Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, and End-Stage Renal Disease Treatment Choices Model, 67136-67303 [2022-23778]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 87, Number 214 (Monday, November 7, 2022)]
[Rules and Regulations]
[Pages 67136-67303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23778]



[[Page 67135]]

Vol. 87

Monday,

No. 214

November 7, 2022

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 413 and 512





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

Federal Register / Vol. 87 , No. 214 / Monday, November 7, 2022 / 
Rules and Regulations

[[Page 67136]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 512

[CMS-1768-F]
RIN 0938-AU79


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

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

ACTION: Final rule.

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SUMMARY: This final rule updates and revises the End-Stage Renal 
Disease (ESRD) Prospective Payment System for calendar year 2023. This 
rule also updates the payment rate for renal dialysis services 
furnished by an ESRD facility to individuals with acute kidney injury. 
In addition, this rule updates requirements for the ESRD Quality 
Incentive Program and finalizes changes to the ESRD Treatment Choices 
Model.

DATES: This final rule is effective on January 1, 2023, except for the 
amendment to 42 CFR 413.234 in instruction number 4, which is effective 
January 1, 2025.

FOR FURTHER INFORMATION CONTACT: [email protected], for issues 
related to the ESRD PPS and coverage and payment for renal dialysis 
services furnished to individuals with acute kidney injury (AKI).
    [email protected], for issues related to applications 
for the Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) or the Transitional Drug Add-on Payment 
Adjustment (TDAPA).
    Delia Houseal, (410) 786-2724, for issues related to the ESRD 
Quality Incentive Program (QIP).
    [email protected], for issues related to the ESRD Treatment 
Choices (ETC) Model.

SUPPLEMENTARY INFORMATION: 
    Current Procedural Terminology (CPT) Copyright Notice: Throughout 
this final rule, we use CPT[supreg] codes and descriptions to refer to 
a variety of services. We note that CPT[supreg] codes and descriptions 
are copyright 2020 American Medical Association (AMA). All Rights 
Reserved. CPT[supreg] is a registered trademark of the AMA. Applicable 
Federal Acquisition Regulations (FAR) and Defense Federal Acquisition 
Regulations (DFAR) apply.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a Table of Contents.
I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Cost and Benefits
II. Calendar Year (CY) 2023 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background
    B. Provisions of the Proposed Rule, Public Comments, and 
Responses to the Comments on the CY 2023 ESRD PPS
    C. Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) for CY 2023 Payment
    D. Continuation of Approved Transitional Add-On Payment 
Adjustments for New and Innovative Equipment and Supplies for CY 
2023
    E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for New Renal Dialysis Drugs or Biological Products for 
CY 2023
    F. Summary of Request for Information About Addressing Issues of 
Payment for New Renal Dialysis Drugs and Biological Products After 
Transitional Drug Add-on Payment Adjustment (TDAPA) Period Ends
    G. Summary of Requests for Information on Health Equity Issues 
Within ESRD PPS With a Focus on Pediatric Payment
III. Calendar Year (CY) 2023 Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury (AKI)
    A. Background
    B. Summary of the Proposed Provisions, Public Comments, and 
Responses to Comments on the CY 2023 Payment for Renal Dialysis 
Services Furnished to Individuals With AKI
    C. Annual Payment Rate Update for CY 2023
IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    A. Background
    B. Flexibilities for the ESRD QIP in Response to the Public 
Health Emergency (PHE) Due to COVID-19
    C. Updates to the Performance Standards Applicable to the PY 
2023 Clinical Measures
    D. Technical Updates to the SRR and SHR Clinical Measures 
Beginning With the PY 2024 ESRD QIP
    E. Updates to Requirements Beginning With the PY 2025 ESRD QIP
    F. Updates for the PY 2026 ESRD QIP
    G. Requests for Information (RFI) on Topics Relevant to ESRD QIP
V. End-Stage Renal Disease Treatment Choices (ETC) Model
    A. Background
    B. Summary of the Proposed Provisions, Public Comments, and 
Responses to Comments on the ETC Model
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Impact Analysis
    D. Detailed Economic Analysis
    E. Accounting Statement
    F. Regulatory Flexibility Act Analysis (RFA)
    G. Unfunded Mandates Reform Act Analysis (UMRA)
    H. Federalism
    I. Congressional Review Act
VIII. Files Available to the Public via the Internet Regulations 
Text

I. Executive Summary

A. Purpose

    This rule finalizes changes related to the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS), payment for renal dialysis 
services furnished to individuals with acute kidney injury (AKI), the 
ESRD Quality Incentive Program (QIP), and the ESRD Treatment Choices 
(ETC) Model.
1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
    On January 1, 2011, we implemented the ESRD PPS, a case-mix 
adjusted, bundled PPS for renal dialysis services furnished by ESRD 
facilities as required by section 1881(b)(14) of the Social Security 
Act (the Act), as added by section 153(b) of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275). 
Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA, 
and amended by section 3401(h) of the Patient Protection and Affordable 
Care Act (the Affordable Care Act) (Pub. L. 111-148), established that 
beginning calendar year (CY) 2012, and each subsequent year, the 
Secretary of the Department of Health and Human Services (the 
Secretary) shall annually increase payment amounts by an ESRD market 
basket increase factor, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This rule 
updates the ESRD PPS for CY 2023.
2. Coverage and Payment for Renal Dialysis Services Furnished to 
Individuals With Acute Kidney Injury (AKI)
    On June 29, 2015, the President signed the Trade Preferences 
Extension Act of 2015 (TPEA) (Pub. L. 114-27). Section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA

[[Page 67137]]

amended section 1834 of the Act by adding a new subsection (r) that 
provides for payment for renal dialysis services furnished by renal 
dialysis facilities or providers of services paid under section 
1881(b)(14) of the Act to individuals with AKI at the ESRD PPS base 
rate beginning January 1, 2017. This rule updates the AKI payment rate 
for CY 2023.
3. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is 
authorized by section 1881(h) of the Act. The Program fosters improved 
patient outcomes by establishing incentives for facilities to meet or 
exceed performance standards established by the Centers for Medicare & 
Medicaid Services (CMS). This final rule finalizes several updates for 
Payment Year (PY) 2023, including the suppression of individual ESRD 
QIP measures for PY 2023 under the measure suppression policy 
previously finalized for the duration of the COVID-19 public health 
emergency (PHE), as well as updates for PY 2024, PY 2025, and PY 2026.
4. End-Stage Renal Disease Treatment Choices (ETC) Model
    The ETC Model is a mandatory Medicare payment model tested under 
section 1115A of the Act. The ETC Model is operated by the Center for 
Medicare and Medicaid Innovation (Innovation Center), and tests the use 
of payment adjustments to encourage greater utilization of home 
dialysis and kidney transplants, to preserve or enhance the quality of 
care furnished to Medicare beneficiaries while reducing Medicare 
expenditures.
    The ETC Model was finalized as part of a final rule published in 
the Federal Register on September 29, 2020, titled, ``Medicare Program: 
Specialty Care Models to Improve Quality of Care and Reduce 
Expenditures'' (85 FR 61114), referred to herein as the ``Specialty 
Care Models final rule.'' In this rule, we finalize certain changes to 
the ETC Model, including adding a parameter to the Performance Payment 
Adjustment (PPA) achievement scoring methodology and adding an 
additional protection related to flexibilities for furnishing and 
billing kidney disease patient education services by ETC Participants. 
This final rule also discusses our intent to disseminate participant-
level model performance information to the public.

B. Summary of the Major Provisions

1. ESRD PPS
     Rebasing and revision of the End-Stage Renal Disease 
Bundled (ESRDB) market basket for CY 2023: We are updating the ESRDB 
market basket to a 2020 base year, reflecting the most recent and 
complete set of Medicare Cost Report (MCR) data as well as other 
publicly available data. In addition, we are updating the labor-related 
share of the ESRD PPS base rate to reflect the 2020 labor-related cost 
share weights designated in the ESRDB market basket.
     Update to the ESRD PPS base rate for CY 2023: The final CY 
2023 ESRD PPS base rate is $265.57. This amount reflects the 
application of the wage index budget-neutrality adjustment factor 
(0.999730) and a productivity-adjusted market basket increase of 3.0 
percent as required by section 1881(b)(14)(F)(i)(I) of the Act, 
equaling $265.57 (($257.90 x 0.999730) x 1.030 = $265.57).
     Annual update to the wage index: We adjust wage indices on 
an annual basis using the most current hospital wage data and the 
latest core-based statistical area (CBSA) delineations to account for 
differing wage levels in areas in which ESRD facilities are located. 
For CY 2023, we are updating the wage index values based on the latest 
available data.
     Permanent cap on wage index decreases: For CY 2023 and 
subsequent years, we are establishing a permanent policy to apply a 5-
percent cap on any ESRD facility's wage index decrease from its wage 
index in the prior year, regardless of the circumstances causing the 
decline.
     Wage index floor: We are raising the wage index floor, for 
areas with wage index values below the floor, from 0.5000 to 0.6000.
     Outlier policy refinement: The ESRD PPS has an outlier 
policy that targets 1.0 percent of total Medicare ESRD PPS expenditures 
in outlier payments for ESRD beneficiaries who require a high level of 
renal dialysis services. We are modifying the methodology for 
calculating the fixed-dollar loss (FDL) amounts for adult patients.
     Annual update to the outlier policy: We are updating the 
outlier policy based on the most current data and our refinement to the 
outlier policy. Accordingly, we are updating the Medicare allowable 
payment (MAP) amounts for adult and pediatric patients for CY 2023 
using the latest available CY 2021 claims data. We are updating the 
ESRD outlier services FDL amount for pediatric patients using the 
latest available CY 2021 claims data, and calculating the FDL amount 
for adult patients using the latest available claims data from CY 2019, 
CY 2020, and CY 2021, in accordance with the methodology discussed in 
section II.B.1.c.(4) of this final rule. For pediatric beneficiaries, 
the final FDL amount will decrease from $26.02 to $23.29, and the final 
MAP amount will decrease from $27.15 to $25.59, as compared to CY 2022 
values. For adult beneficiaries, the final FDL amount will decrease 
from $75.39 to $73.19, and the final MAP amount will decrease from 
$42.75 to $39.62. The 1.0 percent target for outlier payments was not 
achieved in CY 2021. Outlier payments represented approximately 0.5 
percent of total payments rather than 1.0 percent.
     Definition of an oral-only drug: Beginning January 1, 
2025, we will include the word functional in the definition of oral-
only drug at 42 CFR 413.234(a). Specifically, under the final 
definition, an oral-only drug will be a drug or biological product with 
no injectable functional equivalent or other form of administration 
other than an oral form.
     Update to the offset amount for the transitional add-on 
payment adjustment for new and innovative equipment and supplies 
(TPNIES) for CY 2023: The final CY 2023 average per treatment offset 
amount for the TPNIES for capital-related assets that are home dialysis 
machines is $9.79. This offset amount reflects the application of the 
productivity-adjusted market basket increase of 3.0 percent ($9.50 x 
1.030 = $9.79).
     TPNIES applications received for CY 2023: In this final 
rule, we announce our determinations on the three TPNIES applications 
under consideration for the TPNIES for CY 2023 payment.
2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
    We are updating the AKI payment rate for CY 2023. The final CY 2023 
payment rate is $265.57, which is the same as the base rate finalized 
under the ESRD PPS for CY 2023.
3. ESRD QIP
    We are finalizing our proposals to suppress the Standardized 
Hospitalization Ratio (SHR) clinical measure, Standardized Readmission 
Ratio (SRR) clinical measure, In-Center Hemodialysis Consumer 
Assessment of Healthcare Providers and Systems (ICH CAHPS) clinical 
measure, Long-Term Catheter Rate clinical measure, Percentage of 
Prevalent Patients Waitlisted (PPPW) clinical measure, and

[[Page 67138]]

Kt/V Dialysis Adequacy Comprehensive clinical measure for PY 2023 under 
our previously finalized measure suppression policy because we have 
determined that circumstances caused by the public health emergency 
(PHE) due to COVID-19 have significantly affected the measures and 
resulting performance scores. We are also suppressing the Standardized 
Fistula Rate clinical measure for PY 2023 under our previously 
finalized measure suppression policy because we have determined that 
the circumstances caused by the COVID-19 PHE have also significantly 
affected the Standardized Fistula Rate clinical measure and resulting 
performance score. Additionally, we are finalizing that we will 
calculate the minimum Total Performance Score (mTPS) for PY 2023 based 
on the seven measures that are not suppressed. We are also finalizing 
our proposal to use CY 2019 data to calculate performance standards for 
the PY 2023 ESRD QIP. We are also updating the technical specifications 
of the SHR clinical measure and SRR clinical measure so that the 
measure results are expressed as rates instead of ratios beginning with 
the PY 2024 ESRD QIP. We are finalizing our proposal to add the COVID-
19 Vaccination Coverage among Healthcare Personnel (HCP) measure to the 
ESRD QIP measure set beginning with the PY 2025 ESRD QIP. We are also 
finalizing our proposal to convert the Standardized Transfusion Ratio 
(STrR) reporting measure to a clinical measure beginning with PY 2025, 
and are further finalizing our proposal to express this measure as a 
rate to align with the technical updates to also express the SHR and 
SRR clinical measure results as rates. In addition, we are finalizing 
our proposal to convert the Hypercalcemia clinical measure to a 
reporting measure, beginning with PY 2025. Furthermore, we are 
finalizing our proposal to create a new Reporting Measure domain and to 
re-weight remaining measure domains beginning with PY 2025.
    This final rule also includes a summary of public comments received 
in response to requests for information that appeared in the CY 2023 
ESRD PPS proposed rule. In those requests for information, we solicited 
feedback on several important topics, including potential quality 
measures for home dialysis, the expansion of our quality reporting 
programs to allow us to provide more actionable and comprehensive 
information on health care disparities across multiple variables and 
new care settings, and on the possible future inclusion of two 
potential social drivers of health screening measures in the ESRD QIP.
4. ETC Model
    In this final rule, we are updating the PPA achievement scoring 
methodology beginning in the fifth Measurement Year (MY5) of the ETC 
Model, which begins January 1, 2023. We are also clarifying the 
requirements for qualified staff to furnish and bill kidney disease 
patient education services under the ETC Model's Medicare program 
waivers. In addition, we discuss our intent to disseminate participant-
level model performance information to the public.

C. Summary of Costs and Benefits

    In section VII.D.5 of this final rule, we set forth a detailed 
analysis of the impacts that the finalized changes will have on 
affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Final ESRD PPS
    The impact table in section VII.D.5.a of this final rule displays 
the estimated change in payments to ESRD facilities in CY 2023 compared 
to estimated payments in CY 2022. The overall impact of the CY 2023 
changes is projected to be a 3.1 percent increase in payments. 
Hospital-based ESRD facilities have an estimated 3.1 percent increase 
in payments compared with freestanding facilities with an estimated 3.0 
percent increase. We estimate that the aggregate ESRD PPS expenditures 
will increase by approximately $300 million in CY 2023 compared to CY 
2022. This reflects a $300 million increase from the payment rate 
update, approximately $2.5 million in estimated TPNIES payment amounts 
and approximately $2.3 million in estimated TDAPA payment amounts, as 
further described in the next paragraph. Because of the projected 3.1 
percent overall payment increase, we estimate there will be an increase 
in beneficiary coinsurance payments of 3.1 percent in CY 2023, which 
translates to approximately $60 million.
    Section 1881(b)(14)(D)(iv) of the Act provides that the ESRD PPS 
may include such other payment adjustments as the Secretary determines 
appropriate. Under this authority, CMS implemented Sec.  413.234 to 
establish the TDAPA, a transitional drug add-on payment adjustment for 
certain new renal dialysis drugs and biological products and Sec.  
413.236 to establish the TPNIES, a transitional add-on payment 
adjustment for new and innovative equipment and supplies, which are not 
budget neutral.
    As discussed in section II.D. of this final rule, the TPNIES 
payment period for the Tablo[supreg] System will continue in CY 2023. 
We estimate that the TPNIES payment amounts for the Tablo[supreg] 
System in CY 2023 would be approximately $2.5 million, of which, 
approximately $490,000 would be attributed to beneficiary coinsurance 
amounts. As discussed in section II.E. of this final rule, the TDAPA 
payment period for KORSUVATM (difelikefalin) will continue 
in CY 2023. We estimate that the overall TDAPA payment amounts in CY 
2023 would be approximately $2.3 million, of which, approximately 
$468,000 would be attributed to beneficiary coinsurance amounts.
2. Impacts of the Final Payment for Renal Dialysis Services Furnished 
to Individuals With AKI
    The impact table in section VII.D.5.b of this final rule displays 
the estimated change in payments to ESRD facilities in CY 2023 compared 
to estimated payments in CY 2022. The overall impact of the CY 2023 
changes is projected to be a 2.9 percent increase in payments for 
individuals with AKI. Hospital-based ESRD facilities have an estimated 
2.8 percent increase in payments compared with freestanding ESRD 
facilities with an estimated 2.9 percent increase. The overall impact 
reflects the effects of the final update to the labor-related share, 
final CY 2023 wage index, final permanent cap on wage index decreases, 
final increase to the wage index floor, and the final payment rate 
update. We estimate that the aggregate payments made to ESRD facilities 
for renal dialysis services furnished to patients with AKI, at the 
final CY 2023 ESRD PPS base rate, will increase by $2 million in CY 
2023 compared to CY 2022.
3. Impacts of the ESRD QIP
    In the CY 2021 ESRD PPS final rule, we estimated that the overall 
economic impact of the PY 2023 ESRD QIP would be approximately $224 
million as a result of the policies we had finalized at that time (85 
FR 71400). The $224 million figure for PY 2023 included costs 
associated with the collection of information requirements, which we 
estimated would be approximately $208 million, and $16 million in 
estimated payment reductions across all facilities. In the CY 2023 ESRD 
PPS proposed rule, we estimated that the overall economic impact of the 
PY 2023 ESRD QIP would be approximately $218 million (87 FR 38467). In 
that proposed rule, we estimated that the $218 million figure for PY 
2023 included costs associated with the collection of

[[Page 67139]]

information requirements and recalculated estimated payment reductions 
based on the six measures we proposed to suppress for PY 2023. However, 
as a result of the policies impacting the PY 2023 ESRD QIP that we are 
finalizing in this final rule, including the additional suppression of 
the Standardized Fistula Rate clinical measure, we are modifying our 
previous estimate. We now estimate that the overall economic impact of 
the PY 2023 ESRD QIP will be approximately $213.5 million. The $213.5 
million figure for PY 2023 includes costs associated with the 
collection of information requirements, which we estimate will be 
approximately $208 million, and recalculated estimated payment 
reductions of approximately $5.5 million across all facilities based on 
the seven measures we are finalizing for suppression for PY 2023. 
Although we are updating the way we express the SHR clinical measure 
and the SRR clinical measure results beginning with PY 2024, these 
technical updates will not impact our previously estimated economic 
impact for the PY 2024 ESRD QIP.
    In the CY 2023 ESRD PPS proposed rule, we estimated that the 
overall economic impact of the PY 2025 ESRD QIP would be approximately 
$252 million as a result of the policies we have previously finalized 
and the proposals in the proposed rule (87 FR 38467). The $252 million 
figure for PY 2025 included costs associated with the collection of 
information requirements, which we estimated would be approximately 
$215 million, and $37 million in estimated payment reductions across 
all facilities. In this final rule, we continue to estimate that the 
overall economic impact of the PY 2025 ESRD QIP will be approximately 
$252 million as a result of the policies we have previously finalized 
and the proposals we are finalizing in this final rule. However, we 
have updated our estimated costs associated with collection of 
information requirements and payment reductions across all facilities. 
The $252 million figure for PY 2025 includes costs associated with the 
collection of information requirements, which we estimate would be 
approximately $220 million, and $32 million in estimated payment 
reductions across all facilities. We are also updating our estimate 
that the overall economic impact of the PY 2026 ESRD QIP would be 
approximately $252 million as a result of the policies we have 
previously finalized. The $252 million figure for PY 2026 includes 
costs associated with the collection of information requirements, which 
we estimate would be approximately $220 million, and $32 million in 
estimated payment reductions across all facilities.
4. Impacts of the Final Changes to the ETC Model
    The impact estimate in section VII.D.5.d of this final rule 
describes the estimated change in anticipated Medicare program savings 
arising from the ETC Model over the duration of the ETC Model as a 
result of the changes in this final rule. We estimate that the ETC 
Model will result in $28 million in net savings over the 6.5 year 
duration of the ETC Model. We also estimate that the changes in this 
final rule will produce no change in net savings for the ETC Model.

II. Calendar Year (CY) 2023 End Stage Renal Disease (ESRD) Prospective 
Payment System (PPS)

A. Background

1. Statutory Background
    On January 1, 2011, CMS implemented the ESRD PPS, a case-mix 
adjusted bundled PPS for renal dialysis services furnished by ESRD 
facilities, as required by section 1881(b)(14) of the Act, as added by 
section 153(b) of the Medicare Improvements for Patients and Providers 
Act of 2008 (MIPPA). Section 1881(b)(14)(F) of the Act, as added by 
section 153(b) of MIPPA and amended by section 3401(h) of the Patient 
Protection and Affordable Care Act (the Affordable Care Act), 
established that beginning with CY 2012, and each subsequent year, the 
Secretary shall annually increase payment amounts by an ESRD market 
basket increase factor reduced by the productivity adjustment described 
in section 1886(b)(3)(B)(xi)(II) of the Act.
    Section 632 of the American Taxpayer Relief Act of 2012 (ATRA) 
(Pub. L. 112-240) included several provisions that apply to the ESRD 
PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act, 
which required the Secretary, by comparing per patient utilization data 
from 2007 with such data from 2012, to reduce the single payment for 
renal dialysis services furnished on or after January 1, 2014, to 
reflect the Secretary's estimate of the change in the utilization of 
ESRD-related drugs and biologicals (excluding oral-only ESRD-related 
drugs). Consistent with this requirement, in the CY 2014 ESRD PPS final 
rule, we finalized $29.93 as the total drug utilization reduction and 
finalized a policy to implement the amount over a 3- to 4-year 
transition period (78 FR 72161 through 72170).
    Section 632(b) of ATRA prohibited the Secretary from paying for 
oral-only ESRD-related drugs and biologicals under the ESRD PPS prior 
to January 1, 2016. Section 632(c) of ATRA required the Secretary, by 
no later than January 1, 2016, to analyze the case-mix payment 
adjustments under section 1881(b)(14)(D)(i) of the Act and make 
appropriate revisions to those adjustments.
    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) was enacted. Section 217 of PAMA included 
several provisions that apply to the ESRD PPS. Specifically, sections 
217(b)(1) and (2) of PAMA amended sections 1881(b)(14)(F) and (I) of 
the Act and replaced the drug utilization adjustment that was finalized 
in the CY 2014 ESRD PPS final rule (78 FR 72161 through 72170) with 
specific provisions that dictated the market basket update for CY 2015 
(0.0 percent) and how the market basket should be reduced in CY 2016 
through CY 2018.
    Section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA to 
provide that the Secretary may not pay for oral-only ESRD-related drugs 
under the ESRD PPS prior to January 1, 2024. Section 217(a)(2) of PAMA 
further amended section 632(b)(1) of ATRA by requiring that in 
establishing payment for oral-only drugs under the ESRD PPS, the 
Secretary must use data from the most recent year available. Section 
217(c) of PAMA provided that as part of the CY 2016 ESRD PPS 
rulemaking, the Secretary shall establish a process for--(1) 
determining when a product is no longer an oral-only drug; and (2) 
including new injectable and intravenous products into the ESRD PPS 
bundled payment.
    Finally, under the Stephen Beck, Jr., Achieving a Better Life 
Experience Act of 2014 (ABLE) (Pub. L. 113-295).), Section 204 of ABLE 
amended section 632(b)(1) of ATRA, as amended by section 217(a)(1) of 
PAMA provides that payment for oral-only renal dialysis services cannot 
be made under the ESRD PPS bundled payment prior to January 1, 2025.
2. System for Payment of Renal Dialysis Services
    Under the ESRD PPS, a single per-treatment payment is made to an 
ESRD facility for all the renal dialysis services defined in section 
1881(b)(14)(B) of the Act and furnished to individuals for the 
treatment of ESRD in the ESRD facility or in a patient's home. We have 
codified our definition of renal dialysis services at Sec.  413.171, 
which is in 42 CFR part 413, subpart H, along with other ESRD

[[Page 67140]]

PPS payment policies. The ESRD PPS base rate is adjusted for 
characteristics of both adult and pediatric patients and accounts for 
patient case-mix variability. The adult case-mix adjusters include five 
categories of age, body surface area, low body mass index, onset of 
dialysis, and four comorbidity categories (that is, pericarditis, 
gastrointestinal tract bleeding, hereditary hemolytic or sickle cell 
anemia, myelodysplastic syndrome). A different set of case-mix 
adjusters are applied for the pediatric population. Pediatric patient-
level adjusters include two age categories (under age 22, or age 22 to 
26) and two dialysis modalities (that is, peritoneal or hemodialysis) 
(Sec.  413.235(a) and (b)).
    The ESRD PPS provides for three facility-level adjustments. The 
first payment adjustment accounts for ESRD facilities furnishing a low 
volume of dialysis treatments (Sec.  413.232). The second payment 
adjustment reflects differences in area wage levels developed from 
core-based statistical areas (CBSAs) (Sec.  413.231). The third payment 
adjustment accounts for ESRD facilities furnishing renal dialysis 
services in a rural area (Sec.  413.233).
    There are four additional payment adjustments under the ESRD PPS. 
The ESRD PPS provides adjustments, when applicable, for: (1) a training 
add-on for home and self-dialysis modalities (Sec.  413.235(c)); (2) an 
additional payment for high cost outliers due to unusual variations in 
the type or amount of medically necessary care (Sec.  413.237); (3) a 
TDAPA for certain new renal dialysis drugs and biological products 
(Sec.  413.234(c)); and (4) a TPNIES for certain qualifying, new and 
innovative renal dialysis equipment and supplies (Sec.  413.236(d)).
3. Updates to the ESRD PPS
    Policy changes to the ESRD PPS are proposed and finalized annually 
in the Federal Register. The CY 2011 ESRD PPS final rule was published 
on August 12, 2010 in the Federal Register (75 FR 49030 through 49214). 
That rule implemented the ESRD PPS beginning on January 1, 2011 in 
accordance with section 1881(b)(14) of the Act, as added by section 
153(b) of MIPPA, over a 4-year transition period. Since the 
implementation of the ESRD PPS, we have published annual rules to make 
routine updates, policy changes, and clarifications.
    We published a final rule, which appeared in the November 8, 2021 
issue of the Federal Register, titled ``Medicare Program; End-Stage 
Renal Disease Prospective Payment System, Payment for Renal Dialysis 
Services Furnished to Individuals With Acute Kidney Injury, and End-
Stage Renal Disease Quality Incentive Program, and End-Stage Renal 
Disease Treatment Choices Model,'' referred to herein as the ``CY 2022 
ESRD PPS final rule.'' In that rule, we updated the ESRD PPS base rate, 
wage index, and outlier policy for CY 2022. We also updated the average 
per treatment offset amount for the TPNIES for CY 2022. In addition, we 
announced our approval of one application for the TPNIES for CY 2022 
payment. For further detailed information regarding these updates, see 
86 FR 61874.

B. Provisions of the Proposed Rule, Public Comments, and Responses to 
the Comments on the CY 2023 ESRD PPS

    The proposed rule, titled ``Medicare Program; End-Stage Renal 
Disease Prospective Payment System, Payment for Renal Dialysis Services 
Furnished to Individuals with Acute Kidney Injury, End-Stage Renal 
Disease Quality Incentive Program, and End-Stage Renal Disease 
Treatment Choices Model'' (87 FR 38464 through 38586), referred to as 
the ``CY 2023 ESRD PPS proposed rule,'' appeared in the June 28, 2022 
version of the Federal Register, with a comment period that ended on 
August 22, 2022. In that proposed rule, we proposed to make a number of 
annual updates for CY 2023, including updates to the ESRD PPS base 
rate, wage index, outlier policy, and the TPNIES offset amount. We also 
proposed several policy changes, including increasing the wage index 
floor, establishing a permanent cap on wage index decreases, modifying 
the outlier methodology, changing the definition of oral-only drug, and 
revising the descriptions of several ESRD PPS functional categories. 
The proposed rule included a summary of the three CY 2023 TPNIES 
applications that we received by the February 1, 2022 deadline and our 
preliminary analysis of the applicants' claims related to substantial 
clinical improvement and other eligibility criteria for the TPNIES. In 
addition, the rule included a request for information regarding 
potential payment adjustments for certain new renal dialysis drugs and 
biological products as well as health equity issues under the ESRD PPS 
with a focus on pediatric dialysis payment.
    We received 291 public comments on our proposals, including 
comments from kidney and dialysis organizations, such as large dialysis 
organizations (LDOs), small dialysis organizations, for-profit and non-
profit ESRD facilities, ESRD networks, and a dialysis coalition. We 
also received comments from patients; healthcare providers for adult 
and pediatric ESRD beneficiaries; home dialysis services and advocacy 
organizations; provider and legal advocacy organizations; 
administrators and insurance groups; a non-profit dialysis association, 
a professional association, and alliances for kidney care and home 
dialysis stakeholders; drug and device manufacturers; health care 
systems; a health solutions company; and the Medicare Payment Advisory 
Commission (MedPAC).
    We received several comments related to issues that we either did 
not discuss in the CY 2023 ESRD PPS proposed rule or that we discussed 
for the purpose of background or context, but for which we did not 
propose changes. These include, for example, concerns about infections, 
comments on comorbidities that should or should not be considered for 
payment adjustments, suggestions for changes to payments for drugs and 
biological products, and suggestions for additional screenings for 
Medicare beneficiaries to detect kidney disease earlier. In addition, 
we received several comments regarding the TDAPA and TPNIES payment 
adjustments and length of the payment period. We also received comments 
regarding the TPNIES application process, implementation challenges 
from the CY 2022 TPNIES approval for the Tablo[supreg] System, and 
requests to amend the ESRD facility cost report and align Medicare 
Advantage plans with the ESRD PPS. While we are not providing detailed 
responses to those comments in this final rule because they are either 
out of scope of the proposed rule or concern topics for which we did 
not propose changes, we thank the commenters for their input and will 
potentially consider the recommendations in future rulemaking.
    We received various comments requesting changes to Medicare 
payments for home dialysis. Some of these suggestions were to increase 
payments for home dialysis training, to increase the number of training 
sessions for home dialysis, to increase payments for home dialysis 
treatments, and to allow clinics to bill for telemedicine related to 
home dialysis. We thank the commenters for their recommendations 
regarding home dialysis; however, these comments are out of scope given 
that we did not propose to make any changes to the Medicare payment for 
home dialysis. Nevertheless, we will review and assess the feasibility 
of the commenters' recommendations and, if warranted, consider 
proposing changes to our policies in future rulemaking.
    In this final rule, we provide a summary of each proposed 
provision, a summary of the public comments received and our responses 
to them, and

[[Page 67141]]

the policies we are finalizing for the CY 2023 ESRD PPS.
1. CY 2023 ESRD PPS Update
a. CY 2023 ESRD Bundled (ESRDB) Market Basket Rebasing and Revision; 
Market Basket Increase Factor; Productivity Adjustment; and Labor-
Related Share
(1) Rebasing and Revising of the ESRDB Market Basket
(a) Background
    In accordance with section 1881(b)(14)(F)(i) of the Act, as added 
by section 153(b) of MIPPA and amended by section 3401(h) of the 
Affordable Care Act, beginning in 2012, the ESRD PPS payment amounts 
are required to be annually increased by an ESRD market basket increase 
factor and reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity 
adjustment may result in the increase factor being less than 0.0 for a 
year and may result in payment rates for a year being less than the 
payment rates for the preceding year. Section 1881(b)(14)(F)(i) of the 
Act also provides that the market basket increase factor should reflect 
the changes over time in the prices of an appropriate mix of goods and 
services included in renal dialysis services.
    As required under section 1881(b)(14)(F)(i) of the Act, CMS 
developed an all-inclusive ESRD Bundled (ESRDB) input price index using 
CY 2008 as the base year (75 FR 49151 through 49162). We subsequently 
revised and rebased the ESRDB input price index to a base year of CY 
2012 in the CY 2015 ESRD PPS final rule (79 FR 66129 through 66136). In 
the CY 2019 ESRD PPS final rule (83 FR 56951 through 56964), we 
finalized a rebased ESRDB input price index to reflect a CY 2016 base 
year. Effective for CY 2023, we proposed to rebase and revise the ESRDB 
market basket to a base year of CY 2020.
    Although ``market basket'' technically describes the mix of goods 
and services used for ESRD treatment, this term is also commonly used 
to denote the input price index (that is, cost categories, their 
respective weights, and price proxies combined) derived from a market 
basket. Accordingly, the term ``ESRDB market basket,'' as used in this 
document, refers to the ESRDB input price index.
    The ESRDB market basket is a fixed-weight, Laspeyres-type price 
index. A Laspeyres-type price index measures the change in price, over 
time, of the same mix of goods and services purchased in the base 
period. Any changes in the quantity or mix of goods and services (that 
is, intensity) purchased over time are not measured.
    The index is constructed in three steps. First, a base period is 
selected where total base period expenditures are estimated for a set 
of mutually exclusive and exhaustive spending categories, with the 
proportion of total costs that each category represents being 
calculated. These proportions are called ``cost weights'' or 
``expenditure weights.'' Second, each expenditure category is matched 
to an appropriate price or wage variable, referred to as a ``price 
proxy.'' In almost every instance, these price proxies are derived from 
publicly available statistical series that are published on a 
consistent schedule (preferably at least on a quarterly basis). 
Finally, the expenditure weight for each cost category is multiplied by 
the level of its respective price proxy. The sum of these products 
(that is, the expenditure weights multiplied by their price index 
levels) for all cost categories yields the composite index level of the 
market basket in a given period. Repeating this step for other periods 
produces a series of market basket levels over time. Dividing an index 
level for a given period by an index level for an earlier period 
produces a rate of growth in the input price index over that timeframe.
    As noted previously, the market basket is described as a fixed-
weight index because it represents the change in price over time of a 
constant mix (quantity and intensity) of goods and services purchased 
to provide renal dialysis services. The effects on total expenditures 
resulting from changes in the mix of goods and services purchased 
subsequent to the base period are not measured. For example, an ESRD 
facility hiring more nurses to accommodate the needs of patients would 
increase the volume of goods and services purchased by the ESRD 
facility, but would not be factored into the price change measured by a 
fixed-weight ESRD market basket. Only when the index is rebased would 
changes in the quantity and intensity be captured, with those changes 
being reflected in the cost weights. Therefore, we rebase the market 
basket periodically so that the cost weights reflect changes between 
base periods in the mix of goods and services that ESRD facilities 
purchase to furnish ESRD treatment.
    We last rebased the ESRDB market basket cost weights effective for 
CY 2019 (83 FR 56951 through 56964), with 2016 data used as the base 
period for the construction of the market basket cost weights. In the 
CY 2023 ESRD PPS proposed rule (87 FR 38468 through 38480), we proposed 
to use 2020 as the base year for the rebased ESRDB market basket cost 
weights. The cost weights for this 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 2020 (that is, the average 
index level for CY 2020 is equal to 100). The major source data for the 
ESRDB market basket is the 2020 MCRs (Form CMS-265-11, OMB NO. 0938-
0236), supplemented with 2012 data from the United States (U.S.) Census 
Bureau's Services Annual Survey (SAS) inflated to 2020 levels. The 2012 
SAS data is the most recent year of detailed expense data published by 
the Census Bureau for North American International Classification 
System (NAICS) Code 621492: Kidney Dialysis Centers. We also proposed 
to use May 2020 Occupational Employment Statistics data from the U.S. 
Department of Labor's Bureau of Labor Statistics (BLS) to estimate the 
weights for the Wages and Salaries and Employee Benefits occupational 
blends. We provide more detail on our methodology in section 
II.B.1.a.(1)(b) of this final rule.
    The terms ``rebasing'' and ``revising,'' while often used 
interchangeably, actually denote different activities. The term 
``rebasing'' means moving the base year for the structure of costs of 
an input price index (that is, in the CY 2023 ESRD PPS proposed rule, 
we proposed to move the base year cost structure from 2016 to 2020) 
without making any other major changes to the methodology. The term 
``revising'' means changing data sources, cost categories, and/or price 
proxies used in the input price index. For CY 2023, we proposed to 
rebase the ESRDB market basket to reflect the 2020 cost structure of 
ESRD facilities and to revise the index, that is, make changes to cost 
categories or price proxies used in the index.
    We proposed to use CY 2020 as the new base year because 2020 is the 
most recent year for which relatively complete MCR data were available. 
We analyzed the cost weights for the years 2017 through 2020 and found 
that the expenses reported in the ESRD facility MCRs for 2020 were 
consistent with those in the prior years. Additionally, given the 
nature of renal dialysis services, any impacts on utilization due to 
the COVID-19 Public Health Emergency (PHE) were minimal, as dialysis is 
not an optional treatment and must continue even during the PHE. In 
developing the proposed market basket, we reviewed ESRD expenditure 
data from ESRD MCRs (CMS Form 265-11, OMB NO. 0938-0236) for 2020 for 
each freestanding ESRD facility that reported expenses and payments. 
The 2020

[[Page 67142]]

MCRs are for those ESRD facilities whose cost reporting period began on 
or after October 1, 2019, and before October 1, 2020. Of the 2020 MCRs, 
approximately 91 percent of freestanding ESRD facilities had a begin 
date on January 1, 2020, approximately 5 percent had a begin date prior 
to January 1, 2020, and approximately 4 percent had a begin date after 
January 1, 2020. We explained that using this methodology allowed our 
sample to include ESRD facilities with varying cost report years 
including, but not limited to, the Federal fiscal year (FY) or CY.
    We proposed to maintain our policy of using data from freestanding 
ESRD facilities (which account for over 90 percent of total ESRD 
facilities in CY 2020) because freestanding ESRD facility data reflect 
the actual cost structure faced by the ESRD facility itself. In 
contrast, expense data for hospital-based ESRD facilities reflect the 
allocation of overhead from the entire institution.
    We developed cost category weights for the 2020-based ESRDB market 
basket in two stages. First, we derived base year cost weights for ten 
major categories (Wages and Salaries, Employee Benefits, 
Pharmaceuticals, Supplies, Laboratory Services, Housekeeping, 
Operations & Maintenance, Administrative & General, Capital-Related 
Building and Fixtures, and Capital-Related Moveable Equipment) from the 
ESRD MCRs. Second, we divided the Administrative & General cost 
category into further detail using 2012 SAS data for the industry 
Kidney Dialysis Centers NAICS 621492 inflated to 2020 levels. We 
applied the estimated 2020 distributions from the SAS data to the 2020 
Administrative & General cost weight to yield the more detailed 2020 
cost weights in the proposed market basket. This is the same 
methodology we used in the CY 2019 ESRD PPS rulemaking to break the 
Administrative & General costs into more detail for the 2016-based 
ESRDB market basket (83 FR 56951 through 56964).
    We included a total of 21 detailed cost categories for the 2020-
based ESRDB market basket, whereas the 2016-based ESRDB market basket 
had 20 detailed cost categories. A detailed discussion of the 
provisions is provided in section II.B.1.a.(1)(b) of this final rule.
(b) Cost Category Weights
    Using Worksheets A and B from the 2020 MCRs, we first computed cost 
shares for ten major expenditure categories: Wages and Salaries, 
Employee Benefits, Pharmaceuticals, Supplies, Laboratory Services, 
Housekeeping, Operations & Maintenance, Administrative and General, 
Capital-Related Building and Fixtures, and Capital-Related Moveable 
Equipment. Edits were applied to include only cost reports that had 
total costs greater than zero. Total costs as reported on the MCR 
include those costs payable under the ESRD PPS. For example, we 
excluded expenses related to vaccine costs from total expenditures 
since these are not paid for under the ESRD PPS.
    To reduce potential distortions from outliers in the calculation of 
the individual cost weights for the major expenditure categories for 
each cost category, values less than the 5th percentile or greater than 
the 95th percentile were excluded from the major cost weight 
computations. The proposed data set, after removing cost reports with 
total costs equal to or less than zero and excluding outliers, included 
information from approximately 6,625 independent ESRD facilities' cost 
reports from an available pool of 7,413 cost reports.
    Table 1 presents the 2020-based ESRDB and 2016-based ESRDB market 
basket major cost weights as derived directly from the MCR data.
[GRAPHIC] [TIFF OMITTED] TR07NO22.000

