currently, we consider all air or bone
conduction hearing devices, whether external, internal, or implanted,
including, but not limited to, middle ear implants, osseointegrated
devices, dental anchored bone conduction devices, and other types of
external or non-invasive devices that mechanically stimulate the
cochlea, as hearing aids. All of these devices provide traditional
``aid'' to hearing and are excluded in accordance with section
1862(a)(7) of the Act. In order for an item to be covered by Medicare,
it must fall into a Medicare benefit category and not be statutorily
excluded. Not only are these devices statutorily excluded they do not
fall in a benefit category. Specifically, they do not meet the
statutory definition of a prosthetic device found at section 1861(s)(8)
of the Act which, in part, states a ``prosthetic devices (other than
dental) which replace all or part of an internal body organ.'' They do
not replace the function of an internal body organ and thus are not
considered prosthetic devices under Medicare payment policy. In regard
to BAHA, it is a bone conduction hearing aid device that is
osseointegrated. There are currently only two hearing devices that are
not statutorily excluded and are a covered Medicare item that fall into
the prosthetic benefit category; namely, the cochlear implant and the
auditory brainstem device. These two devices meet the definition of a
prosthetic device in that they replace the function of the inner ear
consistent with the definition of prosthetic devices described in
section 1861(s)(8) of the Act.

C. Proposed Provisions

After further considering the statutory Medicare hearing aid
exclusion under section 1862(a)(7) of the Act, and re-examining the
different types of external and implanted devices, we propose to
interpret the term ``hearing aid'' to include all types of air or bone
conduction hearing aid devices, whether external, internal, or
implanted, including, but not limited to, middle ear implants,
osseointegrated devices, dental anchored bone conduction devices, and
other types of external or non-invasive devices that mechanically
stimulate the cochlea. We believe, based on our understanding of

[[Page 40297]]

how such devices function, that such devices are hearing aids that are
not otherwise covered as prosthetic devices, in that they do not
replace all or part of an internal body organ. Therefore, we propose to
modify the regulation at Sec. 411.15(d)(1) to specify that the hearing
aid exclusion encompasses all types of air conduction and bone
conduction hearing aids (external, internal, or implanted).
Osseointegrated devices such as the BAHA are bone conduction hearing
aids that mechanically stimulate the cochlea; therefore, we believe
that the hearing aid exclusion applies to these devices and propose
that Medicare should not cover these devices, consistent with our
interpretation of section 1862(a)(7) of the Act. In addition, an NCD
was issued for cochlear implant devices with the result that this
determination and recent requests to expand coverage of hearing devices
raises serious questions about the intent and scope of the Medicare
coverage exclusion for hearing aids. It is for these reasons that we
are addressing the hearing aid coverage exclusion in notice and comment
rulemaking, and believe that the BAHA device qualifies as a hearing aid
because it functions like other bone conduction hearing aids that are
subject to the Medicare statutory coverage exclusion for hearing aids.
We continue to believe that the hearing aid exclusion does not
apply to brain stem implants and cochlear implants because these
devices directly stimulate the auditory nerve, replacing the function
of the inner ear rather than aiding the conduction of sound as hearing
aids do. Therefore, we are not proposing any changes to our current
policy about brain stem implants and cochlear implants and how such
implants fall outside of the hearing aid statutory exclusion (that is,
such devices would fall outside the Medicare coverage exclusion for
hearing aids and remain covered subject to the Medicare NCD 50.3 found
at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/ncd103c1_Part1.pdf). We propose, however, to modify Sec.
411.15(d)(2) to specifically note that such devices do not fall within
the hearing aid exclusion.
We seek public comment on this proposal.

VIII. Definition of Minimal Self-Adjustment of Orthotics Under
Competitive Bidding

A. Background

Section 1847 (a)(1)(A) of the Act mandates the implementation of
CBPs throughout the United States for awarding contracts for furnishing
competitively priced items and services, including OTS orthotics
described in section 1847(a)(2)(C) of the Act (leg, arm, back or neck
braces described in section 1861(s)(9) of the Act for which payment
would otherwise be made under section 1834(h)) which require minimal
self-adjustment for appropriate use and do not require expertise in
trimming, bending, molding, assembling, or customizing to fit the
individual. The regulation at 42 CFR 414.402 currently defines
``minimal self-adjustment'' as ``an adjustment that the beneficiary,
caretaker for the beneficiary, or supplier of the device can perform
and does not require the services of a certified orthotist (that is, an
individual who is certified by either the American Board for
Certification in Orthotics and Prosthetics, Inc., or the Board for
Orthotist/Prosthetist Certification) or an individual who has
specialized training.'' This current definition was proposed in the 71
FR 25669 (May 1, 2006) Notice for Proposed Rulemaking (NPRM) but did
not include the term ``individual with specialized training.'' The
definition was finalized in the 72 FR 18022 (April 10, 2007) Final Rule
with the term ``individual with specialized training'' added after
receiving comments that disagreed with the May 2006 definition and
pointed out that occupational therapists, physical therapists, and
physicians are licensed and trained to provide orthotics.

B. Current Issues

Since adoption of the minimal self-adjustment definition there has
been some concerns raised by industry and other stakeholders regarding
who is considered an individual with specialized training. We have had
many inquiries and comments that this term is too ambiguous and left
open for interpretation. In order to identify OTS orthotics for the
purpose of implementing CBPs for these items and services in accordance
with the statute, we need a clearer distinction between OTS orthotics
and those that require more than minimal self-adjustment and expertise
in custom fitting. In doing so, we believe it is essential to identify
the credentials and training a supplier needs to have in order to be
considered a supplier with expertise in custom fitting; therefore, we
believe the term ``individual with specialized training'' must be
clarified. We believe these professionals must have specialized
training equivalent to a certified orthotist for the provision of
custom fitted orthotic devices such that these professionals satisfy
requirements concerning higher education, continuing education
requirements, licensing, and certification/registration requirements so
that they meet a minimum professional skill level in order to ensure
the highest standard of care and safety for Medicare beneficiaries.
This would also help to prevent any supplier without expertise in
custom fitting orthotics from potentially circumventing the competitive
bidding process by furnishing custom fitting they are not qualified to
provide in the event that they are not awarded a contract for
furnishing OTS orthotics in their service area as the custom fitted
devices are not statutorily included in the CBP.
In addition, for claims processing and payment system purposes
under the CBP, we need to identify OTS orthotics, which we accomplish
with codes in the HCPCS. The HCPCS codes are used on claims to identify
the items and services furnished to the beneficiary, that is, to
identify orthotics that are furnished OTS and subject to the CBP and to
identify orthotics that have been custom fitted by suppliers with
expertise. On February 9, 2012, CMS issued initial guidance identifying
specific HCPCS codes considered OTS orthotics and provided a 60-day
comment period posted at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/OTS_Orthotics.html. We received 185
comments. There was no general consistency between the various
commenters on which specific HCPCS codes the commenters believed were
appropriately deemed OTS. Many commenters expressed their support for
the proposed list while others made numerous useful recommendations to
improve the OTS list. We considered each comment and performed a
thorough review of the individual HCPCS codes and devices included in
the codes to assess appropriate orthotic categorization. Through this
process we identified HCPCS codes that described items that we believe
are never furnished OTS, HCPCS codes that described items that are
always furnished OTS, and HCPCS codes that described items that may or
may not be furnished OTS, depending on whether more than minimal
fitting and adjustment of a particular device by an expert is necessary
for a particular patient. In order to address this issue we decided to
create HCPCS codes for items that may or may not be custom fitted,
depending on individual patient's needs, into separate codes that
described the item when it has been furnished OTS and when it has been
custom fitted. The new HCPCS codes

[[Page 40298]]

were published and became effective January 1, 2014 and are published
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/OTS_Orthotics.html.

C. Proposed Provisions

Prefabricated orthotics are either furnished OTS or with custom
fitting and are identified in the HCPCS. As noted above, with regard to
minimal self-adjustment, Sec. 414.402 in part identifies an individual
with expertise in fitting as a certified orthotist or an individual
with specialized training. Recently a DME Medicare Administrative
Contractor (MAC) Web site Article entitled ``Correct Coding--
Definitions used for Off-the-Shelf versus Custom Fitted Prefabricated
Orthotics (Braces)--Revised,'' was published March 27, 2014, and
included: A physician, a treating practitioner, an occupational
therapist, or physical therapist in compliance with all applicable
Federal and State licensure and regulatory requirements. The DME MAC
published this article following the change in 2014 HCPCS codes for OTS
and custom fitted orthotics as an education tool for Medicare enrolled
DMEPOS suppliers. We believe physicians, treating practitioners,
occupational therapists, and physical therapists are considered
``individuals with specialized training'' that possess training
equivalent to a certified orthotist for the provision of custom fitted
orthotic devices through their individual degree programs and
continuing education requirements. In addition, physicians, treating
practitioners, occupational therapists, and physical therapists possess
equivalent or higher educational degrees, continuing education
requirements, licensing, and certification and/or registration
requirements. We believe these professionals meet a minimum
professional skill level in order to ensure the highest standard of
care and safety for Medicare beneficiaries. Each of these professionals
has undergone medical training in various courses such as kinesiology
and anatomy. For example, through coursework the named medical
professionals gain a clinical understanding of the human body, proper
alignment, normal range of motion, agonist and antagonist relationship,
and biomechanics necessary to modify a custom fitted orthotic device
properly.
Clinical providers such as assistants, fitters, and manufacturer
representatives that work under the supervision of the individual with
specialized training must do so as required under their governing body
Code of Ethics and supervision standards as well as state licensure
requirements. These individuals are not considered to have specialized
training for the purposes of providing custom fitting; therefore,
orthotics adjusted by these individuals but not by individuals with
specialized training would still be considered OTS.
The current regulation of orthotic provision in the U.S. is
inconsistent between individual States. There are currently 17 States
that require licensure in P&O. In States that do require licensure for
the provision of orthotics, individual states do not all recognize
certified orthotic fitters and do not provide licensure for this level
of provider. This inconsistency also prompts us to provide
clarification on the individuals who are recognized as having
specialized training for the purposes of determining what constitutes
minimal self-adjustment of OTS orthotics.
We propose to update the definition of minimal self-adjustment in
Sec. 414.402 to codify an individual with specialized training
includes: a physician defined in section 1861(r) of the Act, a treating
practitioner defined at section 1861(aa)(5) (physician assistant, nurse
practitioner, or clinical nurse specialist), an occupational therapist
defined at 42 CFR 484.4, or physical therapist defined at 42 CFR 484.4,
who is in compliance with all applicable Federal and State licensure
and regulatory requirements for reasons discussed above. We seek
comments on this proposal.