    We proposed to disaggregate the Administrative & General major cost 
category developed from the MCR into more detail to more accurately 
reflect ESRD facility costs. Those categories include: Benefits, 
Professional Fees, Telephone, Utilities, and All Other Goods and 
Services. We describe below how the initially computed categories and 
weights from the cost reports were modified to yield the proposed 2020 
ESRDB market basket expenditure

[[Page 67143]]

categories and weights presented in the CY 2023 ESRD PPS proposed rule.
Wages and Salaries
    The Wages and Salaries cost weight is comprised of direct patient 
care wages and salaries and non-direct patient care wages and salaries. 
Direct patient care wages and salaries for 2020 was derived from 
Worksheet B, column 5, lines 8 through 17 of the MCR. Non-direct 
patient care wages and salaries includes all other wages and salaries 
costs for non-health workers and physicians, which we derived using the 
following steps:
    Step 1: To capture the salary costs associated with non-direct 
patient care cost centers, we calculated salary percentages for non-
direct patient care from Worksheet A of the MCR. The estimated ratios 
were calculated as the ratio of salary costs (Worksheet A, columns 1 
and 2) to total costs (Worksheet A, column 4). The salary percentages 
were calculated for seven distinct cost centers: `Operations and 
Maintenance of Plant' combined with `Capital Related Costs-Renal 
Dialysis Equipment' (line 3 and 6), Housekeeping (line 4), Employee 
Health and Wellness (EH&W) Benefits for Direct Patient Care (line 8), 
Supplies (line 9), Laboratory (line 10), Administrative & General (line 
11), and Pharmaceuticals (line 12).
    Step 2: We then multiplied the salary percentages computed in step 
1 by the total costs for each corresponding reimbursable cost center 
totals as reported on Worksheet B. The Worksheet B totals were based on 
the sum of reimbursable costs reported on lines 8 through 17. For 
example, the salary percentage for Supplies (as measured by line 9 on 
Worksheet A) was applied to the total expenses for the Supplies cost 
center (the sum of costs reported on Worksheet B, column 7, lines 8 
through 17). This provided us with an estimate of Non-Direct Patient 
Care Wages and Salaries.
    Step 3: The estimated Wages and Salaries for each of the cost 
centers on Worksheet B derived in step 2 were subsequently summed and 
added to the direct patient care wages and salaries costs.
    Step 4: The estimated non-direct patient care wages and salaries 
(see step 2) were then subtracted from their respective cost categories 
to avoid double-counting their values in the total costs.
    Using this methodology, we derived a proposed Wages and Salaries 
cost weight of 34.5 percent, reflecting an estimated direct patient 
care wages and salaries cost weight of 25.7 percent and non-direct 
patient care wages and salaries cost weight of 8.9 percent, as seen in 
Table 2.
    The final adjustment made to this category was to include Contract 
Labor costs. These costs appear on the MCR; however, they are embedded 
in the Other Costs from the trial balance reported on Worksheet A, 
Column 3 and cannot be disentangled using the MCRs. To avoid double 
counting of these expenses we proposed to move the estimated cost 
weight for the contract labor costs from the Administrative and General 
category (where we believed the majority of the contract labor costs 
would be reported) to the Wages and Salaries category. We used data 
from the SAS (2012 data inflated to 2020), which reported 2.4 percent 
of total expenses were spent on contract labor costs. We allocated 80 
percent of that contract labor cost weight to the Wages and Salaries 
category. At the same time, we subtracted that same amount from the 
Administrative and General category, where the majority of contract 
labor expenses would likely be reported on the MCR. The 80 percent 
figure that was used was determined by taking salaries as a percentage 
of total compensation (excluding contract labor) from the 2020 MCR 
data. This is the same method that was used to allocate contract labor 
costs to the Wages and Salaries cost category for the 2016-based ESRDB 
market basket.
    The resulting cost weight for Wages and Salaries increased to 36.5 
percent when contract labor wages were added. The calculation of the 
Wages and Salaries cost weight for the 2020-based ESRDB market basket 
is shown in Table 2 along with the similar calculation for the 2016-
based ESRDB market basket.
[GRAPHIC] [TIFF OMITTED] TR07NO22.001

Employee Benefits
    The proposed Employee Benefits cost weight was derived from the MCR 
data for direct patient care and supplemented with data from the SAS 
(2012 data inflated to 2020) to account for non-direct patient care 
Employee Benefits. The MCR data only reflects Employee Benefit costs 
associated with health and wellness; that is, it does not reflect 
retirement benefits.
    To reflect the benefits related to non-direct patient care for 
employee health and wellness, we estimated the impact on the benefit 
weight using SAS. Unlike the MCR, the SAS collects detailed expenses 
for employee benefits including expenses related to the retirement and 
pension benefits. Incorporating the SAS data produced an Employee 
Benefits (both direct patient care and non-direct patient care) weight 
that was 1.3 percentage points higher (9.0 vs. 7.7) than the Employee 
Benefits weight for direct patient care calculated directly from the 
MCR. To avoid double-counting and to ensure all of the market basket 
weights still totaled 100 percent, we removed this additional 1.3 
percentage points for Non-Direct Patient Care Employee Benefits from 
the

[[Page 67144]]

Administrative and General cost category.
    The final adjustment made to this category was to include contract 
labor benefit costs. Once again, we noted, these costs appear on the 
MCR; however, they are embedded in the Other Costs from the trial 
balance reported on Worksheet A, Column 3 and cannot be disentangled 
using the MCR data. Identical to our methodology previously discussed 
for allocating Contract Labor Costs to Wages and Benefits, we applied 
20 percent of total Contract Labor Costs, as estimated using the SAS, 
to the Benefits cost weight calculated from the cost reports. The 20 
percent figure was determined by taking benefits as a percentage of 
total compensation (excluding contract labor) from the 2020 MCR data. 
The resulting cost weight for Employee Benefits increased to 9.5 
percent when contract labor benefits were added. This is the same 
method that was used to allocate contract labor costs to the Benefits 
cost category for the 2016-based ESRDB market basket.
    Table 3 compares the 2016-based Benefits cost share derivation as 
detailed in the CY 2019 ESRD PPS final rule (83 FR 56954) to the 
proposed 2020-based Benefits cost share derivation.
[GRAPHIC] [TIFF OMITTED] TR07NO22.002

Pharmaceuticals
    The proposed 2020-based ESRDB market basket included expenditures 
for all drugs, including formerly separately billable drugs and all 
other ESRD-related drugs that were covered under Medicare Part D before 
the ESRD PPS was implemented. We calculated a Pharmaceuticals cost 
weight from the following cost centers on Worksheet B, the sum of lines 
8 through 17, for the following columns: column 11, ``Drugs Included in 
Composite Rate,'' column 12, ``Erythropoiesis stimulating agents 
(ESAs)''; and column 13, ``ESRD-Related and AKI -Related Drugs.'' We 
did not include the drug expenses for Non-ESRD Related Drugs, Supplies, 
and Labs as reported on line 5, column 10 or the AKI Non-Renal Related 
Drugs, Supplies, & Lab as reported on line 5.01 column 10 as these 
expenses are not included in the ESRD PPS bundled payment amount. 
Section 1842(o)(1)(A)(iv) of the Act requires that influenza, 
pneumococcal, COVID-19, and hepatitis B vaccines described in paragraph 
(A) or (B) of section 1861(s)(10) of the Act be paid based on 95 
percent of average wholesale price (AWP) of the drug. Since these 
vaccines are not paid for under the ESRD PPS, we did not include 
expenses reported on worksheet B, column 9 line 7 in the 2020-based 
ESRDB market basket.
    Finally, to avoid double-counting, the weight for the 
Pharmaceuticals category was reduced to exclude the estimated share of 
Non-Direct Patient Care Wages and Salaries associated with the 
applicable pharmaceutical cost centers referenced previously. This 
resulted in an ESRDB market basket weight for Pharmaceuticals of 10.1 
percent. ESA expenditures accounted for 6.0 percentage points of the 
Pharmaceuticals cost weight, and All Other Drugs accounted for the 
remaining 4.1 percentage points.
    The Pharmaceuticals cost weight decreased 2.3 percentage points 
from the 2016-based ESRDB market basket to the 2020-based ESRDB market 
basket (12.4 percent to 10.1 percent). Most ESRD facilities experienced 
a decrease in their Pharmaceuticals cost weight since 2016.
Supplies
    We calculated the Supplies cost weight using the costs reported in 
the Supplies cost center (Worksheet B, line 5 and the sum of lines 8 
through 17, column 7) of the MCR. To avoid double-counting, the 
Supplies costs were reduced to exclude the estimated share of Non-
Direct patient care Wages and Salaries associated with this cost 
center. The resulting proposed 2020-based ESRDB market basket weight 
for Supplies was 11.0 percent, approximately 0.6 percentage point 
higher than the weight for the 2016-based ESRDB market basket.
Laboratory Services
    We calculated the proposed Laboratory Services cost weight using 
the costs reported in the Laboratory cost center (Worksheet B, line 5 
and the sum of line 8 through 17, column 8) of the MCR. To avoid 
double-counting, the Laboratory Services costs were reduced to exclude 
the estimated share of Non-Direct Patient Care Wages and Salaries 
associated with this cost center. The 2020-based ESRDB market basket 
weight for Laboratory Services was estimated at 1.3 percent, which is a 
0.9 percentage point decrease from the 2016-based ESRDB market basket.
Housekeeping
    We calculated the proposed Housekeeping cost weight using the costs 
reported on Worksheet A, line 4, column 8, of the MCR. To avoid double-
counting, the weight for the Housekeeping category was reduced to 
exclude the estimated share of Non-Direct Patient Care Wages and 
Salaries associated with this cost center. These costs were divided by 
total costs to derive a 2020-based ESRDB market basket weight for 
Housekeeping of 0.5 percent. For the 2016-based ESRDB market basket the 
cost category weight for both Housekeeping and Operations costs were 
combined into a single cost weight. The Housekeeping cost weight in the 
2016-based ESRDB market basket

[[Page 67145]]

would have been 0.5 percent if it had been broken out separately.
Operations & Maintenance
    We proposed a new Operations & Maintenance cost category that 
includes the direct expenses incurred in the operation and maintenance 
of the plant and equipment such as heat, light, water (excluding water 
treatment for dialysis purposes), air conditioning, and air treatment; 
the maintenance and repair of building, parking facilities, and 
equipment; painting; elevator maintenance; performance of minor 
renovation of buildings and equipment; and protecting employees, 
visitors, and facility property. As previously discussed, these costs 
had formerly been combined with the Housekeeping expenses in a single 
cost category for Housekeeping and Operations. The proposed 2020-based 
ESRDB market basket Operations & Maintenance cost category reflects the 
expenses for Operations & Maintenance, which also includes the costs 
for Water and Sewerage that was a stand alone cost category in the 
2016-based ESRDB market basket. We calculated the Operations & 
Maintenance cost weight using the costs reported on Worksheet A, line 
3, column 8, of the MCR. To avoid double-counting, the weight for the 
Operations & Maintenance category was reduced to exclude the estimated 
share of Non-Direct Patient Care Wages and Salaries associated with 
this cost center. The resulting proposed 2020-based ESRDB market basket 
weight for Operations & Maintenance was 3.7 percent.
Capital
    We developed a market basket weight for the Capital category using 
data from Worksheet B of the MCRs. Capital-related costs include 
depreciation and lease expenses for buildings, fixtures and movable 
equipment, property taxes, insurance costs, the costs of capital 
improvements, and maintenance expense for buildings, fixtures, and 
machinery. The MCR captures Capital-related Costs including: (1) 
Capital-Related- Building and Fixtures (2) Capital-Related Costs--
Moveable Equipment and (3) Housekeeping, and Operations & Maintenance 
costs in Worksheet B, column 2. Since we developed separate expenditure 
categories for Housekeeping, and Operations & Maintenance, as detailed 
previously, we excluded these costs from the propose Capital cost 
weights. To calculate the Capital-related Buildings and Fixtures cost 
weight we summed expenses reported in Worksheet B lines 8 through 17, 
column 2 less Housekeeping, Operations & Maintenance (as derived from 
expenses reported on Worksheet A, as described previously), and less 
Capital-related Moveable equipment costs (calculated as Worksheet A, 
column 8, line 2 divided by the sum of Worksheet A, column 8, lines 1 
and 2). The Capital-related moveable equipment cost weight is equal to 
Capital-related Renal Dialysis Equipment costs (Worksheet B, the sum of 
lines 8 through 17, column 4 plus Capital-Related Moveable Equipment 
(as described in the prior sentence)). We reasoned this delineation was 
particularly important given the critical role played by dialysis 
machines. Likewise, because price changes associated with Buildings and 
Fixtures could move differently than those associated with Machinery, 
we stated that we continue to believe that two capital-related cost 
categories are appropriate. The resulting proposed 2020-based ESRDB 
market basket weights for Capital-related Buildings and Fixtures and 
Capital-related Moveable Equipment were 9.4 and 4.4 percent, 
respectively.
Administrative & General
    We proposed to compute the proportion of total Administrative & 
General expenditures using the Administrative and General cost center 
data from Worksheet B, the sum of lines 8 through 17, (column 9) of the 
MCRs. Additionally, we removed contract labor from this cost category 
and apportioned these costs to the Wages and Salaries and Employee 
Benefits cost weights. Similar to other expenditure category 
adjustments, we then reduced the computed weight to exclude Wages and 
Salaries and Benefits associated with the Administrative and General 
cost center for Non-direct Patient Care as estimated from the SAS data. 
The resulting proposed Administrative and General cost weight was 13.7 
percent.
    We proposed to further disaggregate the Administrative and General 
cost weight to derive detailed cost weights for Electricity, Natural 
Gas, Telephone, Professional Fees, and All Other Goods and Services. 
These detailed cost weights were derived by inflating the detailed 2012 
SAS data forward to 2020 by applying the annual price changes from the 
respective price proxies to the appropriate market basket cost 
categories that were obtained from the 2012 SAS data. We repeated this 
practice for each year to 2020. We then calculated the cost shares that 
each cost category represents of the 2012 data inflated to 2020. These 
resulting 2020 cost shares were applied to the Administrative and 
General cost weight derived from the MCR (net of contract labor and 
additional benefits) to obtain the detailed cost weights for the 
proposed 2020-based ESRDB market basket. This method is similar to the 
method used for the 2016-based ESRDB market basket.
    Table 4 lists all of the cost categories and cost weights in the 
proposed 2020-based ESRDB market basket compared to the 2016-based 
ESRDB market basket.
BILLING CODE 4120-01-P

[[Page 67146]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.003

BILLING CODE 4120-01-C
    We received several comments regarding the proposed methodology for 
deriving the detailed cost weights of the 2020-based ESRDB market 
basket. The comments and our responses are set forth below.
    Comment: Many commenters, including LDOs, a coalition of dialysis 
organizations, and a professional association supported the proposal to 
rebase and revise the ESRDB market basket base year to 2020. These 
commenters agreed that the data from 2016 no longer reflect the current 
mix of goods and services for providing ESRD care, and some also 
expressed agreement with the proposed major cost categories and weights 
as well as the disaggregation of the Administrative & General cost 
category. While many commenters supported the proposed rebased market 
basket, several commenters stated that the 2020 revised cost weights do 
not adequately capture the trends in the health care labor market that 
have continued into 2022, and that the proposed 2020 cost weights, 
particularly for labor and related costs, are likely underrepresented 
as a portion of the market basket. These commenters requested that CMS 
continue to monitor the effects of the COVID-19 PHE on freestanding 
ESRD facilities' costs moving forward and consider rebasing the ESRDB 
market basket more frequently (than every four years) if these trends 
change and the cost category weights no longer accurately represent 
freestanding ESRD facilities' costs.
    Response: We appreciate the commenters' support for rebasing and 
revising the ESRDB market basket to a 2020 base year. We also 
understand the commenters' concerns that the data from 2020 do not 
necessarily reflect the current relative cost share weights that ESRD 
facilities may be experiencing in 2022. However, the 2020 data reflect 
the latest available data available to estimate the ESRDB market basket 
cost share weights at the time of the CY 2023 ESRD PPS proposed rule. 
We will continue to monitor the cost share weights for potential 
effects of the COVID-19 PHE on freestanding ESRD facilities' costs and, 
if technically appropriate, consider rebasing the ESRDB market basket 
more frequently than usual should the cost weights change 
significantly.
    Comment: MedPAC requested that CMS's rebasing of the ESRDB market 
basket should reflect the findings from the agency's most recent audit 
of

[[Page 67147]]

freestanding ESRD facilities, which found that cost reports have 
included costs that are not allowable under Medicare.
    Response: We understand MedPAC's concerns regarding the 2018 
audited cost report data; \1\ however, we do not agree that the results 
of the audited data can be directly utilized for determining the ESRDB 
market basket cost weights in the 2020 cost report data. Although the 
audited cost report data identified potential areas where cost levels 
were misreported by some facilities, we do not believe that slightly 
different cost levels will result in substantial variation to the 
relative cost share weights derived from the unaudited data, since the 
cost weights are based on relative shares of the total. Additionally, 
the weights are derived from all facilities and, therefore, for an 
audited report to impact the overall market basket cost shares, the 
misreporting will have to be prevalent across a significant percentage 
of facilities. Finally, the audit was performed on a sample of cost 
reports for 2018 and we proposed to use data from 2020 cost reports; 
any inaccuracies in the 2018 data do not necessarily mean that 2020 
data will be impacted in the same way.
---------------------------------------------------------------------------

    \1\ Details on the audit process and findings, as well as 
adjustments for unallowable costs based on its findings, can be 
found in the CY 2022 ESRD PPS proposed rule (86 FR 36322).
---------------------------------------------------------------------------

    Final Rule Action: After consideration of the public comments we 
received, we are finalizing the methodology for deriving the detailed 
cost weights of the 2020-based ESRDB market basket as proposed without 
modification.
(c) Price Proxies for the 2020-Based ESRDB Market Basket
    After developing the cost weights for the 2020-based ESRDB market 
basket, we proposed to select the most appropriate wage and price 
proxies currently available to represent the rate of price change for 
each expenditure category. We based the price proxies on BLS data and 
grouped them into one of the following BLS categories:
     Employment Cost Indexes. Employment Cost Indexes (ECIs) 
measure the rate of change in employment wage rates and employer costs 
for employee benefits per hour worked. These indexes are fixed-weight 
indexes and strictly measure the change in wage rates and employee 
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE) 
as price proxies for input price indexes because they are not affected 
by shifts in occupation or industry mix, and because they measure pure 
price change and are available by both occupational group and by 
industry. The industry ECIs are based on the NAICS and the occupational 
ECIs are based on the Standard Occupational Classification System 
(SOC).
     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 are available.
    We evaluated the price proxies using the criteria of reliability, 
timeliness, availability, and relevance:
    Reliability. Reliability indicates that the index is based on valid 
statistical methods and has low sampling variability. Widely accepted 
statistical methods ensure that the data were collected and aggregated 
in a way that can be replicated. Low sampling variability is desirable 
because it indicates that the sample reflects the typical members of 
the population. (Sampling variability is variation that occurs by 
chance because only a sample was surveyed rather than the entire 
population.)
    Timeliness. Timeliness implies that the proxy is published 
regularly, preferably at least once a quarter. The market baskets are 
updated quarterly, and therefore, it is important for the underlying 
price proxies to be up-to-date, reflecting the most recent data 
available. We believe, as stated in the CY 2023 ESRD PPS proposed rule, 
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. As stated in the CY 2023 ESRD PPS proposed rule, we prefer 
that our proxies are publicly available because this helps to ensure 
that our market basket increase factors are as transparent to the 
public as possible. In addition, this enables the public to be able to 
obtain the price proxy data on a regular basis.
    Relevance. Relevance means that the proxy is applicable and 
representative of the cost category weight to which it is applied. The 
CPIs, PPIs, and ECIs that we have selected meet these criteria. 
Therefore, as stated in the CY 2023 ESRD PPS proposed rule, we believe 
that they continue to be the best measure of price changes for the cost 
categories to which they will be applied.
    Table 7 lists all proposed price proxies for the 2020-based ESRDB 
market basket. We note that we proposed to use the same proxies as 
those used in the 2016-based ESRDB market basket, except for the price 
proxy for the Other Drugs (except ESAs) cost category. Below is a 
detailed explanation of the proposed price proxies used for each cost 
category.
Wages and Salaries
    We proposed to continue using a blend of ECIs to proxy the Wages 
and Salaries cost weight in the 2020-based ESRDB market basket, and to 
continue using four occupational categories and associated ECIs based 
on full-time equivalents (FTE) data from ESRD MCRs and ECIs from BLS. 
We calculated occupation weights for the blended Wages and Salaries 
price proxy using 2020 FTE data from the MCR data multiplied by the 
associated 2020 Average Mean Wage data from the Bureau of Labor 
Statistics' Occupational Employment Statistics. This is similar to the 
methodology used in the 2016-based ESRDB market basket to derive these 
occupational wages and salaries categories.
Health Related Wages and Salaries
    We proposed to continue using the ECI for Wages and Salaries for 
All Civilian Workers in Hospitals (BLS series code #CIU1026220000000I) 
as the price proxy for health-related occupations. Of the two health-
related ECIs that we considered (``Hospitals'' and ``Health Care and 
Social Assistance''), the wage distribution within the Hospital NAICS 
sector (622) is more closely related to the wage distribution of ESRD 
facilities than it is to the wage distribution of the Health Care and 
Social Assistance NAICS sector (62).
    The Wages and Salaries--Health Related subcategory weight within 
the Wages and Salaries cost category accounts for 79.4 percent of total 
Wages and Salaries in 2020. The ESRD MCR FTE categories used to define 
the Wages and Salaries--Health Related subcategory include 
``Physicians,'' ``Registered Nurses,'' ``Licensed Practical Nurses,'' 
``Nurses' Aides,'' ``Technicians,'' and ``Dieticians''.
Management Wages and Salaries
    We proposed to continue using the ECI for Wages and Salaries for 
Private

[[Page 67148]]

Industry Workers in Management, Business, and Financial (BLS series 
code #CIU2020000110000I). As we stated in the CY 2023 ESRD PPS proposed 
rule, we believe this ECI is the most appropriate price proxy to 
measure the wages and salaries price growth of management personnel at 
ESRD facilities.
    The Wages and Salaries--Management subcategory weight within the 
Wages and Salaries cost category is 9.0 percent in 2020. The ESRD MCR 
FTE category used to define the Wages and Salaries--Management 
subcategory is ``Management.''
Administrative Wages and Salaries
    We proposed to continue using the ECI for Wages and Salaries for 
Private Industry Workers in Office and Administrative Support (BLS 
series code #CIU2020000220000I). As we stated in the CY 2023 ESRD PPS 
proposed rule, we believe this ECI is the most appropriate price proxy 
to measure the wages and salaries price growth of administrative 
support personnel at ESRD facilities.
    The Wages and Salaries--Administrative subcategory weight within 
the Wages and Salaries cost category is 5.3 percent in 2020. The ESRD 
MCR FTE category used to define the Wages and Salaries--Administrative 
subcategory is ``Administrative.''
Services Wages and Salaries
    We proposed to continue using the ECI for Wages and Salaries for 
Private Industry Workers in Service Occupations (BLS series code 
#CIU2020000300000I). As we stated in the CY 2023 ESRD PPS proposed 
rule, we believe this ECI is the most appropriate price proxy to 
measure the wages and salaries price growth of all other non-health 
related, non-management, and non-administrative service support 
personnel at ESRD facilities.
    The Services subcategory weight within the Wages and Salaries cost 
category is 6.3 percent in 2020. The ESRD MCR FTE categories used to 
define the Wages and Salaries--Services subcategory are ``Social 
Workers'' and ``Other.''
    Table 5 lists the four ECI series and the corresponding weights 
used to construct the proposed ECI blend for Wages and Salaries 
compared to the 2016-based weights for the subcategories. As we stated 
in the CY 2023 ESRD PPS proposed rule, we believe this ECI blend is the 
most appropriate price proxy to measure the growth of wages and 
salaries faced by ESRD facilities.
[GRAPHIC] [TIFF OMITTED] TR07NO22.004

Employee Benefits
    We proposed to continue using an ECI blend for Employee Benefits in 
the 2020-based ESRDB market basket where the components match those of 
the Wage and Salaries ECI blend. The occupation weights for the blended 
Benefits price proxy (Table 6) are the same as those for the wages and 
salaries price proxy blend as shown in Table 5. BLS does not publish 
ECI for Benefits price proxies for each Wage and Salary ECI; however, 
where these series are not published, they can be derived by using the 
ECI for Total Compensation and the relative importance of wages and 
salaries with total compensation as published by BLS for each detailed 
ECI occupational index.
Health Related Benefits
    We proposed to continue using the ECI for Benefits for All Civilian 
Workers in Hospitals to measure price growth of this subcategory. This 
is calculated using the ECI for Total Compensation for All Civilian 
Workers in Hospitals (BLS series code #CIU1016220000000I) and the 
relative importance of Wages and Salaries within Total Compensation as 
published by BLS. As we stated in the CY 2023 ESRD PPS proposed rule, 
we believe this constructed ECI series is technically appropriate for 
the reason stated in the Wages and Salaries price proxy section.
Management Benefits
    We proposed to continue using the ECI for Benefits for Private 
Industry Workers in Management, Business, and Financial to measure 
price growth of this subcategory. This ECI is calculated using the ECI 
for Total Compensation for Private Industry Workers in Management, 
Business, and Financial (BLS series code #CIU2010000110000I) and the 
relative importance of wages and salaries within total compensation. As 
we stated in the CY 2023 ESRD PPS proposed rule, we believe this 
constructed ECI series is technically appropriate for the reason stated 
in the Wages and Salaries price proxy section.
Administrative Benefits
    We proposed to continue using the ECI for Benefits for Private 
Industry Workers in Office and Administrative Support to measure price 
growth of this subcategory. This ECI is calculated using the ECI for 
Total Compensation for Private Industry Workers in Office and 
Administrative Support (BLS series code #CIU2010000220000I) and the 
relative importance of Wages and Salaries within Total Compensation. As 
we stated in the CY 2023 ESRD PPS proposed rule, we believe this 
constructed ECI series is technically appropriate for the reason stated 
in the wages and salaries price proxy section.
Services Benefits
    We proposed to continue using the ECI for Total Benefits for 
Private Industry Workers in Service Occupations (BLS series code 
#CIU2030000300000I) to measure price growth of this subcategory. As we 
stated in the CY 2023 ESRD PPS proposed rule, we believe this ECI 
series is

[[Page 67149]]

technically appropriate for the reason stated in the Wages and Salaries 
price proxy section. We also stated we believe the proposed benefits 
ECI blend continues to be the most appropriate price proxy to measure 
the growth of benefits prices faced by ESRD facilities. Table 6 lists 
the four ECI series and the corresponding weights used to construct the 
proposed benefits ECI blend.
[GRAPHIC] [TIFF OMITTED] TR07NO22.005

Electricity
    We proposed to continue using the PPI Commodity for Commercial 
Electric Power (BLS series code #WPU0542) to measure the price growth 
of this cost category.
Natural Gas
    We proposed to continue using the PPI Commodity for Commercial 
Natural Gas (BLS series code #WPU0552) to measure the price growth of 
this cost category.
Pharmaceuticals
    ESAs: We proposed to continue using the PPI Commodity for 
Biological Products, Excluding Diagnostic, for Human Use (which we will 
abbreviate as PPI-BPHU) (BLS series code #WPU063719) as the price proxy 
for the ESA drugs in the market basket. The PPI-BPHU measures the price 
change of prescription biologics, and ESAs will be captured within this 
index, if they are included in the PPI sample. Since the PPI relies on 
confidentiality with respect to the companies and drugs/biologicals 
included in the sample, we explained that we do not know if these drugs 
are indeed reflected in this price index. However, as we stated in the 
CY 2023 ESRD PPS proposed rule, we believe the PPI-BPHU is an 
appropriate proxy to use because although ESAs may be a small part of 
the fuller category of biological products, we can examine whether the 
price increases for the ESA drugs are similar to the drugs included in 
the PPI-BPHU. We did this by comparing the historical price changes in 
the PPI-BPHU and the average sales price (ASP) for ESAs and found the 
cumulative growth to be consistent over the past 4 years. We stated 
that we will continue to monitor the trends in the prices for ESA drugs 
as measured by other price data sources to ensure that the PPI-BPHU is 
still an appropriate price proxy.
    Other Drugs (except ESA): For all other drugs included in the ESRD 
PPS bundled payment other than ESAs, we proposed to use a blend of 50 
percent of the PPI Commodity for Vitamin, Nutrient, and Hematinic 
Preparations (which we will abbreviate as PPI-VNHP) (BLS series code 
#WPU063807), and 50 percent of the PPI Commodity for Pharmaceuticals 
for human use, prescription (which we will abbreviate as PPI-
Pharmaceuticals) (BLS series code #WPUSI07003). As we stated in the CY 
2023 ESRD PPS proposed rule, we continue to believe that the PPI-VNHP 
is an appropriate price proxy for the iron supplements commonly used in 
the treatment of ESRD, and an analysis of claims data indicated that 
iron supplement costs account for about half of the All Other ESRD-
related Drugs costs. For the remaining drugs represented in the non-ESA 
drug category (such as calcimimetics and Vitamin D analogs) we believed 
a different price proxy would be more appropriate and we proposed to 
use the PPI Commodity for Pharmaceuticals for human use, prescription, 
which captures the inflationary price pressures for all types of 
prescription drugs rather than a single therapeutic category of drugs. 
Though this PPI measure includes a wide variety of prescription drugs, 
we noted that we believe it is technically appropriate to use a broad 
indicator of prescription drug price trends for three key reasons: (1) 
the more detailed PPI measure where we believe these types of non-ESA 
drugs will be captured will more likely reflect price trends not faced 
by ESRD facilities, such as cancer drugs, (2) there have been notable 
changes to the types and mix of drugs paid for under the ESRD PPS 
bundled payment since 2016, such as the inclusion of formerly oral-only 
calcimimetics and the addition of AKI-related drugs, and (3) the 
potential for future changes to the types and mix of drugs that may be 
paid for under the ESRD PPS bundled payment, such as when other drugs 
that are currently oral-only drugs are included in the ESRD PPS 
beginning for CY 2025. For these reasons, as we stated in the CY 2023 
ESRD PPS proposed rule, we believe that a broader drug index 
representing a larger mix of prescription drugs is a technical 
improvement to the proposed price proxy for this cost category. We 
stated that we will continue to monitor the relative share of expenses 
for iron supplements and other types of drugs for this cost category to 
determine if the 50/50 PPI blend warrants an adjustment, and if so, we 
will propose such an adjustment in future rulemaking.
Supplies
    We proposed to continue using the PPI Commodity for Surgical and 
Medical Instruments (BLS series code #WPU1562) to measure the price 
growth of this cost category.

[[Page 67150]]

Laboratory Services
    We proposed to continue using the PPI Industry for Medical 
Laboratories (BLS series code #PCU621511621511) to measure the price 
growth of this cost category.
Telephone Service
    We proposed to continue using the CPI U.S. city average for 
Telephone Services (BLS series code #CUUR0000SEED) to measure the price 
growth of this cost category.
Housekeeping
    We proposed to continue using the PPI Commodity for Cleaning and 
Building Maintenance Services (BLS series code #WPU49) to measure the 
price growth of this cost category.
Operations & Maintenance
    For the Operations & Maintenance cost category, we proposed to use 
the ECI for Total compensation for All Civilian workers in 
Installation, maintenance, and repair (BLS series code 
#CIU1010000430000I) to measure the price growth of this cost category. 
This price proxy accounts for the compensation expenses related to 
maintenance and repair workers. As we stated in the CY 2023 ESRD PPS 
proposed rule, we believe the majority of expenses for maintenance and 
repair to be labor-related costs and therefore, believe that this ECI 
is the most technically appropriate price proxy for this cost category.
Professional Fees
    We proposed to continue using the ECI for Total Compensation for 
Private Industry Workers in Professional and Related (BLS series code 
#CIU2010000120000I) to measure the price growth of this cost category.
All Other Goods and Services
    We proposed to continue using the PPI Commodity for Final demand--
Finished Goods Less Foods and Energy (BLS series code #WPUFD4131) to 
measure the price growth of this cost category.
Capital-Related Building and Fixtures
    We proposed to continue using the PPI Industry for Lessors of 
Nonresidential Buildings (BLS series code #PCU531120531120) to measure 
the price growth of this cost category.
Capital-Related Moveable Equipment
    We proposed to continue using the PPI Commodity for Electrical 
Machinery and Equipment (BLS series code #WPU117) to measure the price 
growth of this cost category.
    Table 7 shows all the proposed price proxies and cost weights for 
the 2020-based ESRDB Market Basket.
BILLING CODE 4120-01-P

[[Page 67151]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.006


[[Page 67152]]


[GRAPHIC] [TIFF OMITTED] TR07NO22.007

BILLING CODE 4120-01-C
    We received several comments regarding the proposed price proxies 
in the 2020-based ESRDB market basket. The comments and our responses 
are set forth below.
    Comment: Several commenters, including a coalition of dialysis 
organizations, supported the proposal to adopt the PPI Commodity for 
Pharmaceuticals for human use, prescription (BLS series code 
#WPUSI07003) within the blended price proxy for Non-ESA drugs in the 
ESRDB market basket. They stated that they believe the majority of the 
non-ESA drugs in the ESRD PPS bundled payment align with this proxy and 
not the PPI Commodity data for Chemicals and allied products-Vitamin, 
nutrient, and hematinic preparations. The commenters requested for CMS 
to monitor the impact of this change and adjust the weight of the 
blended proxy in future years, if appropriate, and for CMS to 
potentially consider breaking out the weight for the non-ESA blend 
formally into two separate market basket categories in the future.
    Response: We appreciate the commenters' support for the proposed 
50/50 blended price proxy for the Non-ESA drug cost category. We will 
continue to monitor the mix of the expenses for the non-ESA drugs 
accounted for in this category and consider if it may be appropriate to 
propose to adjust the cost weights of this blended price proxy through 
future notice and comment rulemaking.
    Comment: One LDO expressed that they believe the process and 
indices used by CMS to capture year over year growth in the ESRDB 
market basket have worked relatively well since the ESRD PPS was 
implemented in 2011. The commenter stated that they do not object to 
CMS's use of the ECI for Wages and Salaries for All Civilian Workers in 
Hospitals as the price proxy for the ESRDB market basket's health-
related occupations; however, they have concerns that the ECI is not 
designed to accurately capture rapid changes in inflation and market 
dynamics of the type seen as a result of the COVID-19 PHE. 
Specifically, the commenter stated that ESRD facilities have 
experienced dramatic increases in overtime pay, dramatic increases in 
hiring bonuses, increases in travel costs, and a higher dependency on 
travel nurses and staffing agencies, which demand hourly rates that far 
exceed the average. One LDO and a non-profit dialysis association cited 
a study by Altarum that showed that between July 2021 and June 2022, 
healthcare wages grew by an average of 6.9 percent, compared to 5.1 
percent for all private sector jobs. The same study showed that average 
hourly earnings in healthcare grew 7.4 percent, compared to 5.2 percent 
across all private sector jobs. The study also showed that the quantity 
of healthcare workers has decreased relative to the levels from before 
the COVID-19 PHE, reporting 78,000 fewer workers in July 2022 compared 
to February 2020. The nonprofit dialysis association noted that while 
other industries outside of healthcare may be able to fund the rising 
costs of labor by increasing their prices or improving efficiency, ESRD 
facilities are unable to do so because the majority of ESRD patients 
are Medicare beneficiaries, and therefore the majority of ESRD 
facilities' revenue is determined by the Federal government. The 
nonprofit dialysis association further noted that ESRD facilities have 
specialized requirements--many of which are codified in Federal 
regulations--for dialysis nurses, home

[[Page 67153]]

dialysis nurse specialists, and dialysis patient care technicians, that 
require additional education, training, experience, and certification 
beyond what is often required of clinical staff in other healthcare 
settings. As a result, the commenter stated, ESRD facilities can be 
easily outbid for clinical workers by better financed hospitals, health 
plans, clinical practices, and other healthcare settings that may also 
have fewer clinical requirements.
    Response: The ESRDB market basket reflects changes over time in the 
price of providing renal dialysis services and will not reflect 
increases in costs associated with changes in the volume or intensity 
of input goods and services. To measure price growth for ESRD facility 
wages and salaries costs, the ESRDB market basket relies on a blend of 
ECIs reflecting the occupational skill mix of FTEs as reported on the 
2020 Medicare cost report forms. The majority of the weight for 
compensation costs is for health-related occupations, and accounts for 
approximately 80 percent of the ESRD facility compensation costs. The 
health-related workers' Wages and Salaries, and Benefits, cost 
categories use the ECI for wages and salaries and the ECI for benefits 
for civilian hospital workers, respectively. We believe that these ECIs 
are the best available price proxies to account for the health-related 
workers' occupational skill mix within ESRDs. The BLS Occupational 
Employment and Wage Statistics (OEWS) data are one of the primary data 
sources used to derive the weights for the ECI. In 2020, which we 
proposed as the base year of the ESRDB market basket, a little over 56 
percent of total employment for NAICS 622100 was attributed to Health 
Professional and Technical occupations, and approximately 13 percent 
was attributed to Health Service occupations. Therefore, in the absence 
of ESRD-specific data, we believe that the highly skilled hospital 
workforce captured by the ECI for hospital workers (inclusive of 
therapists, nurses, and other clinicians) is a reasonable proxy for the 
compensation component of the ESRDB market basket. Additionally, we 
believe that by utilizing the relative distribution of workers based on 
the FTE data reported on the ESRD cost report, the occupational 
distribution of the compensation costs weights is technically 
appropriate.
    Comment: One LDO encouraged CMS to provide more transparency 
regarding the ESRDB market basket price proxies forecasting models' 
methodologies and underlying assumptions, and stated that greater 
transparency could better inform stakeholder feedback and help identify 
opportunities to improve the models' capacity to capture economic 
anomalies that facilities have encountered in recent years.
    Response: We appreciate the commenter's feedback on improving the 
forecasting model capacity of the price proxies used in the ESRDB 
market basket. CMS uses independent forecasts of the price proxies for 
the CMS market baskets from IHS Global Inc. (IGI), a nationally 
recognized economic and financial forecasting firm. The rationale for 
using an independent forecaster is to ensure neutrality in the annual 
ESRDB market basket increase and productivity adjustment while 
reflecting comprehensive economic and health sector forecasting model 
capabilities that extend beyond CMS' expertise. As the forecasting 
models are proprietary in nature, we are not licensed to share 
information related to the detailed models. More information on the IGI 
economic forecasts can be found at the following website, https://ihsmarkit.com/products/US-economic-modeling-forecasting-services.html.
    Final Rule Action: After consideration of the public comments we 
received, we are finalizing the 2020-based ESRDB market basket price 
proxies as proposed.
(d) Rebasing Results
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38479), a 
comparison of the yearly differences of increase factors from CY 2019 
to CY 2023 for the 2016-based ESRDB market basket and the 2020-based 
ESRDB market basket showed that the CY 2023 ESRDB market basket 
increase factor would be 0.2 percentage point lower if we continued to 
use the 2016-based ESRDB market basket. For the years prior to CY 2023 
the annual market basket increase factors were the same, except for CY 
2021 where the 2020-based market basket was 0.1 percentage point lower. 
We did not receive any comments related to the comparison of the ESRDB 
market basket updates comparing the 2016-based and 2020-based ESRDB 
market baskets.
(2) Labor-Related Share for the ESRD PPS
    We define the labor-related share (LRS) as those expenses that are 
labor-intensive and vary with, or are influenced by, the local labor 
market. The labor-related share of a market basket is determined by 
identifying the national average proportion of operating costs that are 
related to, influenced by, or vary with the local labor market.
    We proposed to use the 2020-based ESRDB market basket cost weights 
to determine the proposed labor-related share for ESRD facilities. 
Specifically, effective for CY 2023, we proposed a labor-related share 
of 55.2 percent, compared to the current 52.3 percent that was based on 
the 2016-based ESRDB market basket, as shown in Table 8. These figures 
represent the sum of Wages and Salaries, Benefits, Housekeeping, 
Operations & Maintenance, 87 percent of the weight for Professional 
Fees (details discussed later in this subsection), and 46 percent of 
the weight for Capital-related Building and Fixtures expenses (details 
discussed later in this subsection). We used the same methodology for 
the 2016-based ESRDB market basket.

[[Page 67154]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.008

    As discussed in the CY 2023 ESRD PPS proposed rule, the proposed 
labor-related share for Professional Fees reflects the proportion of 
ESRD facilities' professional fees expenses that we believe vary with 
local labor market (87 percent). We conducted a survey of ESRD 
facilities in 2008 to better understand the proportion of contracted 
professional services that ESRD facilities typically purchase outside 
of their local labor market. These purchased professional services 
include functions such as accounting and auditing, management 
consulting, engineering, and legal services. Based on the survey 
results, we determined that, on average, 87 percent of professional 
services are purchased from local firms and 13 percent are purchased 
from businesses located outside of the ESRD's local labor market. Thus, 
we included 87 percent of the cost weight for Professional Fees in the 
labor-related share (87 percent is the same percentage as used in prior 
years).
    As discussed in the CY 2023 ESRD PPS proposed rule, the proposed 
labor-related share for capital-related expenses reflects the 
proportion of ESRD facilities' capital-related expenses that we believe 
varies with local labor market wages (46 percent of ESRD facilities' 
Capital-related Building and Fixtures expenses). Capital-related 
expenses are affected in some proportion by variations in local labor 
market costs (such as construction worker wages) that are reflected in 
the price of the capital asset. However, many other inputs that 
determine capital costs are not related to local labor market costs, 
such as interest rates. The 46-percent figure is based on regressions 
run for the inpatient hospital capital PPS in 1991 (56 FR 43375). We 
noted that 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).
    We received several comments regarding our calculation of the 
proposed labor-related share based on the 2020-based ESRDB market 
basket. The comments and our responses are set forth below.
    Comment: Several commenters, including a coalition of dialysis 
organizations, a nonprofit dialysis association, and a provider 
advocacy organization, supported the proposed increase of the labor 
share from 52.3 percent to 55.2 percent, and stated that their 
experience is that the costs of labor are rising exponentially. The 
commenters further stated that they do not believe that shifting the 
market basket percentage alone will address the labor shortage's impact 
on payments and costs.
    Response: We appreciate the commenters' support of the proposed 
labor-related share. This increase in the ESRD PPS labor-related share 
reflects the relative increase in labor-related costs compared to non-
labor-related costs that ESRD facilities have experienced since 2016 
and through 2020. We will continue to monitor the ESRD cost report data 
for significant changes to the ESRD cost share weights.
    Final Rule Action: After consideration of the public comments we 
received, we are finalizing the 2020-based labor-related share of 55.2 
percent effective for CY 2023, as proposed.
(3) CY 2023 ESRD Market Basket Increase Factor, Adjusted for 
Productivity
    Under section 1881(b)(14)(F)(i) of the Act, beginning in CY 2012, 
the ESRD PPS payment amounts are required to be annually increased by 
an ESRD market basket percentage increase factor and reduced by the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act. We proposed to use the 2020-based ESRDB market basket as 
described in section II.B.1 of this final rule to compute the CY 2023 
ESRDB market basket increase factor and labor-related share based on 
the best available data. Consistent with historical practice, we 
proposed to estimate the ESRDB market basket increase factor based on 
IGI's forecast using the most recently available data. IGI is a 
nationally recognized economic and financial forecasting firm with 
which CMS contracts to forecast the components of the market baskets.
(a) CY 2023 Market Basket Increase Factor
    Based on IGI's first quarter 2022 forecast, the proposed 2020-based 
ESRDB market basket increase factor for CY 2023 was projected to be 2.8 
percent. We also proposed that if more recent data became available 
after the publication of the proposed rule and before the publication 
of the final rule (for example, a more recent estimate of the market 
basket update or productivity adjustment), we would use such data, if 
appropriate, to determine the CY 2023 market basket update in this 
final rule. Based on the more recent data available for this CY 2023 
ESRD PPS final rule (that is, IGI's third quarter 2022 forecast of the 
2020-based ESRDB market basket with historical data through the second 
quarter of 2022), we

[[Page 67155]]

estimate that the ESRD PPS CY 2023 market basket update is 3.1 percent.
(b) Productivity Adjustment
    Under section 1881(b)(14)(F)(i) of the Act, as amended by section 
3401(h) of the Affordable Care Act, for CY 2012 and each subsequent 
year, the ESRD market basket percentage increase factor shall be 
reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide, private nonfarm business multifactor productivity 
(MFP) (as projected by the Secretary for the 10-year period ending with 
the applicable FY, year, cost reporting period, or other annual period) 
(the ``productivity adjustment''). MFP is derived by subtracting the 
contribution of labor and capital input growth from output growth. The 
detailed methodology for deriving the MFP projection was finalized in 
the CY 2012 ESRD PPS final rule (76 FR 70232 through 70235).
    BLS publishes the official measures of productivity for the U.S. 
economy. As we noted in the CY 2023 ESRD PPS proposed rule, the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act previously was published by BLS as private nonfarm business MFP. 
Beginning with the November 18, 2021 release of productivity data, BLS 
replaced the term ``multifactor productivity'' with ``total factor 
productivity'' (TFP). BLS noted that this is a change in terminology 
only and will not affect the data or methodology.\2\ As a result of the 
BLS name change, the productivity measure referenced in section 
1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as private 
nonfarm business TFP; however, as mentioned previously, the data and 
methods are unchanged. We referred readers to https://www.bls.gov/productivity/ for the BLS historical published TFP data. A complete 
description of IGI's TFP projection methodology is available on the CMS 
website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in the CY 2022 ESRD PPS final rule 
(86 FR 61879), we noted that effective for CY 2022 and future years, 
CMS will be changing the name of this adjustment to refer to it as the 
productivity adjustment rather than the MFP adjustment. We stated this 
was not a change in policy, as we will continue to use the same 
methodology for deriving the adjustment and rely on the same underlying 
data.
---------------------------------------------------------------------------

    \2\ Total Factor Productivity in Major Industries--2020. 
Available at: https://www.bls.gov/news.release/prod5.nr0.htm.
---------------------------------------------------------------------------

    As discussed in the CY 2023 ESRD PPS proposed rule, based on IGI's 
first quarter 2022 forecast with historical data through the fourth 
quarter of 2021, the proposed productivity adjustment for CY 2023 (the 
10-year moving average of TFP for the period ending CY 2023) was 
projected to be 0.4 percentage point. Furthermore, we proposed that if 
more recent data became available after the publication of the proposed 
rule and before the publication of this final rule (for example, a more 
recent estimate of the market basket and/or productivity adjustment), 
we would use such data, if appropriate, to determine the CY 2023 market 
basket update and productivity adjustment in this final rule. Based on 
the more recent data available from IGI's third quarter 2022 forecast, 
the current estimate of the productivity adjustment for CY 2023 is 0.1 
percentage point.
(c) CY 2023 Market Basket Increase Factor Adjusted for Productivity
    In accordance with section 1881(b)(14)(F)(i) of the Act, we 
proposed to base the CY 2023 market basket update, which is used to 
determine the applicable percentage increase for the ESRD PPS payments, 
on IGI's first quarter 2022 forecast of the 2020-based ESRDB market 
basket. We proposed to then reduce this percentage increase by the 
estimated productivity adjustment for CY 2023 of 0.4 percentage point 
(the 10-year moving average growth of TFP for the period ending CY 2023 
based on IGI's first quarter 2022 forecast). Therefore, the proposed CY 
2023 ESRDB update was equal to 2.4 percent (2.8 percent market basket 
update reduced by the 0.4 percentage point productivity adjustment). 
Furthermore, as noted previously, we proposed that if more recent data 
became available after the publication of the proposed rule and before 
the publication of this final rule (for example, a more recent estimate 
of the market basket and/or productivity adjustment), we would use such 
data, if appropriate, to determine the CY 2023 market basket update and 
productivity adjustment in this final rule.
    We invited public comment on our proposals for the CY 2023 market 
basket update and productivity adjustment. The following is a summary 
of the public comments received on the proposed CY 2023 market basket 
update and productivity adjustment and our responses:
    Comment: Many commenters, including an LDO, a provider advocacy 
organization, a nonprofit dialysis association, a coalition of dialysis 
organizations, a network of dialysis organizations, and a professional 
organization, generally supported the utilization of the most recent 
data available (for example, a more recent estimate of the market 
basket and/or productivity adjustment) to determine the final CY 2023 
ESRD PPS update. MedPAC recommended that the ESRD PPS base rate 
increase for CY 2023 should be updated by the amount determined under 
current law, and that analysis reported in the March 2022 Report to the 
Congress: Medicare Payment Policy \3\ concluded that this increase is 
warranted based on analysis of payment adequacy (which includes an 
assessment of beneficiary access, supply and capacity of facilities, 
facilities' access to capital, quality, and financial indicators for 
the sector). At the same time, other commenters expressed their concern 
that the CY 2023 ESRD PPS update insufficiently captures the rising 
costs that ESRD facilities have experienced and continue to experience, 
particularly the impact of the health-related compensation costs. 
However, commenters expressed different views about the scope and 
nature of the staffing challenges facing ESRD facilities. A provider 
advocacy organization claimed that the ongoing COVID-19 PHE is creating 
significant and lasting effects on staffing and supply costs. In 
contrast, a patient-led dialysis organization maintained that the 
current labor shortages are not a temporary phenomenon related to the 
ongoing COVID-19 PHE, but the result of a demographic shift in labor 
market conditions in the healthcare industry. This commenter stated 
that the American workforce as a whole has shrunk, and mentioned a 2008 
report from the Institute of Medicine that further described the 
demographic shift the commenter identified.\4\ Many commenters 
requested that CMS consider using its statutory authority to apply a 
labor add-on payment adjustment to the ESRD PPS for CY 2023.
---------------------------------------------------------------------------

    \3\ https://www.medpac.gov/document/march-2022-report-to-the-congress-medicare-payment-policy/.
    \4\ https://pubmed.ncbi.nlm.nih.gov/25009893/.
---------------------------------------------------------------------------

    Many commenters, including LDOs, ESRD facilities, professional 
associations, patients, provider advocacy organizations, and a 
coalition of dialysis organizations, stated that a labor add-on payment 
adjustment factor is needed because ESRD facilities have

[[Page 67156]]

had to contend with rising costs in labor, medical supplies, and rent. 
They noted that the largest contributor to higher input costs is 
accelerating labor costs, which have been exacerbated by the nation-
wide shortages in qualified clinical staff, and that they need to 
increasingly rely on contract labor, which has led to a significant, 
permanent increase in labor costs.
    Response: We are required to update ESRD PPS bundled payments by 
the market basket update adjusted for productivity under section 
1881(b)(14)(F)(i) of the Act, which states that the Secretary shall 
annually increase payment amounts by an ESRD market basket percentage 
increase that reflects changes over time in the prices of an 
appropriate mix of goods and services included in renal dialysis 
services. We believe the 2020-based ESRDB market basket increase 
adequately reflects the average change in the price of goods and 
services ESRD facilities purchase to provide renal dialysis services, 
and is technically appropriate to use as the ESRD PPS payment update 
factor. The ESRDB market basket is a fixed-weight, Laspeyres-type index 
that reflects changes over time in the price of providing renal 
dialysis services and will not reflect increases in costs associated 
with changes in the volume or intensity of input goods and services. As 
such, the ESRDB market basket update will reflect the prospective price 
pressures described by the commenters as increasing during a high 
inflation period (such as faster wage growth or higher energy prices), 
but inherently will not reflect other factors that might increase the 
level of costs, such as the quantity of labor used. However, as we note 
in section II.B.1.a.(2) of this CY 2023 ESRD PPS final rule, the 2020-
based ESRDB market basket reflects an increase to the cost category 
weights for labor-related costs. Therefore, the final CY 2023 ESRDB 
market basket update reflects the most recent available data regarding 
both prices and the quantity of labor used to provide renal dialysis 
services.
    We agree with the commenters who stated that recent higher 
inflationary trends have impacted the outlook for price growth over the 
next several quarters. At the time of the CY 2023 ESRD PPS proposed 
rule, based on the IGI first quarter 2022 forecast with historical data 
through the fourth quarter of 2021, the 2020-based ESRDB market basket 
update was forecasted to be 2.8 percent for CY 2023, reflecting 
forecasted compensation prices of about 3.9 percent (by comparison, 
compensation growth in the ESRDB market basket averaged 2.2 percent 
from 2012 through 2021). In the CY 2023 ESRD PPS proposed rule, we 
proposed that if more recent data became available, we would use such 
data, if appropriate, to derive the final CY 2023 ESRDB market basket 
update for the final rule. For this final rule, we now have an updated 
forecast of the price proxies underlying the market basket that 
incorporates more recent historical data and reflects a revised outlook 
regarding the U.S. economy and expected price inflation for CY 2023 for 
ESRD facilities. Based on the IGI third quarter 2022 forecast with 
historical data through the second quarter of 2022, we are projecting a 
CY 2023 ESRDB market basket update of 3.1 percent (reflecting 
forecasted compensation growth of 4.5 percent) and productivity 
adjustment of 0.1 percentage point. Therefore, for CY 2023, a final 
productivity adjusted ESRDB market basket update of 3.0 percent (3.1 
percent less 0.1 percentage point) will be applicable, compared to the 
2.4 percent productivity adjusted ESRDB market basket update that was 
proposed.
    As for commenters' suggestions for alternatives to the 
productivity-adjusted ESRDB market basket update for CY 2023, as noted 
previously, we are required by statute to update ESRD PPS payments by 
the market basket update adjusted for productivity. Any change to the 
productivity adjusted-market basket update would require legislation to 
amend the statute. While we acknowledge the commenters' suggestions 
that we apply an add-on payment adjustment to the ESRD PPS for CY 2023 
to account for increasing labor costs, we note that we did not propose 
to establish an add-on payment adjustment for labor under section 
1881(b)(14)(D)(iv) of the Act or to use other methods or data sources 
to update ESRD PPS payment rates for CY 2023, and we are not finalizing 
such an approach for this final rule. We proposed to update ESRD PPS 
payments by the market basket update, which is consistent with the 
statute and our longstanding policy for updating the ESRD PPS base 
rate. We do not believe it would be appropriate to apply additional 
adjustments to the ESRD PPS base rate to circumvent the statutorily-
required market basket update. Further, as discussed earlier in this 
section of this final rule, we are finalizing our proposal to rebase 
the ESRDB market basket to reflect more recent data on ESRD facility 
cost structures, and we believe this rebased ESRDB market basket 
appropriately reflects the prospective price pressures described by the 
commenters as increasing during a high inflation period. Consistent 
with our proposal, we have used more recent data to calculate a final 
ESRDB productivity-adjusted market basket update of 3.0 percent for CY 
2023.
    Comment: Several commenters, including an LDO and a coalition of 
dialysis organizations, recognized that CMS does not have the authority 
to eliminate the productivity adjustment from the annual ESRD PPS 
update calculation, but stated that they continue to be concerned by 
the historically small and even negative Medicare margins, and that the 
experience of ESRD facilities is contrary to the idea that productivity 
can be improved year-over-year. The commenters also stated their view 
that the current productivity adjustment does not capture factors 
unique to ESRD facilities, such as required staffing structures or 
operational changes required due to the impact of the COVID-19 PHE, 
including establishing cohort clinics to minimize disruptions in care 
that can impede improvements in productivity.
    One LDO stated that CMS's current approach, which applies the same 
adjustment across the board to other sectors subject to a reduction for 
productivity, is a blunt instrument. This commenter recommended that 
CMS work with the kidney care community and policymakers to revisit 
this policy and devise a productivity adjustment that: (1) better 
reflects factors over which ESRD facilities have control and that 
affect opportunity for productivity gains, and (2) accounts for the 
statutory reductions to the ESRD PPS already in place to account for 
expected gains in efficiency.
    Response: We acknowledge the commenters' concerns regarding 
productivity growth at the economy-wide level and its application to 
ESRD facilities; however, as the commenters acknowledge, section 
1881(b)(14)(F)(i) of the Act requires the application of the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act to the ESRD PPS market basket increase factor for 2012 and 
subsequent years. As required by statute, the CY 2023 productivity 
adjustment is derived based on the 10-year moving average growth in 
economy-wide productivity for the period ending CY 2023. We will 
continue to monitor the impact of the ESRD PPS updates, including the 
effects of the productivity adjustment, on ESRD facility margins as 
well as beneficiary access to care as reported by MedPAC in their 
annual Report to the Congress.
    Comment: Many commenters, including LDOs, ESRD facilities,

[[Page 67157]]

professional associations, patients, provider advocacy organizations, 
and a coalition of dialysis organizations, requested that CMS apply a 
forecast error payment adjustment to the ESRD PPS base rate to support 
ESRD facilities during this inflationary period, particularly 
accounting for what commenters state is an error in the forecasted 
payment updates for CYs 2021 and 2022. The commenters stated that 
forecasted payment updates that they view as incorrect, coupled with 
the impact of the workforce shortage, have put them in financial 
difficulty. The commenters suggested that CMS should apply the actual 
percent increase in the market basket for the two CYs, 2021 and 2022, 
where the forecast missed its mark. The commenters highlighted that CMS 
has applied this type of an adjustment in other parts of the Medicare 
program historically, such as for SNFs, and could do so for the ESRD 
PPS on a temporary or even permanent basis. A couple of commenters 
recommended that the forecast error correction could be designed and 
implemented in a manner similar to the SNF market basket forecast error 
correction, triggered by positive and negative forecast errors that 
exceed 0.5 percentage points.
    One provider advocacy organization stated that they understand that 
this is not a customary practice for CMS, but these extraordinary times 
call for extraordinary measures and CMS has discretion to implement a 
forecast error adjustment based on section 1881(b)(14)(D)(iv) of the 
Act, which states that the ESRD PPS may include such other payment 
adjustments as the Secretary determines appropriate. This commenter 
further stated that while they recognize that updates to the ESRD 
market basket are set prospectively, and some degree of forecast error 
is inevitable, ESRD facilities should not be financially disadvantaged 
as a result of CMS market basket forecasting errors. This commenter, 
along with one LDO, stated that they believe establishing a forecast 
error payment adjustment in the ESRD PPS is within CMS' existing 
statutory authority under section 1881(b)(F)(i)(I) of the Act.
    Several commenters, including an LDO, a coalition of dialysis 
organizations, and a nonprofit dialysis association, stated that 
failure to correct for the missed IGI forecast error projections of the 
market basket updates for CYs 2021 and 2022 will result in chronic 
underfunding of the ESRD PPS going forward. These commenters stated 
that each successive update to the ESRD PPS base rate will be building 
on a previous rate that has never accounted for the large and rapid 
inflationary trends in CY 2021 through CY 2023. One LDO and a coalition 
of dialysis organizations further expressed that a forecast error 
payment adjustment is imperative given the Medicare ESRD PPS's current 
narrow margins and the fact that over 90 percent of the ESRD 
beneficiaries rely on Medicare coverage.
    Response: As discussed previously, the ESRDB market basket updates 
are set prospectively, which means that the update relies on a mix of 
both historical data for part of the period for which the update is 
calculated, and forecasted data for the remainder. For instance, the CY 
2023 market basket update in this final rule reflects historical data 
through the second quarter of CY 2022 and forecasted data through the 
fourth quarter of CY 2023. While there is no precedent to adjust for 
market basket forecast error in the annual ESRD PPS update, the 
forecast error for a market basket update is calculated as the actual 
market basket increase for a given year less the forecasted market 
basket increase.\5\ Due to the uncertainty regarding future price 
trends, forecast errors can be both positive and negative. For example, 
the CY 2017 ESRDB forecast error was -0.8 percentage point, while the 
CY 2021 ESRDB forecast error was +1.2 percentage point; CY 2022 
historical data is not yet available to calculate a forecast error for 
CY 2022.
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    \5\ FAQ--Market Basket Definitions and General Information. 
Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/info.pdf.
---------------------------------------------------------------------------

    As discussed earlier in this section of this final rule, our 
longstanding policy since the inception of the ESRD PPS has been to 
update ESRD PPS payments based on an appropriate market basket in 
accordance with section 1881(b)(14)(F)(i) of the Act. For this final 
rule, we have incorporated more recent historical data and forecasts, 
which utilize the most current projections of expected future price and 
wage pressures likely to be faced by ESRD facilities to provide renal 
dialysis services. We did not propose a forecast error payment 
adjustment for CY 2023, and we are not finalizing such an adjustment 
for this final rule. As we have discussed in past rulemaking (85 FR 
71434; 80 FR 69031) and in section II.B.1.b.(2) of this final rule, 
predictability in Medicare payments is important to enable ESRD 
facilities to budget and plan their operations. As we noted earlier in 
this section, forecast error calculations are unpredictable, and can be 
both positive and negative. We note that over longer periods of time, 
the positive differences between the actual and forecasted market 
basket increase in prior years can offset negative differences; 
therefore, we do not believe it is necessary to implement a forecast 
error payment adjustment for the ESRD PPS based solely on a positive CY 
2021 forecast error.
    Final Rule Action: After consideration of the comments we received, 
we are finalizing a CY 2023 ESRDB productivity-adjusted market basket 
increase of 3.0 percent based on the most recent data available. As 
noted previously, based on the more recent data available for this CY 
2023 ESRD PPS final rule (that is, IGI's third quarter 2022 forecast of 
the 2020-based ESRDB market basket with historical data through the 
second quarter of 2022), the CY 2023 ESRDB market basket update is 3.1 
percent. Based on the more recent data available from IGI's third 
quarter 2022 forecast, the current estimate of the productivity 
adjustment for CY 2023 is 0.1 percentage point. Therefore, the current 
estimate of the CY 2023 ESRD productivity-adjusted market basket 
increase factor is equal to 3.0 percent (3.1 percent market basket 
update reduced by 0.1 percentage point productivity adjustment).
b. CY 2023 ESRD PPS Wage Indices
(1) Background
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index payment adjustment, such as the 
index referred to in section 1881(b)(12)(D) of the Act, as the 
Secretary determines to be appropriate. In the CY 2011 ESRD PPS final 
rule (75 FR 49200), we finalized an adjustment for wages at Sec.  
413.231. Specifically, CMS adjusts the labor-related portion of the 
base rate to account for geographic differences in the area wage levels 
using an appropriate wage index, which reflects the relative level of 
hospital wages and wage-related costs in the geographic area in which 
the ESRD facility is located. We use OMB's CBSA-based geographic area 
designations to define urban and rural areas and their corresponding 
wage index values (75 FR 49117). OMB publishes bulletins regarding CBSA 
changes, including changes to CBSA numbers and titles. The bulletins 
are available online at https://www.whitehouse.gov/omb/information-for-agencies/bulletins/.
    For CY 2023, we proposed to update the wage indices to account for 
updated wage levels in areas in which ESRD facilities are located using 
our existing methodology. We proposed to use the most recent pre-floor, 
pre-reclassified

[[Page 67158]]

hospital wage data collected annually under the inpatient PPS. The ESRD 
PPS wage index values are calculated without regard to geographic 
reclassifications authorized under sections 1886(d)(8) and (d) (10) of 
the Act and utilize pre-floor hospital data that are unadjusted for 
occupational mix. For CY 2023, the updated wage data are for hospital 
cost reporting periods beginning on or after October 1, 2018, and 
before October 1, 2019 (FY 2019 cost report data).
    We have also adopted methodologies for calculating wage index 
values for ESRD facilities that are located in urban and rural areas 
where there is no hospital data. For a full discussion, see the CY 2011 
and CY 2012 ESRD PPS final rules at 75 FR 49116 through 49117 and 76 FR 
70239 through 70241, respectively. For urban areas with no hospital 
data, we compute the average wage index value of all urban areas within 
the State to serve as a reasonable proxy for the wage index of that 
urban CBSA, that is, we use that value as the wage index. For rural 
areas with no hospital data, we compute the wage index using the 
average wage index values from all contiguous CBSAs to represent a 
reasonable proxy for that rural area. We applied the statewide urban 
average based on the average of all urban areas within the State to 
Hinesville-Fort Stewart, Georgia (78 FR 72173), and we applied the wage 
index for Guam to American Samoa and the Northern Mariana Islands (78 
FR 72172).
    A wage index floor value (0.5000) is applied under the ESRD PPS as 
a substitute wage index for areas with very low wage index values. 
Currently, all areas with wage index values that fall below the floor 
are located in Puerto Rico. However, the wage index floor value is 
applicable for any area that may fall below the floor. A description of 
the history of the wage index floor under the ESRD PPS can be found in 
the CY 2019 ESRD PPS final rule (83 FR 56964 through 56967).
    An ESRD facility's wage index is applied to the labor-related share 
of the ESRD PPS base rate. In the CY 2019 ESRD PPS final rule (83 FR 
56963), we finalized a labor-related share of 52.3 percent, which was 
based on the 2016-based ESRDB market basket. In the CY 2021 ESRD PPS 
final rule (85 FR 71436), we updated the OMB delineations as described 
in the September 14, 2018 OMB Bulletin No. 18-04, beginning with the CY 
2021 ESRD PPS wage index. In addition, we finalized the application of 
a 5 percent cap on any decrease in an ESRD facility's wage index from 
the ESRD facility's wage index from the prior CY. We finalized that the 
transition would be phased in over 2 years, such that the reduction in 
an ESRD facility's wage index would be capped at 5 percent in CY 2021, 
and no cap would be applied to the reduction in the wage index for the 
second year, CY 2022. For CY 2023, as discussed in section II.B.1.a(2) 
of this final rule, the labor-related share to which the wage index 
will be applied is 55.2 percent, based on the 2020-based ESRDB market 
basket.
    For CY 2023, we proposed to update the ESRD PPS wage index to use 
the most recent hospital wage data. The CY 2023 ESRD PPS wage index is 
set forth in Addendum A and is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. Addendum A 
provides a crosswalk between the CY 2022 wage index and the CY 2023 
wage index. Addendum B provides an ESRD facility level impact analysis. 
Addendum B is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.
    We received several comments on our proposal to update the ESRD PPS 
wage index. The comments and our responses are set forth below.
    Comment: Four commenters, including an ESRD facility, a physician, 
and a dialysis administrator, expressed concerns that the ESRD PPS wage 
index does not reflect the realities faced by dialysis clinics and 
would lead to too low payments to hire and retain staff. These 
commenters pointed to inflation and the COVID-19 PHE as main factors 
driving the increase in healthcare wages. Several commenters 
representing a network of rural ESRD facilities indicated that they 
thought the wage index was too low for their area, not accurately 
reflecting the cost of labor.
    Response: We appreciate the concerns that commenters raised; 
however, we did not propose to change the wage index methodology for CY 
2023 and are not finalizing any changes to that methodology in this 
final rule. The wage data used to construct the ESRD PPS wage index are 
updated annually, based on the most current data available, and are 
based on OMB's CBSA delineations when applying the rural definitions 
and corresponding wage index values. As discussed in CY 2011 ESRD PPS 
final rule (75 FR 49200), the wage index reflects the relative level of 
hospital wages and wage-related costs in the geographic area in which 
the ESRD facility is located. Because the wage index is scaled relative 
to the national average, it does not reflect changes over time to the 
cost of labor. Rather, it is the market basket increase which accounts 
for national trends, including inflation. As discussed in the CY 2023 
ESRD PPS proposed rule (87 FR 38480), we proposed to increase the ESRD 
PPS base rate for CY 2023 by the market basket increase factor in 
accordance with section 1881(b)(14)(F)(i) of the Act, which provides 
that the market basket increase factor should reflect the changes over 
time in the prices of an appropriate mix of goods and services that 
reflect the costs of furnishing renal dialysis services. As discussed 
in section II.B.1.a.(3) of this CY 2023 ESRD PPS final rule, the final 
productivity-adjusted market basket update for CY 2023 is 3.0 percent 
based on the latest available data. We note that this final update is 
0.6 percentage point higher than the proposed update and reflects a 
revised outlook regarding the U.S. economy and expected price inflation 
for CY 2023 for ESRD facilities. We believe the final productivity 
adjusted market basket update will address some of the commenters' 
concerns regarding rising wages due to inflation.
    Comment: Several commenters suggested changes to the wage index 
methodology. One professional association and one non-profit dialysis 
facility suggested CMS use a wage index methodology for the ESRD PPS 
that is consistent with the inpatient payment wage index policies, 
including using a different labor-related share for ESRD facilities 
with a low wage index. A non-profit health insurance organization in 
Puerto Rico suggested CMS implement a payment adjustment for clinics 
with wage index values in the lowest quartile, similar to the system 
used by IPPS. A non-profit health insurance organization in Puerto Rico 
and a healthcare group in Puerto Rico expressed a desire for CMS to 
create a new wage index based only on data from ESRD facilities. These 
commenters claimed that the current wage index based on hospital data 
is inadequate given the differences in staffing needs between ESRD 
facilities and hospitals.
    Response: We appreciate the commenters' suggestions for modifying 
the methodology for the ESRD PPS wage index. We did not propose changes 
to the ESRD PPS wage index methodology for CY 2023, and therefore we 
are not finalizing any changes to that methodology in this final rule. 
As discussed in section II.B.1.b.(2) of this final rule, we are 
finalizing a permanent 5-percent cap on any decrease to an ESRD 
facility's wage index from its

[[Page 67159]]

wage index in the prior year, and as discussed in section II.B.1.b.(3) 
of this final rule, we are finalizing an increase to the wage index 
floor from 0.5000 to 0.6000. We believe that these final policies will 
address some of the underlying concerns of the commenters by assisting 
in the higher labor costs affecting low wage index areas, maintaining 
the ESRD PPS wage index as a relative measure of the value of labor in 
prescribed labor market areas, increasing predictability of ESRD PPS 
payments for ESRD facilities, and mitigating instability and 
significant negative impacts to ESRD facilities resulting from 
significant changes to the wage index. We did not propose and are not 
finalizing other methodological changes that commenters suggested; 
however, we will take these comments into consideration to potentially 
inform future rulemaking.
    Final Rule Action: We are finalizing our proposal to update the 
ESRD PPS wage index for CY 2023 to use the most recent hospital wage 
data, as proposed.
(2) Permanent Cap on Wage Index Decreases
    As discussed in section II.B.1.b.(1) of this final rule and in 
previous ESRD PPS rules, under the authority of section 
1881(b)(14)(D)(iv)(II) of the Act, we have proposed and finalized 
temporary, budget-neutral transition policies in the past to help 
mitigate negative impacts on ESRD facilities following the adoption of 
certain ESRD PPS wage index changes. In the CY 2015 ESRD PPS final rule 
(79 FR 66142), we implemented revised OMB area delineations using a 2-
year transition, with a 50/50 blended wage index for all ESRD 
facilities in CY 2015 \6\ and 100 percent of the wage index based on 
the new OMB delineations in CY 2016. In the CY 2021 ESRD PPS proposed 
rule (85 FR 42160 through 42161), we proposed a transition policy to 
help mitigate any negative impacts that ESRD facilities may experience 
due to our proposal to adopt the 2018 OMB delineations under the ESRD 
PPS. We noted that because the overall amount of ESRD PPS payments 
would increase slightly due to the 2018 OMB delineations, the effect of 
the wage index budget neutrality factor would be to reduce the ESRD PPS 
per treatment base rate for all ESRD facilities paid under the ESRD 
PPS, despite the fact that the majority of ESRD facilities would be 
unaffected by the 2018 OMB delineations. Thus, we explained that we 
believed it would be appropriate to provide for a transition period to 
mitigate the resulting short-term instability of a lower ESRD PPS base 
rate as well as consequential negative impacts to ESRD facilities that 
experience reduced payments. We proposed to apply a 5-percent cap on 
any decrease in an ESRD facility's wage index from its final wage index 
from the prior calendar year, that is, CY 2020. We explained that we 
believed the 5-percent cap would provide greater transparency and would 
be administratively less complex than the prior methodology of applying 
a 50/50 blended wage index (85 FR 71478). We proposed that no cap would 
be applied to the reduction in the wage index for the second year, that 
is, CY 2022 (85 FR 42161).
---------------------------------------------------------------------------

    \6\ ESRD facilities received 50 percent of their CY 2015 wage 
index value based on the OMB delineations for CY 2014 and 50 percent 
of their CY 2015 wage index value based on the newer OMB 
delineations. 79 FR 66142.
---------------------------------------------------------------------------

    Several commenters to the CY 2021 ESRD PPS proposed rule supported 
the wage index transition policy that we proposed for CY 2021; however, 
as discussed in the CY 2021 ESRD PPS final rule (86 FR 71434 through 
71436), some commenters expressed concerns about the large negative 
effects of the new labor market area delineations on certain areas. A 
patient organization suggested that the 5 percent cap may not provide 
an adequate transition for labor market areas that would experience a 
decrease in their wage index of greater than 10 percent. Similarly, a 
national non-profit dialysis organization recommended that CMS provide 
an extended transition period, beyond the proposed 5 percent limit for 
2021, for at least 3 years. Some commenters, including MedPAC, 
suggested alternatives to the methodology. MedPAC suggested that the 5 
percent cap limit should apply to both increases and decreases in the 
wage index.
    We stated in the CY 2021 ESRD PPS final rule that we believed a 5 
percent cap on the overall decrease in an ESRD facility's wage index 
value would be an appropriate transition, as it would effectively 
mitigate any significant decreases in an ESRD facility's wage index for 
CY 2021. With respect to extending the transition period for at least 3 
years, we stated that we believed this would undermine the goal of the 
wage index policy, which is to improve the accuracy of payments under 
the ESRD PPS, and would serve to further delay improving the accuracy 
of the ESRD PPS by continuing to pay certain ESRD facilities more than 
their wage data suggest is appropriate. We also stated that the 
transition policies are not intended to curtail the positive impacts of 
certain wage index changes, so it would not be appropriate to also 
apply the 5 percent cap on wage index increases. We acknowledged that a 
transition policy was necessary to help mitigate initial significant 
negative impacts from revised OMB delineations, but expressed that this 
mitigation must be balanced against the importance of ensuring accurate 
payments. We finalized the transition policy for CY 2021 as proposed. 
We did not propose to extend the transition policy for CY 2022 or 
future years, however, as we discussed in the CY 2022 ESRD PPS final 
rule (86 FR 61881), we received comments acknowledging and supporting 
the final phase-in of the updated OMB delineations for CY 2022.
    In the CY 2023 ESRD PPS proposed rule (87 FR 38482), we noted that 
based on our past wage index transition policies and public comments, 
we recognized that certain changes to our wage index policy may 
significantly affect Medicare payments to ESRD facilities. Commenters 
have raised concerns about scenarios in which changes to wage index 
policy may have significant negative impacts on ESRD facilities. 
Therefore, in the CY 2023 ESRD PPS proposed rule, we considered how 
best to address those scenarios.
    We explained that in the past, we have established transition 
policies of limited duration to phase in significant changes to labor 
market areas, such as revised OMB delineations. In taking this approach 
in the past, we sought to mitigate short-term instability and 
fluctuations that can negatively impact ESRD facilities due to wage 
index changes. In accordance with the ESRD PPS wage index regulations 
at Sec.  413.231(a), we adjust the labor-related portion of the base 
rate to account for geographic differences in the area wage levels 
using an appropriate wage index that is established by CMS, and which 
reflects the relative level of hospital wages and wage-related costs in 
the geographic area in which the ESRD facility is located. Our policy 
is generally to use the most current hospital wage data and analysis 
available to ensure the accuracy of the ESRD PPS wage index, in 
accordance with Sec.  413.196(d)(2). As discussed in the CY 2023 ESRD 
PPS proposed rule (87 FR 38482) as well as earlier in this section of 
the final rule, we believe that past wage index transition policies 
have helped mitigate initial significant negative impacts from changes 
such as revised OMB delineations. However, we recognized that changes 
to the wage index have the potential to create instability and 
significant negative impacts on certain ESRD facilities even when labor 
market areas do not change as a result of revised OMB delineations.