IX. Revision To Change of Ownership Rules To Allow Contract Suppliers
To Sell Specific Lines of Business

A. Background

Section 1847(a) of the Act, as amended by section 302(b)(1) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) (Pub. L. 108-173), requires the Secretary to establish and
implement CBPs in CBAs throughout the United States for contract award
purposes for the furnishing of certain competitively priced DMEPOS
items and services. The programs mandated by section 1847(a) of the Act
are collectively referred to as the ``Medicare DMEPOS Competitive
Bidding Program.'' The 2007 DMEPOS competitive bidding final rule
(Medicare Program; Competitive Acquisition for Certain DMEPOS and Other
Issues published in the Federal Register on April 10, 2007 (71 FR
17992)), required CBPs for certain Medicare Part B covered items of
DMEPOS throughout the United States. The CBP, which was phased in over
several years, utilizes bids submitted by qualified suppliers to
establish applicable payment amounts under Medicare Part B for certain
DMEPOS items for beneficiaries receiving services in designated CBAs.
CMS awards contracts to those suppliers who meet all of the
competitive bidding requirements and whose composite bid amounts fall
at or below the pivotal bid (the bid at which the capacity provided by
qualified suppliers meets the demand for the item). These qualified
suppliers will be offered a competitive bidding contract for that PC,
provided there are a sufficient number of qualified suppliers (there
must be at a minimum of 2) to serve the area. Contracts are awarded to
multiple suppliers for each PC in each CBA and will be re-competed at
least once every 3 years.
CMS specifies the duration of the contracts awarded to each
contract supplier in the Request for Bid Instructions. We also conduct
extensive bidder education where we inform bidders of the requirements
and obligations of contract suppliers. Each winning supplier is awarded
a single contract that includes all winning bids for all applicable
CBAs and PCs. A competitive bidding contract cannot be subdivided. For
example, if a contract supplier breaches its contract, the entire
contract is subject to termination. In the Physician Fee Schedule final
rule published on November 29, 2010, we stated that ``once a supplier's
contract is terminated for a particular round due to breach of contract
under the DMEPOS CBP, the contract supplier is no longer a DMEPOS
contract supplier for any DMEPOS CBP PC for which it was awarded under
that contract. This termination applies to all areas and PCs because
there is only one contract that encompasses all CBAs and PCs for which
the supplier was awarded a contract.'' (75 FR 73578)
A competitive bidding contract cannot be sold. However, CMS may
permit the transfer of a contract to an entity that merges with or
acquires a competitive bidding contract supplier if the new owner
assumes all rights, obligations, and liabilities of the competitive
bidding contract pursuant to regulations at 42 CFR 414.422(d).
For the transfer of a contract to be considered, the CHOW must
include the assumption of the entire contract, including all CBAs and
PCs awarded under the contract.

B. Proposed Provisions

We propose to revise Sec. 414.422(d) to permit transfer of part of
a competitive bidding contract under specific

[[Page 40299]]

circumstances. We believe requiring a transfer of the entire contract
to a successor entity in all circumstances may be overly restrictive,
and may be preventing routine merger and acquisition activity. To
maintain integrity of the bidding process we award one contract that
includes all the CBA/PCs combinations for which the supplier qualifies
for and accepts as a contract supplier. This proposed rule would
establish an exception to the prohibition against transferring part of
a contract by allowing a contract supplier to sell a distinct company
(for example, an affiliate, subsidiary, sole proprietor, corporation,
or partnership) which furnishes one or more specific PCs or serves one
or more specific CBAs and transfer the portion of the contract
initially serviced by the distinct company, including the PC(s),
CBA(s), and location(s), to a qualified successor entity who meets all
competitive bidding requirements (i.e., financial standards, licensing,
and accreditation). The proposed exception would not apply to existing
contracts but would apply to contracts issued in all future rounds of
the program, starting with the Round 2 Recompete. As required in Sec.
414.422(d) we are also requiring a contract supplier that wants to sell
a distinct company which furnishes one or more specific PCs or serves
one or more specific CBAs to notify CMS 60 days before the anticipated
date of a change of ownership. If documentation is required to
determine if a successor entity is qualified that documentation must be
submitted within 30 days of anticipated change of ownership, pursuant
to Sec. 414.422(d)(2)(ii). We propose that CMS would then modify the
contract of the original contract supplier by removing the affected
PC(s), CBA(s) and locations from the original contract. For CMS to
approve the transfer, we propose that several conditions would have to
be met. First, we propose that every CBA, PC, and location of the
company being sold must be transferred to the new owner. Second, we
propose that all CBAs and PC's in the original contract that are not
explicitly transferred by CMS must remain unchanged in that original
contract for the duration of the contract period unless transferred by
CMS pursuant to a subsequent CHOW. Third, we propose that all
requirements in 42 CFR 414.422(d)(2) must be met. Fourth, we propose
that the sale of the company must include all of the company's assets
associated with the CBA and/or PC(s). Finally, we propose that CMS must
determine that transferring part of the original contract will not
result in disruption of service or harm to beneficiaries. No transfer
will be permitted for purposes of this program if we determine that the
new supplier does not meet the competitive bidding requirements (such
as financial requirements) and does not possess all applicable licenses
and accreditation for the product(s). In order for the transfer to
occur, the contract supplier and successor entity must enter into a
novation agreement with CMS and the successor entity must accept all
rights, responsibilities and liabilities under the competitive bidding
contract. Part of a novation agreement requires successor entity to
``seamlessly continue to service beneficiaries.'' We believe that these
proposed conditions are necessary for proper administration of the
program, to ensure that payments are made correctly and also to ensure
continued contract accountability and viability along with continuity
of service and access to beneficiaries. We specifically invite comments
on whether more or different conditions would be appropriate.
In addition, we are proposing to update the current CHOW
regulation, Sec. 414.422(d) to clarify the language to make it easier
to comprehend. The proposed changes reformat the regulation so that the
requirements applicable to successor entities and new entities are
listed separately. These proposed changes to the regulation are
technical, and not substantive in nature. CMS seeks comments on all
changes proposed for Sec. 414.422.

X. Proposed Changes to the Appeals Process for Termination of
Competitive Bidding Contract

We propose to modify the DMEPOS CBP's appeals process for
termination of competitive bidding contracts under Sec. 414.423.
First, we propose to modify the effective date of termination in the
termination notice CMS sends to a contract supplier found to be in
breach of contract. Currently, the regulation at 42 CFR
414.423(b)(2)(vi) indicates that the effective date of termination is
45 days from the date of the notification letter unless a timely
hearing request ``has been'' filed or corrective action plan ``has
been'' submitted within 30 days of the effective date of the
notification letter (emphasis added). We propose to change these
references to provide additional clarification. This change would
emphasize that the contract will automatically be terminated if the
supplier does not time file a hearing request or submit corrective
action plan. This proposed change is also being addressed at 42 CFR
414.423(l). We propose deleting the lead-in sentence, as it does not
properly lead into the first paragraph. Additionally, we propose
inserting language from the lead-in sentence in the second paragraph to
indicate that the contract supplier, ``whose contract has been
terminated,'' must notify beneficiaries of the termination of their
contract. Second, we propose to modify the deadline by which a supplier
whose competitive bidding contract is being terminated must notify
affected beneficiaries that it is no longer a contract supplier.
Current regulations at 42 CFR 414.423(l)(2)(i) require a contract
supplier to provide this notice within 15 days of receipt of a final
notice of termination. We propose to change the beneficiary
notification deadline to no later than 15 days prior to the effective
date of termination. This proposed change is intended to provide
beneficiaries with the protection of advanced notice prior to a
contract supplier being terminated from the CBP so they have sufficient
time to plan/coordinate their current and future DMEPOS needs.

XI. Technical Change Related To Submitting Bids for Infusion Drugs
Under the DMEPOS Competitive Bidding Program

The standard payment rules for drugs administered through infusion
pumps covered as DME are located at section 1842(o)(1)(D) of the Act,
and mandate that payment for infusion drugs furnished through a covered
item of DME on or after January 1, 2004, is equal to 95 percent of the
average wholesale price for such drug in effect on October 1, 2003. The
regulations implementing section 1842(o)(1)(D) of the Act are located
at 42 CFR 414.707(a), under Subpart I of Part 414. Section
1847(a)(2)(A) of the Act mandates the establishment of CBPs for covered
items defined in section 1834(a)(13), for which payment would otherwise
be made under section 1834(a), including items used in infusion and
drugs (other than inhalation drugs) and supplies used in conjunction
with DME. Section 1847(b)(2)(A)(iii) of the Act prohibits the awarding
of contracts under a CBP unless the total amounts to be paid to
contract suppliers are expected to be less than would otherwise be
paid. The regulations implementing section 1847(b)(2)(A)(iii) of the
Act with respect to items paid on a fee schedule basis under Subparts C
and D of Part 414 are located at 42 CFR 414.412(b)(2), and specify that
``the bids submitted for each item in a PC cannot exceed the payment
amount that would otherwise apply to the item under Subpart C or
Subpart D of this part.'' In addition, the regulations regarding the
conditions for awarding

[[Page 40300]]

contracts under the DMEPOS CBP at 42 CFR 414.414(f) state that ``a
contract is not awarded under this subpart unless CMS determines that
the amounts to be paid to contract suppliers for an item under a CBP
are expected to be less than the amounts that would otherwise be paid
for the same item under subpart C or subpart D.'' The regulations
implementing of section 1847(b)(2)(A)(iii) of the Act did not address
payments for drugs under subpart I, which was an oversight. We
therefore propose to revise Sec. Sec. 414.412(b)(2) and 414.414(f) to
include a reference to drugs paid under subpart I in addition to items
paid under subparts C or D. We propose to revise Sec. 414.412(b)(2) to
specify that the bid amounts submitted for each drug in a PC cannot
exceed the payment limits that would otherwise apply to the drug under
subpart I of part 414. This concerns certain infusion drugs with
payment limits equal to 95 percent of the average wholesale price for
the drug in effect on October 1, 2003, in accordance with Sec.
414.707(a)(3). See https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=7065f17b411e37b3788b6e7fcce21f89&rgn=div8&view=text&node=42:3.0.1.1.1.9.1.3&idno=42. We propose to revise Sec. 414.414(f) to
specify that a contract is not awarded under this subpart unless CMS
determines that the amounts to be paid to contract suppliers for
infusion drugs provided with respect to external infusion pumps under a
CBP are expected to be less than the amounts that would otherwise be
paid to suppliers for the same drug under subpart I of part 414. We
seek comments on this proposal.

XII. Accelerating Health Information Exchange

HHS believes all patients, their families, and their healthcare
providers should have consistent and timely access to their health
information in a standardized format that can be securely exchanged
between the patient, providers, and others involved in the patient's
care. (HHS August 2013 Statement, ``Principles and Strategies for
Accelerating Health Information Exchange''). The Department is
committed to accelerating health information exchange (HIE) through the
use of electronic health records (EHRs) and other types of health
information technology (HIT) across the broader care continuum through
a number of initiatives including: (1) Alignment of incentives and
payment adjustments to encourage provider adoption and optimization of
HIT and HIE services through Medicare and Medicaid payment policies,
(2) adoption of common standards and certification requirements for
interoperable HIT, (3) support for privacy and security of patient
information across all HIE-focused initiatives, and (4) governance of
health information networks. These initiatives are designed to
encourage HIE among health care providers, including professionals and
hospitals eligible for the Medicare and Medicaid EHR Incentive Programs
and those who are not eligible for the EHR Incentive programs, and are
designed to improve care delivery and coordination across the entire
care continuum. For example, the Transition of Care Measure 2
in Stage 2 of the Medicare and Medicaid EHR Incentive Programs requires
HIE to share summary records for at least 10 percent of care
transitions. In addition, to increase flexibility in ONC's regulatory
certification structure and expand HIT certification, ONC has proposed
a voluntary 2015 Edition EHR Certification rule to more easily
accommodate HIT certification for technology used by all health care
settings to facilitate greater HIE across the entire care continuum.
We believe that HIE and the use of certified EHRs can effectively
and efficiently help ESRD facilities and nephrologists improve internal
care delivery practices, support management of patient care across the
continuum, and support the reporting of electronically specified
clinical quality measures (eCQMs). More information on the 2015 Edition
EHR certification rule can be found at: https://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations.

XIII. Collection of Information Requirements

A. Legislative Requirement for Solicitation of Comments

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection requirement
should be approved by OMB, section 3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we solicit comment on the following
issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.