[[Page 67160]]

In addition, we noted in the proposed rule that year-to-year 
fluctuations in an area's wage index can occur due to external factors 
beyond an ESRD facility's control, such as the COVID-19 PHE, and for an 
individual ESRD facility, these fluctuations can be difficult to 
predict. While we have maintained that temporary transition policies 
provide sufficient time for facilities to make operational changes for 
future CYs and have noted separate agency actions to address certain 
external factors, such as the issuance of waivers and flexibilities 
during the COVID-19 PHE (85 FR 71435), we also recognized that 
predictability in Medicare payments is important to enable ESRD 
facilities to budget and plan their operations.
    In light of these considerations, we proposed a permanent 
mitigation policy to smooth the impact of year-to-year changes in ESRD 
PPS payments related to decreases in the ESRD PPS wage index. We 
proposed a policy that we believed would increase the predictability of 
ESRD PPS payments for ESRD facilities; mitigate instability and 
significant negative impacts to ESRD facilities resulting from changes 
to the wage index; and use the most current data to maintain the 
accuracy of the ESRD PPS wage index.
    In the CY 2023 ESRD PPS proposed rule, we stated that we believed 
our transition policy that applied a 5-percent cap on wage index 
decreases for CY 2021 provided greater transparency and was 
administratively less complex than prior transition methodologies. In 
addition, we stated that we believed this methodology mitigated short-
term instability and fluctuations that can negatively impact ESRD 
facilities due to wage index changes. We also stated that we believed 
the 5-percent cap we applied to all wage index decreases for CY 2021 
provided an adequate safeguard against significant and unpredictable 
payment reductions in that year, related to the adoption of the revised 
OMB delineations. However, we recognized there are circumstances that a 
2-year transition policy, like the one adopted for CY 2021, would not 
effectively address for future years in which ESRD facilities continue 
to be negatively affected by significant wage index decreases. 
Therefore, we proposed a permanent policy that we believed would 
eliminate the need for temporary and potentially uncertain transition 
adjustments to the wage index in the future due to specific policy 
changes or circumstances outside ESRD facilities' control (for example, 
public health or other emergencies, or the adoption of future OMB 
revisions to the CBSA delineations through rulemaking).
    As we noted in the CY 2023 ESRD PPS proposed rule (87 FR 38482), 
typical year-to-year variation in the ESRD PPS wage index has 
historically been within 5 percent, and we expected this would continue 
to be the case in future years. We explained that, because ESRD 
facilities are usually experienced with this level of wage index 
fluctuation, we believed applying a 5-percent cap on all wage index 
decreases each year, regardless of the reason for the decrease, would 
effectively mitigate instability in ESRD PPS payments due to any 
significant wage index decreases that may affect ESRD facilities in a 
year. Therefore, we stated, we believed this approach would address 
concerns about instability that commenters raised in response to the CY 
2021 ESRD PPS proposed rule. In addition, we stated that we believed 
applying a 5-percent cap on all wage index decreases would support 
increased predictability about ESRD PPS payments for ESRD facilities, 
enabling them to more effectively budget and plan their operations. 
Lastly, because applying a 5-percent cap on all wage index decreases 
would represent a small overall impact on the labor market area wage 
index system, we stated that we believed it would still ensure the wage 
index is a relative measure of the value of labor in prescribed labor 
market areas. We noted that with a permanent cap, we would be able to 
continue to update the wage index with the most current hospital wage 
data as required under Sec.  413.196(d)(2) to more accurately align the 
use of labor resources with ESRD PPS payment while mitigating the 
instability in payments to individual ESRD facilities that such updates 
may otherwise cause. We discussed that we would compute a wage index 
budget-neutrality adjustment factor that is applied to the ESRD PPS 
base rate. We estimated that applying a 5-percent cap on all wage index 
decreases would have a very small effect on the wage index budget 
neutrality factor for CY 2023, and therefore would have a small effect 
on the ESRD PPS base rate. We stated that this small effect on budget 
neutrality also demonstrates that this policy would have a minimal 
impact on the ESRD PPS wage index overall. The wage index \7\ is a 
measure of the value of labor (wage and wage-related costs) in a 
prescribed labor market area relative to the national average. 
Therefore, we anticipated that in the absence of any proposed wage 
index policy changes such as changes to OMB delineations, most ESRD 
facilities would not experience year-to-year wage index declines 
greater than 5 percent in any given year. Therefore, we anticipated 
that the impact to the wage index budget neutrality factor in future 
years would continue to be minimal. We also stated that we believed 
that when the 5-percent cap would be applied under this policy, it 
likely would be applied similarly to all ESRD facilities in the same 
labor market area, as the hospital average hourly wage data in the CBSA 
(and any relative decreases compared to the national average hourly 
wage) would be similar. While this policy may result in ESRD facilities 
in a CBSA receiving a higher wage index than others in the same area 
(such as in situations when OMB delineations change), we stated that we 
believed the impact would be temporary, as the average hourly wage of 
facilities in a labor market would tend to converge to the mean average 
hourly wage of the CBSA.
---------------------------------------------------------------------------

    \7\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/AcuteInpatientPPS/
wageindex#:~:text=A%20labor%20market%20area's%20wage,portion%20of%20t
he%20standardized%20amounts.
---------------------------------------------------------------------------

    As noted previously, section 1881(b)(14)(D)(iv)(II) of the Act 
provides that the ESRD PPS may include a geographic wage index payment 
adjustment, such as the index referred to in section 1881(b)(12)(D) of 
the Act, as the Secretary determines to be appropriate. Under our 
regulations at Sec.  413.231(a), we must use an appropriate wage index 
to adjust the labor-related portion of the base rate to account for 
geographic differences in the area wage levels. We stated in the CY 
2023 ESRD PPS proposed rule that we believed a 5-percent cap on wage 
index decreases would be appropriate for the ESRD PPS. Therefore, for 
CY 2023 and subsequent years, we proposed to apply a 5-percent cap on 
any decrease to an ESRD facility's wage index from its wage index in 
the prior year, regardless of the circumstances causing the decline. 
That is, an ESRD facility's wage index for CY 2023 would not be less 
than 95 percent of its final wage index for CY 2022, regardless of 
whether the ESRD facility is part of an updated CBSA, and for 
subsequent years, an ESRD facility's wage index would not be less than 
95 percent of its wage index calculated in the prior CY. We noted this 
also would mean that if an ESRD facility's prior CY wage index is 
calculated with the application of the 5-percent cap, the following 
year's wage index would not be less than 95 percent of the ESRD 
facility's capped wage index in the prior CY. For example, if an ESRD 
facility's wage index for CY

[[Page 67161]]

2023 is calculated with the application of the 5-percent cap, then its 
wage index for CY 2024 would not be less than 95 percent of its capped 
wage index in CY 2023. Lastly, we stated that a newly opened or newly 
certified ESRD facility would be paid the wage index for the area in 
which it is geographically located for its first full or partial CY 
with no cap applied, because a new ESRD facility would not have a wage 
index in the prior CY. We proposed to reflect the permanent cap on wage 
index decreases in our regulations at Sec.  413.231(c).
    We received several comments on our proposal to establish a 
permanent cap on wage index decreases for the ESRD PPS. The comments 
and our responses are set forth below.
    Comment: Commenters broadly supported the proposed 5-percent cap on 
wage index decreases. A coalition of dialysis organizations expressed 
appreciation that CMS recognized the need for greater predictability to 
avoid negative impacts on ESRD facilities, but noted that the wage 
index continues to raise concern among many of its members and that a 
conversation around the wage index and the implications of the budget 
neutrality requirement should take place. One LDO encouraged CMS to 
also engage with the kidney care community and use its statutory 
authority to develop and apply an alternative to the hospital wage 
index.
    Response: We thank the commenters for their support. We also 
appreciate the general concerns that commenters raised about the wage 
index. We did not propose for CY 2023 any of the changes to the ESRD 
PPS wage index that these commenters suggested, but we will take these 
suggestions into consideration to potentially inform future rulemaking.
    Comment: MedPAC supported the proposal to cap wage index decreases 
at 5 percent, but suggested also applying a cap to wage index increases 
of more than 5 percent.
    Response: We appreciate MedPAC's suggestion that the cap on wage 
index changes of more than 5 percent should also be applied to 
increases in the wage index. However, as we discussed in the CY 2023 
ESRD PPS proposed rule (87 FR 38482), one purpose of the proposed 
policy is to help mitigate the significant negative impacts of certain 
wage index changes. As we noted in the proposed rule, we believe that 
applying a 5-percent cap on all wage index decreases would support 
increased predictability about ESRD PPS payments for ESRD facilities, 
enabling them to more effectively budget and plan their operations. 
That is, we proposed to cap decreases because we believe that an ESRD 
facility would be able to more effectively budget and plan when there 
is predictability about its expected minimum level of ESRD PPS payments 
in the upcoming CY. We did not propose to limit wage index increases 
because we do not believe such a policy is needed to enable ESRD 
facilities to more effectively budget and plan their operations. For 
these reasons, we believe it is appropriate for ESRD facilities that 
experience an increase in their wage index value to receive that wage 
index value.
    Comment: Several commenters, including a nonprofit dialysis 
association, an LDO, and a couple of independent ESRD facilities 
encouraged CMS to implement the proposed 5-percent cap in a way that 
would protect facilities that experienced substantial reductions to 
their wage index due to the adoption of the new CBSA delineations in CY 
2021.
    Response: As we noted earlier in this final rule, we stated in the 
CY 2021 ESRD PPS final rule that we believed a 5-percent cap on the 
overall decrease in an ESRD facility's wage index value would be an 
appropriate transition, as it would effectively mitigate any 
significant decreases in an ESRD facility's wage index for CY 2021. We 
indicated that no cap would be applied to the reduction in the second 
year, CY 2022. We did not propose to extend the transition policy for 
CY 2022 or future years, however, as we discussed in the CY 2022 ESRD 
PPS final rule (86 FR 61881), we received comments acknowledging and 
supporting the final phase-in of the updated OMB delineations for CY 
2022. We have historically implemented transitions of limited duration, 
such as in the CY 2015 ESRD PPS final rule (79 FR 66142), to address 
CBSA changes due to substantial updates to OMB delineations. As 
discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38482) and 
earlier in this final rule, our policy is generally to use the most 
current hospital wage data and analysis available to ensure the 
accuracy of the ESRD PPS wage index, in accordance with Sec.  
413.196(d)(2). In accordance with this general policy, we proposed to 
use the most recent pre-floor, pre-reclassified hospital wage data 
collected annually under the inpatient PPS and the most recent prior-
year ESRD PPS wage index to determine the facilities to which the 5-
percent cap would apply in CY 2023. We proposed that the CY 2023 ESRD 
PPS 5-percent cap wage index policy would be prospective to mitigate 
any significant decreases beginning in CY 2023.
    Final Rule Action: After consideration of the comments received, 
for CY 2023 and subsequent years, we are finalizing as proposed a 
permanent 5-percent cap on any decrease to an ESRD facility's wage 
index from its wage index in the prior year, which we will apply in a 
budget-neutral manner. This means that an ESRD facility's wage index 
for CY 2023 will not be less than 95 percent of its final wage index 
for CY 2022, and for subsequent years, an ESRD facility's wage index 
will not be less than 95 percent of its wage index calculated in the 
prior CY. Also, if an ESRD facility's prior CY wage index is calculated 
with the application of the 5 percent cap, the following year's wage 
index will not be less than 95 percent of the ESRD facility's capped 
wage index in the prior CY. We are also finalizing as proposed that a 
newly opened or newly certified ESRD facility will be paid the wage 
index for the area in which it is geographically located for its first 
full or partial CY with no cap applied, because a new ESRD facility 
would not have a wage index in the prior CY. We will reflect the 
permanent cap on wage index decreases in our regulations at Sec.  
413.231(c) by stating that beginning January 1, 2023, CMS applies a cap 
on decreases to the wage index, such that the wage index applied to an 
ESRD facility is not less than 95 percent of the wage index applied to 
that ESRD facility in the prior calendar year.
    As previously discussed in this final rule, we believe this 
mitigation policy will maintain the ESRD PPS wage index as a relative 
measure of the value of labor in prescribed labor market areas, 
increase predictability of ESRD PPS payments for ESRD facilities, and 
mitigate instability and significant negative impacts to ESRD 
facilities resulting from significant changes to the wage index. In 
section VII.D.5 of this final rule, we estimate the impact to payments 
for ESRD facilities in CY 2023 based on this policy. We also note that 
we will examine the effects of this policy on an ongoing basis in the 
future to assess its continued appropriateness.
(3) Update to ESRD PPS Wage Index Floor
(a) Background
    A wage index floor value is applied under the ESRD PPS as a 
substitute wage index for areas with very low wage index values. 
Currently, all areas with wage index values that fall below the floor 
are located in Puerto Rico; however, the wage index floor value is 
applicable for any area that may fall below the floor.

[[Page 67162]]

    In the CY 2011 ESRD PPS final rule (75 FR 49116 through 49117), we 
finalized a policy to reduce the wage index floor by 0.05 for each of 
the remaining years of the ESRD PPS transition, that is, until CY 2014. 
We applied a 0.05 reduction to the wage index floor for CYs 2012 and 
2013, resulting in a wage index floor of 0.5500 and 0.5000, 
respectively (CY 2012 ESRD PPS final rule, 76 FR 70241). We continued 
to apply and reduce the wage index floor by 0.05 in CY 2013 (77 FR 
67459 through 67461). Although we only intended to provide a wage index 
floor during the 4-year transition in the CY 2014 ESRD PPS final rule 
(78 FR 72173), we decided to continue to apply the wage index floor and 
reduce it by 0.05 per year for CY 2014 and for CY 2015, resulting in a 
wage index floor of 0.4500 and 0.4000, respectively.
    In the CY 2016 ESRD PPS final rule (80 FR 69006 through 69008), 
however, we decided to maintain a wage index floor of 0.4000, rather 
than further reduce the floor by 0.05. We stated that we needed more 
time to study the wage indices that are reported for Puerto Rico to 
assess the appropriateness of discontinuing the wage index floor (80 FR 
69006).
    In the CY 2017 ESRD PPS proposed rule (81 FR 42817), we presented 
the findings from analyses of ESRD facility cost report and claims data 
submitted by facilities located in Puerto Rico and mainland facilities. 
We solicited public comments on the wage index for CBSAs in Puerto Rico 
as part of our continuing effort to determine an appropriate policy. We 
did not propose to change the wage index floor for CBSAs in Puerto 
Rico, but we requested public comments and feedback on the suggestions 
that were submitted in the CY 2016 ESRD PPS final rule (80 FR 69007). 
After considering the public comments we received regarding the wage 
index floor, in the CY 2017 ESRD PPS final rule, we finalized a wage 
index floor of 0.4000 (81 FR 77858).
    In the CY 2018 ESRD PPS final rule (82 FR 50747), we finalized a 
policy to permanently maintain the wage index floor of 0.4000, because 
we believed it was set at an appropriate level to provide additional 
payment support to the lowest wage areas. This policy also obviated the 
need for an additional budget-neutrality adjustment that would reduce 
the ESRD PPS base rate, beyond the adjustment needed to reflect updated 
hospital wage data, to maintain budget neutrality for wage index 
updates.
    In the CY 2019 ESRD PPS proposed rule (83 FR 34328 through 34330), 
we proposed to increase the wage index floor from 0.4000 to 0.5000. We 
conducted various analyses to support our proposal to increase the wage 
index floor from 0.4000 to 0.5000. We calculated alternative wage 
indexes for Puerto Rico that combined labor quantities, that is FTEs, 
from cost reports with BLS wage information to create two regular 
Laspeyres price indexes \8\ (ranging between 0.510 and 0.550). We 
discuss this analysis in detail in the following paragraphs, however, 
the complete discussion can be found in the CY 2019 ESRD PPS proposed 
rule at 83 FR 34328 through 34330.
---------------------------------------------------------------------------

    \8\ A Laspeyres index is an index formula used in price 
statistics for measuring price development of the basket of goods 
and services consumed in the base period (https://ec.europa.eu/
eurostat/statistics-explained/
index.php?title=Glossary:Laspeyres_price_index#:~:text=The%20Laspeyre
s%20price%20index%20is,cost%20in%20the%20current%20period).
---------------------------------------------------------------------------

    In response to the CY 2019 wage index floor proposal, we received 
several comments. One commenter opposed the proposal and expressed 
concern over the data sources used to develop the wage indexes in 
general. This commenter requested additional documentation of our 
analysis to determine the two alternative wage indices for Puerto Rico. 
Several commenters expressed support for the proposal to increase the 
wage index from 0.40 in 2018 to 0.50 for CY 2019 and subsequent years, 
because they believed it would assist ESRD facilities in providing 
access to high-quality care particularly in rural areas where access 
challenges may be present. Some commenters expressed support for CMS's 
position that the then-current wage index floor was too low; however, 
they recommended CMS set the wage index floor higher than 0.5000 
(specifically, at 0.5936, which was identified as the lower boundary of 
CMS's statistical outlier analysis as discussed further in this section 
of the final rule).
    In response to these comments, in the CY 2019 ESRD PPS final rule 
(83 FR 56967), we stated that we continued to believe that a wage index 
floor of 0.5000 struck an appropriate balance between providing 
additional payments to areas that fell below the wage floor while 
minimizing the impact on the ESRD PPS base rate. We noted that the 
purpose of the wage index adjustment is to recognize differences in 
ESRD facility resource use for wages specific to the geographic area in 
which facilities are located. While a wage index floor of 0.5000 
continued to be the lowest wage index nationwide, we noted that the 
areas subject to the floor continued to have the lowest wages compared 
to mainland facilities. We noted that the increase to the wage index 
floor to 0.5000 was a 25 percent increase over the then-current floor 
and would provide a higher wage index for all facilities in Puerto Rico 
where wage indexes, based on hospital reported data, range from .3300 
to .4400. For these reasons, we stated that we believed a wage index 
floor of 0.5000 was appropriate and would support labor costs in low 
wage areas.
    Therefore, in the CY 2019 ESRD PPS final rule (83 FR 56964 through 
56967), we finalized an increase to the wage index floor from 0.4000 to 
0.5000 for CY 2019 and subsequent years. We explained that we revisited 
our evaluation of payments to ESRD facilities located in the lowest 
wage areas to be responsive to comments from interested parties and to 
ensure payments under the ESRD PPS are appropriate. We provided 
statistical analyses that supported a higher wage index floor and 
finalized an increase from 0.4000 to 0.5000 to safeguard access to care 
in affected areas.
    As noted previously in this final rule, currently, all areas with 
wage index values that fall below the floor are located in Puerto Rico; 
however, the wage index floor value is applicable for any area that may 
fall below the floor. The wage index floor of 0.5000 has been in effect 
since January 1, 2019.
    We did not include any wage index floor proposals in the CY 2022 
ESRD PPS proposed rule, however, we received several public comments 
regarding the wage index floor. As discussed in the CY 2022 ESRD PPS 
final rule (86 FR 61881), three commenters, including a large dialysis 
organization, a non-profit health insurance organization in Puerto 
Rico, and a healthcare group in Puerto Rico, commented on the wage 
index for ESRD facilities located in Puerto Rico. These commenters 
recommended that CMS increase the wage index floor from 0.5000 to 
0.5500, noting that in the CY 2019 ESRD PPS proposed rule, CMS reported 
that its own analysis indicated that Puerto Rico's wage index likely 
lies between 0.5100 and 0.5500. They noted that CMS further stated that 
any wage index values less than 0.5936 are considered outlier values. 
They also pointed out that CMS still finalized a floor at 0.5000 and 
that we characterized it as a balance between providing additional 
payments to affected areas while minimizing the impact on the ESRD PPS 
base rate. Another commenter recommended that CMS evaluate policy 
inequities between the ESRD PPS wage index for ESRD

[[Page 67163]]

facilities located in Puerto Rico compared to other states and 
territories, taking into consideration the unique circumstances that 
affect Puerto Rico, including its shortage of healthcare specialists 
and labor work force, remote geography, transportation and freighting 
costs, drug pricing, and lack of transitional care services.
    In response to these comments, we stated in the CY 2022 ESRD PPS 
final rule that we would not finalize any changes to those policies 
since we did not propose any changes to the wage index floor or wage 
index methodology for CY 2022, but would take these suggestions into 
account when considering future rulemaking.
(b) CY 2023 Wage Index Floor Proposal
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index adjustment, such as the index 
referred to in section 1881(b)(12)(D) of the Act, as the Secretary 
determines to be appropriate. Based on this authority, in the CY 2023 
ESRD PPS proposed rule (87 FR 38483 through 38486), we proposed to 
increase the wage index floor in accordance with the Secretary's 
efforts to account for geographic differences in an area's wage levels 
using an appropriate wage index which reflects the relative level of 
hospital wages and wage-related costs in the geographic area in which 
the ESRD facility is located.
    For CY 2023 and subsequent years, we proposed to increase the wage 
index floor to 0.6000. We stated that we believed that this wage floor 
increase is responsive to comments from interested parties, safeguards 
access to care in areas at the lowest end of the current wage index 
distribution, and is supported by data and analyses that support a 
higher wage index floor, as discussed in the following subsections.
(i) Analysis of Puerto Rico Cost Reports for the CY 2019 ESRD PPS 
Rulemaking
    We explained that for the CY 2019 ESRD PPS proposed rule (83 FR 
34329 through 34330), we performed an analysis using ESRD facility cost 
reports and wage information specific to Puerto Rico from the BLS 
(https://www.bls.gov/oes/2015/may/oes_pr.htm). The analysis utilized 
data from cost reports for freestanding facilities and for hospital-
based facilities in Puerto Rico for CYs 2013 through 2015.
    Using these data, we calculated alternative wage indexes for Puerto 
Rico that combined labor quantities, that is FTEs, from cost reports 
with BLS wage information to create two regular Laspeyres price 
indexes. In the context of this analysis, a Laspeyres price index can 
be viewed as a relative, weighted average wage of labor in each 
geographical area. This average combines the wages of various labor 
categories according to certain weights. The two indexes we considered 
used the same BLS-derived wages but different weights. The first index 
used quantity weights derived from the overall U.S. use of labor 
inputs. The second index used quantity weights derived from the Puerto 
Rico use of labor inputs. The alternative wage indexes derived from the 
analysis indicated that Puerto Rico's wage index likely lies between 
0.5100 and 0.5500. As noted earlier in this section of this final rule 
and discussed in the CY 2019 ESRD PPS final rule (83 FR 56967), 
commenters have noted that both values are above the current wage index 
floor and suggest that the current 0.5000 wage index floor may be too 
low. Commenters pointed out CMS's analysis shows that Puerto Rico's 
wage index likely lies between 0.51 and 0.55, while additional analyses 
note that any wage index values less than 0.5936 are considered outlier 
values, with 0.5936 therefore as the lower wage index boundary. They 
expressed concern that in the CY 2019 ESRD PPS proposed rule CMS 
proposed a new floor of only 0.5000 even though the present methodology 
applied to Puerto Rico has created the only outlier in the U.S. As we 
stated in the CY 2019 ESRD PPS final rule (83 FR 56967), at that time, 
we believed that a wage index floor of 0.5000 struck an appropriate 
balance between providing additional payments to areas that fall below 
the wage floor while minimizing the impact on the ESRD PPS base rate. 
At the time, we conducted analyses to gauge the appropriateness of the 
then-current wage index floor of 0.4000 and determine whether it was 
too low. We did not propose to use these analyses to determine the 
exact value for a new wage index floor.
    Specifically, as we explained in the CY 2019 ESRD PPS final rule, 
CMS performed a statistical outlier analysis to identify the upper and 
lower boundaries of the distribution of the current wage index values 
and remove outlier values at the edges of the distribution. In the 
general sense, an outlier is an observation that lies outside a defined 
range from other values in a population. In this case, the population 
of values is the various wage indexes within the CY 2019 wage index. 
The lower and upper quartiles (the 25th and 75th percentiles) are also 
used. The lower quartile is Q1 and the upper quartile is Q3. The 
difference (Q3-Q1) is called the interquartile range (IQR). The IQR is 
used in calculating the inner and outer fences of a data set. The inner 
fences are needed for identifying mild outlier values in the edges of 
the distribution of a data set. Any values in the data set that are 
outside of the inner fences are identified as an outlier. The standard 
multiplying value for identifying the inner fences is 1.5. First, we 
identified the Q1 and Q3 quartiles of the CY 2018 wage index, which are 
as follows: Q1 = 0.8303 and Q3 = 0.9881. Next, we identified the IQR: 
IQR = 0.9881-0.8303 = 0.1578. Finally, we identified the inner fence 
values as shown below. Lower inner fence: Q1-1.5*IQR = 0.8303-(1.5 x 
0.1578) = 0.5936. This statistical outlier analysis demonstrated that 
any wage index values less than 0.5936 are considered outlier values, 
and 0.5936 as the lower boundary also suggested that the current wage 
index floor could be appropriately reset at a higher level.
    Based on these analyses, we finalized a wage index floor of 0.5000 
in the CY 2019 ESRD PPS final rule. We continued to apply the wage 
index floor of 0.5000 per year through CY 2022. Although we did not 
propose specific policies relating to the wage index floor in the CY 
2022 ESRD PPS proposed rule, commenters on that rule noted that past 
hurricanes and the COVID-19 PHE have created infrastructure challenges 
that lead to high costs of dialysis care. These commenters requested 
CMS increase the wage index floor. In the CY 2023 ESRD PPS proposed 
rule, we stated that in response to comments and our continued concern 
regarding access, we were revisiting the CY 2019 analysis, and believed 
that the statistical analysis of the CY 2019 data indicated that a wage 
index floor as high as 0.5936 would be appropriate.
(ii) Analysis of the CY 2023 ESRD PPS Final Rule Analytic File
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38385 
through 38486), we performed an analysis to compare the impact of three 
options to adjust the wage index floor upward using the CY 2023 ESRD 
PPS final rule analytic file. The analytic file included qualifying 
data for beneficiaries for whom a 72x claim for renal dialysis services 
was submitted in the outpatient file setting during CY 2021. We 
analyzed the impact of three options for adjustment for the wage index 
floor: (1) wage index floor of 0.5000 (that is, no change), (2) wage 
index floor of 0.5500, and (3) wage index floor of 0.6000. 
Specifically, we examined how these three options would potentially 
impact the base rate,

[[Page 67164]]

outlier thresholds, and average payment rates for all ESRD facilities.
    Among the three options, we considered the wage index floor of 
0.5000 as the baseline or starting point used for comparisons. We then 
compared the impact on various aspects of the ESRD PPS under the 
alternative options using the 0.5500 and 0.6000 wage index floor.
    First, we examined the potential impact on the proposed base rate 
for CY 2023 (87 FR 38485). Under the baseline (wage index value of 
0.5000), the proposed base rate for CY 2023 would be $264.14. The 
remaining two options (0.5500 floor and 0.6000 floor) would result in a 
proposed base rate of $264.11 and $264.09, respectively. We noted that 
these options would decrease the ESRD PPS base rate due to the 
application of the budget neutrality factor for each option, however as 
discussed in the following paragraph, we noted that the overall impact 
to ESRD PPS payments would be negligible.
    Next, we examined the potential impact to the proposed outlier 
thresholds for CY 2023. Relative to the baseline (wage index floor 
value of 0.5000), all options would have little or no impact on either 
the proposed outlier MAP or the FDL. Lastly, we examined the potential 
impact to overall ESRD facility payments. After accounting for all 
payment adjustments under the ESRD PPS and applying the proposed budget 
neutrality factor for each option, we noted in the proposed rule that 
all options would be associated with a 3.00 percent increase in 
projected payments for CY 2023 due to the proposed market basket update 
and proposed outlier FDL and MAP amounts. We estimated that the change 
in overall payments attributable to increasing the wage index floor 
would be less than 0.01 percentage point. However, we estimated that 
there would be a significant increase in payments to ESRD facilities 
located in Puerto Rico. Under the 0.5500 wage index floor option, we 
estimated that payments to ESRD facilities in Puerto Rico would 
increase by approximately 3.8 percent relative to the 0.5000 wage index 
floor option. Under the 0.6000 wage index floor option, we estimated 
that payments to Puerto Rico facilities would increase by approximately 
7.6 percent relative to the 0.5000 floor. In other words, increasing 
the wage index floor to 0.6000 would maximize the positive impacts for 
ESRD facilities located in Puerto Rico while continuing to minimize the 
impact to overall ESRD PPS payments.
    As noted previously, the statistical analysis presented in the CY 
2019 ESRD PPS rulemaking resulted in values for the lower and upper 
fences for appropriate wage index values (lower = 0.5936, upper = 
0.7514). Any values in the data set that are outside of the fences are 
identified as an outlier. Therefore, we stated, the analysis indicated 
that a wage index floor of 0.5936 would be appropriate, because any 
wage index values less than 0.5936 or greater than 0.7514 would be 
considered outlier values, and a wage index value within the fences 
could be appropriate. For greater simplicity and public understanding, 
we proposed to round the lower fence of 0.5936 to the nearest 0.05, to 
align with the increment of change that we previously adopted in the CY 
2011 ESRD PPS final rule (75 FR 49116 through 49117) for historical 
reductions to the ESRD PPS wage index floor. As a result, after 
rounding to the nearest 0.05, a wage index floor of 0.6000 would be in 
line with the data.
    We noted that we strive for a wage index floor value that maintains 
the accuracy of payments under the ESRD PPS, that is, has minimal 
impact on the base rate, outlier thresholds, and average payment rates 
for all ESRD facilities. Based on our analysis of several options using 
the most recent analytic file for this final rule, we identified that a 
value near the lower fence of 0.5936 as described in the prior 
paragraph would maximize the positive impacts for ESRD facilities with 
wage indexes below the floor while continuing to minimize the impact to 
overall ESRD PPS payments.
(iii) Wage Index Floor Proposed Action
    Based on our re-evaluation the CY 2019 analysis and subsequent 
analysis of several options using the most recent analytic file for the 
CY 2023 ESRD PPS proposed rule, we proposed to increase the wage index 
floor to 0.6000. We stated that we believed our analyses supported that 
wage index floor value and would strike the right balance between 
providing increased payment to areas for which labor costs are higher 
than the current wage index for the relevant CBSAs indicate, while 
maintaining the accuracy of payments under the ESRD PPS and minimizing 
the overall impact to all ESRD facilities. In addition, we proposed to 
amend Sec.  413.231 by adding new paragraph (d) to reflect this change 
and to codify the wage index floor policy. We stated we believed this 
increase from the current 0.5000 wage index floor value would minimize 
the impact to the base rate while providing increased payment to areas 
that need it.
    Currently, only rural Puerto Rico and 8 urban CBSAs in Puerto Rico 
receive the wage index floor of 0.5000. The next lowest wage index is 
the Virgin Islands CBSA with a value of 0.6002. All CBSAs in Puerto 
Rico would be subject to the wage index floor of 0.6000. Though the 
wage index floor value currently would only affect areas in Puerto 
Rico, we noted that, consistent with our established policy, the 
proposed wage index floor value of 6.000 would be applicable for any 
area that may fall below the floor.
    We solicited comment on the proposal to increase the wage index 
floor from 0.5000 to 0.6000. The comments and our responses are set 
forth below.
    Comment: MedPAC expressed opposition to the proposed wage index 
floor increase and expressed that wage index floors and related 
policies distort area wage indexes. MedPAC recommended that CMS 
establish an ESRD PPS wage index for all ESRD facilities using wage 
data that represents all employers and industry-specific occupational 
weights, rather than the hospital wage data currently used. Several 
commenters also agreed with MedPAC's recommendation to establish a wage 
index specific to ESRD facilities.
    Response: We appreciate MedPAC's comments, but we do not agree with 
the suggestion that the proposed wage index floor would distort area 
wage indexes under the ESRD PPS. As our analysis shows, wage indexes 
below the lower fence of 0.5936 are statistical outliers, so the 
application of the floor would serve to improve rather than distort the 
accuracy of the ESRD PPS wage index overall. Further, our analysis of 
the impact to the ESRD PPS base rate indicates that the proposed wage 
index floor would strike the right balance between providing increased 
payment to areas for which labor costs are higher than the current wage 
index for the relevant CBSAs indicate, while maintaining the accuracy 
of payments under the ESRD PPS and minimizing the overall impact to all 
ESRD facilities.
    We appreciate the feedback that we should use wage data that 
represents all employers and industry-specific occupational weights for 
the ESRD PPS wage index. We note that for our analysis to determine if 
the wage index floor could be appropriately set at a higher value, we 
used wage data from the BLS and FTEs by occupation reported on the cost 
reports for independent ESRD facilities. Specifically, we calculated 
labor weights by occupation for Puerto Rico and the greater U.S. as the 
treatment weighted average of the FTEs reported on independent facility 
cost reports. We did not include hospital-based cost

[[Page 67165]]

report data because the occupations for which the FTEs were reported 
were not identical between independent and hospital-based cost reports. 
Although an ESRD facility wage index that more specifically targets the 
labor mix applicable to ESRD facilities could potentially identify more 
granular cost differences between labor market areas, some commenters 
expressed concern that it could increase the reporting burden on ESRD 
facilities. We appreciate MedPAC's suggestions for establishing a new 
wage index for the ESRD PPS and may consider these recommendations for 
potential future rulemaking.
    Comment: Several commenters, including a national dialysis 
provider, an LDO, and an insurance organization, expressed support for 
finalizing the wage index floor policy as proposed. The commenters who 
supported our proposal stated that a wage index floor increase to 
0.6000 would improve access and quality of care for Medicare ESRD 
beneficiaries in Puerto Rico, given that all areas with wage index 
values below the floor are in Puerto Rico. These commenters stated that 
a wage index floor of 0.6000 would improve equality amongst all ESRD 
facilities given that the next lowest wage index value outside of 
Puerto Rico is the Virgin Islands, with a proposed wage index value of 
0.6004. These commenters stated that health equity in the Medicare 
program would be served by minimizing payment disparities between the 
lowest and highest paid ESRD facilities.
    Response: We thank the commenters for their support of the wage 
index floor proposal. We are aiming to strike a balance between 
providing increased payment to areas where actual labor costs are 
higher than the current wage index indicates while minimizing the 
overall impact to all ESRD facilities. We believe a wage index floor of 
0.6000 is appropriate and will support labor costs in low wage areas.
    Comment: While most commenters supported finalizing the wage index 
floor policy as proposed, these same commenters also stated that CMS 
should consider future refinements to the wage index floor policy. 
Commenters claimed that the current analysis is based on the data from 
cost reports from the years 2013 through 2015. Commenters explained 
that since 2015, the economic situation in Puerto Rico has worsened due 
to natural disasters, PHEs, post COVID-19 inflation, and new economic 
measures imposed under the Puerto Rico Oversight, Management, and 
Economic Stability Act. The commenters stated that CMS should conduct 
new analysis of cost reports for free-standing and hospital-based ESRD 
facilities in Puerto Rico and increase the wage index floor to 0.7000.
    Response: As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 
38483 through 38486), we revisited our analysis using ESRD facility 
cost reports and wage information specific to Puerto Rico from the BLS 
utilizing data from cost reports for freestanding facilities and for 
hospital-based facilities in Puerto Rico for CYs 2013 through 2015. We 
used this data to determine if the wage index floor could be 
appropriately set at a higher value. We did not propose to use these 
analyses to determine the exact value for a new wage index floor. 
Instead, we considered the cost report analyses, along with the 
analysis of the CY 2023 ESRD PPS proposed rule analytic file, to 
determine a higher wage index floor, which assists ESRD facilities in 
areas with low wage index levels while maintaining the accuracy of 
payments under the ESRD PPS. We appreciate these recommendations 
regarding our wage index floor analysis and may consider these 
suggestions for potential future rulemaking.
    In our efforts to strike a balance between resource use and 
payment, we also stated in the CY 2023 ESRD PPS proposed rule (87 FR 
38484 through 38486) that our analysis of several options using the 
most recent analytic file for the CY 2023 proposed rule showed that a 
higher wage index floor will slightly decrease the ESRD PPS base rate 
for all ESRD facilities due to the application of the budget neutrality 
factor. Given that increasing the wage index floor results in 
proportional decrease in the base rate for all facilities, we must 
establish a value that that maintains the accuracy of payments under 
the ESRD PPS. An increase to the wage index floor to 0.6000 is a 20 
percent increase over the current wage index floor and will provide a 
higher wage index for all facilities in areas that fall below the 
floor, which are currently all located in Puerto Rico, and will assist 
in the higher labor costs affecting low wage index areas. We continue 
to believe that a wage index floor of 0.6000 strikes an appropriate 
balance between providing additional payments to areas that fall below 
the wage index floor while minimizing the impact on average payment 
rates for all ESRD facilities.
    Comment: Some commenters made additional comments regarding Puerto 
Rico and the staffing difficulties ESRD facilities face there. 
Commenters expressed their belief that failing economic factors have 
led to a relocation of health care professionals from Puerto Rico to 
the U.S. mainland. Commenters expressed their belief that ESRD 
facilities have had to increase wages to retain qualified staff. 
Commenters stated that under local regulation, Puerto Rico ESRD 
facilities can only employ Registered Nurses (RNs) rather than 
technicians for medical care. Commenters also stated that under local 
regulation, RNs and other ESRD facility staff in Puerto Rico must be 
bilingual. Commenters explained that for these reasons ESRD facility 
staff are costlier in Puerto Rico.
    Response: We thank commenters for the additional information 
regarding ESRD facilities in Puerto Rico. We have codified the wage 
index policy and our methodology at Sec.  413.231. As discussed 
previously, we adjust the labor-related portion of the base rate to 
account for geographic difference is area wage using an appropriate 
wage index which reflects the relative level of hospital wages and 
wage-related costs in the geographic area in which the ESRD facility is 
located. To acquire such data to develop the wage index annually, 
changes in labor costs are captured in the survey of wages and wage-
related costs derived from the MCRs, the Hospital Wage Index 
Occupational Mix Survey, hospitals' payroll records, contracts, and 
other wage-related documentation. This process is utilized by other 
Medicare prospective payment systems. We appreciate the additional 
information regarding the staffing costs in Puerto Rico; however, we 
believe that Puerto Rico's labor costs should be captured in the wage-
related documentation used for the development of the annual wage 
index.
    Regarding concerns raised about the need to hire bilingual RNs, the 
need for bilingual staff occurs in both inpatient and outpatient 
settings and hospital cost reports should reflect those additional 
costs. As stated in the CY 2019 ESRD PPS final rule (83 FR 56967), we 
note that in every analysis we conducted, the average salary of RNs in 
Puerto Rico was approximately half that of mainland facilities and none 
of the analyses produced a 0.7000 wage index value.
    Regarding the use of RNs in Puerto Rico facilities, we have 
received conflicting information from Puerto Rico about the how local 
scope of practice for RNs and other staff impact ESRD facility costs. 
We are continuing to explore alternative methodologies for accounting 
for the labor-related costs of all ESRD facilities and we may revisit 
the use of a wage index floor under the ESRD PPS in that context in 
future rulemaking. We note that any changes to the ESRD PPS wage index 
floor would

[[Page 67166]]

be proposed through notice and comment rulemaking.
    Comment: Commenters expressed their belief that health disparities 
in the patient population in Puerto Rico justify a higher wage index 
floor than proposed. Commenters stated that diabetes is rampant in 
Puerto Rico and that its prevalence is higher in the Puerto Rican 
population compared to the U.S. The commenters further stated that 
diabetes is a primary cause of kidney failure, heart disease, and 
cardiac chronic related conditions. Commenters stated that Puerto Rico 
has prominent levels of disease burden resulting in higher complex care 
needs and higher costs.
    Response: The wage index payment adjustment is intended to 
recognize geographic differences in wage levels in areas in which ESRD 
facilities are located. We do not believe it would be appropriate to 
raise the wage index floor to mitigate other issues such as non-labor 
costs or costs associated with issues of disease burden disparities.
    Final Rule Action: After considering the public comments we 
received regarding the wage index floor, we are finalizing an increase 
to the wage index floor from 0.5000 to 0.6000 for CY 2023 and 
subsequent years as proposed. In addition, we are amending Sec.  
413.231 by adding new paragraph (d) to reflect this change and to 
codify the wage index floor policy. Section 413.231(d) will provide 
that beginning January 1, 2023, CMS applies a floor of 0.6000 to the 
wage index, such that the wage index applied to an ESRD facility is not 
less than 0.6000.
c. CY 2023 Update to the Outlier Policy
(1) Background
    Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS 
include a payment adjustment for high cost outliers due to unusual 
variations in the type or amount of medically necessary care, including 
variability in the amount of ESAs necessary for anemia management. Some 
examples of the patient conditions that may be reflective of higher 
facility costs when furnishing dialysis care would be frailty and 
obesity. A patient's specific medical condition, such as secondary 
hyperparathyroidism, may result in higher per treatment costs. The ESRD 
PPS recognizes high cost patients, and we have codified the outlier 
policy and our methodology for calculating outlier payments at Sec.  
413.237.
    Section 413.237(a)(1) enumerates the following items and services 
that are eligible for outlier payments as ESRD outlier services: (i) 
Renal dialysis drugs and biological products that were or would have 
been, prior to January 1, 2011, separately billable under Medicare Part 
B; (ii) Renal dialysis laboratory tests that were or would have been, 
prior to January 1, 2011, separately billable under Medicare Part B; 
(iii) Renal dialysis medical/surgical supplies, including syringes, 
used to administer renal dialysis drugs and biological products that 
were or would have been, prior to January 1, 2011, separately billable 
under Medicare Part B; (iv) Renal dialysis drugs and biological 
products that were or would have been, prior to January 1, 2011, 
covered under Medicare Part D, including renal dialysis oral-only drugs 
effective January 1, 2025; and (v) renal dialysis equipment and 
supplies, except for capital-related assets that are home dialysis 
machines (as defined in Sec.  413.236(a)(2)), that receive the 
transitional add-on payment adjustment as specified in Sec.  413.236 
after the payment period has ended.\9\
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    \9\ Under Sec.  413.237(a)(1)(vi), as of January 1, 2012, the 
laboratory tests that comprise the Automated Multi-Channel Chemistry 
panel are excluded from the definition of outlier services.
---------------------------------------------------------------------------

    In the CY 2011 ESRD PPS final rule (75 FR 49142), CMS stated that 
for purposes of determining whether an ESRD facility would be eligible 
for an outlier payment, it would be necessary for the facility to 
identify the actual ESRD outlier services furnished to the patient by 
line item (that is, date of service) on the monthly claim. Renal 
dialysis drugs, laboratory tests, and medical/surgical supplies that 
are recognized as ESRD outlier services were specified in Transmittal 
2134, dated January 14, 2011.\10\ We use administrative issuances and 
guidance to continually update the renal dialysis service items 
available for outlier payment via our quarterly update CMS Change 
Requests, when applicable. For example, we use these issuances to 
identify renal dialysis oral drugs that were or would have been covered 
under Part D prior to 2011 to provide unit prices for determining the 
imputed MAP amounts. In addition, we use these issuances to update the 
list of ESRD outlier services by adding or removing items and services 
that we determined, based our monitoring efforts, are either 
incorrectly included or missing from the list.
---------------------------------------------------------------------------

    \10\ Transmittal 2033 issued August 20, 2010, was rescinded and 
replaced by Transmittal 2094, dated November 17, 2010. Transmittal 
2094 identified additional drugs and laboratory tests that may also 
be eligible for ESRD outlier payment. Transmittal 2094 was rescinded 
and replaced by Transmittal 2134, dated January 14, 2011, which 
included one technical correction. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2134CP.pdf
---------------------------------------------------------------------------

    Under Sec.  413.237, an ESRD facility is eligible for an outlier 
payment if its imputed (that is, calculated) MAP amount per treatment 
for ESRD outlier services exceeds a threshold. The MAP amount 
represents the average estimated expenditure per treatment for services 
that were or would have been considered separately billable services 
prior to January 1, 2011. The threshold is equal to the ESRD facility's 
predicted MAP amount per treatment plus the FDL amount. As described in 
the following paragraphs, the facility's predicted MAP amount is the 
national adjusted average ESRD outlier services MAP amount per 
treatment, further adjusted for case-mix and facility characteristics 
applicable to the claim. We use the term ``national adjusted average'' 
in this section of this final rule to more clearly distinguish the 
calculation of the average ESRD outlier services MAP amount per 
treatment from the calculation of the predicted MAP amount for a claim. 
The average ESRD outlier services MAP amount per treatment is based on 
utilization from all ESRD facilities, whereas the calculation of the 
predicted MAP amount for a claim is based on the individual ESRD 
facility and patient characteristics of the monthly claim. In 
accordance with Sec.  413.237(c), ESRD facilities are paid 80 percent 
of the per treatment amount by which the imputed MAP amount for outlier 
services (that is, the actual incurred amount) exceeds this threshold. 
ESRD facilities are eligible to receive outlier payments for treating 
both adult and pediatric dialysis patients.
    In the CY 2011 ESRD PPS final rule and codified in Sec.  
413.220(b)(4), using 2007 data, we established the outlier percentage, 
which is used to reduce the per treatment base rate to account for the 
proportion of the estimated total payments under the ESRD PPS that are 
outlier payments, at 1.0 percent of total payments (75 FR 49142 through 
49143). We also established the FDL amounts that are added to the 
predicted outlier services MAP amounts. The outlier services MAP 
amounts and FDL amounts are different for adult and pediatric patients 
due to differences in the utilization of separately billable services 
among adult and pediatric patients (75 FR 49140). As we explained in 
the CY 2011 ESRD PPS final rule (75 FR 49138 through 49139), the 
predicted outlier services MAP amounts for a patient are determined by 
multiplying the adjusted average outlier services MAP amount by the 
product of the patient-specific case-mix adjusters

[[Page 67167]]

applicable using the outlier services payment multipliers developed 
from the regression analysis used to compute the payment adjustments. 
We discuss the details of our current methodology for calculating the 
MAP and FDL amounts in the following section.
(2) Overview of Current Outlier Methodology
    We update the national adjusted average MAP amounts and FDL amounts 
each year using the latest available data in the annual regulatory 
updates to the ESRD PPS, in accordance with our longstanding policy (75 
FR 49174). As noted earlier in this section of the final rule, based on 
our longstanding policy finalized in the CY 2011 ESRD PPS final rule 
(75 FR 49139 through 49140), the national adjusted average MAP amounts 
represent the national average estimated expenditure per treatment for 
ESRD outlier services, adjusted by a standardization factor. As 
detailed in the following paragraph, when evaluating outlier 
eligibility for a particular patient treated in a particular facility 
for a particular month, this national adjusted average is further 
adjusted to reflect the patient-specific case-mix severity and facility 
characteristics. We refer to this further adjusted MAP amount as the 
predicted MAP amount. Unlike the national average outlier MAP amount 
per treatment, the predicted MAP amount varies across patients (and 
even across patient-months). The national adjusted average MAP amounts 
and FDL amounts are different for adult and pediatric patients due to 
differences in the utilization of separately billable services among 
adult and pediatric patients (75 FR 49140).
    Under the methodology finalized in the CY 2011 ESRD PPS final rule 
(75 FR 49174), each year, using the latest available ESRD PPS data, we 
compute the national average MAP amount, and establish the FDL amount 
at a level that results in projected outlier payments that equal 1.0 
percent of total payments under the ESRD PPS. When setting the outlier 
thresholds for the ESRD PPS rule, we first identify all ESRD outlier 
services for all beneficiaries using the most recently complete 72x 
claims data, which is claims from 2 years prior. For example, for the 
CY 2022 ESRD PPS rulemaking (86 FR 61882), we used 2020 claims. For 
items billed using HCPCS codes, we include injectable drugs as eligible 
ESRD outlier services if they belong to one of the ESRD PPS functional 
categories but are not in one of the composite rate drug categories 
(both are described in Chapter 11, Section 20.3 of the Medicare Benefit 
Policy Manual).\11\ We do not include composite rate items because they 
are not eligible for outlier payments, in accordance with our 
longstanding ESRD PPS policy of including only formerly separately 
billable items and services as eligible ESRD outlier services (75 FR 
49138). For items billed using National Drug Codes (NDCs), we include 
all oral drugs included on the ESRD outlier services list, which 
includes oral calcimimetics (starting January 1, 2021), and oral 
vitamin D analogs. We also include laboratory services that are on the 
list of eligible ESRD outlier services published by CMS.\12\ Two supply 
HCPCS codes are eligible for outlier payments (A4657 syringe and A4913 
miscellaneous supplies).
---------------------------------------------------------------------------

    \11\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
    \12\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Outlier_Services.
---------------------------------------------------------------------------

(a) Methodology for Calculating Imputed MAP Amounts and Predicted MAP 
Amounts
    As we explained in the CY 2011 ESRD PPS final rule (75 FR 49142), 
the ESRD facility must identify all ESRD outlier services furnished to 
the patient by line item on the monthly claim that it submits to 
Medicare to receive the outlier payment adjustment. We estimate the 
imputed MAP amount for these services by applying the established 
pricing methodologies described in the following paragraph of this 
final rule. The imputed MAP amounts for each of these services are 
summed and divided by the corresponding number of treatments identified 
on the claim to yield the imputed ESRD outlier services MAP amount per 
treatment.
    We multiply the utilization (that is, units of ESRD outlier 
services reported on the 72X claim) with prices to obtain the outlier-
eligible amount. We obtain the utilization only from claim lines that 
are fully covered by Medicare (that is, claim lines that do not include 
any non-covered charge amount) containing ESRD outlier services. 
Separately billable services that are performed in the ESRD facility 
during dialysis that are not related to the treatment of ESRD are not 
included in the outlier-eligible amount. In the CY 2011 ESRD PPS final 
rule (75 FR 49142), we finalized the basis for estimating imputed MAP 
amounts as follows: For pricing of ESRD outlier services that are Part 
B renal dialysis drugs reported with HCPCS codes, we use the latest 
Average Sales Price (ASP) data, which is updated quarterly. ESRD 
outlier services that are renal dialysis drugs formerly covered under 
Part D and reported with NDCs are priced based on the national average 
pricing data retrieved from the Medicare Prescription Drug Plan Finder, 
which reflect pharmacy dispensing and administration fees. For ESRD 
outlier services that are laboratory tests billed using HCPCS codes, we 
use the latest payment rates from the Clinical Laboratory Fee Schedule. 
For renal dialysis supplies used to administer ESRD outlier services 
Part B drugs (for example, syringes), we estimate MAP amounts based on 
the predetermined fees that apply to these items, that is, we pay $0.50 
for each syringe identified on an ESRD facility's claims form. For 
other medical/surgical supplies such as intravenous sets and gloves, 
the Medicare Claims Processing Manual currently allows Medicare 
contractors to elect among various options to price these supplies, 
such as the Drug Topics Red Book, Med-Span, or First Data Bank (CMS 
Pub. 100-04, Chapter 8, Sec.  60.2.1). We sum up the outlier-eligible 
amounts for drugs, laboratory tests, and supplies separately.
    Next, we inflate the outlier-eligible amounts calculated for drugs, 
laboratory tests, and supplies from the latest available prices to 
forecasted prices for the rule year.\13\ For example, in the CY 2022 
ESRD PPS rulemaking (86 FR 61882), we used 2021 prices inflated to the 
forecasted prices for CY 2022. Then, we add the inflated drug, 
laboratory test, and supply amounts and multiply the total amount by 
0.98, in accordance with the budget neutrality requirement under 
section 153(b) of MIPPA. Lastly, we divide the amount by the number of 
treatments reported on the claim to obtain imputed MAP amount per 
treatment.
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    \13\ We use a blended 4-quarter moving average of the ESRDB 
market basket price proxies for pharmaceuticals to inflate drug 
prices to the rule year. We inflate laboratory test prices to the 
rule year based on the estimated change in payment rates under the 
Clinical Laboratory Fee Schedule, using a CPI forecast to estimate 
changes for years in which a new survey will be implemented. For 
supplies, we apply a 0 percent inflation factor, because these 
prices are based on predetermined fees or prices established by the 
Medicare contractor.
---------------------------------------------------------------------------

    After calculating the imputed MAP amount per treatment, we then 
compute the predicted MAP amount for the claim. As we explained in the 
CY 2011 ESRD PPS final rule (75 FR 49138 through 49139), the patient-
specific predicted MAP amount is equal to the national adjusted average 
MAP amount multiplied by the patient-specific case-mix adjusters. The 
national average MAP amount is adjusted by applying a standardization 
factor that reflects the

[[Page 67168]]

national average of patients' outlier services case-mix severity. We 
apply this standardization factor to avoid systematically biasing the 
national average MAP amount calculation, which would result in setting 
the FDL amounts at a level that is too low. By applying the 
standardization factor to the national average MAP amount when 
calculating the patient-specific predicted MAP amount, we ensure that 
total imputed MAP dollars equal total predicted MAP dollars. The 
methodology for calculating this standardization factor is discussed in 
detail in the following section.
(b) Methodology for Calculating Case-Mix Standardization Factor and 
National Adjusted Average MAP Amount
    We publish the national adjusted average MAP amount each year in 
the ESRD PPS proposed and final rule along with the adjustment factor. 
We currently use the ESRD outlier services multipliers that are the 
separately billable (SB) multipliers developed from the regression 
analysis used in the CY 2016 ESRD PPS refinement (80 FR 68993 and 80 FR 
69002). As discussed in the CY 2016 ESRD PPS final rule (80 FR 68970), 
in accordance with section 632(c) of ATRA, we analyzed the case-mix 
payment adjustments under the ESRD PPS using more recent data. We 
revised the adjustments by changing the adjustment payment amounts 
based on our updated regression analysis using CYs 2012 and 2013 ESRD 
claims and cost report data. There was no change in the ESRD PPS 
outlier methodology for CY 2016, however, we updated the ESRD outlier 
services multipliers (80 FR 69008). The current ESRD outlier services 
multipliers are presented in Tables 9 and 10 in this section. A more 
detailed description of the steps is provided in the following 
paragraphs.
[GRAPHIC] [TIFF OMITTED] TR07NO22.009


                                Table 10: Pediatric Outlier Services Multipliers
----------------------------------------------------------------------------------------------------------------
     Patient Characteristics                               Outlier Services Multipliers
----------------------------------------------------------------------------------------------------------------
                                                                              Separately
               Age                     Modality          Population %          Billable         Expanded Bundle
                                                                              Multiplier      Payment Multiplier
----------------------------------------------------------------------------------------------------------------
>13                               PD                              27.62               0.410               1.063
----------------------------------------------------------------------------------------------------------------
>13                               HD                              19.23               1.406               1.306
----------------------------------------------------------------------------------------------------------------
13-17                             PD                              20.19               0.569               1.102
----------------------------------------------------------------------------------------------------------------
13-17                             HD                              32.96               1.494               1.327
----------------------------------------------------------------------------------------------------------------


[[Page 67169]]

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

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

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

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

    A claim is eligible for an outlier payment if the imputed MAP 
amount per treatment--(Threshold per Treatment) >0.
    We simulate total outlier payments, separately for adult and 
pediatric patients, starting with the prior rule year's FDL amounts. If 
the sum of projected outlier payments for the particular rule year is 
higher than 1.0 percent of total payments, we increase the FDL amounts 
to decrease the amount of outlier payments. In contrast, if projected 
outlier payments are lower than 1.0 percent of total payments, we 
decrease the FDL amounts to increase the amount of outlier payments. We 
determine the separate adult and pediatric FDL amounts that bring 
projected adult and pediatric outlier payments to 1.0 percent of total 
payments for each patient population. We announce the proposed and 
final MAP amounts and FDL amounts in the annual ESRD PPS proposed and 
final rules, respectively.
(d) Example of Outlier Calculation
    The following is an example of the calculation of the outlier 
payment. John, a 68-year-old male Medicare beneficiary, is 187.96 cm. 
in height and weighs 95 kg. John receives hemodialysis 3 times weekly. 
In January 2022, he was hospitalized for 4 days for a compound ankle 
fracture. During the hospitalization John did not undergo any dialysis 
treatments. After discharge John resumed his dialysis treatments, but 
required additional laboratory testing and above-average doses of 
several injectable drugs, particularly EPO, to return his hemoglobin 
levels to the normal range. During January 2022, John received 9 
hemodialysis treatments at his usual ESRD facility. The facility 
submitted a claim for eligible ESRD outlier services including drugs 
and biological products, laboratory tests, and supplies totaling 
$3,000.00.
    We begin by computing the predicted MAP amount per treatment based 
on the ESRD outlier services case-mix adjustment factors applicable to 
John. These factors are age and BSA. John's BSA is 2.2161. Following 
the methodology adopted in the CY 2016 ESRD PPS final rule (80 FR 
68989), we calculate the exponent of the PM for BSA by subtracting the 
national average BSA from John's BSA and dividing by 0.1. Applying the 
ESRD outlier services multiplier set forth in Table 9 of this final 
rule for BSA, John's ESRD outlier services payment multiplier (PM) for 
BSA is computed as follows:

1.000(2.2161-1.9)/0.1 = 1.0003.16135 = 1.000

    Using this calculated PM for BSA and the PM for age from Table 9, 
John's outlier services PM is calculated as:

1.005 \*\1.000 = 1.005

    For CY 2022, the national average MAP amount per treatment for 
adult patients is $42.75. Therefore, the predicted MAP amount per 
treatment for John is: $42.75 * 1.005 = $42.96.
    Next, we determine the imputed MAP amount per treatment which 
reflects the estimated expenditure for ESRD outlier services incurred 
by the ESRD facility. John's imputed MAP amount per treatment is equal 
to the total amount of drugs and biological products, laboratory tests, 
and supplies submitted on the claim, divided by the number of 
treatments. We calculate this as:

$3000.00 / 9 = $333.33.

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

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

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

Imputed MAP amount minus Threshold: $333.33 - $118.35 = $214.98
Outlier payments per treatment: $214.98 * .80 = $171.98
Total outlier payments: $171.98 * 9 = $1,547.82
(3) Current Issue and Concerns From Interested Parties
    As we discussed in the CY 2023 ESRD PPS proposed rule (87 FR 
38493), for several years, outlier payments have consistently landed 
below the target of 1.0 percent of total ESRD PPS payments. Commenters 
have raised concerns that the methodology we currently use to calculate 
the outlier payment adjustment results in underpayment to ESRD 
facilities, as money was removed from the base rate to balance the 
outlier payment (85 FR 71409, 71438 through

[[Page 67170]]

71439; 84 FR 60705 through 60706; 83 FR 56969). Therefore, they have 
urged us to adopt an alternative modeling approach that accounts for 
declining trends in spending for eligible ESRD outlier services over 
time.
    MedPAC echoed these concerns in a comment in response to the CY 
2021 ESRD PPS proposed rule (85 71438 through 71440), and also 
suggested that the introduction of calcimimetics as an eligible ESRD 
outlier service could perpetuate this issue. MedPAC predicted that if 
calcimimetic use decreases between 2019 (when the products were paid 
under the ESRD PPS using the TDAPA) and 2021 (when the products would 
be paid as part of the ESRD PPS base rate), the outlier threshold would 
be set too high, and outlier payments would be lower than the target of 
1.0 percent of total CY 2021 payments.
    We explained in the CY 2023 ESRD PPS proposed rule (87 FR 38490 
through 38491) that, in response to the concerns raised by MedPAC and 
others, CMS has been conducting research in conjunction with its 
contractor, including holding three technical expert panels (TEPs), to 
investigate possible improvements to the ESRD PPS payment 
methodologies. As discussed in the CY 2022 ESRD PPS proposed rule (86 
FR 36401 through 36402), during the second and third TEP meetings 
convened by the CMS contractor in 2019 and 2020, panelists discussed 
their specific concerns regarding the current outlier policy and 
alternative methodologies to achieve the 1.0 percent outlier target. 
Some TEP panelists and interested parties have strongly advocated that 
we establish a new outlier methodology using alternative modeling 
approaches that account for trends in formerly separately billable 
spending over time. Other interested parties advocated for changing the 
outlier percentage. Overall, panelists expressed support for any change 
to outlier calculations that result in total outlier payments being 
closer to the target.
    In the CY 2022 ESRD PPS proposed rule (86 FR 36402), we stated that 
we were considering potential revisions to the calculation of the 
outlier threshold to address concerns from interested parties. In that 
rule, we presented the information that was previously provided to the 
TEP to solicit comments from interested parties in the dialysis 
community and the public (86 FR 36402). We published an RFI to solicit 
comments on the approaches noted in the previous paragraph and any 
information that would better inform future modifications to the 
methodology (86 FR 36402). In addition to generally seeking input 
regarding calculating the outlier payment adjustment, we specifically 
requested responses to the following questions:
     An alternative approach could be to estimate the 
retrospective FDL trend by using historical utilization data. How many 
years of data should be included in calculation of this trend to best 
capture changes in treatment patterns?
     The simulation of the FDL can be improved by better 
anticipating changes in utilization of ESRD outlier services. What are 
the factors that affect the use of ESRD outlier services over time, and 
to what extent should CMS try to forecast the effect of these factors?
     As ESRD beneficiaries can now choose to enroll in Medicare 
Advantage (MA), please describe any anticipated effects of this 
enrollment change on the use of ESRD outlier services in the ESRD PPS.
     Adoption of the suggested methodology may account for 
systematic changes in the use of high cost outlier items. However, 
inherently unpredictable changes may still push the outlier payment off 
the 1.0 percent target. Please comment on the acceptability of the 
following payment adjustment methods: Payment reconciliation in the 
form of an add-on payment adjustment or a payment reduction might be 
necessary to bring payments in line with the 1 percent target. An add-
on payment adjustment would be distributed after sufficient data reveal 
the magnitude of the deviation (1 year after the end of the payment 
year). The distribution of these monies could be done via a lump sum or 
via a per-treatment payment add-on effective for 1 year. This add-on 
payment adjustment would be paid irrespective of the outlier claim 
status in that year. A payment reduction could take the form of a 
reduction in the base rate, also to be applied 1 year after the end of 
the payment year.
    As discussed in the CY 2022 ESRD PPS final rule (86 FR 61996), we 
received numerous public comments in response to our RFI on payment 
reform under the ESRD PPS. As discussed in a more detailed comment 
summary on the CMS website,\14\ we received comments from major 
national patient and provider organizations and MedPAC on the RFI 
regarding the outlier policy. Commenters reiterated their concerns that 
outlier payments under the ESRD PPS have not achieved the 1.0 percent 
target since the system was implemented. Commenters focused on three 
main suggestions for the outlier policy: (1) reducing the target 
outlier percentage to 0.5 or 0.6 percent, which commenters maintained 
would more closely align with the historical percentage that has been 
paid under the ESRD PPS; (2) changing the methodology used to calculate 
the FDL and MAP amounts to better account for not only historical 
trends in utilization but also changes in prices and utilization of new 
and innovative products; and (3) re-allocating money from the ESRD PPS 
that is not paid out for outliers--either by allowing unspent funds to 
apply to a subsequent year's withhold amount or establishing a payment 
mechanism to support ESRD facilities' activities aimed at reducing 
health disparities.
---------------------------------------------------------------------------

    \14\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.
---------------------------------------------------------------------------

(4) Changes to the Outlier Methodology for CY 2023
    In response to significant public comments received over many 
years, in the CY 2023 ESRD PPS proposed rule (87 FR 38491 through 
38493), we proposed changes to the outlier policy for CY 2023 and 
subsequent years. As we discussed in the proposed rule, we considered 
the three main suggestions that commenters raised in response to the CY 
2022 RFI in developing these proposed changes.
    First, we considered the recommendation from commenters that CMS 
reduce the outlier percentage from 1.0 percent to 0.5 percent or 0.6 
percent. Although this approach would allow us to potentially increase 
payment under the ESRD PPS base rate for treatment of those patients 
who do not qualify for outlier payments, we stated that we were chiefly 
concerned that this approach would not directly address the root cause 
of outlier payments totaling less than 1 percent of overall ESRD PPS 
payments in prior years. Although reducing the target outlier 
percentage would reduce the size of outlier payments relative to total 
ESRD PPS payments, we stated that we were concerned that if we do not 
change the methodology that we use to prospectively determine the 
outlier threshold, we may continue to not meet even the lower target 
outlier percentage.
    Additionally, as discussed in the CY 2011 ESRD PPS final rule (75 
FR 49134), we established the 1.0 percent outlier percentage because it 
struck an appropriate balance between our objective of paying an 
adequate amount for the most costly, resource-intensive patients while 
providing an appropriate level of payment for those patients who do not 
qualify for outlier payments. We stated that we were concerned that a

[[Page 67171]]

reduced outlier percentage may not provide the appropriate level of 
payment for outlier cases, and may not protect access for beneficiaries 
whose care is unusually costly. This is because if we were to decrease 
the target outlier percentage, we would need to significantly increase 
the FDL amounts, which would make it more difficult for ESRD facilities 
to receive outlier payment based on their claims. Therefore, after 
careful consideration, we did not propose to reduce the outlier 
percentage.
    Next, we considered the recommendation to re-allocate money from 
the ESRD PPS that is not paid out for outliers. As explained earlier in 
this section of the final rule, we solicited comments in the CY 2022 
ESRD PPS proposed rule (86 FR 36402) about a potential payment 
reconciliation in the form of an add-on payment adjustment or a payment 
reduction, which might be necessary to bring outlier payments in line 
with the 1.0 percent target. As we described in the detailed RFI 
comment summary document on the CMS website,\15\ several commenters 
supported this idea, and recommended that CMS allow unspent outlier 
funds from the prior year to reduce the amount set aside for outliers 
in the next year. Other commenters suggested that unspent outlier funds 
could be used to fund initiatives that support health equity. One 
national dialysis organization pointed out that lags in the claims 
process and refiling of claims, often over different calendar years, 
will present challenges to such an approach. This organization noted 
that these challenges could make it difficult to accurately calculate 
the amount of the add-on payment adjustment or ``clawback'' payment 
amount for each year. In the CY 2023 ESRD PPS proposed rule, we stated 
that we agreed with the concerns this organization raised, and believed 
that these challenges would make it difficult to accurately 
operationalize commenters' recommendations that we allow unspent funds 
to apply to a subsequent year's withhold amount or establish a payment 
mechanism to support ESRD facilities' activities aimed at reducing 
health disparities. Therefore, after careful consideration, we did not 
propose to establish a payment reconciliation methodology for the ESRD 
PPS outlier policy.
---------------------------------------------------------------------------

    \15\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.
---------------------------------------------------------------------------

    Lastly, we discussed in the CY 2023 ESRD PPS proposed rule that we 
considered the feedback from interested parties and commenters in the 
past ESRD PPS TEPs and in comments to the RFI in the CY 2022 ESRD PPS 
proposed rule regarding the methodology used to calculate the FDL 
amounts. As commenters have previously noted, the current methodology 
that we use to prospectively calculate the FDL amounts has not been 
able to effectively account for declining use of eligible ESRD outlier 
services (that is, separately billable items and services prior to 
2011) each year since the implementation of the ESRD PPS. For example, 
the CY 2021 FDL amounts ($48.33 for adult and $41.04 pediatric 
patients) were added to the predicted MAP amounts to determine the 
outlier thresholds using 2019 data. The outlier MAP amount continued to 
fall from 2019 to 2021. Consequently, in 2021 claims, outlier payments 
comprised approximately 0.4 percent of total ESRD PPS payments, 
demonstrating that the use of 2019 data resulted in thresholds too high 
to achieve the targeted 1.0 percent outlier payment.
    Several organizations that commented in response to the RFI \16\ in 
the CY 2022 ESRD PPS proposed rule expressed that using a retrospective 
FDL trend based on historical utilization data will provide a better 
calculation of the appropriate prospective FDL amounts. These 
organizations also cautioned that such a methodology will remain 
sensitive to changes in utilization or price increases for new and 
innovative products. Commenters suggested that such a methodology will 
likely not succeed in estimating the appropriate FDL amounts in years 
when there are significant changes to the ESRD PPS, such as in years 
that immediately follow the end of a period during which CMS has paid 
for a product using the TDAPA or TPNIES payment adjustments under the 
ESRD PPS. MedPAC suggested that CMS consider modeling alternative 
approaches to establishing the outlier threshold and use an approach 
that reflects the trend over time in spending for items in the ESRD PPS 
bundled payment that were separately billable prior to 2011.
---------------------------------------------------------------------------

    \16\ https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/Educational_Resources.
---------------------------------------------------------------------------

    We also noted that in the CY 2022 ESRD PPS final rule (86 FR 
36402), we solicited comments on any anticipated effects enrollment 
changes in MA plans might have on the use of ESRD outlier services. 
National provider organizations pointed out that to the extent that MA 
plans are not permitted to systematically include healthier ESRD 
beneficiaries and exclude costly beneficiaries, there would seem to be 
little impact on the outlier pool. They expressed concern about the 
decision\17\ to eliminate network adequacy standards that apply to ESRD 
facilities. They predicted these decisions would discourage many ESRD 
patients from enrolling in MA plans, especially those needing 
specialized treatment or requiring additional medications. To the 
extent this scenario may occur, commenters claimed that it could result 
in ``outlier'' patients, specifically, those sicker, costlier patients, 
remaining in traditional Medicare and the healthier, less costly 
patients enrolling in MA plans.
---------------------------------------------------------------------------

    \17\ We believe the commenters were referring to a CMS decision 
to remove outpatient dialysis from the list of facility types 
subject to network adequacy standards and require that MA 
organizations submit an attestation that it has as an adequate 
network that provides the required access and availability to 
dialysis services, including outpatient facilities. CMS indicated in 
the Medicare Program; Contract Year 2021 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription 
Drug Benefit Program, and Medicare Cost Plan Program (CMS-4190-F) 
final rule that we believe there is more than one way to access 
medically necessary dialysis care and that we wanted plans to 
exercise all of their options to best meet a beneficiary's health 
care needs. (85 FR 33796, 33852 through 33866). Further, regardless 
of whether a facility or provider specialty type is subject to 
network adequacy standards, MA organizations are required in Sec.  
422.112(a)(3) to arrange for health care services outside of the 
plan provider network when network providers are unavailable or 
inadequate to meet an enrollee's medical needs. Section 
422.112(a)(10) requires MA plans to ensure access and availability 
to covered services consistent with the prevailing community pattern 
of health care delivery in the areas served by the network. (85 FR 
33858 through 33860).
---------------------------------------------------------------------------

    Based on these comments, in the CY 2023 ESRD PPS proposed rule, we 
proposed an approach that would account for the historical trend in 
spending for formerly separately billable items and services and would 
also effectively account for the introduction of new and innovative 
products under the ESRD PPS. We stated that we believed that our 
proposed methodology would also adapt to changes in the ESRD PPS 
patient population, such as the potential scenario that commenters 
raised in which costlier ``outlier'' patients might remain in 
traditional Medicare while healthier, less costly patients enroll in MA 
plans.
    As we discussed earlier in this section of the final rule, our 
current methodology prospectively calculates the adult and pediatric 
FDL and MAP amounts based on simulated outlier payments. The 
utilization of outlier services for these simulated outlier payments 
comes from a single year of ESRD PPS claims, and the prices come from 
the pricing methodology described earlier in this section of the final 
rule

[[Page 67172]]

using latest available prices inflated to forecasted prices for the 
rule year. Under the current methodology, we prospectively set the 
adult and pediatric FDL amounts so that simulated outlier payments for 
the rule year are estimated to equal 1.0 percent.
    For CY 2023 and subsequent years, we proposed to continue to 
calculate the adult and pediatric MAP amounts for the rule year (CY 
2023) following our established methodology, but we would prospectively 
calculate the adult FDL amounts based on the historical trend in FDL 
amounts that would have achieved the 1.0 percent outlier target in the 
3 most recent available data years. We also proposed to adjust the 
calculation of the historical FDL trend for years that immediately 
follow the end of a period during which CMS has paid for a product 
using the TDAPA or TPNIES payment adjustments under the ESRD PPS. We 
noted in the proposed rule that we did not propose to apply this method 
to pediatric FDL amount calculations, as the pediatric population is 
too small to reliably use this method.
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38492 
through 38493), we proposed the following steps for prospectively 
calculating the adult FDL amounts:
     Step 1: Use ESRD PPS claims from the 3 most recent 
available data years, relative to the rule year. For CY 2023, this 
would include data from CY 2019, CY 2020, and CY 2021. Using these 
claims, the projected base rate for the rule year, and the latest 
available prices of ESRD outlier services, we would use our established 
methodology to calculate the FDL amounts that would have achieved the 
1.0 percent outlier target for each year. In the following steps, we 
refer to these calculated FDL amounts as the ``retrospective'' FDL 
amounts.
     Step 2: If any items or services that were previously paid 
for using the TDAPA or TPNIES in any of the 3 most recent available 
data years would be ESRD outlier services for the rule year, then we 
would also calculate an alternative series of retrospective FDL 
amounts. This alternative series would account for any new ESRD outlier 
services, that is, any ESRD outlier services for the rule year that 
were previously paid for using the TDAPA or TPNIES in any of the 3 most 
recent available data years. In the following steps, we refer to this 
alternative series of retrospective FDL amounts as the ``adjusted'' 
retrospective FDLs. Specifically, we would calculate the adjusted 
retrospective FDL amounts as follows:
    ++ If a new ESRD outlier service was paid for using the TDAPA or 
TPNIES in the most recent available data year, as in the case of 
calcimimetics in the CY 2020 data used for the CY 2022 ESRD PPS 
rulemaking, then we would calculate the first retrospective FDL amount 
for that year using the latest available prices and historical 
utilization of ESRD outlier services that includes TDAPA or TPNIES 
utilization for the new ESRD outlier service. We would also calculate a 
second retrospective FDL amount for that year that excludes the new 
ESRD outlier service. To calculate the adjusted retrospective FDLs for 
the preceding 2 data years, we would take the difference between the 
corresponding FDL amount with and without the new ESRD outlier service 
for the most recent data year, and add this amount to each 
retrospective FDL amount calculated in Step 1. For CY 2023, we would 
add the difference calculated for CY 2021 to the retrospective FDL 
amounts for CY 2020 and CY 2019.
    ++ If a new ESRD outlier service first became eligible in the most 
recent available data year, as in the case of calcimimetics in the CY 
2021 data used for this CY 2023 ESRD PPS proposed rule, then we would 
calculate the first retrospective FDL amount for the most recent data 
year using the latest available prices and historical utilization of 
ESRD outlier services. We would also calculate a second retrospective 
FDL amount for that year that excludes the new ESRD outlier service. To 
calculate the adjusted retrospective FDL amounts for the preceding 2 
data years, we would take the difference between the corresponding FDL 
amount with and without the new ESRD outlier service for the most 
recent data year, and add this amount to each retrospective FDL amount 
calculated in Step 1. For CY 2023, we would add the difference 
calculated for CY 2021 to the retrospective FDL amounts for CY 2020 and 
CY 2019.
    ++ If a new ESRD outlier service first became eligible in the 
second most recent available data year, as in the case of calcimimetics 
in the CY 2022 data that we would expect to use for the CY 2024 
rulemaking, then we would calculate retrospective FDL amounts for the 
most recent two data years using the latest available prices and 
historical utilization of outlier services. For the earliest historical 
year, in which the new ESRD outlier service was still being paid for 
using the TDAPA or the TPNIES, we would also calculate a second 
retrospective FDL amount for that year that excludes the new ESRD 
outlier service. To calculate the adjusted retrospective FDL amount for 
the earliest historical year, we would take the difference between the 
corresponding FDL amount with and without the new ESRD outlier service 
in the second most recent available data year, and add this amount to 
the retrospective FDL amount calculated in Step 1. For CY 2023, we 
would add the difference calculated for CY 2020 to the retrospective 
FDL amount for CY 2019.
    ++ If a new ESRD outlier service first became outlier eligible 
earlier than any of the 3 most recent available data years, we would 
not calculate any adjusted retrospective FDL amounts for that item or 
service. For example, for CY 2025, we would not calculate any adjusted 
retrospective FDL amounts to account for calcimimetics in the CY 2021, 
CY 2022, and CY 2023 claims. We would calculate only the series of 
retrospective FDL amounts for these years in accordance with Step 1.
     Step 3: Using either the series of retrospective FDL 
amounts or adjusted retrospective FDL amounts, as appropriate, for the 
3 most recent available data years, we would use a linear regression to 
calculate the historical trend in FDL amounts. We would project this 
trend forward to determine the appropriate FDL amount for the rule 
year.
    We received several comments on our proposal to modify the outlier 
methodology. Those comments and our responses are set forth below.
    Comment: Several commenters urged CMS to reduce the outlier 
percentage from 1.0 percent to 0.5 or 0.6 percent. A provider advocacy 
organization further claimed that even if CMS were to achieve the full 
1 percent outlier target, $82 million in ESRD PPS expenditures would be 
withheld from ESRD facilities until a later date when outlier payment 
adjustments were processed and distributed. This commenter recommended 
that CMS reduce the percentage of payments allocated for the outlier 
pool from 1 percent to 0.5 percent to ensure the maximum amount of up-
front funds flow to ESRD facilities during this time of crisis 
currently being driven by staffing shortages and inflationary 
pressures. A small and rural dialysis provider voiced similar concerns 
and claimed that reducing the outlier percentage to 0.5 percent would 
serve ESRD patients by helping to keep their units open.
    Response: As discussed in the CY 2023 ESRD PPS proposed rule, we 
are concerned that a reduced outlier percentage may not provide the 
appropriate level of payment for outlier

[[Page 67173]]

cases, and may not protect access for beneficiaries whose care is 
unusually costly. If we were to reduce the outlier percentage, we would 
then need to increase the FDL amount which would make it more difficult 
for ESRD facilities to receive outlier payment based on their claims. 
Regarding the comment about money being withheld from ESRD facilities, 
we note that outlier payments are paid as an adjustment to the ESRD PPS 
base rate, so payment is made when the ESRD claim is paid. There is no 
reason that outlier payments would be processed or paid at a later date 
than any other payments under the ESRD PPS.
    We appreciate the concerns commenters raised about staffing 
shortages and inflationary pressures, and we agree with the commenters 
who stated that recent higher inflationary trends have impacted the 
outlook for price growth over the next several quarters. As discussed 
in section II.B.1.a.(3)(c) of this final rule, we are finalizing a 3.0 
percent increase to the productivity-adjusted ESRDB market basket for 
CY 2023. We believe that this final update to the market basket more 
accurately accounts for the recent inflationary pressures and changes 
in the cost of labor that commenters cited.
    Comment: Several commenters expressed their belief that the outlier 
policy results in money being withheld from ESRD facilities and not 
returned to them, due to the fact that the ESRD PPS achieved less than 
the 1 percent outlier target in past years. A provider advocacy 
organization claimed that from 2019 to 2021, the outlier policy has 
resulted in over $150 million in Medicare dollars designated for the 
ESRD PPS outlier pool but not ultimately released to ESRD facilities. 
An LDO estimated that total ``leakage'' from the outlier pool exceeds 
$500 million as of CY 2021 and encouraged CMS to consider that a 
payment reconciliation methodology or other additional measures may be 
necessary to stem what they described as the loss of patient care 
dollars from the ESRD PPS. Some commenters suggested reducing a 
subsequent year's target percent or applying a mechanism to restore 
unspent outlier dollars to the ESRD PPS.
    Response: While we appreciate the concerns that commenters raised, 
we note that ESRD PPS payment policy is set prospectively. That is, we 
establish the outlier FDL and MAP amounts each year at a level that our 
analysis indicates will effectively protect access for the costliest 
beneficiaries while maintaining an appropriate ESRD PPS base rate for 
all other beneficiaries. As discussed previously, we did not propose, 
nor are we finalizing, to establish a payment reconciliation 
methodology for the ESRD PPS outlier policy for CY 2023, because we 
considered that lags in the claims process and refiling of claims, 
often over different calendar years, would present challenges to such 
an approach.
    Regarding the suggestion to reduce a subsequent year's target 
outlier percentage, we do not believe this approach would be 
appropriate at this time. As noted earlier in this final rule and 
discussed in the CY 2023 ESRD PPS proposed rule, we are concerned that 
a reduced outlier percentage may not provide the appropriate level of 
payment for outlier cases, and may not protect access for beneficiaries 
whose care is unusually costly. If we were to reduce the outlier 
percentage, we would then need to increase the FDL amount which would 
make it more difficult for ESRD facilities to receive outlier payment 
based on their claims. Rather, we believe the proposed methodology is 
the most appropriate, because it better aligns assumptions about future 
trends in prices and utilization of ESRD outlier services with actual 
trends in the utilization of such services.
    Comment: A provider advocacy organization expressed concern about 
the impact of the outlier policy on pediatric ESRD facilities, and 
stated that instead of attempting to qualify more cases for outlier 
payments, CMS should analyze the cost of providing care in pediatric 
facilities and develop a pediatric-specific ESRD PPS base rate to 
appropriately compensate these specialized facilities for their work. A 
professional organization of pediatric nephrologists expressed similar 
concerns, and recommended that CMS adopt a pediatric modifier to 
appropriately reimburse for pediatric care, since the proposed 
continuation of the longstanding outlier policy applies to such a small 
number of pediatric patients that it does not adequately address costs.
    Response: We appreciate the concerns these commenters raised about 
payment adequacy for pediatric patients. In the CY 2022 ESRD PPS 
proposed rule (86 FR 36402 through 36404), we solicited comments on 
ESRD PPS payment for pediatric patients. In the CY 2022 ESRD PPS final 
rule (86 FR 61997), we noted similar concerns from commenters that the 
total costs of ESRD care delivered to pediatric dialysis patients are 
not covered by the current ESRD PPS bundled payment and existing 
pediatric multipliers. Additionally, as discussed in section II.E of 
this final rule, we received comments in response to our RFI in the CY 
2023 ESRD PPS proposed rule about ways to address payment disparities 
for pediatric patients. We appreciate the thoughtful responses that 
commenters provided to both of these comment solicitations, and will 
take them into consideration to potentially inform future rulemaking.
    While we agree with commenters that the ESRD PPS outlier policy 
alone is not sufficient to account for the costs of furnishing renal 
dialysis services to pediatric beneficiaries, we continue to believe 
that an outlier policy is important for paying an adequate amount for 
the most costly, resource-intensive pediatric patients. As we noted in 
the CY 2011 ESRD PPS final rule (75 FR 49139), our longstanding 
methodology establishes separate FDL and MAP amounts for pediatric and 
adult beneficiaries so that the outlier thresholds for determining 
outlier payments for pediatric patients are not inappropriately high, 
resulting in fewer outlier payments for these beneficiaries.
    Comment: Several commenters, including a network of dialysis 
organizations and regional offices, a nonprofit dialysis association, a 
coalition of dialysis organizations, MedPAC, and an LDO, expressed 
support for the proposed change to the outlier methodology. A network 
of dialysis organizations and regional offices further stated they 
support the outlier payment adjustment as an appropriate protection for 
patients who utilize significantly more services than the average 
patient.
    MedPAC supported the proposed methodology and acknowledged that it 
is likely to improve outlier payment accuracy, but also urged CMS to 
refine its approach for applying the pricing data that the agency uses 
to project FDL amounts, particularly for drugs. MedPAC suggested CMS 
use a drug price inflation factor based on ASP values, and noted that 
the ASP data that CMS uses to determine facilities' actual outlier 
payments might be a more accurate data source on drug prices than the 
ESRDB market basket pharmaceutical price proxies that are currently 
used.
    Lastly, one LDO encouraged CMS to monitor the performance of the 
outlier payment adjustment under the proposed methodology. A coalition 
of dialysis organizations expressed support for the proposed change to 
the outlier methodology and encouraged CMS to continue sharing any 
under- or over-payment from the outlier pool and consider ways to 
adjust the target outlier percentage as needed.
    Response: We appreciate commenters' support for the proposed change 
to the

[[Page 67174]]

outlier methodology. We intend to continue to monitor the performance 
of the outlier policy on an ongoing basis and continue to publish 
information in our annual rules in the Federal Register about the 
performance of the outlier policy in the future. We appreciate the 
methodological suggestions that commenters provided. Although we are 
not finalizing those changes in this final rule, we will take these 
suggestions into consideration to potentially inform future rulemaking.
    Comment: A nonprofit dialysis association and an LDO expressed 
concerns about using TDAPA and TPNIES expenditures in the calculation 
of the FDL and MAP amounts. The LDO claimed that the inclusion of these 
expenditures has the potential to increase the dollars withheld from 
the ESRD PPS base rate and result in the outlier pool paying less than 
the 1 percent target. The nonprofit dialysis association claimed that 
the proposed methodology would not succeed in estimating the outlier 
pool in years where there were significant changes to the ESRD PPS, 
such as in years when CMS incorporates new ESRD outlier services that 
were previously paid for using the TDAPA or the TPNIES into the ESRD 
PPS bundled payment.
    Response: We believe that these commenters have misunderstood how 
TDAPA and TPNIES expenditures would be used in the proposed outlier 
methodology, as well as the effect that including these expenditures 
would have on outlier payments. As the commenters correctly noted, any 
renal dialysis service that is paid for using the TDAPA or the TPNIES 
would not be considered an eligible ESRD outlier service. However, 
following the conclusion of the TDAPA or TPNIES payment period, certain 
renal dialysis services would become eligible ESRD outlier services. 
Under our proposed methodology, which we are finalizing, we will only 
include expenditures for renal dialysis services that are in their 
final year of payment under the TDAPA or the TPNIES if those services 
would become eligible ESRD outlier services in the following (target) 
year. We did not propose to include any TDAPA or TPNIES expenditures in 
our estimates of ESRD outlier payments for setting the FDL and MAP 
amounts for any services that would not be eligible ESRD outlier 
services in the target year. We also proposed to account for the 
introduction of such new eligible ESRD outlier services by calculating 
a retrospective trend line based on prior years' TDAPA or TPNIES 
utilization. Because these expenditures will be added to the 
retrospective FDLs to calculate the adjusted retrospective FDLs under 
the proposed methodology, our inclusion of TDAPA or TPNIES utilization 
will always reduce the slope of the trend line of the adjusted 
retrospective FDL, as demonstrated in Figure 1. Therefore, contrary to 
the concerns that commenters raised, this inclusion of TDAPA and TPNIES 
utilization data will avoid overestimating ESRD outlier expenditures in 
years when new renal dialysis services are added to the ESRD PPS 
bundled payment and will reduce the likelihood of paying less than the 
1 percent outlier target.
    Final Rule Action: After careful consideration of the comments, we 
are finalizing our proposed methodology for prospectively calculating 
the adult FDL amounts for the outlier policy beginning for CY 2023.
    For illustration purposes, Figure 1 presents an example of the 
adult retrospective FDL amounts and adjusted retrospective FDL amounts 
calculated for CY 2019, CY 2020, and CY 2021, as well as the projected 
FDL trend through CY 2023, under our final methodology. The adjusted 
retrospective FDL amounts shown in Figure 1 will account for the 
difference in retrospective FDL amounts calculated with and without 
calcimimetics, which became ESRD outlier services beginning January 1, 
2021. Figure 1 illustrates how the methodology will incorporate data 
for new ESRD outlier services while continuing to account for the 
downward historical trend in spending for formerly separately billable 
items and services.