B. Requirements in Regulation Text

In section II.F of this proposed rule, we are proposing changes to
regulatory text for the ESRD PPS in CY 2015. However, the changes that
are being proposed do not impose any new information collection
requirements.

C. Additional Information Collection Requirements

This proposed rule does not impose any new information collection
requirements in the regulation text, as specified above. However, this
proposed rule does make reference to several associated information
collections that are not discussed in the regulation text contained in
this document. The following is a discussion of these information
collections.
1. ESRD QIP
The information collection requirements associated with the ESRD
QIP are currently approved under OMB control number 0938-0386.
a. Data Validation Requirements for the PY 2017 ESRD QIP
Section III.F.9 in this proposed rule outlines our data validation
proposals for PY 2017. Specifically, we propose to randomly sample
records from 300 facilities as part of our continuing pilot data-
validation program. Each sampled facility would be required to produce
approximately 10 records, and the sampled facilities will be reimbursed
by our validation contractor for the costs associated with copying and
mailing the requested records. The burden associated with these
validation requirements is the time and effort necessary to submit the
requested records to a CMS contractor. We estimate that it will take
each facility approximately 2.5 hours to comply with this requirement.
If 300 facilities are asked to submit records, we estimate that the
total combined annual burden for these facilities will be 750 hours
(300 facilities x 2.5 hours). According to the Bureau of Labor
Statistics, the mean hourly wage of a registered nurse is $33.13/hour.
Since we anticipate that nurses (or administrative staff who would be
paid at a lower hourly wage) would submit this data, we estimate that
the aggregate cost of the CROWNWeb data validation would be $24,847.50
(750 hours x $33.13/hour) total or $82.83 ($24,847.50/300 facilities)
per facility in the sample.

[[Page 40301]]

Under the proposed feasibility study for validating data reported
to the NHSN Dialysis Event Module, we propose to randomly select nine
facilities to provide CMS with a quarterly list of all positive blood
cultures drawn from their patients during the quarter, including any
positive blood cultures collected on the day of, or the day following,
a facility patient's admission to a hospital. A CMS contractor will
review the lists to determine if dialysis events for the patients in
question were accurately reported to the NHSN Dialysis Event Module. If
we determine that additional medical records are needed to validate
dialysis events, facilities will be required to provide those records
within 60 days of a request for this information. We estimate that the
burden associated with this feasibility study will be the time and
effort necessary for each selected facility to compile and submit to
CMS a quarterly list of positive blood cultures drawn from its
patients. We estimate that it will take each participating facility
approximately two hours per quarter to comply with this submission. If
nine facilities are asked to provide lists, we estimate the quarterly
burden for these facilities would be 72 hours per year (9 facilities x
2 hours/quarter x 4 quarters/year). Again, we estimate the mean hourly
wage of a registered nurse to be $33.13/hour, and we anticipate nurses
(or administrative staff who would be paid at a lower hourly wage)
would be responsible for preparing and submitting the list. Because we
anticipate nurses (or administrative staff who would be paid at a lower
hourly rate) would compile and submit these data, we estimate that the
aggregate annual cost of the feasibility study to validate NHSN data
would be $2,385.36 (72 hours x $33.13/hour) total or $265.04 per
facility ($2,385.36/9 facilities).
b. Proposed NHSN Healthcare Personnel Influenza Vaccination Reporting
Measure for PY 2018
We are proposing to include, beginning with the PY 2018 ESRD QIP, a
measure requiring facilities to report healthcare personnel influenza
vaccination data to NHSN. The NHSN is a secure, Internet-based
surveillance system which is maintained and managed by CDC. Many
dialysis facilities already submit NHSN Bloodstream Infection clinical
measure data to NHSN. Specifically, we are proposing to require
facilities to submit on an annual basis an HCP Influenza Vaccination
Summary Form to NHSN, according to the specifications available in the
NHSN Healthcare Personnel Safety Component Protocol. We estimate the
burden associated with this measure to be the time and effort necessary
for facilities to complete and submit the HCP Influenza Vaccination
Summary Form on an annual basis. We estimate that approximately 5,996
facilities will treat ESRD patients in PY 2018. We estimate it will
take each facility approximately 75 minutes to collect and submit the
data necessary to complete the Healthcare Personnel Influenza
Vaccination Summary Form on an annual basis. Therefore, the estimated
total annual burden associated with reporting this measure in PY 2018
is 7,495 hours [(75/60) hours x 5,996 facilities]. Again, we estimate
the mean hourly wage of a registered nurse to be $33.13, and we
anticipate nurses (or administrative staff who would be paid at a lower
hourly wage) would be responsible for this reporting. In total, we
believe the cost for all ESRD facilities to comply with the reporting
requirements associated with the NHSN Healthcare Personnel Influenza
Vaccination reporting measure would be approximately $248,309 (7,495
hours x $33.13/hour) total, or $41.37 ($248,309/5,996 facilities) per
facility.

XIV. 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.

XV. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
We examined the impacts of this proposed rule as required by
Executive Order 12866 (September 30, 1993, Regulatory Planning and
Review) and Executive Order 13563 on Improving Regulation and
Regulatory Review (January 11, 2011). Executive Orders 12866 and 13563
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasizes the importance
of quantifying both costs and benefits of reducing costs, harmonizing
rules, and promoting flexibility. This rule has been designated
economically significant under section 3(f)(1) of Executive Order
12866. Accordingly, the rule has been reviewed by the Office of
Management and Budget. We have prepared a Regulatory Impact Analysis
that to the best of our ability presents the costs and benefits of the
proposed rule. We solicit comments on the regulatory impact analysis
provided.
2. Statement of Need
This rule proposes a number of routine updates for renal dialysis
services in CY 2015 and proposes several policy changes to the ESRD
PPS. The routine updates include proposed updates to the wage index
values, the wage index budget-neutrality adjustment factor, and the
outlier payment threshold amounts. The proposed policy changes to the
ESRD PPS include the revisions to the ESRDB market basket, changes in
the CBSA delineations, changes to the labor-related share,
clarifications in the low-volume payment adjustment, and additions and
corrections to the ICD-10 codes that will be used for the comorbidity
payment adjustment when compliance with ICD-10 is required beginning
October 1, 2015. In addition, this rule implements sections
1881(b)(14)(F)(i) and (I), as amended by section 217 (b)(1) and (2) of
PAMA, under which the drug utilization adjustment transition is
eliminated and a 0.0 percent update to the ESRD PPS base rate is
imposed in its place. This rule also implements the delay in payment
for oral-only drugs used for the treatment of ESRD under the ESRD PPS
until January 1, 2024 as required by section 217(a) of PAMA. Failure to
publish this proposed rule would result in ESRD facilities not
receiving appropriate payments in CY 2015.
This rule proposes to implement requirements for the ESRD QIP by
proposing to adopt measure sets for the PYs 2017 and 2018 programs, as
directed by section 1881(h) of the Act. Failure to propose requirements
for the PY 2017 ESRD QIP would prevent continuation of the ESRD QIP
beyond PY 2016. In addition, proposing requirements for the PY 2018
ESRD QIP provides facilities with more time to review and fully
understand new measures before their implementation in the ESRD QIP.
This proposed rule proposes to establish a methodology for
adjusting DMEPOS payment amounts using information from the Medicare
DMEPOS CBP. The proposed rule would also phase in special payment rules
for certain DME and enteral nutrition in a limited number of areas

[[Page 40302]]

under the Medicare DMEPOS CBP. This proposed rule also proposes to
clarify the Medicare hearing aid coverage exclusion under section
1862(a)(7). In addition, this proposed rule would modify the definition
of minimal self-adjustment at Sec. 414.402 to indicate what
specialized training is needed by suppliers to provide custom fitting
services if they are not certified orthotists. Finally, if finalized,
this proposed rule would provide clarification of the CHOW under the
Medicare DMEPOS CBP.
3. Overall Impact
We estimate that the proposed revisions to the ESRD PPS will result
in an increase of approximately $30 million in payments to ESRD
facilities in CY 2015, which includes the amount associated with
updates to outlier threshold amounts, updates to the wage index,
changes in CBSA delineations, and the labor-related share.
For PY 2017, we estimate that the proposed requirements related to
the ESRD QIP will cost approximately $27 thousand total, and the
payment reductions will result in a total impact of approximately $16
million across all facilities. For PY 2018, we estimate that the
proposed requirements related to the ESRD QIP will cost approximately
$248 thousand total, and the payment reductions will result in a total
impact of approximately $6.4 million across all facilities, resulting
in a total impact from the proposed ESRD QIP of approximately $6.6
million.
We estimate that the proposed methodology for adjusting DMEPOS
payment amounts using information from DMEPOS CBPs would save over $7
billion over FY 2016-2020. The savings would be primarily achieved from
the reduced payment amounts for items and services.
We estimate the special payment rules would not have a negative
impact on beneficiaries and suppliers, or on the Medicare program.
Contract suppliers are responsible for furnishing items and services
needed by the beneficiary, and the cost to suppliers for furnishing
these items and services generally would not change based on whether or
not the equipment and related items and services are paid for
separately under a capped rental payment method. Because the supplier's
bids would reflect the cost of furnishing items in accordance with the
new payment rules, we expect the overall savings generally would be the
same as they are under the current payment rules. Furthermore, as
indicated above, the special payment rules would be phased in under a
limited number of areas first to determine impact on the program,
beneficiaries, and suppliers, including their effects on cost, quality,
and access before expanding to other areas after notice and comment
rulemaking, if supported by evaluation results. We believe that the
special payment rules would give beneficiaries more choice and
flexibility in changing suppliers. We estimate the proposed
clarification of the statutory Medicare hearing aid coverage exclusion
leading to withdrawal of coverage for bone anchored hearing aid (BAHA)
devices would not have a significant fiscal impact on the Medicare
program because the Medicare program expenditure for BAHA paid under
Medicare during the period CY2005 through CY 2013 was less than
9,000,000 per year. This proposed regulation would provide guidance as
to coverage of DME with regard to the statutory exclusion. The proposed
rule proposes to specify that cochlear implants and brain stem implants
are not hearing aids subject to the statutory exclusion and therefore,
proposes no change to the current Medicare coverage status for these
items.
We estimate that the proposed clarification of the definition of
minimal self-adjustment would have no significant impact on program
expenditures or access to orthotics. This proposed clarification would
impact suppliers furnishing custom fitted orthotics that do not have
the expertise necessary to make more than minimal adjustments to an
orthotic that a beneficiary or caregiver could be trained to make. The
impact on these few suppliers will vary according to the caseload of
custom fitted orthotics provided by an individual supplier. However, we
believe the majority of custom fitted devices are currently being
furnished by an individual with expertise.
We estimate clarifying the CHOW under the Medicare DMEPOS CBP would
have no significant impact to DMEPOS suppliers.

B. Detailed Economic Analysis

1. CY 2015 End-Stage Renal Disease Prospective Payment System
a. Effects on ESRD Facilities
To understand the impact of the changes affecting payments to
different categories of ESRD facilities, it is necessary to compare
estimated payments in CY 2014 to estimated payments in CY 2015. To
estimate the impact among various types of ESRD facilities, it is
imperative that the estimates of payments in CY 2014 and CY 2015
contain similar inputs. Therefore, we simulated payments only for those
ESRD facilities for which we are able to calculate both current
payments and new payments.
For this proposed rule, we used the December 2013 update of CY 2013
National Claims History file as a basis for Medicare dialysis
treatments and payments under the ESRD PPS. We updated the 2013 claims
to 2014 and 2015 using various updates. The updates to the ESRD PPS
base rate are described in section II.B of this proposed rule. Table 38
shows the impact of the estimated CY 2015 ESRD payments compared to
estimated payments to ESRD facilities in CY 2014.