[[Page 67175]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.011

(5) CY 2023 Update to the Outlier Services MAP Amounts and FDL Amounts
    For CY 2023, we proposed to update the MAP amounts for adult and 
pediatric patients using the latest available CY 2021 claims data. We 
proposed to update the ESRD outlier services FDL amount for pediatric 
patients using the latest available CY 2021 claims data, and use the 
latest available claims data from CY 2019, CY 2020, and CY 2021 to 
calculate the FDL amount for adults, in accordance with the proposed 
methodology discussed in section II.B.1.c.(4) of this final rule.
    We also stated that we recognize that the utilization of ESAs and 
other outlier services have continued to decline under the ESRD PPS, 
and that we have lowered the MAP amounts and FDL amounts every year 
under the ESRD PPS. CY 2021 claims data showed outlier payments 
represented approximately 0.5 percent of total payments. Accordingly, 
as discussed in section II.B.1.c.(4) of this final rule, we are 
changing our ESRD PPS outlier methodology to better target 1.0 percent 
of total payments.
    For this final rule, the outlier services MAP amounts and pediatric 
FDL amounts for CY 2023 were updated based on claims data from CY 2021, 
consistent with our policy to base any adjustments made to the MAP 
amounts under the ESRD PPS upon the most recent data year available and 
our proposal for CY 2023. The adult FDL amounts for CY 2023 were 
derived from the projected FDL trend calculated according to the 
methodology described in section II.B.1.c.(4) of this final rule that 
we are finalizing for CY 2023.
    The impact of this update is shown in Table 11, which compares the 
outlier services MAP amounts and FDL amounts used for the outlier 
policy in CY 2022 with the updated final estimates for this final rule. 
The estimates for the final CY 2023 MAP amounts, which are included in 
Column II of Table 11, were inflation adjusted to reflect projected 
2023 prices for ESRD outlier services.

[[Page 67176]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.012

    As demonstrated in Table 11, the estimated FDL per treatment that 
determines the CY 2023 outlier threshold amount for adults (Column II; 
$73.19) is lower than that used for the CY 2022 outlier policy (Column 
I; $75.39). The lower threshold is accompanied by a decrease in the 
adjusted average MAP for outlier services from $42.75 to $39.62. For 
pediatric patients, there is a decrease in the FDL amount from $26.02 
to $23.29. There is a corresponding decrease in the adjusted average 
MAP for outlier services among pediatric patients, from $27.15 to 
$25.59.
    We estimate that the percentage of patient months qualifying for 
outlier payments in CY 2023 will be 5.90 percent for adult patients and 
12.90 percent for pediatric patients, based on the 2021 claims data and 
methodology finalized in section II.B.1.c.(4) of this final rule. The 
outlier MAP and FDL amounts continue to be lower for pediatric patients 
than adults due to the continued lower use of outlier services 
(primarily reflecting lower use of ESAs and other injectable drugs).
(6) Outlier Percentage
    In the CY 2011 ESRD PPS final rule (75 FR 49081) and under Sec.  
413.220(b)(4), we reduced the per treatment base rate by 1 percent to 
account for the proportion of the estimated total payments under the 
ESRD PPS that are outlier payments as described in Sec.  413.237. Based 
on the 2021 claims, outlier payments represented approximately 0.5 
percent of total payments, which is below the 1 percent target due to 
declines in the use of outlier services.
    As we stated in the CY 2023 ESRD PPS proposed rule (87 FR 38494), 
recalibration of the thresholds using 2021 data and the proposed 
methodology, which is further described in section II.B.1.c.(4) of this 
final rule, is expected to result in aggregate outlier payments closer 
to the 1 percent target in CY 2023. We stated in the CY 2023 ESRD PPS 
proposed rule that we believed finalizing the proposed update to the 
outlier MAP and FDL amounts for CY 2023 would increase payments for 
ESRD beneficiaries requiring higher resource utilization. This would 
move us closer to meeting our 1 percent outlier policy goal, because we 
are using more current data for computing the MAP and FDL amounts, 
which is more in line with current outlier services utilization rates. 
We also noted in the CY 2023 ESRD PPS proposed rule that recalibration 
of the FDL amounts would result in no change in payments to ESRD 
facilities for beneficiaries with renal dialysis items and services 
that are not eligible for outlier payments.
    The comments and our responses to the comments on our proposed 
updates to the outlier policy are set forth below.
    Comment: Several commenters noted that the outlier policy has 
historically achieved less than the 1 percent target, and recommended 
that CMS eliminate the ESRD PPS outlier policy. One small dialysis 
organization within a large health system stated that they appreciate 
CMS's willingness to address outlier payments but expressed concern 
that the outlier provision is not working as intended. Several 
commenters, including MedPAC, LDOs, and a network of dialysis 
organizations and regional offices, expressed support for the outlier 
policy and the proposed adjustment to the methodology for calculating 
the FDL amount for adults.
    Response: We appreciate the support from commenters. Regarding the 
commenters who recommended the elimination of the outlier policy, we 
note that as we discussed earlier in this CY 2023 ESRD PPS final rule, 
we are concerned that reducing the outlier percentage to 0 would not 
provide the appropriate level of payment for outlier cases, and may not 
protect access for

[[Page 67177]]

beneficiaries whose care is unusually costly.
    Final Rule Action: After considering the public comments, we are 
finalizing the updated outlier thresholds for CY 2023 displayed in 
Column II of Table 11 of this final rule and based on CY 2021 data.
d. Final Impacts to the CY 2023 ESRD PPS Base Rate
(1) ESRD PPS Base Rate
    In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), CMS 
established the methodology for calculating the ESRD PPS per-treatment 
base rate, that is, the ESRD PPS base rate, and calculating the per 
treatment payment amount, which are codified at Sec.  413.220 and Sec.  
413.230. The CY 2011 ESRD PPS final rule also provides a detailed 
discussion of the methodology used to calculate the ESRD PPS base rate 
and the computation of factors used to adjust the ESRD PPS base rate 
for projected outlier payments and budget neutrality in accordance with 
sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, 
respectively. Specifically, the ESRD PPS base rate was developed from 
CY 2007 claims (that is, the lowest per patient utilization year as 
required by section 1881(b)(14)(A)(ii) of the Act), updated to CY 2011, 
and represented the average per treatment MAP for composite rate and 
separately billable services. In accordance with section 1881(b)(14)(D) 
of the Act and our regulation at Sec.  413.230, the per-treatment 
payment amount is the sum of the ESRD PPS base rate, adjusted for the 
patient specific case-mix adjustments, applicable facility adjustments, 
geographic differences in area wage levels using an area wage index, 
and any applicable outlier payment, training adjustment add-on, TDAPA, 
and TPNIES.
(2) Annual Payment Rate Update for CY 2023
    The final ESRD PPS base rate for CY 2023 is $265.57. This update 
reflects several factors, described in more detail as follows:
    Wage Index Budget-Neutrality Adjustment Factor: We compute a wage 
index budget-neutrality adjustment factor that is applied to the ESRD 
PPS base rate. For CY 2023, we did not propose any changes to the 
methodology used to calculate this factor, which is described in detail 
in the CY 2014 ESRD PPS final rule (78 FR 72174). We computed the final 
CY 2023 wage index budget-neutrality adjustment factor using treatment 
counts from the 2021 claims and facility-specific CY 2022 payment rates 
to estimate the total dollar amount that each ESRD facility will have 
received in CY 2022. The total of these payments became the target 
amount of expenditures for all ESRD facilities for CY 2023. Next, we 
computed the estimated dollar amount that would have been paid for the 
same ESRD facilities using the CY 2023 ESRD PPS wage index and labor-
related share for CY 2023. As discussed in section II.B.1.b of this 
final rule, the ESRD PPS wage index for CY 2023 includes an update to 
the most recent hospital wage data and continued use of the 2018 OMB 
delineations. Additionally, as discussed in section II.B.1.b(3)(b)(iii) 
of this final rule, we are increasing the ESRD PPS wage index floor 
from 0.5000 to 0.6000 and applying a permanent 5-percent cap on any 
decrease to an ESRD facility's wage index from its wage index in the 
prior year, regardless of the circumstances causing the decline. The 
total of these payments becomes the new CY 2023 amount of wage-adjusted 
expenditures for all ESRD facilities. The wage index budget-neutrality 
factor is calculated as the target amount divided by the new CY 2023 
amount. When we multiplied the wage index budget neutrality factor by 
the applicable CY 2023 estimated payments, aggregate payments to ESRD 
facilities would remain budget neutral when compared to the target 
amount of expenditures. That is, the wage index budget neutrality 
adjustment factor ensures that wage index adjustments do not increase 
or decrease aggregate Medicare payments with respect to changes in wage 
index updates. The CY 2023 wage index budget-neutrality adjustment 
factor is 0.999730. This application would yield a CY 2023 ESRD PPS 
base rate of $257.83 prior to the application of the market basket 
increase factor ($257.90 x 0.999730 = $257.83). This CY 2023 wage index 
budget-neutrality adjustment factor reflects the impact of all wage 
index policy changes, including the CY 2023 ESRD PPS wage index and 
labor-related share, increase to the wage index floor, and permanent 5-
percent cap on wage index decreases.
    For purposes of illustration and analysis, we also calculated a 
separate budget neutrality factor to estimate the impact that the 
permanent 5-percent cap on wage index decreases would have on CY 2023 
ESRD PPS payments. Following the steps described earlier in this 
section of the CY 2023 ESRD PPS final rule, we divided estimated 
payments without the 5-percent cap by estimated payments with the cap. 
We calculated the resulting budget neutrality factor as 0.999905. 
Applying this budget neutrality factor to the ESRD PPS base rate, we 
estimate that the permanent 5-percent cap would result in a $0.02 
decrease to the ESRD PPS base rate ($257.90 x 0.999905 = $257.88). The 
overall CY 2023 wage index budget-neutrality adjustment factor is lower 
because of the effects on budget neutrality of the updated CY 2023 wage 
index data.
    Market Basket Increase: Section 1881(b)(14)(F)(i)(I) of the Act 
provides that, beginning in 2012, the ESRD PPS payment amounts are 
required to be annually increased by the ESRD market basket percentage 
increase factor. The latest CY 2023 projection of the ESRDB market 
basket percentage increase factor is 3.1 percent. In CY 2023, this 
amount must be reduced by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act, as required by section 
1881(b)(14)(F)(i)(II) of the Act. As discussed previously in section 
II.B.1.a of this final rule, the productivity adjustment for CY 2023 is 
0.1 percent, thus yielding an update to the base rate of 3.0 percent 
for CY 2023. Therefore, the CY 2023 ESRD PPS base rate is $265.57 
($257.90 x 0.999730 x 1.030 = $265.57).
    The comments and our responses to the comments on our proposed 
updates to the ESRD PPS base rate are set forth below.
    Comment: Several commenters expressed concerns with the proposed 
update to the ESRD PPS base rate for CY 2023. Many commenters, 
including LDOs, ESRD facilities, professional associations, patients, 
provider advocacy organizations, and a coalition of dialysis 
organizations, requested that CMS apply a forecast error payment 
adjustment to the ESRD PPS base rate to support ESRD facilities during 
this inflationary period, particularly accounting for what forecasters 
state is an error in the forecasted payment updates for CYs 2021 and 
2022. The commenters stated that forecasted payment updates that they 
view as incorrect, coupled with the impact of the workforce shortage, 
have put them in financial difficulty. A coalition of dialysis 
organizations and a non-profit dialysis association both noted that if 
CMS were to adjust the CY 2022 base rate for forecast error, the CY 
2022 base rate would have been $263.21, which would result in a 
calculated CY 2023 proposed base rate of $269.53 rather than the 
proposed $264.09.
    Response: As we discussed in section II.B.1.a.(3)(c) of this CY 
2023 ESRD PPS final rule, there is no precedent to adjust for market 
basket forecast error in the annual ESRD PPS update; however, the

[[Page 67178]]

forecast error for a market basket update is calculated as the actual 
market basket increase for a given year less the forecasted market 
basket increase. Due to the uncertainty regarding future price trends, 
forecast errors can be both positive and negative. For example, the CY 
2017 ESRDB forecast error was -0.8 percentage point, while the CY 2021 
ESRDB forecast error was +1.2 percentage point; CY 2022 historical data 
is not yet available to calculate a forecast error for CY 2022.
    We further noted in section II.B.1.a.(3)(c) of this final rule that 
our longstanding policy since the inception of the ESRD PPS has been to 
update ESRD PPS payments based on an appropriate market basket in 
accordance with section 1881(b)(14)(F)(i) of the Act. For this final 
rule, we have incorporated more recent historical data and forecasts, 
which utilize the most current projections of expected future price and 
wage pressures likely to be faced by ESRD facilities to provide renal 
dialysis services. We did not propose a forecast error payment 
adjustment for CY 2023, and we are not finalizing such an adjustment 
for this final rule. As we have discussed in past rulemaking (85 FR 
71434; 80 FR 69031) and in section II.B.1.b.(2) of this final rule, 
predictability in Medicare payments is important to enable ESRD 
facilities to budget and plan their operations. As we noted in section 
II.B.1.a.(3)(c) of this final rule, forecast error calculations are 
unpredictable, and can be both positive and negative. We note that over 
longer periods of time, the positive differences between the actual and 
forecasted market basket increase in prior years can offset negative 
differences; therefore, we do not believe it is necessary to implement 
a forecast error adjustment for the ESRD PPS based solely on a positive 
CY 2021 forecast error.
    Final Rule Action: After consideration of the public comments 
received, we are finalizing a CY 2023 ESRD PPS base rate of $265.57. 
This amount reflects the CY 2023 wage index budget-neutrality 
adjustment factor of 0.999730, and the CY 2023 ESRD PPS productivity-
adjusted market basket update of 3.0 percent.
e. Update to the Average per Treatment Offset Amount for Home Dialysis 
Machines
    In the CY 2021 ESRD PPS final rule (85 FR 71427), we expanded 
eligibility for the TPNIES under Sec.  413.236 to include certain 
capital-related assets that are home dialysis machines when used in the 
home for a single patient. To establish the TPNIES basis of payment for 
these items, we finalized the additional steps that the Medicare 
Administrative Contractors (MACs) must follow to calculate a pre-
adjusted per treatment amount, using the prices they establish under 
Sec.  413.236(e) for a capital-related asset that is a home dialysis 
machine, as well as the methodology that CMS uses to calculate the 
average per treatment offset amount for home dialysis machines that is 
used in the MACs' calculation, to account for the cost of the home 
dialysis machine that is already in the ESRD PPS base rate. For 
purposes of this final rule, we will refer to this as the ``TPNIES 
offset amount.''
    The methodology for calculating the TPNIES offset amount is set 
forth in Sec.  413.236(f)(3). Section 413.236(f)(3)(v) states that 
effective January 1, 2022, CMS annually updates the amount determined 
in Sec.  413.236(f)(3)(iv) by the ESRD bundled market basket percentage 
increase factor minus the productivity adjustment factor. The TPNIES 
for capital-related assets that are home dialysis machines is based on 
65 percent of the MAC-determined pre-adjusted per treatment amount, 
reduced by the TPNIES offset amount, and is paid for 2 calendar years.
    We proposed a CY 2023 TPNIES offset amount for capital-related 
assets that are home dialysis machines of $9.73, based on the proposed 
CY 2023 ESRDB market basket increase factor minus the productivity 
adjustment of 2.4 percent (2.8 percent minus 0.4 percentage point). We 
explained in the CY 2023 ESRD PPS proposed rule that applying the 
proposed update factor of 1.024 to the CY 2022 offset amount resulted 
in the proposed CY 2023 offset amount of $9.73 ($9.50 x 1.024 = $9.73). 
We proposed to update this calculation to use the most recent data 
available in the CY 2023 ESRD PPS final rule.
    We received 5 comments on this proposal, including comments from an 
LDO, small dialysis organization, a home dialysis advocacy 
organization, a coalition of dialysis organizations, and a provider 
advocacy organization. The comments and our responses to the comments 
on the proposed update to the TPNIES offset amount are set forth below.
    Comment: All of the commenters on this proposal expressed concern 
about the proposed application of the TPNIES offset amount for CY 2023. 
Two commenters expressed that the application of the TPNIES offset 
amount blunts the potential positive impact of the TPNIES. The LDO 
agreed with the application of the TPNIES offset amount but expressed 
that the current policy may diminish innovation and limit resources 
necessary for ESRD facilities to incorporate new and innovative 
equipment and supplies into their practices. The home dialysis advocacy 
organization expressed opposition to the application of the TPNIES 
offset amount but expressed appreciation for the proposed use of the 
market basket update factor to update the TPNIES offset adjustment 
amount.
    Response: We appreciate the concerns that these commenters raised. 
As discussed in the CY 2021 ESRD PPS final rule (85 FR 71422 through 
71423), we finalized an offset amount so that the TPNIES will cover the 
estimated marginal costs of new and innovative home dialysis machines. 
ESRD facilities using the new and innovative home dialysis machine 
receive a per treatment payment to cover some of the cost of the new 
machine per treatment minus a per treatment payment amount that we 
estimate to be included in the ESRD PPS base rate for current home 
dialysis machines that they already own. Because we have received 
questions about how the TPNIES offset amount is included in the 
calculation of payments under the ESRD PPS, we are clarifying that 
under the policy at Sec.  413.236(f)(iii) that was established in the 
CY 2020 ESRD PPS final rule, the annually-adjusted offset amount is 
subtracted from the MAC-determined price to account for the cost of 
home dialysis machine that is already in the ESRD PPS base rate. We 
disagree with the commenters who stated that the TPNIES offset will 
lead to decreased resources or less innovation. Rather, the TPNIES 
offset amount prevents duplicate payment under the ESRD PPS for a 
service which is already included in the ESRD PPS base rate.
    Final Rule Action: We are finalizing our proposal to calculate the 
CY 2023 TPNIES offset amount using the most recent data available. The 
CY 2022 TPNIES offset amount for capital-related equipment that are 
home dialysis machines used in the home is $9.50. As discussed 
previously in section II.B.1.a of this final rule, the final CY 2023 
ESRDB market basket increase factor minus the productivity adjustment 
is 3.0 percent (3.1 percent minus 0.1 percent). Applying the update 
factor of 1.030 to the CY 2022 TPNIES offset amount results in a final 
CY 2023 TPNIES offset amount of $9.79 ($9.50 x 1.030).

[[Page 67179]]

f. Revision to the Oral-Only Drug Definition and Clarification 
Regarding the ESRD PPS Functional Category Descriptions
(1) Background
    Section 1881(b)(14)(A)(i) of the Act requires the Secretary to 
implement a payment system under which a single payment is made to a 
provider of services or a renal dialysis facility for renal dialysis 
services in lieu of any other payment. Section 1881(b)(14)(B) of the 
Act defines renal dialysis services, and subclause (iii) of such 
section states that these services include other drugs and biologicals 
\18\ that are furnished to individuals for the treatment of ESRD and 
for which payment was made separately under this title, and any oral 
equivalent form of such drug or biological.
---------------------------------------------------------------------------

    \18\ As discussed in the CY 2019 ESRD PPS final rule (83 FR 
56922), we began using the term ``biological products'' instead of 
``biologicals'' under the ESRD PPS to be consistent with FDA 
nomenclature. We use the term ``biological products'' in this CY 
2023 ESRD PPS proposed rule except where referencing specific 
language in the Act or regulations.
---------------------------------------------------------------------------

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

[[Page 67180]]

oral-only drug is approved by FDA. We stated that we will undertake 
rulemaking to include the oral and any non-oral version of the drug in 
the ESRD PPS bundled payment when it is no longer considered an oral-
only drug under this regulation. In addition, we noted that we will pay 
for the existing oral-only drugs (which were, at that time, only 
phosphate binders and calcimimetics) using the TDAPA, as applicable. We 
stated that this will allow us to collect data reflecting current 
utilization of both the oral and injectable or intravenous forms of the 
drugs, as well as payment patterns and beneficiary co-pays, before we 
add these drugs to the ESRD PPS bundled payment. We also stated that 
for future oral-only drugs for which a non-oral form of administration 
comes on the market, we will apply our drug designation process as we 
will for all other new drugs.
    In the CY 2016 ESRD PPS final rule (80 FR 69017), we also codified 
the term ESRD PPS functional category at Sec.  413.234(a) as a distinct 
grouping of drugs and biologicals, as determined by CMS, whose end 
action effect is the treatment or management of a condition or 
conditions associated with ESRD. We explained that we codified this 
definition in regulation text to formalize the approach we adopted in 
CY 2011 because the drug designation process is dependent on the ESRD 
PPS functional categories (80 FR 69015). We provided a detailed 
discussion of how we accounted for renal dialysis drugs and biological 
products in the ESRD PPS base rate since the implementation of the ESRD 
PPS (80 FR 69013 through 69015). We discussed how we grouped renal 
dialysis drugs and biological products into functional categories based 
on their action (80 FR 37831). We explained that this was done for the 
purpose of adding new drugs and biological products with the same 
function into the functional categories and the ESRD PPS bundled 
payment as expeditiously as possible after the drug becomes 
commercially available to provide access for the ESRD Medicare 
population (80 FR 69014). Our approach of considering drugs and 
biological products as included in the ESRD PPS base rate if they fit 
within one of our ESRD PPS functional categories is reflected in the 
drug designation process set forth in our regulations at Sec.  413.234.
    In 2017, FDA approved an injectable calcimimetic. In accordance 
with the policy finalized in the CY 2016 ESRD PPS final rule (80 FR 
69013 through 69027) described in the previous paragraphs, we issued a 
change request to implement payment under the ESRD PPS for both the 
oral and injectable forms of calcimimetics using the TDAPA.\19\ We paid 
for calcimimetics using the TDAPA under the ESRD PPS for 3 years, CY 
2018 through CY 2020, during which time CMS collected utilization data. 
In the CY 2021 ESRD PPS final rule (85 FR 71406 through 71410), we 
finalized a modification to the ESRD PPS base rate to account for the 
costs of calcimimetics following the methodology codified at Sec.  
413.234(f). Accordingly, effective January 1, 2021,\20\ calcimimetics 
are no longer paid for using the TDAPA and instead are included in the 
ESRD PPS base rate. We also noted that effective January 1, 2021, 
calcimimetics are eligible for outlier payments as ESRD outlier 
services under Sec.  413.237.\21\
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    \19\ Change Request 10065, Transmittal 1889, issued August 4, 
2017, replaced by Transmittal 1999, issued January 10, 2018, 
implemented the TDAPA for calcimimetics effective January 1, 2018.
    \20\ Change Request 12011, Transmittal 10568, issued January 14, 
2021.
    \21\ In the CY 2020 ESRD PPS final rule (84 FR 60803), CMS made 
a technical change to Sec.  413.234(a) to revise the definitions of 
``ESRD PPS functional category'' and ``Oral-only drug'' to use the 
term ``biological product'' instead of ``biological'' for greater 
consistency with FDA nomenclature.
---------------------------------------------------------------------------

    As we explained in the CY 2023 ESRD PPS proposed rule (87 FR 
38498), at the present time, phosphate binders are still considered 
oral-only drugs, and therefore under current law will be paid under 
Medicare Part D until January 1, 2025, as long as they remain oral-only 
drugs. Beginning January 1, 2025, in accordance with Sec.  
413.174(f)(6), payment to an ESRD facility for renal dialysis service 
drugs and biologicals with only an oral form furnished to ESRD patients 
will be incorporated into the ESRD PPS and separate payment will no 
longer be provided.
    Under our current policy (80 FR 69027), if an injectable equivalent 
or other form of administration of phosphate binders were to be 
approved by FDA prior to January 1, 2025, the phosphate binders would 
no longer be considered oral-only drugs and would no longer be paid 
outside the ESRD PPS. We would pay for the oral and any non-oral 
version of the drug using the TDAPA under the ESRD PPS for at least 2 
years, during which time we would collect and analyze utilization data. 
If no other injectable equivalent (or other form of administration) of 
phosphate binders is approved by the FDA prior to January 1, 2025 then 
we would pay for these drugs using the TDAPA under the ESRD PPS for at 
least 2 years beginning January 1, 2025. CMS will then undertake 
rulemaking to modify the ESRD PPS base rate to account for the cost and 
utilization of the drug in the ESRD PPS bundled payment. As required by 
section 632(b)(1) of ATRA, as amended by section 217(a)(2) of PAMA, in 
establishing payment for oral-only drugs under the ESRD PPS, we will 
use the most recently available data.
(2) CMS Observations Regarding Decrease in Drug Utilization and 
Medicare Expenditures When Drugs Are Included in the ESRD PPS
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38497), 
as we prepare for the incorporation of oral-only drugs into the ESRD 
PPS bundled payment beginning January 1, 2025, we have been studying 
trends in drug utilization and Medicare expenditures for renal dialysis 
drugs and biological products. We noted that our observations, 
presented below, provided further support for our longstanding view 
that oral-only renal dialysis service drugs and biological products are 
an essential part of the ESRD PPS bundled payment and should be paid 
for under the ESRD PPS.
    With the transition of payment for calcimimetics from Medicare Part 
D to Medicare Part B, we observed two distinct patterns. First, when 
the calcimimetics were paid for using the TDAPA under the ESRD PPS 
beginning 2018, we observed a significant increase in the utilization 
of calcimimetics across patients of all races and ethnicities, with a 
more significant uptake by the African-American/Black minority 
population. As utilization increased, cost decreased. To demonstrate, 
before 2018, only brand-name oral calcimimetics were available, but in 
2018, generic oral calcimimetics began to enter the market. We observed 
a greater than ten-fold decrease in the per milligram cost of 
Cinacalcet, the oral calcimimetic, from Quarter 1 2018, which was the 
beginning of the TDAPA period for calcimimetics, and Quarter 4 2020. We 
stated that we believed that the transition of payment for 
calcimimetics from Part D to Part B increased access for the population 
that lacked Part D coverage or had less generous coverage than the Part 
D standard benefit. Second, after we incorporated the calcimimetics 
into the ESRD PPS bundled payment beginning January 1, 2021, we noted a 
decrease in the calcimimetic utilization overall, with a pronounced 
decrease in the more expensive injectable calcimimetic. To mitigate the 
risk of potential access issues for minority populations, which include 
African-American/Black, Asian, Hispanic, and Other non-white 
populations, we stated that we believed it is important that any future 
oral-only

[[Page 67181]]

drugs that fit into a current ESRD PPS functional category be included 
in the ESRD bundled payment through the processes previously finalized 
in our regulations at Sec.  413.234 and described in this CY 2023 ESRD 
PPS final rule.
    We stated in the proposed rule that we have noted a similar pattern 
in the change in utilization with other renal dialysis service drugs, 
such as vitamin D agents, which were separately paid prior to the 
establishment of the ESRD PPS and subsequently included in the ESRD PPS 
bundled payment. Prior to the implementation of ESRD PPS, certain renal 
dialysis drugs and biological products were separately paid according 
to the number of units of the drug administered; in other words, the 
more units of a drug or biological product administered, the higher the 
Medicare payment.\22\ Between 2011 and 2013, the first 3 years of the 
new ESRD PPS, the utilization of formerly separately billable renal 
dialysis drugs and biological products included in the ESRD PPS bundled 
payment declined. With the inclusion of the formerly separately 
billable renal dialysis drugs and biological products in the ESRD PPS 
bundled payment, the ESRD PPS increased the incentive for ESRD 
facilities to be more efficient in providing these products.
---------------------------------------------------------------------------

    \22\ Report to the Congress: Medicare Payment Policy, March 
2017. p. 169. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/mar17_medpac_ch6.pdf.
---------------------------------------------------------------------------

    We noted that CMS has observed that incorporation of formerly 
separately billable renal dialysis drugs and biological products into 
the ESRD PPS bundled payment is followed by a decrease in utilization 
of the drug. For example, by drug class, on a per treatment basis, 
between 2007 and 2013, the use of vitamin D agents (part of the bone 
and mineral metabolism ESRD PPS functional category) declined by 20 
percent, with most of the decline occurring between 2010 and 2013. 
Under the ESRD PPS, drug utilization and ASP data suggest increased 
competition between the two principal vitamin D agents in the ESRD PPS 
bundled payment. Between 2010 and 2014, per treatment use of 
paricalcitol, the costlier vitamin D drug (according to Medicare ASP 
data) declined, while per treatment use of doxercalciferol, the less 
costly vitamin D drug, increased. Between 2010 and 2015, the ASP price 
per unit for both these products declined by 60 percent. We have 
observed a similar pattern in price decline as a result of competition 
with the oral calcimimetics between 2018 and 2021. The brand name oral 
cinacalcet (a calcimimetic) was paid under Medicare Part D drug before 
2018, but the price of the oral drug dropped significantly once the 
injectable calcimimetic became available and the oral (both brand name 
and generics) and the injectable calcimimetic became eligible for 
payment using the TDAPA under the ESRD PPS.
    We explained in the CY 2023 ESRD PPS proposed rule that we have 
been monitoring health outcomes since 2011 and have not observed any 
sustained increase in adverse outcomes related to incorporation of 
renal dialysis drugs or biological products into the ESRD PPS bundled 
payment, including adverse outcomes related to changes in utilization 
of different forms of calcimimetics, as noted in the previous 
paragraph. To date, we have monitored for hospitalizations, fractures, 
strokes, acute myocardial infarctions, heart failures, 
parathyroidectomies, and calciphylaxis. Utilization of calcimimetics 
remains higher among minority populations, which include African-
American/Black, Asian, Hispanic, and Other non-white populations, and 
we have not observed any sustained adverse health outcomes due to this 
change in utilization. We noted that we continue to monitor these 
health outcomes on an ongoing basis.
(3) CMS Observations on Part D Spending for Dialysis Drugs
    We noted in the CY 2023 ESRD PPS proposed rule that, while the use 
of formerly separately billable renal dialysis drugs included in the 
ESRD PPS bundled payment declined between 2011 and 2013, the use of 
dialysis drugs paid under Medicare Part D (as measured by Medicare 
spending) increased. Medicare Part D spending for oral-only drugs in 
2016, which at that time only included calcimimetics and phosphate 
binders, grew to $2.3 billion, an increase of 22 percent per year 
compared with 2011. When calculated on a per treatment basis, Medicare 
Part D spending for dialysis drugs increased by 20 percent per year. In 
addition, between 2011 and 2016, total Medicare Part D spending for 
dialysis drugs grew more rapidly than total Medicare Part D spending 
for ESRD beneficiaries on dialysis (22 percent vs. 11 percent, 
respectively). In 2016, Medicare Part D spending for dialysis drugs 
constituted 60 percent of gross Medicare Part D spending for ESRD 
beneficiaries.
    As we noted previously in the proposed rule and this section of the 
final rule, beginning on January 1, 2018, calcimimetics were paid for 
using the TDAPA under the ESRD PPS and beginning on January 1, 2021, 
were incorporated into the ESRD PPS bundled payment. Currently, 
phosphate binders are the only drugs that are paid for under Medicare 
Part D as oral-only drugs.
    A number of studies, including studies by CMS, have examined trends 
in Medicare spending for phosphate binders. Between 2013 and 2014, 
Medicare Part D spending for phosphate binders increased by 24 percent 
to approximately $980 million. Medicare costs for phosphate binders for 
patients on dialysis and patients with chronic kidney disease enrolled 
in Medicare Part D exceeded $1.5 billion in 2015. Additionally, annual 
Medicare expenditures for phosphate binders increased by 118 percent 
(approximately $486 million) between 2008 and 2013, reflecting 
increasing numbers of patients on dialysis being prescribed phosphate 
binders and large increases in per-user phosphate binder costs. During 
these 6 years, total costs per user-year for phosphate binders 
increased 67 percent, in contrast to a 21 percent increase for all 
other Medicare Part D medications for patients receiving dialysis 
services.\23\
---------------------------------------------------------------------------

    \23\ Am J Kidney Dis 2018 Feb;71(2):246-253. doi: 10.1053/
j.ajkd.2017.09.007. Epub 2017 Nov 28. CMS's data also confirms this 
figure.
---------------------------------------------------------------------------

    We noted that MedPAC has also studied Medicare spending under Part 
D for phosphate binders. According to MedPAC's report titled March 2021 
Report to the Congress: Medicare Payment Policy,\24\ between 2017 and 
2018, spending for phosphate binders furnished to FFS beneficiaries on 
dialysis declined by 17 percent to $1.1 billion. This decline is linked 
to FDA's approval in 2017 for a generic version of Renvela[supreg] 
(sevelamer carbonate), a phosphate binder. By contrast, spending grew 
12 percent per year for the five-year period 2012 through 2017. In 
2018, Medicare Part D spending for phosphate binders accounted for 40 
percent of all Medicare Part D spending for dialysis beneficiaries. The 
most recent CMS data through December 2021 indicates that total 
spending on phosphate binders is approximately $714 million. The 
average spending per treatment of phosphate binders in 2021 is 
approximately $20.09 among all adult ESRD beneficiaries, and $25.02 
among all Part D eligible adult ESRD beneficiaries. This illustrates 
that Medicare Part D spending for the same category of drugs is more 
expensive for ESRD beneficiaries with Medicare Part D.
---------------------------------------------------------------------------

    \24\ https://www.medpac.gov/document/march-2021-report-to-the-congress-medicare-payment-policy/.