Table 38--Impact of Proposed Changes in Payments to ESRD Facilities or CY 2015 Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effect of 2015
changes in
Effect of 2015 wage indexes, Effect of 2015
Number of Number of changes in CBSA changes in Effect of
Facility type facilities treatments outlier policy designations payment rate total 2015
(in millions) % and labor- update % changes %
related share
%
A B C D E F
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities.......................................... 5,996 39.1 0.3 0.0 0.0 0.3
Type:
Freestanding........................................ 5,520 36.6 0.3 0.0 0.0 0.3
Hospital based...................................... 476 2.5 0.3 0.2 0.0 0.5
Ownership Type:

[[Page 40303]]

Large dialysis organization......................... 4,150 27.5 0.3 -0.1 0.0 0.2
Regional chain...................................... 871 5.9 0.2 0.2 0.0 0.4
Independent......................................... 582 3.6 0.2 0.2 0.0 0.4
Hospital based \1\.................................. 393 2.1 0.3 0.1 0.0 0.4
Geographic Location:
Rural............................................... 1,212 5.9 0.3 -0.8 0.0 -0.5
Urban............................................... 4,784 33.3 0.3 0.1 0.0 0.4
Census Region:
East North Central.................................. 979 5.8 0.3 -0.3 0.0 0.0
East South Central.................................. 497 2.9 0.3 -1.2 0.0 -0.9
Middle Atlantic..................................... 661 4.8 0.3 0.9 0.0 1.1
Mountain............................................ 352 1.9 0.2 -0.1 0.0 0.1
New England......................................... 177 1.3 0.3 1.3 0.0 1.5
Pacific \2\......................................... 710 5.4 0.2 1.5 0.0 1.7
Puerto Rico and Virgin Islands...................... 42 0.3 0.3 -3.9 0.0 -3.6
South Atlantic...................................... 1,333 9.1 0.3 -0.6 0.0 -0.3
West North Central.................................. 438 2.0 0.3 -0.2 0.0 0.0
West South Central.................................. 807 5.6 0.3 -0.6 0.0 -0.3
Facility Size:
Less than 4,000 treatments\3\....................... 1,086 2.7 0.3 -0.3 0.0 0.0
4,000 to 9,999 treatments........................... 2,226 10.5 0.3 -0.3 0.0 0.0
10,000 or more treatments........................... 2,523 25.7 0.3 0.1 0.0 0.4
Unknown............................................. 161 0.3 0.3 -0.1 0.0 0.2
Percentage of Pediatric Patients:
Less than 2%........................................ 5,885 38.7 0.3 0.0 0.0 0.3
Between 2 and 19%................................... 48 0.4 0.3 0.0 0.0 0.2
Between 20 and 49%.................................. 12 0.0 0.1 -0.4 0.0 -0.3
More than 50%....................................... 51 0.0 0.0 0.2 0.0 0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership.
\2\ Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.
\3\ Of the 1,086 ESRD facilities with less than 4,000 treatments, approximately 422 would be expected to qualify for the low-volume adjustment in 2015.
This estimate is based on actual claims for 2013 plus the number of hospital-based facilities that may newly qualify with a change in policy. The low-
volume adjustment is mandated by Congress, and is not applied to pediatric patients. The impact to these low-volume facilities is a 0.4 percent
decrease in payments.
Note: Totals do not necessarily equal the sum of rounded parts, as percentages are multiplicative, not additive.

Column A of the impact table indicates the number of ESRD
facilities for each impact category and column B indicates the number
of dialysis treatments (in millions). The overall effect of the
proposed changes to the outlier payment policy described in section
II.B.4 of this proposed rule is shown in column C. For CY 2015, the
impact on all ESRD facilities as a result of the changes to the outlier
payment policy will be a 0.3 percent increase in estimated payments.
The estimated impact of the changes to outlier payment policy ranges
from a 0.0 percent to a 0.3 percent increase. Nearly all ESRD
facilities are anticipated to experience a positive effect in their
estimated CY 2015 payments as a result of the proposed outlier policy
changes.
Column D shows the effect of the wage index, new CBSA delineations,
and labor-related share on ESRD facilities and reflects the CY 2015
wage index values for the ESRD PPS payments. Facilities located in the
census region of Puerto Rico and the Virgin Islands would receive a 3.9
percent decrease in estimated payments in CY 2015. Since most of the
facilities in this category are located in Puerto Rico, the decrease is
primarily due to the change in the labor-related share. The other
categories of types of facilities in the impact table show changes in
estimated payments ranging from a 3.9 percent decrease to a 1.5 percent
increase due to the update of the wage indexes, CBSA delineations and
labor-related share.
Column E shows the effect of the ESRD PPS payment rate update of
0.0 percent as required by section 1881(b)(14)(F) and (I) as amended by
section 217 of PAMA.
Column F reflects the overall impact (that is, the effects of the
proposed outlier policy changes, the proposed wage index, the proposed
CBSA delineations, the proposed labor-related share, and the effect of
the payment rate update. We expect that overall ESRD facilities will
experience a 0.3 percent increase in estimated payments in 2015. ESRD
facilities in Puerto Rico and the Virgin Islands are expected to
receive a 3.6 percent decrease in their estimated payments in CY 2015.
This larger decrease is primarily due to the negative impact of the
change in the labor-related share. The other categories of types of
facilities in the impact table show impacts ranging from a decrease of
0.9 percent to increase of 1.7 percent in their 2015 estimated
payments.

[[Page 40304]]

b. Effects on Other Providers
Under the ESRD PPS, ESRD facilities are paid directly for the renal
dialysis bundle and other provider types such as laboratories, DME
suppliers, and pharmacies, may no longer bill Medicare directly for
renal dialysis services. Rather, effective January 1, 2011, such other
providers can only furnish renal dialysis services under arrangements
with ESRD facilities and must seek payment from ESRD facilities rather
than Medicare. Under the ESRD PPS, Medicare pays ESRD facilities one
payment for renal dialysis services, which may have been separately
paid to suppliers by Medicare prior to the implementation of the ESRD
PPS. Therefore, in CY 2015, we estimate that the proposed ESRD PPS will
have zero impact on these other providers.
c. Effects on the Medicare Program
We estimate that Medicare spending (total Medicare program
payments) for ESRD facilities in CY 2015 will be approximately $9.1
billion. This estimate takes into account a projected increase in fee-
for-service Medicare dialysis beneficiary enrollment of 3.2 percent in
CY 2015.
d. Effects on Medicare Beneficiaries
Under the ESRD PPS, beneficiaries are responsible for paying 20
percent of the ESRD PPS payment amount. As a result of the projected
0.3 percent overall increase in the proposed ESRD PPS payment amounts
in CY 2015, we estimate that there will be an increase in beneficiary
co-insurance payments of 0.3 percent in CY 2015, which translates to
approximately $10 million.
e. Alternatives Considered
For this proposed rule, we proposed to implement a 50/50 blended
wage index for CY 2015 that would apply to all ESRD facilities.
Specifically, the proposal would transition all ESRD facilities
experiencing an impact, or not, due to the implementation of the new
CBSA delineations. We considered proposing to implement the new CBSA
delineations without a transition; however we decided to mitigate the
impact this change would have on ESRD facilities that may experience a
decrease in payments due to the change.
In addition, for CY 2015 we proposed to implement a revised 50.673
percent labor-related share using a 2-year transition. This proposal
would transition all ESRD facilities from the current labor-related
share of 41.737 percent to the revised labor-related share of 50.673
percent. We considered proposing to implement the labor-related share
without a transition; however we decided to mitigate the impact this
change would have on ESRD facilities that may experience a decrease in
payments due to the change.
2. End-Stage Renal Disease Quality Incentive Program
a. Effects of the PY 2017 ESRD QIP
The ESRD QIP provisions are intended to prevent possible reductions
in the quality of ESRD dialysis facility services provided to
beneficiaries as a result of payment changes under the ESRD PPS. The
methodology that we are proposing to use to determine a facility's TPS
for PY 2017 is described in section III.F.5 of this proposed rule. Any
reductions in ESRD PPS payments as a result of a facility's performance
under the PY 2017 ESRD QIP would affect the facility's reimbursement
rates in CY 2017.
We estimate that, of the total number of dialysis facilities
(including those not receiving a TPS), approximately 20 percent or
1,227 of the facilities would likely receive a payment reduction in PY
2017. Facilities that do not receive a TPS are not eligible for a
payment reduction.
In conducting our impact assessment, we have assumed that there
will be an initial count of 5,996 dialysis facilities paid under the
ESRD PPS. Table 39 shows the overall estimated distribution of payment
reductions resulting from the PY 2017 ESRD QIP.

Table 39--Estimated Distribution of PY 2017 ESRD QIP Payment Reductions
------------------------------------------------------------------------
Number of Percent of
Payment reduction (percent) facilities facilities
------------------------------------------------------------------------
0.0............................... 4,484 78.5
0.5............................... 887 15.5
1.0............................... 264 4.6
1.5............................... 58 1.0
2.0............................... 18 0.3
------------------------------------------------------------------------
Note: This table excludes 285 facilities that we estimate will not
receive a payment reduction because they will not report enough data
to receive a Total Performance Score.

To estimate whether or not a facility would receive a payment reduction
in PY 2017, we scored each facility on achievement and improvement on
several measures we have previously finalized and for which there were
available data from CROWNWeb and Medicare claims. Measures used for the
simulation are shown in Table 40.

Table 40--Data Used To Estimate PY 2017 ESRD QIP Payment Reductions
----------------------------------------------------------------------------------------------------------------
Period of time used to calculate
achievement thresholds, performance
Measure standards, benchmarks, and improvement Performance period
thresholds
----------------------------------------------------------------------------------------------------------------
Vascular Access Type:
% Fistula..................... Jan 2012--Dec 2012........................ Jan 2013--Dec 2013.
% Catheter.................... Jan 2012--Dec 2012........................ Jan 2013--Dec 2013.
Kt/V:
Adult HD...................... Jan 2012--Dec 2012........................ Jan 2013--Dec 2013.
Adult PD...................... Jan 2012--Dec 2012........................ Jan 2013--Dec 2013.
Pediatric HD.................. Jan 2012--Dec 2012........................ Jan 2013--Dec 2013.
Hypercalcemia..................... May 2012--Dec 2012........................ Jan 2013--Dec 2013.

[[Page 40305]]

SRR............................... Jan 2011--Dec 2011........................ Jan 2012--Dec 2012.
----------------------------------------------------------------------------------------------------------------

Clinical measure topic areas with less than 11 cases for a facility
were not included in that facility's Total Performance Score. Each
facility's Total Performance Score was compared to the estimated
minimum Total Performance Score and the payment reduction table found
in section III.F.8 of this proposed rule. Facility reporting measure
scores were estimated using available data from CY 2013. Facilities
were required to have a score on at least one clinical and one
reporting measure in order to receive a Total Performance Score.
To estimate the total payment reductions in PY 2017 for each
facility resulting from this proposed rule, we multiplied the total
Medicare payments to the facility during the one year period between
January 2013 and December 2013 by the facility's estimated payment
reduction percentage expected under the ESRD QIP, yielding a total
payment reduction amount for each facility: (Total ESRD payment in
January 2013 through December 2013 times the estimated payment
reduction percentage). For PY 2017, the total payment reduction for the
1,227 facilities estimated to receive a reduction is approximately
$11.9 million ($11,873,127). Further, we estimate that the total costs
associated with the collection of information requirements for PY 2017
described in section VIII.1.a of this proposed rule would be
approximately $27 thousand for all ESRD facilities. As a result, we
estimate that ESRD facilities will experience an aggregate impact of
approximately $11.9 million ($27,232 + $11,873,127 = $11,900,359) in PY
2017, as a result of the PY 2017 ESRD QIP.
Table 41 below shows the estimated impact of the finalized ESRD QIP
payment reductions to all ESRD facilities for PY 2017. The table
estimates the distribution of ESRD facilities by facility size (both
among facilities considered to be small entities and by number of
treatments per facility), geography (both urban/rural and by region),
and by facility type (hospital based/freestanding facilities). Given
that the time periods used for these calculations will differ from
those we are proposing to use for the PY 2017 ESRD QIP, the actual
impact of the PY 2017 ESRD QIP may vary significantly from the values
provided here.

Table 41--Impact of Proposed QIP Payment Reductions to ESRD Facilities in PY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
facilities Payment
Number of Number of Number of expected to reduction
facilities treatments 2013 facilities with receive a (percent change
(in millions) QIP score payment in total ESRD
reduction payments)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities................................................ 5,996 39.1 5,711 1,227 -0.14
Facility Type:
Freestanding.............................................. 5,520 36.6 5,289 1,093 -0.13
Hospital-based............................................ 476 2.5 422 134 -0.24
Ownership Type:
Large Dialysis............................................ 4,150 27.5 3,995 786 -0.12
Regional Chain............................................ 871 5.9 836 169 -0.14
Independent............................................... 582 3.6 534 157 -0.22
Hospital-based (non-chain)................................ 393 2.1 346 115 -0.25
Facility Size:
Large Entities............................................ 5,021 33.5 4,831 955 -0.12
Small Entities \1\........................................ 975 5.7 880 272 -0.23
Rural Status:
1) Yes.................................................... 1,212 5.9 1,167 187 -0.10
2) No..................................................... 4,784 33.3 4,544 1,040 -0.15
Census Region:
Northeast................................................. 792 5.8 770 160 -0.14
Midwest................................................... 1,341 7.7 1,276 314 -0.16
South..................................................... 2,527 17.5 2,460 504 -0.12
West...................................................... 1,015 7.1 966 159 -0.10
US Territories \2\........................................ 321 1.0 239 90 -0.33
Census Division:
East North Central........................................ 979 5.8 909 249 -0.19
East South Central........................................ 497 2.9 475 92 -0.12
Middle Atlantic........................................... 661 4.8 632 139 -0.16
Mountain.................................................. 352 1.9 335 55 -0.10
New England............................................... 177 1.3 168 29 -0.13
Pacific................................................... 710 5.4 671 119 -0.11
South Atlantic............................................ 1,333 9.1 1,279 314 -0.15
West North Central........................................ 438 2.0 417 81 -0.12
West South Central........................................ 807 5.6 783 125 -0.10
US Territories \2\........................................ 42 0.3 42 24 -0.42
Facility Size ( of total treatments):

[[Page 40306]]

Less than 4,000 treatments................................ 1,086 2.7 928 211 -0.17
4,000-9,999 treatments.................................... 2,226 10.5 2,174 423 -0.12
Over 10,000 treatments.................................... 2,523 25.7 2,514 557 -0.14
Unknown................................................... 161 0.3 95 36 -0.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status.
\2\ Includes Puerto Rico and Virgin Islands.
\3\ Based on claims and CROWNWeb data through December 2013.

b. Effects of the PY 2018 ESRD QIP
The methodology that we are proposing to use to determine a
facility's TPS for the PY 2018 ESRD QIP is described in sections
III.F.6 and III.F.7 of this proposed rule. Any reductions in ESRD PPS
payments as a result of a facility's performance under the PY 2018 ESRD
QIP would apply to ESRD PPS payments made to the facility in CY 2018.
We estimate that, of the total number of dialysis facilities
(including those not receiving a TPS), approximately 16 percent or 919
of the facilities would likely receive a payment reduction in PY 2018.
Facilities that do not receive a TPS are not eligible for a payment
reduction.
In conducting our impact assessment, we have assumed that there
will be 5,996 dialysis facilities paid through the PPS. Table 42 shows
the overall estimated distribution of payment reductions resulting from
the PY 2018 ESRD QIP.

Table 42--Estimated Distribution of PY 2018 ESRD QIP Payment Reductions
------------------------------------------------------------------------
Percent of
Payment reduction (percent) Number of facilities
facilities (percent)
------------------------------------------------------------------------
0.0..................................... 4,989 84.4
0.5..................................... 729 12.3
1.0..................................... 132 2.2
1.5..................................... 35 0.6
2.0..................................... 23 0.4
------------------------------------------------------------------------
Note: This table excludes 88 facilities that we estimate will not
receive a payment reduction because they will not report enough data
to receive a Total Performance Score.

To estimate whether or not a facility would receive a payment
reduction in PY 2018, we scored each facility on achievement and
improvement on several measures we have previously finalized and for
which there were available data from CROWNWeb and Medicare claims.
Measures used for the simulation are shown in Table 43.

Table 43-Data Used to Estimate PY 2018 ESRD QIP Payment Reductions
----------------------------------------------------------------------------------------------------------------
Period of time used to
calculate achievement
Measure thresholds, performance Performance period
standards, benchmarks, and
improvement thresholds
----------------------------------------------------------------------------------------------------------------
Vascular Access Type:
% Fistula............................ Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
% Catheter........................... Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
Kt/V:
Adult HD............................. Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
Adult PD............................. Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
Pediatric HD......................... Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
Pediatric PD......................... Jan 2012-Dec 2012........... Jan 2013-Dec 2013.
Hypercalcemia............................ May 2012-Dec 2012........... Jan 2013-Dec 2013.
SRR...................................... Jan 2011-Dec 2011........... Jan 2012-Dec 2012.
STrR..................................... Jan 2011-Dec 2011........... Jan 2012-Dec 2012
----------------------------------------------------------------------------------------------------------------

[[Page 40307]]

the total costs associated with the collection of information
requirements for PY 2018 described in Section VIII.1.b of this proposed
rule would be approximately $248 thousand for all ESRD facilities. As a
result, we estimate that ESRD facilities will experience an aggregate
impact of approximately $7.2 million ($248,309 + $6,958,521 =
$7,206,830) in PY 2018, as a result of the PY 2018 ESRD QIP.
Table 44 below shows the estimated impact of the finalized ESRD QIP
payment reductions to all ESRD facilities for PY 2018. The table
details the distribution of ESRD facilities by facility size (both
among facilities considered to be small entities and by number of
treatments per facility), geography (both urban/rural and by region),
and by facility type (hospital based/freestanding facilities). Given
that the time periods used for these calculations will differ from
those we propose to use for the PY 2018 ESRD QIP, the actual impact of
the PY 2018 ESRD QIP may vary significantly from the values provided
here.

Table 44--Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
facilities Payment
Number of Number of Number of expected to reduction
facilities treatments 2013 facilities with receive a (percent change
(in millions) QIP score payment in total ESRD
reduction payments)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities................................................ 5,996 39.1 5,908 919 -0.10
Facility Type:
Freestanding.............................................. 5,520 36.6 5,455 818 -0.09
Hospital-based............................................ 476 2.5 453 101 -0.17
Ownership Type:
Large Dialysis............................................ 4,150 27.5 4,115 580 -0.08
Regional Chain............................................ 871 5.9 858 127 -0.10
Independent............................................... 582 3.6 561 123 -0.15
Hospital-based (non-chain): 393 2.1 374 89 -0.19
Facility Size:............................................
Large Entities............................................ 5,021 33.5 4,973 707 -0.08
Small Entities \1\........................................ 975 5.7 935 212 -0.16
Rural Status:
(1) Yes................................................... 1,212 5.9 1,190 139 -0.07
(2) No.................................................... 4,784 33.3 4,718 780 -0.10
Census Region:
Northeast................................................. 792 5.8 784 111 -0.08
Midwest................................................... 1,341 7.7 1,318 226 -0.10
South..................................................... 2,527 17.5 2,517 337 -0.07
West...................................................... 1,015 7.1 1,008 109 -0.06
US Territories \2\........................................ 321 1.0 281 136 -0.43
Census Division:
East North Central........................................ 979 5.8 952 202 -0.13
East South Central........................................ 497 2.9 493 67 -0.09
Middle Atlantic........................................... 661 4.8 650 106 -0.10
Mountain.................................................. 352 1.9 349 43 -0.08
New England............................................... 177 1.3 172 21 -0.09
Pacific................................................... 710 5.4 703 90 -0.08
South Atlantic............................................ 1,333 9.1 1,315 232 -0.10
West North Central........................................ 438 2.0 426 53 -0.07
West South Central........................................ 807 5.6 806 90 -0.07
US Territories \2\........................................ 42 0.3 42 15 -0.25
Facility Size (# of total treatments):
Less than 4,000 treatments................................ 1,086 2.7 1,032 215 -0.16
4,000-9,999 treatments.................................... 2,226 10.5 2,225 277 -0.07
Over 10,000 treatments.................................... 2,523 25.7 2,523 352 -0.07
Unknown................................................... 161 0.3 128 75 -0.59
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status.
\2\ Includes Puerto Rico and Virgin Islands.
\3\ Based on claims and CROWNWeb data through December 2013.

3. DMEPOS Provisions
a. Effects of the Proposed Methodology for Adjusting DMEPOS Payment
Amounts Using Information From Competitive Bidding Programs
We estimate that the proposed methodology for adjusting DMEPOS
payment amounts using information from DMEPOS CBPs would save over $7
billion over FY 2016 through 2020. The savings would be primarily
achieved from price reductions for items. Therefore, most of the
economic impact is expected from the reduced prices. We estimate that
approximately half of the DMEPOS items and services furnished to
Medicare beneficiaries are furnished to beneficiaries residing outside
existing CBAs. (See Table 45.)

[[Page 40308]]

Table 45--Impact of Pricing Items in Non-Competitive Areas Using Competitive Bidding Pricing
----------------------------------------------------------------------------------------------------------------
Impact on the federal Impact on beneficiary
government in dollars cost sharing in dollars
FY (to the nearer ten (to the nearer ten
million) million)
----------------------------------------------------------------------------------------------------------------
2016.......................................................... -880 -270
2017.......................................................... -1,430 -470
2018.......................................................... -1,520 -510
2019.......................................................... -1,630 -540
2020.......................................................... -1,750 -580
----------------------------------------------------------------------------------------------------------------

Although these transfers create incentives that very likely cause
changes in the way society uses its resources, we lack data with which
to estimate the resulting social costs or benefits.
b. Effects of the Proposed Special Payment Methodologies and Payment
Rules for Durable Medical Equipment and Enteral Nutrition Furnished
Under the Competitive Bidding Program
We believe that the proposed special payment rules would not have a
significant impact on beneficiaries and suppliers. Contract suppliers
are responsible for furnishing items and services needed by the
beneficiary, and the cost to suppliers for furnishing these items and
services does not change based on whether or not the equipment and
related items and services are paid for separately under a capped
rental payment method. Because the supplier's bids would reflect the
cost of furnishing items in accordance with the new payment rules, we
expect the overall savings would be generally the same as they are
under the current payment rules. Furthermore, as indicated above, we
are proposing that the alterative payment rules would be phased in
under a limited number of areas first to determine impact on the
program, beneficiaries, and suppliers. If supported by evaluation
results, a decision to expand the proposed special payment rules to
other areas would be addressed in future rulemaking.
c. Effects of the Proposed Clarification of the Scope of the Medicare
Hearing Aid Coverage Exclusion
This proposed rule proposes to clarify the scope of the Medicare
coverage exclusion for hearing aids and proposes to no longer cover
BAHAs. However, if finalized, this proposed rule would have no
significant fiscal impact on the Medicare program, because Medicare
program expenditures for BAHAs during the period CY2005 through CY 2013
have been insignificant. This proposed clarification would provide
clear guidance about coverage of DME with regard to the statutory
hearing aid exclusion. The proposed regulation, if finalized, would
explicitly except cochlear implants and brain stem implants from the
hearing aid exclusion, and therefore, Medicare coverage for these
devices would continue.
We estimate that the proposed clarification of the scope of the
Medicare hearing coverage exclusion would save Medicare approximately
$80 million dollars over five years beginning in January 1, 2015
through September 30, 2019. The savings would be primarily achieved
from removing coverage of the BAHA device. (See Table 46.)