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[[Page 67182]]

    MedPAC has also noted the benefits of the future incorporation of 
phosphate binders into the ESRD PPS bundled payment as of January 1, 
2025. As noted in MedPAC's report titled March 2022 Report to the 
Congress: Medicare Payment Policy,\25\ this is expected to result in 
better drug therapy management for the ESRD beneficiary, and to improve 
their access to these medications. MedPAC stated that this is 
especially important since some beneficiaries lack Part D coverage, or 
have coverage less generous than the standard Part D benefit. MedPAC 
also noted that in addition to supporting equitable access for the ESRD 
beneficiaries, including phosphate binders in the ESRD PPS bundled 
payment might improve provider efficiency. MedPAC stated, and we have 
confirmed, that between 2018 and 2019, Medicare total spending 
increased for the phosphate binders that did not have generic 
competitors.
---------------------------------------------------------------------------

    \25\ https://www.medpac.gov/document/march-2022-report-to-the-congress-medicare-payment-policy/.
---------------------------------------------------------------------------

(4) The Oral-Only Drug Definition and ``Functional'' Equivalence Under 
the ESRD PPS
    As noted previously in this section of the final rule, under Sec.  
413.234(a), we define an oral-only drug as ``A drug or biological 
product with no injectable equivalent or other form of administration 
other than an oral form.'' In addition, Sec.  413.234(d) provides that 
an oral-only drug is no longer considered oral-only if an injectable or 
other form of administration of the oral-only drug is approved by FDA. 
In the CY 2023 ESRD PPS proposed rule, we noted that there are various 
types of drug equivalences that are defined in regulation by FDA, 
including pharmaceutical equivalents, bioequivalence, and therapeutic 
equivalents.\26\ However, we have not relied on these types of drug 
equivalences defined by FDA for purposes of the oral-only drug policy 
under the ESRD PPS.
---------------------------------------------------------------------------

    \26\ FDA has defined the terms ``pharmaceutical equivalents'', 
``bioequivalence'', and ``therapeutic equivalents'' at 21 CFR 
314.3(b). In FDA's publication Approved Drug Products with 
Therapeutic Equivalence Evaluations (the ``Orange Book''), 
therapeutic equivalence is used in the context of ``therapeutic 
equivalents'' as that term is defined in Sec.  314.3(b) (i.e., drug 
products containing the same active ingredient(s), among other 
requirements) and does not encompass a comparison of different 
therapeutic agents used for the same condition. https://www.accessdata.fda.gov/scripts/cder/ob/index.cfm.
---------------------------------------------------------------------------

    Moreover, our regulations do not currently specify the meaning of 
the term ``equivalent'' in the definition of ``oral-only drug.'' \27\ 
We stated that we believed that the history of the ESRD PPS and our 
longstanding drug designation process indicate that CMS must consider 
``functional'' equivalence, which is not a term defined in FDA's 
regulations, to evaluate whether there is another form of 
administration other than an oral form and determine if a drug or 
biological product is an oral-only drug. We noted that for purposes of 
the ESRD PPS, we consider a drug or biological product to be 
functionally equivalent if it has the same end action effect as another 
renal dialysis drug or biological product. For example, when we first 
developed the Medicare ESRD PPS, we examined all renal dialysis drugs 
and biological products included in the prior composite rate payment 
system. Functional substitutes for those drugs or biological products 
were part of that evaluation. In the CY 2011 ESRD PPS final rule (75 FR 
49044 through 49053) we explained our process for identifying drugs and 
biological products used for the treatment of ESRD that would be 
included in the ESRD PPS base rate. We performed an extensive analysis 
of Medicare payments for Part B drugs and biological products billed on 
ESRD claims and evaluated each drug and biological product to identify 
its category by indication or mode of action. We stated that 
categorizing drugs and biological products on the basis of drug action 
allows us to determine which categories (and therefore, the drugs and 
biological products within the categories) would be considered used for 
the treatment of ESRD (75 FR 49047).
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    \27\ Neither ATRA, PAMA, nor ABLE includes a definition of 
``equivalent'' for purposes of the oral-only drug determination. 
Additionally, CMS did not provide a definition for or elaborate on 
the meaning of ``equivalent'' for purposes of the oral-only drug 
determination in our prior rules.
---------------------------------------------------------------------------

    In the CY 2016 ESRD PPS final rule, we codified our longstanding 
drug designation process at Sec.  413.234 and reiterated that 
injectable and intravenous drugs and biological products were grouped 
into ESRD PPS functional categories based on their action (80 FR 
69014). This was done for the purpose of adding new drugs or biological 
products with the same functions to the ESRD PPS bundled payment as 
expeditiously as possible after the drugs become commercially available 
so that beneficiaries have access to them. We further clarified that 
the ESRD PPS functional categories are not based on their mode of 
action, but rather end action effect (80 FR 69015 through 69017). 
Accordingly, and as noted previously in this section of this final 
rule, we finalized the definition of an ESRD PPS functional category in 
Sec.  413.234(a) as a distinct grouping of drugs or biological 
products, as determined by CMS, whose end action effect is the 
treatment or management of a condition or conditions associated with 
ESRD (80 FR 69017 and 84 FR 60803).
    Our guidance has also indicated that we consider functional 
equivalence when assessing whether particular drugs are renal dialysis 
services paid for under the ESRD PPS. The Medicare Benefit Policy 
Manual, Chapter 11, Section 20.3F states, ``Drugs that were used as a 
substitute for any of these drugs [that is, drugs that were considered 
composite rate drugs and not billed separately prior to the 
implementation of the ESRD PPS] or are used to accomplish the same 
effect are also covered under the composite rate.'' Given that we rely 
on functional equivalence in determining whether drugs are reflected in 
an ESRD PPS functional category and thus are renal dialysis services 
paid for under the ESRD PPS, we believe the same standard should apply 
when determining if a drug is an oral-only drug.
(5) Revision to the Definition of Oral-Only Drug
    Based on our observations regarding renal dialysis drug utilization 
and spending and the upcoming changes related to payment for oral-only 
drugs under the ESRD PPS, in the CY 2023 ESRD PPS proposed rule, we 
proposed a change to the definition of oral-only drug at Sec.  
413.234(a). The current definition states that an oral-only drug is a 
drug or biological product with no injectable equivalent or other form 
of administration other than an oral form. We proposed a modification 
to the definition to specify that equivalence refers to functional 
equivalence, in line with our current drug designation process, which 
relies on the ESRD PPS functional categories. The proposed definition 
would state that an oral-only drug is a drug or biological product with 
no functional equivalent or other form of administration other than an 
oral form. We proposed that this change would take effect beginning 
January 1, 2025, to coincide with the incorporation of oral-only drugs 
into the ESRD PPS bundled payment under Sec.  413.174(f)(6).
    We proposed this change for several reasons. First, we noted that 
it would be consistent with the policies previously established for 
phosphate binders and calcimimetics. As discussed previously, in the CY 
2016 ESRD PPS final rule, we finalized that when a non-oral form of 
administration of a phosphate binder or

[[Page 67183]]

calcimimetic is approved by FDA, we would go through rulemaking to 
include the oral and any non-oral form of administration of the drug in 
the ESRD PPS bundled payment. We explained that we would not take this 
approach for any subsequent drugs that are approved by FDA and fall 
within the bone and mineral metabolism functional category (or any 
other ESRD PPS functional categories). This is because the phosphate 
binders and calcimimetics were the only renal dialysis drugs for which 
we delayed payment under the ESRD PPS because we did not have 
utilization data (80 FR 69025). We stated in the proposed rule that we 
believed that a revision to the oral-only drug definition to clarify 
that a drug is not an oral-only drug if it has a functional equivalent 
is consistent with that policy; that is, only oral-only drugs that are 
calcimimetics and phosphate binders would be eligible for a potential 
base rate addition and we would not take this approach for any 
subsequent drugs that fall within any of the ESRD PPS functional 
categories (80 FR 69025). While Congress has delayed the incorporation 
of oral-only drugs into the ESRD PPS until January 1, 2025, and this 
delay still applies to the phosphate binders as oral-only drugs, we 
stated that we believed we could still take action at this time to 
ensure that our drug designation process clearly reflects the 
longstanding ESRD PPS functional category framework.
    In addition, we explained in the proposed rule, this change would 
help ensure that we do not perpetuate any further access issues for 
renal dialysis services to disadvantaged ESRD beneficiaries through 
delayed incorporation into the ESRD PPS payment. As noted previously, 
throughout the years, a series of legislative actions delayed the 
inclusion of oral-only drugs into the ESRD PPS bundled payment, from 
2014 to 2016, to 2024, to January 1, 2025. When we first implemented 
the payment system in 2011, we noted that there were certain advantages 
to delaying payment for oral-only drugs under the ESRD PPS and 
continuing to pay for them under Part D, such as giving ESRD facilities 
additional time to make operational changes. We stated that we believed 
that sufficient time has passed since 2011 and we have abundant data 
about historical patterns to incorporate all drugs and biological 
products that are renal dialysis services into the ESRD PPS bundled 
payment as soon as possible under current law.
    We noted that the proposed modification would help ensure that new 
drugs and biological products that become available in the future and 
that are reflected in the ESRD PPS functional categories, are properly 
paid as part of the ESRD PPS. In other words, by specifying that an 
oral-only drug is one with no injectable ``functional'' equivalent, we 
would clearly define the scope of any new drugs or biological products 
that could be considered oral-only drugs in the future, and would 
therefore facilitate incorporation of these renal dialysis services 
into ESRD PPS. Any new oral renal dialysis drugs or biological products 
that are reflected in existing ESRD PPS functional categories and have 
functional equivalents in those categories would not meet the 
definition of an oral-only drug and thus could be included in the ESRD 
PPS bundled payment without delay, either immediately, or through the 
TDAPA eligibility, even if the functional equivalents are not 
``chemical equivalents'' \28\ (that is, products containing identical 
amounts of the same active drug ingredient). We noted that this would 
support beneficiary access to renal dialysis service drugs and would 
meet the intent of the ESRD PPS functional category framework, which is 
to be broad and to facilitate adding new drugs to the therapeutic 
armamentarium of the treating physician (83 FR 56941).
---------------------------------------------------------------------------

    \28\ Like functional equivalence, chemical equivalence is not a 
term defined in FDA's regulations. CMS is using the term chemical 
equivalents for the purpose of the ESRD PPS.
---------------------------------------------------------------------------

    As we noted in the CY 2023 ESRD PPS proposed rule, over the past 
decade, CMS has been monitoring and analyzing data regarding 
beneficiary access to Medicare Part D drugs, Medicare expenditure 
increases for renal dialysis drugs paid under Medicare Part D, health 
equity implications of varying access to Medicare Part D drugs among 
patients with ESRD, and ESRD facility behavior regarding drug 
utilization. We have seen that incorporating Medicare Part D drugs into 
the ESRD PPS has had a significant positive effect of expanding access 
to such drugs for beneficiaries who do not have Medicare Part D 
coverage. As discussed earlier in this section of this final rule, the 
inclusion of Medicare Part D drugs into the ESRD PPS and the 
corresponding expansion of access to these drugs have significant 
health equity implications. For example, we have identified among these 
beneficiaries a significant uptake by the African-American/Black 
minority population for calcimimetics once we began paying for those 
drugs using the TDAPA under the ESRD PPS.
    We stated that we believed the modification of the oral-only drug 
definition would facilitate the inclusion of oral renal dialysis drugs 
into the ESRD PPS bundled payment, as opposed to payment under Medicare 
Part D, and therefore would support health equity for beneficiaries 
with oral-only drugs in their plan of care who lack Medicare Part D 
coverage or have less generous than Medicare Part D standard benefit. 
From 2017 and 2021, between 10 to 20 percent of FFS beneficiaries on 
dialysis either had no Medicare Part D coverage or had coverage less 
generous than the Medicare Part D standard benefit. Timely inclusion of 
renal dialysis drugs and biological products into the ESRD PPS bundled 
payment would promote health equity for those beneficiaries who are not 
enrolled in Part D or who do not have access to these drugs through 
alternate insurance programs.
    We noted that, when compared with all FFS beneficiaries, FFS 
beneficiaries receiving dialysis are disproportionately young, male, 
and African-American, have disabilities and low income as measured by 
dual status, and reside in an urban setting. We stated that we believed 
a clarification to help ensure that renal dialysis drugs and biological 
products are properly included in the ESRD PPS bundled payment would 
increase the likelihood of pharmaceutical compliance for this 
population of patients, promote health equity for patients that lack 
Medicare Part D coverage or have coverage less generous than the Part D 
standard benefit, and contribute to better clinical outcomes by 
leveling the playing field for all patients with ESRD. In addition, 
this requirement would support the goals of Executive Order 13985, 
Advancing Racial Equity and Support for Underserved Communities through 
the Federal Government (86 FR 7009), which required Federal agencies to 
conduct an equity assessment and determine whether new policies, 
regulations, or guidance documents may be necessary to advance equity 
in agency actions and programs. In addition, advancing health equity is 
the first pillar of CMS's 2022 strategic plan (https://www.cms.gov/cms-strategic-plan), and this policy is consistent with that pillar of the 
agency's strategic plan.
    In summary, as discussed in the CY 23 ESRD PPS proposed rule (87 FR 
38500), we believed that a change to the definition of oral-only drug 
to specify ``functional'' equivalence would be consistent with the 
current policy for oral-only drugs and the ESRD PPS functional category 
framework, would help ensure that new renal dialysis

[[Page 67184]]

drugs and biological products are paid for under the ESRD PPS without 
delay, and would continue to support health care practitioners' 
decision-making to meet the clinical needs of their patients. 
Additionally, the proposed modification would promote health equity and 
support proper financial incentives for ESRD facilities, in keeping 
with our fiduciary responsibility to the Medicare Trust Funds. We 
solicited comments on this proposal.
    We received public comments on our proposal to modify the 
definition of oral-only drug from MedPAC, a trade association, a drug 
manufacturer, a non-profit kidney organization, an LDO, a non-profit 
kidney care alliance, a national advocacy organization, a coalition of 
dialysis organizations, and a non-profit dialysis organization. The 
comments on our proposal and our responses are set forth below.
    Comment: Overall, commenters expressed support for the proposed 
change to the definition of oral-only drug to specify that equivalence 
refers to functional equivalence. MedPAC expressed that this proposal 
would help maintain the integrity of the ESRD PPS bundled payment. An 
LDO stated that it agreed that clarifying that ``equivalence'' refers 
to ``functional equivalence'' better aligns with the current drug 
designation process. A non-profit dialysis organization commented that 
they think it is reasonable for CMS to refine the definition to specify 
that an oral-only drug or biological product need not be ``chemically 
identical'' to its intravenous counterpart. A non-profit kidney care 
alliance stated that it agreed with the proposed change to the 
definition, noting that it is reasonable to expect that a new drug or 
biological product would add value and not merely be a copycat product. 
Commenters generally supported CMS' effort to clarify the definition of 
an oral-only drug. However, a drug manufacturer expressed concern that 
CMS would apply the concept of functional equivalence across the entire 
ESRD PPS functional category and noted their concern that drugs for 
very different conditions could be treated as functional equivalents in 
a way that is not clinically appropriate and may, in fact, cause harm 
to the patient. A coalition of dialysis organizations recommended that 
CMS clearly state that the end action effect definition apply more 
narrowly within the ESRD PPS functional categories to the classes of 
products within the relevant functional category. Similarly, a drug 
manufacturer and non-profit kidney organization recommended that within 
the determination of functional equivalence, that is, end action 
effect, CMS should consider drug comparison at the drug class or 
subgroup level and not the functional category level. One commenter 
suggested this recommendation regarding drug class or subgroup would 
accomplish CMS' goal of refining the definition of drugs and biological 
products that qualify as oral only drugs while not setting an 
inappropriate precedent of comparing a single drug or biological 
product to an entire ESRD PPS functional category. A non-profit 
dialysis association noted that they do not believe that Congress, when 
it drew a distinction in statute related to oral-only drugs, intended 
to allow CMS to compare one product to an entire functional category of 
products.
    Some commenters expressed concern that the functional equivalent 
categorization process sends a negative signal to manufacturers and 
stifles innovation. One commenter stated manufacturers have reported 
that there has been a significant decline in demand for certain types 
of drugs since the ESRD PPS bundled payment went into effect. One 
commenter recommended that CMS eliminate the ESRD PPS functional 
categories as a basis for payment policy through the drug designation 
process. Some commenters asked CMS to define functional categories by 
the ``FDA-[approved] indication(s),'' which they believe is a more 
objective way to ensure consistency in the categories.
    Response: We appreciate the support from certain commenters 
regarding the proposed change to the definition of an oral-only drug to 
specify that equivalence means functional equivalence. We disagree with 
the commenters who suggested that functional equivalence for an oral-
only drug be evaluated on mechanism of action and not end action 
effect, as that would be inconsistent with our longstanding policy. In 
the CY 2016 ESRD PPS final rule, we clarified that the ESRD PPS 
functional categories are not based on their mechanism of action, but 
rather their end action effect (80 FR 69015 through 69017). 
Accordingly, and as noted previously in this section of this final 
rule, we finalized the definition of an ESRD PPS functional category in 
Sec.  413.234(a) as a distinct grouping of drugs or biological 
products, as determined by CMS, whose end action effect is the 
treatment or management of a condition or conditions associated with 
ESRD (80 FR 69017 and 84 FR 60803). We do not base the functional 
category determination by comparing the new drug or biological products 
to other drugs or biological products in the functional category. CMS 
reviews a new FDA-approved drug or biological product based on CMS' 
assessment of the end action effect and the description of the 
functional category. This review considers, but is not solely based on, 
the FDA-approved indication(s). The functional categories do not have 
classes and subclasses within the categories, and we do not think 
creating such a delineation or relying on mechanism of action is 
necessary or appropriate. CMS has been using the broader concept of end 
action effect in the context of ESRD PPS since the program's inception 
in 2011, so CMS is following longstanding precedent in this 
circumstance.
    Regarding the suggestion that CMS should classify drugs by their 
FDA-approved indications rather than their end use function, CMS notes 
that functional substitutes for renal dialysis drugs and biological 
products were discussed when the ESRD PPS bundled payment was first 
constructed as a way to identify drugs that were appropriate to include 
in the ESRD PPS base rate. We used functional classification in ESRD 
payment prior to the establishment of the ESRD PPS in CY 2011. 
Specifically, regarding drugs that are included in the composite rate, 
in the CY 2011 ESRD PPS final rule, we specifically stated that drugs 
that are used as a substitute for any of these (composite rate) items, 
or are used to accomplish the same effect, are also covered in the 
composite rate (75 FR 49048). We also noted in the CY 2011 ESRD PPS 
final rule (75 FR 49048) that the composite rate includes the 
following: heparin, heparin antidotes, lidocaine, and local 
anesthetics, which are access management drugs; saline and mannitol, 
which are used for fluid management; Benadryl, an anti-pruritic drug; 
and antibiotics, which are anti-infectives. In the CY 2011 ESRD PPS 
final rule (75 FR 49049) one commenter noted that ESRD-related drugs 
used in the treatment of anemia and bone disease should be (75 FR 
49058) included in the ESRD PPS bundled payment. CMS agreed and 
established the renal dialysis service ESRD drug categories included in 
the final ESRD PPS base rate, which included anemia management and bone 
and mineral metabolism (75 FR 49050). Categorizing drugs in this way 
permitted CMS to determine what categories of drugs are routinely used 
for the treatment of ESRD and should be included in the bundled 
payment. These categories simplified and expedited the process of 
adding new drugs to the bundled payment as they became available.

[[Page 67185]]

    Regarding the concern that drugs for very different conditions 
could be treated as functional equivalents in a way that is not 
clinically appropriate and may, in fact, cause harm to the patient, we 
disagree. We believe that the functional category framework helps 
ensure that the ESRD PPS appropriately supports the unique needs of 
each ESRD patient. In the CY 2019 ESRD PPS final rule (83 FR 56928) we 
emphasized that the functional categories are deliberately broad in 
nature because, when a new drug becomes available, it is added to the 
therapeutic armamentarium of the treating physician (83 FR 56941). This 
allows the practitioner to tailor the pharmaceutical plan of care of 
the individual patient, considering their unique clinical and personal 
profile. In addition, as we noted in the CY 2023 ESRD PPS proposed rule 
(87 FR 38500), the functional category framework supports beneficiary 
access to renal dialysis service drugs and would meet the intent of the 
ESRD PPS functional category framework, which is to be broad and 
facilitate adding new drugs.
    Finally, CMS supports innovation through many mechanisms under the 
ESRD PPS, including the use of the TDAPA for certain new renal dialysis 
drugs and biological products. Regarding the suggestion that CMS 
eliminate the functional categories as the basis for payment, we 
believe this would undermine the ESRD PPS bundled payment. The use of 
functional categories and functional equivalence, in the context of the 
ESRD PPS, supported the goals of the MIPPA, including the incorporation 
of the composite rate services into the ESRD PPS bundled payment (75 FR 
49036), which already included drugs and their substitutes used to 
accomplish the same effect (75 FR 49048).
    Comment: Two commenters requested more information on the process 
CMS would use to determine functional equivalence, factors CMS would 
consider in making functional equivalence decisions, the transparency 
that would be provided for interested parties as these decisions are 
made, and the mechanisms for engaging with CMS as part of this process. 
A trade association requested that we provide specific details on which 
office in CMS would make the functional equivalence decision, who runs 
the office, and their qualifications.
    Response: We appreciate and understand the requests for more 
transparency. The standard for determining functional equivalence is in 
the definitions of an oral-only drug and ESRD functional PPS category 
as set forth in Sec.  413.234(a). In the CY 2023 ESRD PPS proposed 
rule, CMS outlined the history of the oral-only drugs and biological 
products and the history of the ESRD PPS functional categories, going 
back to the CY 2011 ESRD PPS rulemaking (87 FR 38499 through 38503). 
The determination of whether a new drug or biological product is 
included in an ESRD PPS functional category is an element of the drug 
designation process. More information about the drug designation 
process can be found in the Medicare Benefit Policy Manual, Pub. 100-2, 
Chapter 11, Section 20.3.1.\29\ As noted in the CY 2016 ESRD PPS final 
rule (80 FR 69018 through 69019), to determine whether a product is a 
new injectable or intravenous drug or biological product, whether the 
new injectable or intravenous drug or biological product is a renal 
dialysis service, and whether the new injectable or intravenous drug or 
biological product fits into an existing functional category, CMS will 
review the data and information in the new product's FDA approved 
physician labeling, review the new product's information presented for 
obtaining a HCPCS code, and conduct an internal medical review 
following the announcement of the new product's FDA approval and HCPCS 
decision.
---------------------------------------------------------------------------

    \29\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
---------------------------------------------------------------------------

    CMS experts, including medical officers, our contractor, along with 
their clinicians, work collaboratively on the structure of the ESRD PPS 
functional categories, including renal dialysis service drugs and 
biological products that may be suitable and appropriate for inclusion 
in the ESRD PPS bundled payment. The drug designation process is 
connected to the TDAPA application process, which is described at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/ESRD-Transitional-Drug. Specifically, we determine whether 
the new drug is a renal dialysis service, whether it is within an 
existing functional category, and whether the drug is eligible for 
TDAPA. For certain drugs, the TDAPA eligibility process involves CMS 
looking at New Drug Application classifications made by the FDA (84 FR 
60657 through 60668). TDAPA eligibility determinations are released to 
the public via the CMS Change Request process.
    Comment: A trade association, an LDO, a coalition of dialysis 
organizations, and a pharmaceutical company recommended CMS adopt an 
objective clinical standard to serve as the basis for functional 
equivalence when comparing drugs or biological products by relying upon 
FDA-approved indications for those drugs and biological products, which 
they believe is a more objective way to ensure consistency in the 
categories. They recommended that CMS rely on the expertise and role of 
FDA to make functional equivalence determinations.
    Response: FDA is responsible for approving drugs and biological 
products based on safety and efficacy. CMS's functional category 
determination relies, in part, on FDA's expertise, as CMS considers 
FDA's marketing approval of a drug or biological product and the 
information contained in the drug or biological product's FDA-approved 
labeling as part of the basis for the functional category 
determination. In addition, Sec.  413.234(a) states that a new renal 
dialysis drug or biological product is an injectable, intravenous, 
oral, or other form or route of administration drug or biological 
product that is used to treat or manage a condition(s) associated with 
ESRD. It must be approved by FDA on or after January 1, 2020, under 
section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 
of the Public Health Service Act, commercially available, have an HCPCS 
application submitted in accordance with the official Level II HCPCS 
coding procedures, and designated by CMS as a renal dialysis service 
under Sec.  413.171. Oral-only drugs are excluded until January 1, 
2025. There are also additional factors considered in the determination 
for TDAPA eligibility. It is CMS's role, not the role of FDA, to make 
determinations about the ESRD PPS payment policy. We believe that the 
history of the ESRD PPS and our longstanding drug designation process 
indicate it is proper for us to consider ``functional'' equivalence to 
evaluate whether there is another form of administration other than an 
oral form and determine if a drug or biological product is an oral-only 
drug. This history and CMS' reliance on functional equivalence when 
assessing drugs and biological products as oral-only drugs and the 
placement of drugs and biological products in ESRD PPS functional 
categories is described in length in this section of this final rule.
    Comment: We also received several comments related to issues that 
we either did not discuss in the CY 2023 ESRD PPS proposed rule or that 
we discussed for the purpose of background or context, but for which we 
did not propose changes. Some commenters suggested oral-only drugs, 
specifically phosphate binders, should be separately payable 
indefinitely and should be permanently excluded from the ESRD

[[Page 67186]]

PPS bundled payment. Some commenters were concerned that adding drugs 
to the ESRD PPS bundled payment may reduce utilization and patients 
would lose access to oral-only drugs that would impact their care. Some 
drug manufacturers suggested that oral-only drugs should continue to be 
accessed and paid for under Medicare Part D. One commenter focused 
their comments on CMS paying for oral-only drugs that are dispensed 
versus those that are consumed in the billing period. The commenter 
also asked CMS to address what it views as the lack of access to renal 
dialysis service drugs in the Medicare Advantage program.
    Response: With regard to carving out some oral-only drugs, such as 
phosphate binders, from the ESRD PPS bundled payment and paying 
separately for them, we emphasize it was always CMS's intention to pay 
for oral-only drugs as part of the ESRD PPS bundled payment (75 FR 
49038 through 49039). Regarding access to renal dialysis service drugs 
by Medicare beneficiaries, our data has shown that more Medicare 
patients, especially minorities, who are receiving dialysis have better 
access to drugs and biological products when those drugs and biological 
products are part of the ESRD PPS bundled payment. Regarding the 
comment about access to renal dialysis services in the Medicare 
Advantage program, we expect that Medicare ESRD beneficiaries would 
have access to the same renal dialysis services covered under Parts A 
and B when they are enrolled in the Medicare Advantage program.\30\
---------------------------------------------------------------------------

    \30\ Except for the instances specified in 42 CFR 422.318 (for 
entitlement that begins or ends during a hospital stay) and 42 CFR 
422.320 (with respect to hospice care), an Medicare Advantage 
organization offering an MA plan must provide enrollees in that plan 
with all Part A and Part B original Medicare services [see Section 
1852(a)(1)(A) of the Act and 42 CFR 422.100(c)(1)], including 
covered services under Original Medicare related to treatment of 
ESRD if the enrollee is entitled to benefits under both parts, and 
Part B services if the enrollee is a grandfathered ``Part B only'' 
enrollee. The Medicare Advantage Organization fulfills its 
obligation of providing original Medicare benefits by furnishing the 
benefits directly, through arrangements, or by paying for the 
benefits on behalf of enrollees. As noted in 42 CFR 422.112(a), an 
MA organization that offers an MA coordinated care plan may specify 
the networks of providers from whom enrollees may obtain services if 
the MA organization ensures that all covered services, including 
supplemental services contracted for by (or on behalf of) the 
Medicare enrollee, are available and accessible under the plan. 
Therefore, Medicare Advantage enrollees with ESRD may need to 
receive dialysis services from in-network providers to avoid full 
financial liability of the cost of the service.
---------------------------------------------------------------------------

    We have previously addressed the request for a change in billing 
guidance for ESRD facilities to report amount dispensed versus the 
amount consumed in the CY 2018 ESRD PPS final rule (82 FR 50753). 
Although we are not specifically addressing comments that are out-of-
scope of the CY 2023 ESRD PPS proposed rule or topics for which we did 
not propose changes, we thank the commenters for their input and may 
consider the recommendations in future rulemaking.
    Final Rule Action: After consideration of the comments received and 
for the reasons outlined in the proposed rule and earlier in this 
section of the final rule, we are finalizing our proposal to include 
the word ``functional'' in the definition of oral-only drug at Sec.  
413.234(a). To apply this change effective January 1, 2025 as proposed, 
we are finalizing a technical modification to the amendatory language 
to update the regulation text at Sec.  413.234(a). Accordingly, we are 
updating the definition of oral-only drug at Sec.  413.234(a) 
(effective January 1, 2025) to read as follows: ``Oral-only drug. A 
drug or biological product with no injectable functional equivalent or 
other form of administration other than an oral form.''
(6) Revisions To Clarify the ESRD PPS Functional Category Descriptions
    In the CY 2011 ESRD PPS final rule (75 FR 49044 through 49053), we 
discussed the extensive analysis of Medicare payments that we performed 
to identify drugs and biological products that are used for the 
treatment of ESRD and therefore meet the definition of renal dialysis 
services (defined at section 1881(b)(14)(B) of the Act and 42 CFR 
413.171) that would be included in the ESRD PPS base rate. We analyzed 
Medicare Part B drugs and biological products billed on ESRD claims and 
evaluated each drug and biological product to identify its category by 
indication or mode of action. We also explained that categorizing drugs 
and biological products on the basis of drug action would allow us to 
determine which categories (and therefore, the drugs and biological 
products within the categories) would be considered used for the 
treatment of ESRD (75 FR 49047).
    Using this approach, we established categories of drugs and 
biological products that are not considered for the treatment of ESRD, 
categories of drugs and biological products that are always considered 
for the treatment of ESRD, and categories of drugs and biological 
products that may be used for the treatment of ESRD but are also 
commonly used to treat other conditions (75 FR 49049 through 49051). 
Those drugs and biological products that were identified as not used 
for the treatment of ESRD were not considered renal dialysis services 
and were not included in computing the ESRD PPS base rate. The 
categories of drugs and biologicals that were always considered used 
for the treatment of ESRD were identified as access management, anemia 
management, anti-infectives (specifically vancomycin and daptomycin 
used to treat access site infections), bone and mineral metabolism, and 
cellular management (75 FR 49050). In the CY 2015 ESRD PPS final rule, 
we removed anti-infectives from the list of categories of drugs and 
biological products that are included in the ESRD PPS base rate and not 
separately payable (79 FR 66149 through 66150). The categories of drugs 
that were considered always used for the treatment of ESRD have 
otherwise remained unchanged since we finalized them in the CY 2011 
ESRD PPS final rule. The current categories of drugs that are included 
in the ESRD PPS base rate and that may be used for the treatment of 
ESRD but are also commonly used to treat other conditions are 
antiemetics, anti-infectives, antipruritics, anxiolytics, drugs used 
for excess fluid management, drugs used for fluid and electrolyte 
management including volume expanders, and pain management (analgesics) 
(79 FR 66150).
    Although commenters requested that we list the specific ESRD-only 
drugs in the CY 2011 ESRD PPS final rule rather than specifying drugs 
and biological products used for the treatment of ESRD, we chose to 
identify drugs and biological products by functional category. We did 
not finalize a drug-specific list because we did not want to 
inadvertently exclude drugs that may be substitutes for drugs 
identified. We stated that using categories of drugs allows CMS to 
update the bundled ESRD PPS base rate accordingly as new drugs and 
biological products become available (75 FR 49050). Because there are 
many drugs and biological products that have multiple uses, and because 
new drugs and biological products are being developed, we stated that 
we did not believe that a drug-specific list will be beneficial (75 FR 
49050).
    However, we provided a list of the specific Part B drugs and 
biological products (75 FR 49205 through 49209) and the former Part D 
drugs that were included in the bundled ESRD PPS base rate (75 FR 
49210). We emphasized that drugs or biological products furnished for 
the purpose of access management, anemia management, vascular access or 
peritonitis, cellular management and bone and mineral metabolism will 
be considered a renal dialysis service

[[Page 67187]]

under the ESRD PPS and will not be eligible for separate payment. In 
addition, we noted that any drug or biological product used as a 
substitute for a drug or biological product that was included in the 
bundled ESRD PPS base rate would also be a renal dialysis service and 
would not be eligible for separate payment (75 FR 49050).
    In the CY 2016 ESRD PPS final rule (80 FR 69024), we finalized the 
drug designation process in our regulations at Sec.  413.234 as being 
dependent upon the ESRD PPS functional categories, consistent with our 
policy since the implementation of the ESRD PPS in 2011. We discussed 
the history of the ESRD PPS functional category approach and noted that 
we grouped the injectable and intravenous drugs and biological products 
into ESRD PPS functional categories for the purpose of adding new drugs 
or biological products with the same functions to the bundled ESRD PPS 
base rate as expeditiously as possible. We also stated that in previous 
regulations we referred to these categories as drug categories; 
however, we believe the term functional categories is more precise and 
better reflects how we have used the categories. We explained that CMS 
has designated several new drugs and biological products as renal 
dialysis services because they fit within the ESRD PPS functional 
categories, consistent with the process noted in CY 2011 ESRD PPS final 
rule.
    As described more fully in the CY 2016 ESRD PPS final rule (80 FR 
69023 through 69024), CMS established a TDAPA policy in our regulation 
at Sec.  413.234 that is based on a determination as to whether or not 
a drug fits into an existing ESRD PPS functional category. We defined 
an ESRD PPS functional category in our regulation at Sec.  413.234(a) 
as a distinct grouping of drugs or biological products, as determined 
by CMS, whose end action effect is the treatment or management of a 
condition or conditions associated with ESRD.
    In addition, in the CY 2016 ESRD PPS final rule (80 FR 69017), we 
explained that commenters suggested changes to our descriptions of some 
of the ESRD PPS functional categories in the preamble of the CY 2016 
ESRD PPS proposed rule to more precisely define the drugs that will fit 
into the categories. In particular, the commenters suggested changes to 
the anti-infective, pain management, and anxiolytic ESRD PPS functional 
categories to better describe how each of the categories relate to the 
treatment of ESRD in accordance with the statute. The commenters 
suggested that we remove language from the description of the 
antiemetic functional category to eliminate drugs used to treat nausea 
caused by the use of oral-only drugs because these drugs are paid 
outside the ESRD PPS bundled payment and are covered under a separate 
benefit category.
    In response to these suggestions, in the CY 2016 ESRD PPS final 
rule, we moved the anti-infective functional group from the list of 
drugs always used for the treatment of ESRD to the list of drugs that 
may be used for the treatment of ESRD (80 FR 69017). We also adopted 
the commenters' recommendations regarding narrowing the functional 
categories to describe how the category relates to the treatment of 
ESRD. We explained that many of the commenters' recommendations were 
consistent with how we believe the categories should be defined and 
help to ensure that the drugs that fall into them are those that are 
essential for the delivery of maintenance dialysis. We presented the 
final ESRD PPS functional categories, as revised with suggestions from 
commenters, in Table 8B in the CY 2016 ESRD PPS final rule (80 FR 
69018). In that CY 2016 ESRD PPS final rule table, we listed each ESRD 
PPS functional category and rationale for association, meaning the 
reason we included drugs in each category, with examples of drugs in 
certain categories. Table 8B also separated the functional categories 
into those that describe drugs always considered used for the treatment 
of ESRD and those that described drugs that may be used for treatment 
of ESRD.
    In the CY 2019 ESRD PPS final rule (83 FR 56928) we discussed the 
current ESRD PPS functional categories as part of our final policy to 
expand the TDAPA to all new renal dialysis drugs and biological 
products without modifying the base rate for drugs in existing 
functional categories. We emphasized that the functional categories are 
deliberately broad in nature because, when a new drug becomes 
available, it is added to the therapeutic armamentarium of the treating 
physician (83 FR 56941).
    In 2021, a new antipruritic drug was granted marketing 
authorization by FDA. The new antipruritic drug was approved for a 
single indication, chronic kidney disease associated pruritus. The new 
antipruritic drug was approved for the ESRD PPS TDAPA in December 2021 
and will receive the TDAPA from April 1, 2022 until March 31, 2024. The 
Change Request (CR) 12583 that established the TDAPA for KORSUVA\TM\ 
(difelikefalin) was issued on March 15, 2022.\31\ As stated in that CR, 
the drug qualifies for the TDAPA as a drug or biological product used 
to treat or manage a condition for which there is an existing ESRD PPS 
functional category, specifically, the antipruritic category. Because 
the new drug already fits within the antipruritic ESRD PPS functional 
category, the drug will receive the TDAPA for 2 years (Sec.  
413.234(b)). After the TDAPA period, the drug will be considered 
included in the ESRD PPS bundled payment and there will be no 
modification to the base rate (Sec.  413.234(c)(1)(i)).
---------------------------------------------------------------------------

    \31\ https://www.cms.gov/files/document/r11295CP.pdf.
---------------------------------------------------------------------------

    In the CY 2023 ESRD PPS proposed rule (87 FR 38502-38503), we 
explained that carefully reviewed the descriptions for the existing 
ESRD PPS functional categories and proposed certain clarifications to 
ensure our descriptions are as clear as possible for potential TDAPA 
applicants and the public. We noted that these modifications to the 
descriptions would be consistent with our current policies for the ESRD 
PPS functional categories and would not be changes to the categories 
themselves. As required by the definition in Sec.  413.234(a), the 
drugs and biological products in the ESRD PPS functional categories are 
grouped by end action effect, and as we have stated in the past, the 
functional categories are deliberately broad by design to provide 
practitioners an array of drugs to use that meet the specific needs of 
the ESRD patient (83 FR 56941). In offering category descriptions, 
which we have also identified as rationales for association (80 FR 
69015, 69016, and 69018), we noted it has not been our intention to 
strictly define or limit drugs in any functional category but rather to 
broadly describe the renal dialysis drugs and biological products that 
are currently available and fall into the categories. We proposed to 
make the following clarifications:
     Indicate that certain ESRD PPS functional categories may 
include, but are not limited to, drugs that have multiple clinical 
indications. For example, drugs and biological products in the 
anxiolytic functional category could have multiple clinical 
indications, and we proposed to amend the description to reflect this 
understanding.
     Add the term ``biological products'' to the descriptions 
of several ESRD PPS functional categories, which currently refer only 
to ``drugs''.
     Update the examples provided in some category descriptions 
to describe the end action effect of drugs or

[[Page 67188]]

biological products included in that functional category.
    As published in the CY 2023 ESRD PPS proposed rule (87 FR 38503), 
the clarifications to the descriptions of the ESRD PPS functional 
categories are shown in italics in Table 12 of this final rule.
[GRAPHIC] [TIFF OMITTED] TR07NO22.013

    We solicited comments on this proposal and received public comments 
from four organizations: MedPAC, a physicians' professional 
association, a drug manufacturer, and a coalition of dialysis 
organizations. The comments and our responses are set forth below.
    Comment: MedPAC supported the proposed revisions to the 
descriptions of the ESRD PPS functional categories. The Commission 
noted that an important goal of the ESRD PPS is to give ESRD facilities 
an incentive to provide ESRD-related items and services as efficiently 
as possible. They stated that this goal is best achieved by relying on 
the ESRD bundled payment to the greatest extent possible when 
determining payment amounts. Additionally, they expressed that 
including all items and services with a similar function in the ESRD 
PPS bundled payment fosters competition for ESRD-related items and 
services and generates incentives for dialysis providers to constrain 
their costs.
    Response: We agree with MedPAC's assessment and thank them for 
their support of our proposal.
    Comment: Two of the commenters suggested CMS should not proceed 
with its proposed clarifications to the ESRD PPS functional category 
descriptions, as more details are necessary to explain the full intent 
of these changes. One of these commenters suggested the proposed 
clarifications were ``substantive changes'' to the ESRD PPS functional 
category, thus needing more clarification on CMS's intent.