Table 46--Clarification of the Statutory Medicare Hearing Aid Coverage
Exclusion
------------------------------------------------------------------------
Impact to the
Federal Government
FY (rounded to the
nearer $10 millions)
------------------------------------------------------------------------
2015.............................................. -10
2016.............................................. -10
2017.............................................. -20
2018.............................................. -20
2019.............................................. -20
------------------------------------------------------------------------

d. Effects of the Proposed Definition of Minimal Self-Adjustment of
Orthotics Under Competitive Bidding
The proposed rule would modify the definition of minimal self-
adjustment to indicate that it means an adjustment that the
beneficiary, caretaker for the beneficiary, or supplier of the device
can perform and does not require the services of a certified orthotist
(that is, an individual certified by either the American Board for
Certification in Orthotics and Prosthetics, Inc., or the Board for
Orthotist/Prosthetist Certification) or a physician as defined in
section 1861(r) of the Act, a treating practitioner means a physician
assistant, nurse practitioner, or clinical nurse specialist as defined
in section 1861(aa)(5) of the Act, an occupational therapist as defined
in 42 CFR 484.4, or physical therapist as defined in 42 CFR 484.4 in
compliance with all applicable Federal and State licensure and
regulatory requirements. We estimate that the proposed clarification of
the definition of minimal self-adjustment would have no significant
impact on program expenditures or access to orthotics. This proposed
clarification would impact suppliers furnishing custom fitted orthotics
that do not have the expertise necessary to make more than minimal
adjustments to an orthotic that a beneficiary or caregiver could be
trained to make.
e. Effects of the Proposed Revision to Change of Ownership Rules To
Allow Contract Suppliers To Sell Specific Lines of Business
This rule would clarify the change of ownership rules so as to not
interfere with the normal course of business for DME suppliers. This
rule would establish an exception under the CHOW rules to allow
transfer of part of a competitive bidding contract when a contract
supplier sells a distinct line of business to a qualified successor
entity r under certain specific circumstances. This clarification would
impact businesses in a positive way by allowing them to conduct
everyday transactions without interference from our rules and
regulations.

C. Accounting Statement

As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 47 below, we
have prepared an accounting statement showing the classification of the
transfers and costs associated with the various provisions of this
proposed rule.

[[Page 40309]]

Table 47--Accounting Statement: Classification of Estimated Transfers and Costs/Savings
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
ESRD PPS for CY 2015
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers......... $ 30 million.
From Whom to Whom...................... Federal government to ESRD providers.
Increased Beneficiary Co-insurance $10 million.
Payments.
From Whom to Whom...................... Beneficiaries to ESRD providers.
----------------------------------------------------------------------------------------------------------------
ESRD QIP for PY 2017
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers......... -$11.9 million.
From Whom to Whom...................... Federal government to ESRD providers.
----------------------------------------------------------------------------------------------------------------
Category Costs
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ESRD Provider $27 thousand.
Costs.
----------------------------------------------------------------------------------------------------------------
ESRD QIP for PY 2018
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers......... -$7 million.
From Whom to Whom...................... Federal government to ESRD providers.
Annualized Monetized ESRD Provider $248 thousand.
Costs.
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Pricing Items in Non-competitive Areas Using Competitive Bidding Pricing
----------------------------------------------------------------------------------------------------------------
Category Transfer
----------------------------------------------------------------------------------------------------------------
Annualized monetized transfer on Estimates Year Discount rate Period covered
beneficiary cost sharing dollar (percent)
----------------------------------------------------------------------------------------------------------------
-$464.5 million......... 2014 7 2016-2020
-$469.9 million......... 2014 3 2016-2020
----------------------------------------------------------------------------------------------------------------
From Whom to Whom..................... Beneficiaries to Medicare providers.
----------------------------------------------------------------------------------------------------------------
Transfers
----------------------------------------------------------------------------------------------------------------
Annualized monetized transfer payments Estimates Year Discount rate Period covered
dollar (percent)
----------------------------------------------------------------------------------------------------------------
-$1,415.4 million....... 2014 7 2016-2020
-$1,430.5 million....... 2014 3 2016-2020
----------------------------------------------------------------------------------------------------------------
From Whom to Whom..................... Federal government to Medicare providers.
----------------------------------------------------------------------------------------------------------------
Clarification of the Statutory Medicare Hearing Aid Coverage Exclusion
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized monetized transfer payments Estimates Year Discount rate Period covered
dollar (percent)
----------------------------------------------------------------------------------------------------------------
-$15.6 million.......... 2014 7 2015-2019
-$15.8 million.......... 2014 3 2015-2019
----------------------------------------------------------------------------------------------------------------
From Whom to Whom..................... Federal government to Medicare providers.

XVI. Regulatory Flexibility Act Analysis

The Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354)
(RFA) requires agencies to analyze options for regulatory relief of
small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Approximately 16 percent of ESRD dialysis
facilities are considered small entities according to the Small
Business Administration's (SBA) size standards, which classifies small
businesses as those dialysis facilities having total revenues of less
than $35.5 million in any 1 year. Individuals and States are not
included in the definitions of a small entity. For more information on
SBA's size standards, see the Small Business Administration's Web site
at https://www.sba.gov/content/small-business-size-standards (Kidney
Dialysis Centers are listed as 621492 with a size standard of $35.5
million).
We do not believe ESRD facilities are operated by small government
entities such as counties or towns with populations of 50,000 or less,
and therefore, they are not enumerated or included in this estimated
RFA analysis. Individuals and States are not included in the definition
of a small entity.
For purposes of the RFA, we estimate that approximately 16 percent
of ESRD facilities are small entities as that term is used in the RFA
(which includes

[[Page 40310]]

small businesses, nonprofit organizations, and small governmental
jurisdictions). This amount is based on the number of ESRD facilities
shown in the ownership category in Table 38. Using the definitions in
this ownership category, we consider the 582 facilities that are
independent and the 393 facilities that are shown as hospital-based to
be small entities. The ESRD facilities that are owned and operated by
LDOs and regional chains would have total revenues of more than $35.5
million in any year when the total revenues for all locations are
combined for each business (individual LDO or regional chain), and are
not, therefore, included as small entities.
For the ESRD PPS updates proposed in this rule, a hospital-based
ESRD facility (as defined by ownership type) is estimated to receive a
0.4 percent increase in payments for CY 2015. An independent facility
(as defined by ownership type) is also estimated to receive a 0.4
percent increase in payments for CY 2015.
We estimate that of the 1,217 ESRD facilities expected to receive a
payment reduction in the PY 2017 ESRD QIP, 275 of those facilities
would be ESRD small entity facilities. We present these findings in
Table 39 (``Estimated Distribution of PY 2017 ESRD QIP Payment
Reductions'') and Table 41 (``Impact of Proposed QIP Payment Reductions
to ESRD Facilities for PY 2017'') above. We estimate that the payment
reductions will average approximately $9,353 per facility across the
1,217 facilities receiving a payment reduction, and $8,698 for each
small entity facility. Using our estimates of facility performance, we
also estimated the impact of payment reductions on ESRD small entity
facilities by comparing the total payment reductions for the 275 small
entity facilities with the aggregate ESRD payments to all small
facilities. We estimate that there are a total of 885 small facilities,
and that the aggregate ESRD PPS payments to these facilities would
decrease 0.23 percent in PY 2017.
We estimate that of the 1,320 ESRD facilities expected to receive a
payment reduction in the PY 2018 ESRD QIP, 282 are ESRD small entity
facilities. We present these findings in Table 39 (``Estimated
Distribution of PY 2018 ESRD QIP Payment Reductions'') and Table 41
(``Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY
2018'') above. We estimate that the payment reductions will average
approximately $7,119 per facility across the 895 facilities receiving a
payment reduction, and $6,294 for each small entity facility. Using our
estimates of facility performance, we also estimated the impact of
payment reductions on ESRD small entity facilities by comparing the
total estimated payment reductions for 209 small entity facilities with
the aggregate ESRD payments to all small entity facilities. We estimate
that there are a total of 975 small entity facilities, and that the
aggregate ESRD PPS payments to these facilities would decrease 0.16
percent in PY 2018.
We expect that the proposed methodology for adjusting DMEPOS
payment amounts using information from DMEPOS CBPs would have a
significant impact on a substantial number of small suppliers. Although
suppliers furnishing items and services outside CBAs do not have to
compete and be awarded contracts in order to continue furnishing these
items and services, the payment amounts for these items and services
would be reduced using the methodology established as a result of the
proposed rule. The statute requires that the methodology for adjusting
payment amounts take into consideration the costs of furnishing items
and services in areas where the adjustments will occur and these
considerations are discussed in the preamble (refer to section IV(A)(5)
of the preamble). The proposed methodology for making payment
adjustments would allow for adjustments based on bids in different
geographic regions to reflect regional variation in costs of furnishing
items and services and the national floor for adjustments in states
with unique costs. We believe that suppliers would be able to continue
furnishing items and services to beneficiaries in areas outside the
CBAs after the reductions in the payment amounts are applied without a
significant change in the rate at which they accept assignment of
Medicare claims for these items and services. Because section
1834(a)(1)(F)(ii) of the Act mandates that payment amounts for DME
subject to competitive bidding be adjusted in areas where CBPs are not
implemented, the only alternative we can consider other than paying
based on adjusted fee schedule amounts is to implement CBPs in all
areas. However, this approach would have an even greater impact on
small suppliers.
We expect the proposed special payment rules for DME and enteral
nutrition would not have a significant impact on small suppliers. We
believe that these rules would benefit affected suppliers since payment
for rental of DME and enteral nutrition infusion pumps would no longer
be capped and suppliers would retain ownership to the equipment.
We expect that the proposal to modify the definition of minimal
self-adjustment of orthotics would not have a significant impact on
small suppliers. According to the Medicare Pricing, Data Analysis and
Coding (PDAC) Contractor from FY 2010 through FY 2013 there were
approximately 6,000 DMEPOS suppliers with a provider transaction access
number (PTAN) registered with the National Supplier Clearinghouse to
supply orthotics. In addition, there are a limited number of applicable
HCPCS codes (approximately 77) that require a skilled individual's
expertise. We believe that the majority of businesses providing
orthotics already employ a ``skilled individual.'' However, for those
few businesses that do not already have a skilled individual providing
custom fitted orthotics they could comply with the proposed changes to
the definition and requirements by hiring a skilled individual. For
example, according to the Bureau of Labor Statistics Occupational
Employment Statistics May 2013 the median pay for a certified orthotist
was $30.27 an hour. The impact will vary according to the caseload of
custom fitted orthotics provided by an individual supplier.
We expect that although the proposal which clarifies the scope of
the Medicare statutory exclusion for hearing aids would withdraw the
coverage for BAHAs, it would not have a significant impact on small
suppliers since the volume of allowed services for bone anchored
hearing aids covered by Medicare is very small (less than 2,000
nationwide) and would not account for a large percentage of any
individual supplier's total revenue.
We expect that the proposed revisions to CHOW rules to allow
contract suppliers to sell specific lines of business provision would
have a positive impact on suppliers and no significant negative impact
on small suppliers.
Therefore, the Secretary has determined that this proposed rule
would have a significant economic impact on a substantial number of
small entities. We solicit comment on the RFA analysis provided.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. Any
such regulatory impact analysis must conform to the provisions of
section 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

[[Page 40311]]

small rural hospitals because most dialysis facilities are
freestanding. While there are 145 rural hospital-based dialysis
facilities, we do not know how many of them are based at hospitals with
fewer than 100 beds. However, overall, the 145 rural hospital-based
dialysis facilities will experience an estimated 0.1 percent decrease
in payments. As a result, this proposed rule is not estimated to have a
significant impact on small rural hospitals. Therefore, the Secretary
has determined that this proposed rule will not have a significant
impact on the operations of a substantial number of small rural
hospitals.

XVII. Unfunded Mandates Reform Act Analysis

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-4) also requires that agencies assess anticipated costs
and benefits before issuing any rule whose mandates require spending in
any 1 year $100 million in 1995 dollars, updated annually for
inflation. In 2013, that threshold is approximately $141 million. This
proposed rule does not include any mandates that would impose spending
costs on State, local, or Tribal governments in the aggregate, or by
the private sector, of $141 million.

XVIII. Federalism Analysis

Executive Order 13132 on Federalism (August 4, 1999) establishes
certain requirements that an agency must meet when it promulgates a
proposed rule (and subsequent final rule) that imposes substantial
direct requirement costs on State and local governments, preempts State
law, or otherwise has Federalism implications. We have reviewed this
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.

XXI. Congressional Review Act

This proposed rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.

XX. Files Available to the Public via the Internet

The Addenda for the annual ESRD PPS proposed and final rulemakings
will no longer appear in the Federal Register. Instead, the Addenda
will be available only through the Internet and is posted on the CMS
Web site at https://www.cms.gov/ESRDPayment/PAY/list.asp. In addition to
the Addenda, limited data set (LDS) files are available for purchase at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile.html. Readers who
experience any problems accessing the Addenda or LDS files should
contact Stephanie Frilling at (410) 786-4507.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, and X-rays

42 CFR Part 411

Kidney diseases, Medicare, Physician Referral, and Reporting and
recordkeeping requirements

42 CFR Part 413

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

42 CFR Part 414

Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, and Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority for part 405 continues to read as follows:

Authority: Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874,
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a),
1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and
1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C.
263a).

Sec. 405.2102 [Amended]

0
2. Section 405.2102 is amended by removing all the definitions, with
the exception of two definitions, ``Network, ESRD'', and ``Network
organization''.

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT

0
3. The authority citation for part 411 continues to read as follows:

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).

0
4. Section 411.15 is amended by revising paragraph (d) to read as
follows:

Sec. 411.15 Particular services excluded from coverage.

* * * * *
(d) Hearing aids or examinations for the purpose of prescribing,
fitting, or changing hearing aids.
(1) Scope. The scope of the hearing aid exclusion encompasses all
types of air conduction and bone conduction hearing aids (external,
internal, or implanted).
(2) Devices not subject to the hearing aid exclusion. Cochlear
implants and auditory brainstem implants that replace the function of
cochlear structures or auditory nerve and provide electrical energy to
auditory nerve fibers and other neural tissue via implanted electrode
arrays. These devices produce the perception of sound and do not meet
the definition of hearing aid.
* * * * *

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

0
5. The authority citation for part 413 is revised to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Pub. L. 106-113 (113 Stat. 1501A-332), sec. 3201 of Pub. L. 112-96
(126 Stat. 156), sec. 632 of Pub. L. 112-240 (126 Stat. 2354), and
sec. 217 of Pub. L. 113-93.

Sec. 413.174 [Amended]

0
6. In Sec. 413.174, paragraph (f)(6) is amended by removing ``January
1, 2016'' and by adding in its place ``January 1, 2024.''
0
7. Section 413.232 is amended revising paragraphs (b) introductory text
and (f) and adding paragraph (h) to read as follows:

Sec. 413.232 Low-volume adjustment.

* * * * *

[[Page 40312]]

(b) Definition of low-volume facility. A low-volume facility is an
ESRD facility that, as determined based on the documentation submitted
pursuant to paragraph (h) of this section:
* * * * *
(f) Except as provided in paragraph (g) of this section, to receive
the low-volume adjustment an ESRD facility must provide an attestation
statement, by November 1st of each year preceding the payment year, to
its Medicare Administrative Contractor that the facility meets all the
criteria established in this section. For calendar year 2012, the
attestation must be provided by January 3, 2012. For calendar year
2015, the attestation must be provided by December 31, 2014.
* * * * *
(h) To receive the low-volume adjustment, an ESRD facility must
include in their attestation provided pursuant to paragraph (f) of this
section a statement that the ESRD facility meets the definition of a
low-volume facility in paragraph (b) of this section. To determine
eligibility for the low-volume adjustment, the Medicare Administrative
Contractor (MAC) on behalf of CMS relies upon as filed or final settled
12-consecutive month cost reports for the 3 cost reporting years
preceding the payment year to verify the number of treatments, except
that:
(1) In the case of a hospital-based ESRD facility as defined in
Sec. 413.174(c), the MAC relies upon the attestation submitted
pursuant to paragraph (f) of this section and may consider other
supporting data in addition to the total treatments reported in each of
the 12-consecutive month cost reports for the 3 cost reporting years
preceding the payment year to verify the number of treatments that were
furnished by the individual hospital-based ESRD facility seeking the
adjustment; and
(2) In the case of an ESRD facility that has undergone a change of
ownership that does not result in a new Provider Transaction Access
Number for the ESRD facility, the MAC relies upon the attestation and
when the change of ownership results in two non-standard cost reporting
periods (less than or greater than 12-consecutive months), does one or
both of the following for the 3 cost reporting years preceding the
payment year to verify the number of treatments:
(i) Combines the two non-standard cost reporting periods of less
than 12 months to equal a full 12-consecutive month period; and/or
(ii) Combines the two non-standard cost reporting periods that in
combination may exceed 12-consecutive months and prorates the data to
equal a full 12-consecutive month period.

Sec. 413.237 [Amended]

0
8. In Sec. 413.237, paragraph (a)(1)(iv) is amended by removing
``January 1, 2016'' and adding in its place ``January 1, 2024.''

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
9. The authority citation for part 414 continues to read as follows:

Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).
0
10. Section 414.105 is added to read as follows:

Sec. 414.105 Application of Competitive Bidding Information and
Limitation of Inherent Reasonableness Authority

(a) For enteral nutrients, equipment and supplies furnished on or
after January 1, 2011, the fee schedule amounts may be adjusted based
on information on the payment determined as part of implementation of
the programs under subpart F using the methodologies set forth at Sec.
414.210(g).
(b) In the case of such adjustments, the rules at Sec. 405.502(g)
and (h) of this chapter shall not be applied.

Subpart D--Payment for Durable Medical Equipment and Prosthetic and
Orthotic Devices

0
11. The heading for subpart D is revised to read as set forth above.
0
12. Section 414.202 is amended by:
0
A. Adding the definition of ``Frontier state''.
0
B. Revising the definition of ``Region''.
0
C. Adding the definition of ``Rural State''.
The additions and revision read as follows:

Sec. 414.202 Definitions.

* * * * *
Frontier state means a state where at least 50 percent of counties
in the state have a population density of 6 people or less per square
mile.
* * * * *
Region means, for the purpose of implementing Sec. 414.210(g),
geographic areas defined by the Bureau of Economic Analysis in the
United States Department of Commerce for economic analysis purposes,
and, for the purpose of implementing Sec. 414.228, those contractor
service areas administered by CMS regional offices.
Rural State means a state where more than 50 percent of the
population is rural as determined through census data.
0
13. Section 414.210 is amended by revising paragraph (a) and adding
paragraph (g) to read as follows:

Sec. 414.210 General payment rules.

(a) General rule. For items furnished on or after January 1, 1989,
except as provided in paragraphs (c), (d), and (g) of this section,
Medicare pays for durable medical equipment, prosthetics and orthotics,
including a separate payment for maintenance and servicing of the items
as described in paragraph (e) of this section, on the basis of 80
percent of the lesser of--
(1) The actual charge for the item;
(2) The fee schedule amount for the item, as determined in
accordance with the provisions of Sec. Sec. 414.220 through 414.232
* * * * *
(g) Application of Competitive Bidding Information and Limitation
of Inherent Reasonableness Authority. For items furnished on or after
January 1, 2011, the fee schedule amounts may be adjusted based on
information on the payment determined as part of implementation of the
programs under subpart F, of this part, excluding information on the
payment determined in accordance with the special payment rules at
Sec. 414.409. In the case of such adjustments, the rules at Sec.
405.502(g) and (h) of this chapter shall not be applied
(1) Payment adjustments for areas within the contiguous United
States using information from competitive bidding programs. For an item
or service subject to the programs under subpart F, that payment amount
for such item or services for areas within the contiguous United States
shall be established as follows:
(i) CMS determines a regional price for each state in the
contiguous United States and the District of Columbia equal to the un-
weighted average of the single payment amount for an item or service
established in accordance with Sec. 414.416 for competitive bidding
areas that are fully or partially located in the same region where the
state or District of Columbia is located.
(ii) CMS determines a national average price equal to the average
of the regional prices determined under paragraph (g)(1)(i) of this
section.
(iii) A regional price determined under paragraph (g)(1)(i) of this
section cannot be greater than 110 percent of the national average
price determined under paragraph (g)(1)(ii) of this section nor less
than 90 percent of the national average price determined under
paragraph (g)(1)(ii) of this section. In addition, a regional price
determined under paragraph (g)(1)(i) of this section

[[Page 40313]]

for a state designated as a rural or frontier state cannot be less than
110 percent of the national average price determined under paragraph
(g)(1)(ii) of this section.
(2) Payment adjustments for areas outside the contiguous United
States using information from competitive bidding programs. For an item
or service subject to the programs under subpart F, the fee schedule
amounts for areas outside the contiguous United States are adjusted
based on the greater of--
(i) The average of the single payment amounts for the item or
service for CBAs outside the contiguous United States.
(ii) 110 percent of the national average price for the item or
service determined under paragraph (g)(1)(ii) of this section.
(3) Payment adjustments for items and services included in no more
than ten competitive bidding programs. Notwithstanding paragraph (g)(1)
of this section, for an item or service that is included in ten or
fewer competitive bidding programs as defined at Sec. 414.402, the fee
schedule amounts applied for all areas within and outside the
contiguous United States are adjusted based on 110 percent of the un-
weighted average of the single payment amounts for the item or service.
(4) Payment adjustments using data on items and services included
in competitive bidding programs no longer in effect. In the case where
adjustments to fee schedule amounts are made using any of the
methodologies described, if the adjustments are based solely on single
payment amounts from competitive bidding programs that are no longer in
effect, the adjusted fee schedule amounts shall be increased on an
annual basis using the percentage change in the Consumer Price Index
for all Urban Consumers (CPI-U) from the mid-point of the last year the
single payment amounts were in effect to the month ending 6 months
prior to the date the initial payment adjustments would go into effect.
Following the initial adjustment to the fee schedule amounts, the
adjusted fee schedule amounts would continue to be updated every 12
months using the percentage change in the CPI-U for the 12-month period
ending 6 months prior to the date the updated payment adjustments would
go into effect.
(5) Adjusted payment amounts for accessories used with different
types of base equipment. In situations where a HCPCS code that
describes an item used with different types of base equipment is
included in more than one product category in a CBA under competitive
bidding, a weighted average of the single payment amounts for the code
is computed for each CBA, weighted based on national allowed services
for the code when used with different equipment. The weighted average
single payment amount per code per CBA would then be used in applying
the payment adjustment methodologies proposed in this section.
(6) Payment adjustments consistent with items and services
furnished. In the case where payment amounts are established under
subpart F of this part for an item or service that are greater than the
payment amounts established under subpart F of this part for a higher
level item or service (i.e., one with additional features or
functionality), the payment amounts for the lower level of service are
adjusted so that they are no greater than the payment amounts for the
higher level of service before making payment adjustments using any of
the methodologies above.
(7) Payment adjustments for mail order items furnished in the
Northern Mariana Islands. The fee schedule amounts for mail order items
furnished to beneficiaries in the Northern Mariana Islands are adjusted
so that they are equal to 100 percent of the single payment amounts
established under a national mail order competitive bidding program.
(8) Updating adjusted fee schedule amounts. The adjusted fee
schedule amounts are revised each time a single payment amount for an
item or service is updated following one or more new competitions and
as other items are added to programs established under subpart F of
this part.
0
14. Section 414.402 is amended by revising the definition of ``Minimal
self-adjustment'' to read as follows:

Sec. 414.402 Definitions.

* * * * *
Minimal self-adjustment means an adjustment the beneficiary,
caretaker for the beneficiary, or supplier of the device can perform
and does not require the services of a certified orthotist (that is, an
individual certified by either the American Board for Certification in
Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist
Certification), or a physician as defined in 1861(r) of the Act, a
treating practitioner which means a physician assistant, nurse
practitioner, or clinical nurse specialist as defined in section
1861(aa)(5) of the Act, an occupational therapist as defined in Sec.
484.4 of this chapter, or physical therapist as defined in Sec. 484.4
of this chapter who are in compliance with all applicable Federal and
State licensure and regulatory requirements.
* * * * *
0
15. Section 414.408 is amended by adding paragraph (l) to read as
follows:

Sec. 414.408 Payment rules.

* * * * *
(l) Exceptions for certain items and services paid in accordance
with special payment rules. The payment rules in paragraphs (f) thru
(i), (j)(2), (j)(3), (j)(7), and (k) of this section do not apply to
items and services paid in accordance with the special payment rules at
Sec. 414.409.
0
16. Section 414.409 is added to read as follows:

Sec. 414.409 Special payment rules.

(a) Payment on a bundled, continuous rental basis. (1) In no more
than 12 CBAs, in conjunction with competitions that begin on or after
January 1, 2015, payment is made on a bundled, continuous monthly
rental basis for enteral nutrients, supplies and equipment, oxygen and
oxygen equipment, standard manual wheelchairs, standard power
wheelchairs, CPAP and respiratory assist devices, and hospital beds.
The CBAs and competitions where these payment rules apply are announced
in advance of each competition, with the payment rules in this section
used in lieu of the payment rules at Sec. 414.408(f) thru (i), (j)(2),
(j)(3), (j)(7), and (k). The single payment amounts are established
based on bids submitted and accepted for furnishing rented DME and
enteral nutrition on a monthly basis for each month of medical need
during the contract period monthly single payment amount would include
payment for all nutrients, supplies and equipment.
(2) Payment is made on a continuous monthly rental basis for DME.
The single payment amount for the monthly rental of DME includes
payment for the rented equipment, maintenance and servicing of the
rented equipment, and replacement of supplies and accessories necessary
for the effective use of the rented equipment. Separate payment for
replacement of equipment, repair or maintenance and servicing of
equipment, or for replacement of accessories and supplies necessary for
the effective use of equipment is not allowed under any circumstances.
(3) Payment is made on a monthly basis for enteral nutrition. The
single payment amount includes payment for all nutrients, supplies and
equipment. Separate payment for replacement of equipment, repair or
maintenance and servicing of equipment, or for replacement of
accessories and supplies necessary for the effective use of equipment
is not allowed under any circumstances.

[[Page 40314]]

(b) Payment for grandfathered DME items paid on a bundled,
continuous rental basis. Payment to a supplier that elects to be a
grandfathered supplier of DME furnished in CBPs where these special
payment rules apply is made in accordance with Sec. 414.408(a)(1).
(c) Supplier transitions for DME and enteral nutrition paid on a
bundled, continuous rental basis. Changes from a non-contract supplier
to a contract supplier at the beginning of a CBP where payment is made
on a bundled, continuous monthly rental basis results in the contract
supplier taking on responsibility for meeting all of the monthly needs
for furnishing the covered DME or enteral nutrition. In the event that
a beneficiary relocates from a CBA where these special payment rules
apply to an area where rental cap rules apply, a new period of
continuous use begins for the capped rental item, enteral nutrition
equipment, or oxygen equipment as long as the item is determined to be
medically necessary.
(d) Responsibility for repair and maintenance and servicing of
power wheelchairs. In no more than 12 CBAs where payment for power
wheelchairs is made on a capped rental basis, for power wheelchairs
furnished in conjunction with competitions that begin on or after
January 1, 2015, contract suppliers that furnish power wheelchairs
under contracts awarded based on these competitions shall continue to
repair power wheelchairs they furnish following transfer of title to
the equipment to the beneficiary. The responsibility of the contract
supplier to repair, maintain and service beneficiary-owned power
wheelchairs does not apply to power wheelchairs that the contract
supplier did not furnish to the beneficiary. For power wheelchairs that
the contract supplier furnishes during the contract period, the
responsibility of the contract supplier to repair, maintain and service
the power wheelchair once it is owned by the beneficiary continues
until the reasonable useful lifetime of the equipment expires, coverage
for the power wheelchair ends, or the beneficiary relocates outside the
CBA where the item was furnished. The contract supplier may not charge
the beneficiary or the program for any necessary repairs or maintenance
and servicing of a beneficiary-owned power wheelchair it furnished
during the contract period.
0
17. Section 414.412 is amended by revising paragraph (b)(2) and adding
paragraphs (b)(3) through (5) to read as follows:

Sec. 414.412 Submission of bids under a competitive bidding program.

* * * * *
(b) * * *
(2) The bids submitted for each item or drug in a product category
cannot exceed the payment amount that would otherwise apply to the item
under Subpart C, Subpart D, or Subpart I of this part.
(3) The bids submitted for enteral nutrition, oxygen and oxygen
equipment, standard manual wheelchairs, standard power wheelchairs, and
hospital beds paid in accordance with the special payment rules at
Sec. 414.409(a) cannot exceed the average monthly payment for the
bundle of items and services that would otherwise apply to the item
under subpart C or subpart D of this part.
(4) The bids submitted for continuous positive airway pressure
(CPAP) devices and respiratory assist devices paid in accordance with
the special payment rules at Sec. 414.409(a) cannot exceed the 1993
fee schedule amounts for these items, increased by the covered item
update factors provided for these items in section 1834(a)(14) of the
Act.
(5) Suppliers shall take into consideration the special payment
rules at Sec. 414.409(d) when submitting bids for furnishing power
wheelchairs under competitions where these rules apply.
* * * * *
0
18. Section 414.414 is amended by revising paragraph (f) to read as
follows:

Sec. 414.414 Conditions for awarding contracts.

* * * * *
(f) Expected savings. A contract is not awarded under this subpart
unless CMS determines that the amounts to be paid to contract suppliers
for an item or drug under a competitive bidding program are expected to
be less than the amounts that would otherwise be paid for the same item
under subpart C or subpart D or the same drug under subpart I based on
95 percent of the average wholesale price in effect on October 1, 2003.
* * * * *
0
19. Section 414.422 is amended by revising paragraph (d) to read as
follows:

Sec. 414.422 Terms of contracts.

* * * * *
(d) Change of ownership. (1) A contract supplier must notify CMS if
it is negotiating a change in ownership no later than 60 days before
the anticipated date of the change.
(2) CMS may transfer a contract to an entity that merges with, or
acquires, a contract supplier if the entity meets the following
requirements:
(i) A successor entity--
(A) Meets all requirements applicable to contract suppliers for the
applicable competitive bidding program;
(B) Submits to CMS the documentation described under Sec.
414.414(b) through (d) if documentation has not previously been
submitted by the successor entity or if the documentation is no longer
sufficient for CMS to make a financial determination. A successor
entity is not required to duplicate previously submitted information if
the previously submitted information is not need to make a financial
determination. This documentation must be submitted no later than 30
days prior to the anticipated effective date of the change of
ownership; and
(C) Submits to CMS, at least 30 days before the anticipated
effective date of the change of ownership, a signed novation agreement
acceptable to CMS stating that it will assume all obligations under the
contract; or
(ii) A new entity--
(A) Meets the requirements of (d)(2)(i)(A) and (B) of this section;
and
(B) Contract supplier submits to CMS, at least 30 days before the
anticipated effective date of the change of ownership, its final draft
of a novation agreement as described in paragraph (d)(2)(iii) of this
section for CMS review. The new entity submits to CMS, within 30 days
after the effective date of the change of ownership, an executed
novation agreement acceptable to CMS.
(3) Except as specified in paragraph (d)(4) of this section, CMS
transfers the entire contract, including all product categories and
competitive bidding areas, to a new entity.
(4) For contracts issued in the Round 2 Recompete and subsequent
rounds in the case of a CHOW where a contract supplier sells a distinct
company, (e.g., an affiliate, subsidiary, sole proprietor, corporation,
or partnership) that furnishes a specific product category or services
a specific CBA, CMS may transfer the portion of the contract performed
by that company to a successor, if the following conditions are met:
(i) Every CBA, product category, and location of the company being
sold must be transferred to the new qualified owner who meets all
competitive bidding requirements; i.e. financial, accreditation and
licensure;
(iii) All CBAs and product categories in the original contract that
are not explicitly transferred by CMS remain unchanged in that original
contract for the duration of the contract period unless transferred by
CMS pursuant to a subsequent CHOW;

[[Page 40315]]

(iv) All requirements of paragraph (d)(2) of this section are met;
and
(v) The sale of the distinct company includes all of the contract
supplier's assets associated with the CBA and/or product category(s);
and
(vi) CMS determines that transfer of part of the original contract
will not result in disruption of service or harm to beneficiaries.
* * * * *
0
20. Section 414.423 is amended by revising paragraphs (b)(1)(vi),
(l)(2) introductory text, and (l)(2)(i) to read as follows:

Sec. 414.423 Appeals Process for Termination of Competitive Bidding
Contract.

* * * * *
(b) * * *
(1) * * *
(vi) The effective date of termination is 45 days from the date of
the notification letter unless a timely hearing request is filed or a
corrective action plan (CAP) is submitted within 30 days of the date on
the notification letter.
* * * * *
(l) * * *
(2) A contract supplier whose contract has been terminated must
notify all beneficiaries who are receiving rented competitive bid items
or competitive bid items received on a recurring basis, of the
termination of their contract.
(i) The notice to the beneficiary from the supplier whose contract
is terminated must be provided no later than 15 days prior to the
effective date of termination.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

Dated: June 24, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 27, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-15840 Filed 7-2-14; 4:15 pm]
BILLING CODE 4120-01-P

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