[[Page 67189]]

    Response: Just as CMS did in the CY 2016 ESRD PPS final rule (80 FR 
69017), we are taking the opportunity in this rule to make clarifying 
modifications to our descriptions of some of the ESRD PPS functional 
categories to more precisely describe the drugs and biological products 
that will fit into the categories. In the CY 2023 ESRD PPS proposed 
rule, we explained that these proposed changes would help ensure our 
descriptions are as clear as possible for potential TDAPA applicants 
and the public (87 FR 38502). Additionally, we explained that in 
offering category descriptions, which we have also identified as 
rationales for association (80 FR 69015, 69016, and 69018), it has not 
been our intention to strictly define or limit drugs in any functional 
category but rather to broadly describe the renal dialysis drugs and 
biological products that are currently available and fall into the 
categories. In addition, we have stated that the intent of the ESRD PPS 
functional category framework is to be broad and to facilitate adding 
new drugs to the therapeutic armamentarium of the treating physician 
(83 FR 56941). We believe these clarifications are consistent with 
these goals and will help ensure that potential TDAPA applicants and 
the public have a clear picture of the drugs and biological products 
that will fit into each category.
    Comment: One commenter noted multiple examples of functional 
categories including products for multiple indications. They suggested 
there is no clinical basis to group drugs or biological products that 
are for the treatment of different clinical indications into broader 
categories, such as the ``functional categories.'' They stated that in 
assigning these drugs and biological products to the same functional 
category, CMS has created a ``nexus'' between these drugs that does not 
exist to the clinician or the patient.
    Response: With regard to the functional categories including 
products with multiple indications, it has not been our intent to 
exclude a drug from a functional category because it has multiple 
indications. Rather, the functional category structure helps to ensure 
the ESRD patient has broad access to all renal dialysis service drugs, 
which is a distinct benefit to the patient. In addition, the structure 
of the functional categories helps to ensure the treating physician has 
a broad array of drugs to meet the specific, individual needs of each 
ESRD patient, including differing pharmaceutical profiles, co-
morbidities, contra-indications with other drugs the patient may be 
taking, and personal patient preference. To the extent the functional 
categories create a nexus between the drugs and biological products in 
the categories, this nexus is for payment purposes under the ESRD PPS 
and we believe it is beneficial for patients and their clinicians.
    CMS initially placed drugs and biological products in the 
functional categories to group the drugs and biological products by end 
action when used for the treatment of ESRD and thus ensure they are 
included in the ESRD PPS base rate and not separately payable (79 FR 
66149 through 66150). The functional categories have been critical to 
the drug designation process and the inclusion of new drugs and 
biological products into the base rate. As stated previously in this 
section of this rule, in the CY 2016 ESRD PPS final rule (80 FR 69017), 
we defined the term ESRD PPS functional category at Sec.  413.234(a) as 
a distinct grouping of drugs and biologicals, as determined by CMS, 
whose end action effect is the treatment or management of a condition 
or conditions associated with ESRD. We discuss at length the use of 
``end action effect'' in determining functional categories. Although 
clinical indications are part of the information CMS uses in making a 
functional category decision for new drugs and biological products, it 
is not the sole basis.
    Comment: Physician members of the coalition of dialysis 
organizations commented on our proposed addition of the phrase 
``secondary to dialysis'' to the antipruritic and bone mineral 
metabolism ESRD PPS functional category descriptions. They stated that 
these products are not secondary to dialysis, which is a procedure and 
not a patient condition. These commenters claimed that these products 
are secondary to kidney disease, and they suggested that CMS adopt more 
clinically appropriate language. Another commenter stated they do not 
understand CMS's intent in using the phrase ``secondary to dialysis'' 
in the antipruritic and anxiolytic functional categories. This 
commenter noted that their clinicians do not recognize ``secondary to 
dialysis'' as a clinical term. They further questioned CMS' intent in 
changing the language from ``related to dialysis'' to ``secondary to 
dialysis.'' The coalition of dialysis organizations stated that it 
assumes that CMS intends for these phrases to have different meanings, 
but cannot discern what that difference may be. They requested 
clarification on the intent of the change and stated they will not 
support any changes intended to expand the scope of the functional 
categories.
    Response: As we explained in the CY 2023 ESRD PPS proposed rule (87 
FR 38502), it has not been our intention to strictly define or limit 
drugs in any functional category, but rather to broadly describe the 
renal dialysis drugs and biological products that are currently 
available and fall into the categories. Our intent in proposing the 
clarifications to these functional category descriptions was not to 
expand the scope of the functional categories, but rather to more 
clearly describe them. CMS has previously used the phrase ``secondary 
to dialysis'' in some of the descriptions of past rules. For example, 
the phrase ``secondary to dialysis'' was used in Table 8A presenting 
the ESRD PPS functional categories in the CY 2016 ESRD PPS proposed 
rule (80 FR 37832) and final rule (80 FR 69015 through 69016). In both 
rules, the phrase was used in the rationale for association for the 
same three categories that we proposed to use it in now, that is, 
antiemetic, antipruritic, and anxiolytic. In the CY 2019 ESRD PPS 
proposed rule (83 FR 34310) and final rule (83 FR 56928), we replaced 
the phrase ``secondary to dialysis'' with ``related to dialysis'' in 
those three functional categories. That modification did not provide 
the clarity we had anticipated, and some interested parties incorrectly 
interpreted this language as changing the scope of these functional 
categories. Therefore, we proposed to revert back to our original 
language, ``secondary to dialysis,'' in the description of these three 
categories in the context of other proposed modifications to the 
functional category descriptions. The provision of renal dialysis 
services is central to the ESRD PPS, and all renal dialysis service 
drugs and biological products are ``secondary to dialysis.'' Therefore, 
we believe the phrase ``secondary to dialysis'' is a term that 
appropriately reflects that the drugs and biological products in these 
categories are included for the treatment of ESRD-related conditions in 
a dialysis unit, either during or between dialysis treatments. Finally, 
as we did not propose to clarify the description of the bone and 
mineral metabolism category in the CY 2023 ESRD PPS proposed rule, the 
phrase ``secondary to dialysis'' in that functional category 
description remains unchanged.
    Comment: Regarding the bone and mineral metabolism functional 
category, one commenter expressed confusion as to whether the proposed 
addition of ``Examples of drugs/biological products'' is intended 
merely to clarify that phosphate binders and calcimimetics are included 
in the bone and mineral metabolism functional category or if CMS 
intends this new language to be a mechanism to expand

[[Page 67190]]

the scope of the bone and mineral metabolism functional category. The 
commenter stated that it does not support language that expands the 
scope of the bone and mineral metabolism functional category.
    Response: We stated in the proposed rule that we are taking the 
opportunity to review the descriptions for the existing ESRD PPS 
functional categories and propose certain clarifications to ensure our 
descriptions are as clear as possible for potential TDAPA applicants 
and the public (87 FR 38502). These clarifications are meant to address 
some questions raised by applicants that indicated to us that our 
wording could leave room for interpretation on issues where we felt our 
policy intent was clear. In particular, we wanted to clarify that 
biological products are also included in the categories, examples are 
not exhaustive lists, and drugs and biological products with single 
indications are not excluded from any functional categories that 
include drugs and biological products with multiple indications.
    Comment: For the antipruritic functional category, one commenter 
noted that given the recent approval of KORSUVA\TM\, it is important 
for CMS to affirm that we are not proposing any retroactive changes to 
the antipruritic functional category.
    Response: CMS affirmed the disposition of antipruritic drug 
KORSUVA\TM\ (difelikefalin) in both the CY 2023 ESRD PPS proposed rule 
(87 FR 38502) and again in this section of the final rule. In addition, 
CR 12583 stated that the drug qualifies for the TDAPA as a drug or 
biological product used to treat or manage a condition for which there 
is an existing ESRD PPS functional category, specifically, the 
antipruritic category. Because the new drug already fits within the 
antipruritic ESRD PPS functional category, the drug will receive the 
TDAPA for 2 years (Sec.  413.234(b)). After the TDAPA period, the drug 
will be considered included in the ESRD PPS bundled payment and there 
will be no modification to the base rate (Sec.  413.234(c)(1)(i)). The 
new antipruritic drug was approved for the ESRD PPS TDAPA in December 
2021 and will receive the TDAPA from April 1, 2022 until March 31, 
2024, as noted in CR 12583.
    Final Rule Action: After considering the comments and for the 
reasons discussed earlier in this section of this final rule, we are 
finalizing the changes to the descriptions of the ESRD PPS functional 
categories as proposed, as noted in the following Table 13. These 
changes will be effective January 1, 2023.

[[Page 67191]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.014

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

1. Background
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), CMS 
established the transitional add-on payment adjustment for new and 
innovative equipment and supplies (TPNIES) under the ESRD PPS, under 
the authority of section 1881(b)(14)(D)(iv) of the Act, to support ESRD 
facility use and beneficiary access to these new technologies. We 
established this add-on payment adjustment to help address the unique 
circumstances experienced by ESRD facilities when incorporating new and 
innovative equipment and supplies into their businesses and to support 
ESRD facilities transitioning or testing these products during the 
period when they are new to market. We added Sec.  413.236 to establish 
the eligibility criteria and payment policies for the TPNIES.
    In the CY 2020 ESRD PPS final rule (84 FR 60650), we established in 
Sec.  413.236(b) that for dates of service occurring on or after 
January 1, 2020, we would provide the TPNIES to an ESRD facility for 
furnishing a covered equipment or supply only if the item: (1) has been 
designated by CMS as a renal dialysis service under Sec.  413.171; (2) 
is new, meaning granted marketing authorization by the Food and Drug 
Administration (FDA) on or after January 1, 2020; (3) is commercially 
available by January 1 of the particular CY, meaning the year in which 
the payment adjustment would take effect; (4) has a Healthcare Common 
Procedure Coding System (HCPCS) application submitted in accordance 
with the official Level II HCPCS coding procedures by September 1 of 
the particular CY; (5) is innovative, meaning it meets the substantial 
clinical improvement criteria specified in the Inpatient Prospective 
Payment System (IPPS) regulations at Sec.  412.87(b)(1) and related 
guidance; and (6) is not a

[[Page 67192]]

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

[[Page 67193]]

submitted to CMS by the HCPCS Level II code application deadline for 
biannual Coding Cycle 2 for DMEPOS items and services as specified in 
the HCPCS Level II coding guidance on the CMS website in order for the 
equipment or supply to be eligible for the TPNIES the following year. 
Third, we revised Sec.  413.236(b)(5) to remove a reference to related 
guidance on the substantial clinical improvement criteria, as the 
guidance had already been codified.
    Finally, in the CY 2021 ESRD PPS final rule, we expanded the TPNIES 
policy to include certain capital-related assets that are home dialysis 
machines when used in the home for a single patient. We explained that 
capital-related assets are defined in the Provider Reimbursement Manual 
(chapter 1, section 104.1) as assets that a provider has an economic 
interest in through ownership (regardless of the manner in which they 
were acquired). We noted that examples of capital-related assets for 
ESRD facilities are dialysis machines and water purification systems. 
We explained that, although we stated in the CY 2020 ESRD PPS proposed 
rule (84 FR 38354) that we did not believe capital-related assets 
should be eligible for additional payment through the TPNIES because 
the cost of these items is captured in cost reports, they depreciate 
over time, and are generally used for multiple patients, there were a 
number of other factors we considered that led us to consider expanding 
eligibility for these technologies in the CY 2021 ESRD PPS rulemaking. 
We explained that, following publication of the CY 2020 ESRD PPS final 
rule, we continued to study the issue of payment for capital-related 
assets under the ESRD PPS, taking into account information from a wide 
variety of stakeholders and recent developments and initiatives 
regarding kidney care. For example, we considered various HHS home 
dialysis initiatives, Executive Orders to transform kidney care, and 
how the risk of COVID-19 for particularly vulnerable ESRD beneficiaries 
could be mitigated by encouraging home dialysis.
    After closely considering these issues, we proposed a revision to 
Sec.  413.236(b)(6) in the CY 2021 ESRD PPS proposed rule to provide an 
exception to the general exclusion for capital-related assets from 
eligibility for the TPNIES for capital-related assets that are home 
dialysis machines when used in the home for a single patient and that 
meet the other eligibility criteria in Sec.  413.235(b), and finalized 
the exception as proposed in the CY 2021 ESRD PPS final rule. We 
finalized the same determination process for TPNIES applications for 
capital-related assets that are home dialysis machines as for all other 
TPNIES applications; that we will consider whether the new home 
dialysis machine meets the eligibility criteria specified in Sec.  
413.236(b) and announce the results in the Federal Register as part of 
our annual updates and changes to the ESRD PPS. In accordance with 
Sec.  413.236(c), we will only consider, for additional payment using 
the TPNIES for a particular CY, an application for a capital-related 
asset that is a home dialysis machine received by February 1 prior to 
the particular CY. If the application is not received by February 1, 
the application will be denied and the applicant is able to reapply 
within 3 years beginning on the date of FDA marketing authorization to 
be considered for the TPNIES, in accordance with Sec.  413.236(b)(2).
    In the CY 2021 ESRD PPS final rule, at Sec.  413.236(f), we 
finalized a pricing methodology for capital-related assets that are 
home dialysis machines when used in the home for a single patient, 
which requires the MACs to calculate the annual allowance and the 
preadjusted per treatment amount. The pre-adjusted per treatment amount 
is reduced by an estimated average per treatment offset amount to 
account for the costs already paid through the ESRD PPS base rate.\32\ 
We finalized that this amount would be updated on an annual basis so 
that it is consistent with how the ESRD PPS base rate is updated.
---------------------------------------------------------------------------

    \32\ The CY 2021 TPNIES offset amount was $9.32. The CY 2022 
TPNIES offset amount is $9.50. CMS is finalizing a CY 2023 TPNIES 
offset amount of $9.79, as discussed in section II.B.1.(e) of this 
final rule.
---------------------------------------------------------------------------

    We revised Sec.  413.236(d) to reflect that we would pay 65 percent 
of the pre-adjusted per treatment amount minus the offset for capital-
related assets that are home dialysis machines when used in the home 
for a single patient.
    We revised Sec.  413.236(d)(2) to reflect that following payment of 
the TPNIES, the ESRD PPS base rate will not be modified and the new and 
innovative renal dialysis equipment or supply will be an eligible 
outlier service as provided in Sec.  413.237, except a capital-related 
asset that is a home dialysis machine will not be an eligible outlier 
service as provided in Sec.  413.237.
    In summary, under the current eligibility requirements in Sec.  
413.236(b), CMS provides for a TPNIES to an ESRD facility for 
furnishing a covered equipment or supply only if the item: (1) has been 
designated by CMS as a renal dialysis service under Sec.  413.171; (2) 
is new, meaning within 3 years beginning on the date of the FDA 
marketing authorization; (3) is commercially available by January 1 of 
the particular CY, meaning the year in which the payment adjustment 
would take effect; (4) has a complete HCPCS Level II code application 
submitted in accordance with the HCPCS Level II coding procedures on 
the CMS website, by the HCPCS Level II code application deadline for 
biannual Coding Cycle 2 for DMEPOS items and services as specified in 
the HCPCS Level II coding guidance on the CMS website prior to the CY; 
(5) is innovative, meaning it meets the criteria specified in Sec.  
412.87(b)(1); and (6) is not a capital-related asset, except for 
capital-related assets that are home dialysis machines.
    We received three applications for the TPNIES for CY 2023. A 
discussion of these applications is presented below.
a. CloudCath Peritoneal Dialysis Drain Set Monitoring System (CloudCath 
System)
    CloudCath submitted an application for the TPNIES for the CloudCath 
Peritoneal Dialysis Drain Set Monitoring System (CloudCath System) for 
CY 2023. According to the applicant, the CloudCath System is a tabletop 
passive drainage system that detects and monitors solid particles in 
dialysate effluent during peritoneal dialysis (PD) \33\ treatments. 
Solid particles in dialysate effluent, manifesting itself as cloudy 
dialysate, may indicate that the patient has peritonitis, an 
inflammation of the peritoneum in the abdominal wall, usually due to a 
bacterial or fungal infection.\34\ PD therapy is a common cause of 
peritonitis.\35\ If left untreated, the condition can be life 
threatening.\36\ We note that CloudCath previously submitted an 
application for the TPNIES for the CloudCath System for CY 2022, as 
summarized in the CY 2022 ESRD PPS proposed rule (86 FR 36343 through 
36347), but withdrew that application prior to the issuance of the CY 
2022 ESRD PPS final rule (86 FR 61889). As indicated in the CY 2022 
ESRD PPS final rule (86 FR 61889), the applicant withdrew its 
application from consideration after the issuance of the CY 2022 ESRD 
PPS proposed rule because it did not receive FDA marketing 
authorization by July 6, 2021,

[[Page 67194]]

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

    \33\ Peritoneal Dialysis: Waste products pass from the patient's 
body through the peritoneal membrane into the peritoneal (abdominal) 
cavity where the bath solution (dialysate) is introduced and removed 
periodically. Medicare Benefit Policy Manual Chapter 11--End Stage 
Renal Disease (ESRD) (Rev. 257, 03-01-19).
    \34\ Mayo Clinic Staff, ``Peritonitis,'' June 18, 2020, 
available at: https://www.mayoclinic.org/diseases-conditions/peritonitis/symptoms-causes/syc-20376247.
    \35\ Ibid.
    \36\ Ibid.
---------------------------------------------------------------------------

    PD-related peritonitis is a major complication and challenge to the 
long-term success and adherence of patients on PD therapy.\37\ The 
applicant stated that only about 12 percent of eligible patients are on 
PD therapy.\38\ The applicant claimed that the risk of PD-related 
peritonitis, and the challenges to detect it, are the main reasons for 
these figures. The guidelines for diagnosis of PD-related peritonitis, 
as outlined by the International Society for Peritoneal Dialysis 
(ISPD), recommend that peritonitis be diagnosed when at least two of 
the following criteria are present: (1) the patient experiences 
clinical features consistent with peritonitis (abdominal pain and/or 
cloudy dialysate effluent); (2) the patient's dialysate effluent has a 
whole blood count (WBC)
[GRAPHIC] [TIFF OMITTED] TR07NO22.055

with polymorphonuclear (PMN) cells >50 percent; and (3) positive 
dialysis effluent culture is identified.\39\ Additionally, the 
guidelines recommend that PD patients presenting with cloudy effluent 
be presumed to have peritonitis and treated as such until the diagnosis 
can be confirmed or excluded.\40\ Per the guidelines, this means that 
for patients undergoing PD treatments at home, it is recommended that 
they self-monitor for symptoms of peritonitis, cloudy dialysate and/or 
abdominal pain, and seek medical attention for additional testing and 
treatment upon experiencing any or both of these symptoms.
---------------------------------------------------------------------------

    \37\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: https://dx.doi.org/10.3747/pdi.2016.00078.
    \38\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
    \39\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: https://dx.doi.org/10.3747/pdi.2016.00078.
    \40\ Ibid.
---------------------------------------------------------------------------

    According to the applicant, despite the fact that peritonitis is 
highly prevalent, symptom monitoring is insensitive and non-specific, 
which can contribute to late presentation for medical attention and 
treatment. The applicant stated that under the current standard of 
care, PD patients face the following challenges in detecting 
peritonitis. First, the applicant stated that patients' fluid 
observation has low compliance rates as it relies on patients' close 
examination of their own dialysate effluent during PD treatments, which 
often occur while patients are asleep. Second, the applicant noted that 
it can be difficult for patients to visually detect peritonitis in 
dialysate effluent using a ``newspaper test'' for cloudiness, and can 
be even more difficult to see when the fluid is drained into a toilet, 
where it is diluted by water. The applicant stated that, as a result of 
these challenges, patients with ESRD suffer unsatisfactorily high 
mortality and morbidity from peritonitis, as well as high rates of PD 
modality loss, meaning they must discontinue PD and begin a different 
type of dialysis treatment. Per the applicant, the CloudCath System 
addresses these challenges by detecting changes in dialysate effluent 
at much lower levels of particle concentrations than the amount needed 
to accumulate for visual detection by patients.
    Per the applicant, the CloudCath System consists of three 
components: (1) drain set, (2) sensor, and (3) patient monitoring 
software. As explained in the application, the CloudCath System's drain 
set connects to a compatible PD cycler's drain line to enable draining 
and monitoring of dialysate effluent before routing the fluid to the 
drainage receptacle. Per the CloudCath System User Guide, included in 
the application, the CloudCath System is compatible with the following 
PD cyclers: Baxter Healthcare Home Choice PROTM, Baxter 
Healthcare AMIATM Automated PD System, and Fresenius 
Liberty[supreg] Select Cycler. Per the applicant, once the CloudCath 
System is attached to a compatible cycler, the dialysate effluent runs 
through the drain set, through the CloudCath System's optical sensor. 
The applicant explained that the CloudCath System's optical sensor 
detects and monitors changing concentrations of solid particles in the 
dialysate effluent during each dialysis cycle and reports the 
concentrations in a turbidity score. Per the applicant, the CloudCath 
System will indicate whether dialysate effluent has normal turbidity 
and will notify the patient and/or health care professional if the 
dialysate effluent turbidity has exceeded the notification threshold 
set by the patient's dialysis provider. The applicant stated that the 
optical sensor's hardware and software components allow for data 
trending over time and remote monitoring by a health care professional.
(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    Regarding the first TPNIES eligibility criterion in Sec.  
413.236(b)(1), that the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, monitoring for peritonitis is a 
service furnished to individuals for the treatment of ESRD that is 
essential for the delivery of maintenance dialysis. We received no 
public comments on whether the CloudCath System meets this criterion. 
We consider the CloudCath System to be a renal dialysis service under 
Sec.  413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion in Sec.  
413.236(b)(2), that the item is new, meaning within 3 years beginning 
on the date of the FDA marketing authorization, the applicant stated 
that the CloudCath System received FDA marketing authorization on 
February 9, 2022. We received no public comments on whether the 
CloudCath System meets this criterion. Based on the information 
provided by the applicant, we agree that the CloudCath System meets the 
newness criterion.
(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    Regarding the third TPNIES eligibility criterion in Sec.  
413.236(b)(3), that the item is commercially available by January 1 of 
the particular calendar year, meaning the year in which the payment 
adjustment will take effect, the applicant stated in its application 
that the CloudCath System was not currently commercially available but 
noted that it expected the CloudCath System would be commercially 
available immediately after receiving FDA marketing authorization. In 
the CY 2023 ESRD PPS proposed rule (87 FR 38506), we stated that we did 
not have information as to whether the product became currently 
commercially available following the FDA marketing authorization on 
February 9, 2022. We solicited comment on the CloudCath System's 
commercial availability.
    Comment: We received a comment from the applicant indicating that 
the CloudCath System has been commercially available to the U.S. 
population since July 2022. The applicant also provided a link to the

[[Page 67195]]

CloudCath System's marketing materials.\41\
---------------------------------------------------------------------------

    \41\ CloudCath, Remote Monitoring Platform for Catheter-Based 
Treatments. Available at: https://www.cloudcath.com. Accessed on 
September 8, 2022.
---------------------------------------------------------------------------

    Response: Based on the information provided by the applicant, we 
agree that the CloudCath System meets the commercial availability 
criterion.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    Regarding the fourth TPNIES eligibility criterion in Sec.  
413.236(b)(4) requiring that the applicant submit a complete HCPCS 
Level II code application by the HCPCS Level II application deadline of 
July 5, 2022, the applicant stated that it submitted a complete HCPCS 
Level II code application prior to the July 5, 2022 deadline. CMS 
received a HCPCS Level II application by the deadline and therefore, we 
agree the applicant has met the HCPCS Level II application criterion.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With regard to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), the applicant made two claims. First, the applicant 
stated that the CloudCath System offers substantial clinical 
improvement over technologies currently available for the Medicare 
patient population by offering the ability to monitor changes in 
turbidity of peritoneal dialysate effluent through continuous remote 
monitoring in patients with ESRD receiving PD therapy earlier than the 
current standard of care. Per the applicant, by allowing the clinical 
standard of care to be initiated earlier, the use of the CloudCath 
System changes the management of peritonitis patients by enabling 
clinicians to both diagnose peritonitis and initiate antibiotic 
treatment earlier. Second, the applicant stated that the CloudCath 
System offers substantial clinical improvement over existing 
technologies because the device's remote monitoring capabilities 
provides patients with oversight and increased confidence that should 
peritonitis occur, it will be detected more reliably than visual 
detection and earlier than the current standard of care, allowing for 
earlier diagnosis and treatment management. The applicant claimed that 
by alleviating the fear associated with peritonitis and providing this 
additional support and confidence to patients, the CloudCath System can 
enable patients to either switch to or remain on home-PD, ultimately 
improving quality of life.
    The applicant submitted two studies on the technology in support of 
its substantial clinical improvement claims. First, the applicant 
included a preliminary, unpublished report by Briggs, et al. of a proof 
of principle observational study that tested the ability of the 
CloudCath System and its dialysate effluent monitoring algorithm to 
detect indicators of peritonitis.\42\ The study consisted of 70 PD 
patients outside of the U.S. who had been on PD for a long interval of 
time (>10 days), and thus were at an increased risk of developing 
peritonitis. Out of the 64 PD patients whose data were included in the 
study, over 40 PD patients were receiving intermittent PD,\43\ which is 
not commonly used in the U.S. The remainder of the study participants 
were receiving Continuous Ambulatory Peritoneal Dialysis (CAPD).\44\ 
The report states that in the U.S., PD is generally performed in a 
modality called Continuous Cycling Peritoneal Dialysis (CCPD),\45\ in 
which a cycler automatically administers multiple dialysis exchange 
cycles, typically while patients sleep. Samples were collected from 
patients' PD effluent drainage bags and measured in the CloudCath 
System against a proprietary Turbidity Score threshold value and also 
tested for reference laboratory measurements according to ISPD 
guidelines for WBC count and differential
---------------------------------------------------------------------------

    \42\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
    \43\ Intermittent Peritoneal Dialysis (IPD)--Waste products pass 
from the patient's body through the peritoneal membrane into the 
peritoneal cavity where the dialysate is introduced and removed 
periodically by machine. Peritoneal dialysis generally is required 
for approximately 30 hours a week, either as three 10-hour sessions 
or less frequent, but longer, sessions. Medicare Benefit Policy 
Manual Chapter 11--End Stage Renal Disease (ESRD) (Rev. 257, 03-01-
19).
    \44\ Continuous Ambulatory Peritoneal Dialysis (CAPD)--In CAPD, 
the patient's peritoneal membrane is used as a dialyzer. The patient 
connects a 2-liter plastic bag of dialysate to a surgically 
implanted indwelling catheter that allows the dialysate to pour into 
the beneficiary's peritoneal cavity. Every 4 to 6 hours the patient 
drains the fluid out into the same bag and replaces the empty bag 
with a new bag of fresh dialysate. This is done several times a day. 
Medicare Benefit Policy Manual Chapter 11--End Stage Renal Disease 
(ESRD) (Rev. 257, 03-01-19).
    \45\ Continuous Cycling Peritoneal Dialysis (CCPD)--CCPD is a 
treatment modality that combines the advantages of the long dwell, 
continuous steady-state dialysis of CAPD, with the advantages of 
automation inherent in intermittent peritoneal dialysis. The 
solution exchanges are performed at nighttime and are performed 
automatically with a peritoneal dialysis cycler. Generally, there 
are three nocturnal exchanges occurring at intervals of 2\1/2\ to 3 
hours. Upon awakening, the patient disconnects from the cycler and 
leaves the last 2-liter fill inside the peritoneum to continue the 
daytime long dwell dialysis. Medicare Benefit Policy Manual Chapter 
11--End Stage Renal Disease (ESRD) (Rev. 257, 03-01-19).
[GRAPHIC] [TIFF OMITTED] TR07NO22.056

Regarding the Turbidity Score threshold value, the study set a score to 
determine if the effluent sample in the CloudCath System was infected 
or not; samples greater than or equal to the Turbidity Score threshold 
value would be classified as infected, and samples less than the 
Turbidity Score threshold value would be classified as non-infected. 
The crude sensitivity and specificity of the CloudCath System was 96.2 
percent and 91.2 percent, respectively. A majority of false positives 
(44 of 77 samples) occurred among patients already receiving antibiotic 
treatment for peritonitis, and another 20 false positive reports 
occurred because the patient had elevated turbidity due to a cause 
other than peritonitis. The investigators subsequently removed samples 
from patients already receiving treatment for peritonitis, setting the 
sensitivity for detecting peritonitis using the CloudCath System at 99 
percent and the specificity at 97.6 percent.
---------------------------------------------------------------------------

    \46\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: https://dx.doi.org/10.3747/pdi.2016.00078.
---------------------------------------------------------------------------

    The second study the applicant submitted is the Prospective 
Clinical Study to Evaluate the Ability of the CloudCath System to 
Detect Peritonitis Compared to Standard of Care during In-Home 
Peritoneal Dialysis (CATCH).\47\ The applicant stated that it initiated 
this ongoing single-arm, open-label, multi-center study to demonstrate 
that the CloudCath System is able to detect changes in turbidity 
associated with peritonitis in PD patients prior to laboratory 
diagnosis of peritonitis with a high degree of specificity and 
sensitivity. The target enrollment is 186 participants over 18 years of 
age using CCPD as their PD modality, with at least 2 exchanges per 
night.\48\ Patients with

[[Page 67196]]

active infection and/or cancer are excluded from the trial.\49\ The 
primary endpoint is time of peritonitis detection by the CloudCath 
System (defined as two consecutive Turbidity Scores >7.0) as compared 
to laboratory evidence of peritonitis (defined as WBC count >100 cells/
[mu]L or > 0.1 x 10\9\/L with percentage of PMN >50 percent).\50\ While 
the study is ongoing, the applicant included the study protocol and the 
first preliminary results with its application.\51\ According to the 
applicant, the first preliminary results demonstrate that as of 
December 29, 2020, 132 participants were enrolled in the CATCH Study at 
13 sites.\52\
---------------------------------------------------------------------------

    \47\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \48\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' Study 
Protocol (CC-P-001), June 24, 2020.
    \49\ Ibid.
    \50\ Ibid.
    \51\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \52\ Ibid.
---------------------------------------------------------------------------

    Enrolled participants underwent an average of 4.5 dialysate 
exchanges per night.\53\ The preliminary results indicated that, as of 
December 29, 2020, there have been 7 peritonitis events that met the 
ISPD peritoneal fluid cell counts and differentials standard.\54\ 
According to the applicant, 5 of the 7 peritonitis events described in 
the CATCH study occurred after initial use of the CloudCath System, and 
all 5 of the peritonitis events were also detected by the CloudCath 
System.\55\ In the 5 events, the CloudCath System detected peritonitis 
44 to 368 hours prior to the time of detection from a clinical 
laboratory.\56\ The CloudCath System also detected peritonitis 27 to 
344 hours prior to participants presenting to the hospital or clinic 
with signs or symptoms of peritonitis.\57\ The applicant stated that 
these results support the claim that the CloudCath System would enable 
diagnosis of peritonitis earlier than the current standard of care 
through turbidity monitoring. According to the applicant, in the 
remaining 2 peritonitis events, participants experienced peritonitis 
prior to initial use of the CloudCath System, however, the CloudCath 
System detected peritonitis upon initial use.
---------------------------------------------------------------------------

    \53\ Ibid.
    \54\ Ibid.
    \55\ Ibid.
    \56\ Ibid.
    \57\ Ibid.
---------------------------------------------------------------------------

    In addition to the studies on the technology, the applicant 
submitted an article by Muthucumarana, et. al. on the impact of time-
to-treatment on clinical outcomes of PD-related peritonitis.\58\ The 
article included data from the Presentation and the Time of Initial 
Administration of Antibiotics With Outcomes of Peritonitis (PROMPT) 
Study, a prospective multicenter study from 2012 to 2014 that observed 
symptom-to-contact time, contact-to-treatment time, defined as the time 
from health care presentation to initial antibiotic, and symptom-to-
treatment time in Australian PD patients. One hundred sixteen patients 
participated in the survey.\59\ Out of the sample size of 116 survey 
participants, there were 159 episodes of PD-related peritonitis. Of 
these, 38 patient episodes met the primary outcome of PD failure 
(defined as catheter removal or death) at 30 days.\60\ The median 
symptom-to-treatment time was 9.0 hours in all patients, 13.6 hours in 
the PD-fail group, and 8.0 hours in the PD-cure group.\61\ The study 
found that the risk of PD-failure increased by 5.5 percent for each 
hour of delay of administration of antibiotics once patients presented 
to a health care provider.\62\ However, neither symptom-to-contact nor 
symptom-to-treatment was associated with PD-failure in non-adjusted 
analyses, and the time from presentation to a health care provider to 
treatment was only associated with PD-failure outcomes in 
multivariable-adjusted analyses in a subset of patients who presented 
to hospital-based facilities. In addition to the Muthucumarana et al. 
article, the applicant cited to other studies that have found that 
antibiotic treatment should begin as soon as possible to effectively 
treat infections other than peritonitis.63 64 65 Per the 
applicant, these articles on time-to-treatment demonstrate that the 
CloudCath System's ability to detect effluent changes substantially 
earlier improves the standard of care, enabling PD-related peritonitis 
diagnosis and antibiotic treatment earlier while decreasing the 
likelihood of PD-failure due to PD-related peritonitis.
---------------------------------------------------------------------------

    \58\ Muthucumarana, et al., ``The Relationship Between 
Presentation and the Time of Initial Administration of Antibiotics 
With Outcomes of Peritonitis in Peritoneal Dialysis Patients: The 
PROMPT Study.,'' Kidney Int Rep. 2016 Jun 11;1(2):65-72. doi: 
10.1016/j.ekir.2016.05.003. PMID: 29142915; PMCID: PMC5678844.
    \59\ Ibid.
    \60\ Ibid.
    \61\ Ibid.
    \62\ Ibid.
    \63\ Gacouin, A. et al., ``Severe pneumonia due to Legionella 
pneumophila: prognostic factors, impact of delayed appropriate 
antimicrobial therapy,'' Intensive Care Medicine 28, 686-691 (2002), 
https://doi.org/10.1007/s00134-002-1304-8.
    \64\ Houck, PM. et al., ``Timing of antibiotic administration 
and outcomes for Medicare patients hospitalized with community-
acquired pneumonia,'' Arch Intern Med. 2004 Mar 22;164(6):637-44. 
doi: 10.1001/archinte.164.6.637. PMID: 15037492.
    \65\ Lodise TP, et al., ``Outcomes analysis of delayed 
antibiotic treatment for hospital-acquired Staphylococcus aureus 
bacteremia,'' Clin Infect Dis. 2003 Jun 1;36(11):1418-23. doi: 
10.1086/375057. Epub 2003 May 20. PMID: 12766837.
---------------------------------------------------------------------------

    The applicant also submitted letters of support from a nephrologist 
at an academic institution and the following ESRD patient advocacy 
groups: the American Kidney Fund, the American Association of Kidney 
Patients, and the International Society of Nephrology. The 
nephrologist's letter of support endorsed the CloudCath System's 
ability to detect peritonitis and enable clinicians to begin to treat 
the infection earlier, preventing hospitalizations and complications 
such as the abandonment of home dialysis. The nephrologist's letter 
also stated that the CloudCath System helps address the challenge of 
peritonitis as the main reason for abandonment of PD for HD, and will 
encourage a greater number of patients to select PD as their dialysis 
modality of choice. The letters from the American Association of Kidney 
Patients and the International Society of Nephrology encouraged CMS to 
consider the CloudCath System's TPNIES application, explaining that the 
technology would have several benefits to patients, for example, by 
reducing peritonitis-related hospitalizations, increasing adherence to 
PD, and encouraging higher utilization of PD as a viable alternative to 
in-center HD. The American Kidney Fund's letter emphasized that 
peritonitis is a significant concern for PD patients \66\ and requested 
CMS support of all efforts that ensure patients with ESRD undergoing PD 
treatments can quickly detect and treat infections.
---------------------------------------------------------------------------

    \66\ Mehrotra, Rajnish et al., ``The Current State of Peritoneal 
Dialysis,'' Journal of the American Society of Nephrology 27: 3238-
3252, 2016. doi: 10.1681/ASN.2016010112, available at: https://jasn.asnjournals.org/content/jnephrol/27/11/3238.full.pdf?with-ds=yes.
---------------------------------------------------------------------------

    As noted previously in this section of the final rule, the 
applicant previously submitted a TPNIES application for CY 2022, but 
withdrew its application. Compared to the CY 2022 application, the 
applicant updated the number of patients and sites that were enrolled 
in the CATCH study. In its CY 2022 application, the applicant reported 
that as of December 29, 2020, 132 patients were enrolled in the CATCH 
study at 15 sites. In its CY 2023 application, the applicant provided 
updated enrollment figures and stated that as of May 5, 2021, 185 
patients were enrolled in the CATCH study at 15 sites.

[[Page 67197]]

    In response to CMS' preliminary assessment of CloudCath's 
substantial clinical improvement claims in the CY 2022 ESRD PPS 
proposed rule, the applicant provided additional information to clarify 
how the CloudCath System fits into the current standard of care and how 
use of the CloudCath System affects the management of the patient. The 
applicant stated that the monitoring of changes in turbidity enabled by 
the CloudCath System does not require clinicians to deviate from their 
current diagnosis or treatment sequence, since sign and symptom 
monitoring is an already accepted trigger for subsequent clinical steps 
and patient management. However, per the applicant, the detection of 
turbidity does allow clinicians to evaluate patients earlier in this 
clinical pathway for diagnosis of peritonitis and antibiotic/
antimicrobial treatment in accordance with the ISPD guidelines. The 
applicant further stated that earlier detection of turbidity would not 
impact appropriate diagnosis and treatment with respect to false 
positives and that, while a small number of patients in the Briggs et 
al. study showed a change in turbidity that ultimately resulted in a 
false positive for infection, these patients would not have received 
inappropriate use of antimicrobial therapy compared to the standard of 
care per ISPD guidelines. The applicant further stated that even though 
the CloudCath System may in some instances detect change in turbidity 
in patients without infection, these patients would still be clinically 
evaluated for peritonitis diagnosis and eligibility for antimicrobial 
treatment by a clinician as per the existing standard of care with the 
change in turbidity. Therefore, the applicant stated, the CloudCath 
System does not result in increased provision of unnecessary 
antimicrobial therapy, nor deviate from the ISPD guidelines in terms of 
antimicrobial treatment pattern.
(b) CMS Assessment of Substantial Clinical Improvement Claims and 
Sources
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38509 
through 38510), after review of the information provided by the 
applicant regarding the CloudCath System, we noted the following 
concerns with regard to the substantial clinical improvement criteria 
under Sec.  413.236(b)(5) and Sec.  412.87(b)(1).
    Because the applicant claims to offer the ability to diagnose a 
medical condition, PD-related peritonitis, earlier in a patient 
population than allowed by currently available methods, we stated that 
the applicant must also include evidence that use of the new technology 
to make a diagnosis affects the management of the patient, as required 
under the substantial clinical improvement criteria at Sec.  
412.87(b)(1)(ii)(B). Specifically, Sec.  412.87(b)(1)(ii)(B) states 
that a determination that a technology represents substantial clinical 
improvement over existing technology means: the new medical service or 
technology offers the ability to diagnose a medical condition in a 
patient population where that medical condition is currently 
undetectable, or offers the ability to diagnose a medical condition 
earlier in a patient population than allowed by currently available 
methods and there must also be evidence that use of the new medical 
service or technology to make a diagnosis affects the management of the 
patient.
    As noted previously in the CY 2022 ESRD PPS proposed rule (86 FR 
36346 through 36347), it was not clear to us whether the studies 
submitted demonstrate or examine the impacts of using the technology on 
patients with ESRD such that we can determine whether it represents an 
advance that substantially improves the treatment of Medicare 
beneficiaries compared to renal dialysis services previously available. 
We noted that the studies submitted serve as ``proof of concept,'' as 
they are testing whether the CloudCath System detects turbidity in 
dialysate effluent that may indicate PD-related peritonitis, and 
whether they do so earlier than patient observation and a cell count 
test. However, the studies are limited in that they do not observe how 
the CloudCath System, in measuring the turbidity in dialysate effluent 
and doing so earlier than traditional self-monitoring, affects the 
management of the patient as required under the substantial clinical 
improvement criteria at Sec.  412.87(b)(1)(ii)(B). For example, as part 
of the CATCH Study, investigators deactivated the notification 
capability of the CloudCath System for the duration of the study, so 
that neither the participants nor the investigators would be aware of 
the device measurements.\67\ Therefore, as currently designed, the 
CATCH study may not examine patient and clinician behavior, including 
the medical management of the patient, after the CloudCath System 
detected the solid particles in the dialysate effluent. The Briggs et 
al. study also did not examine how use of the CloudCath System impacted 
management of the patient. The investigators in that study stated that 
none of the data from the device was used for clinical decision making, 
which indicates to us that the study did not test how or if the 
CloudCath System offered the ability to diagnose a medical condition 
and how use of the CloudCath System to make a diagnosis affected the 
management of the patient.\68\ Because the studies submitted did not 
observe how patients and clinicians use the CloudCath System's 
monitoring to make decisions regarding patient management, we stated 
that it was unclear how they support a finding that early detection of 
PD-related peritonitis by the CloudCath System meets the substantial 
clinical improvement criteria at Sec.  412.87(b)(1)(ii)(B).
---------------------------------------------------------------------------

    \67\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report, NCT04515498, Jan 27, 2020.
    \68\ Briggs, et. al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
---------------------------------------------------------------------------

    Similarly, while the applicant submitted evidence to show that 
time-to-treatment plays a role in preventing PD failure in patients 
with ESRD with PD-related peritonitis,\69\ we stated that we had not 
received information regarding how the CloudCath System would affect 
management of the patient by reducing time-to-treatment for patients 
with ESRD receiving PD therapy. We also noted that the applicant 
referenced studies that support beginning antibacterial therapy for 
infections other than PD-related peritonitis, like pneumonia, and 
therefore, do not directly demonstrate the importance of time-to-
treatment for PD-related peritonitis.
---------------------------------------------------------------------------

    \69\ Muthucumarana, et. al., ``The Relationship Between 
Presentation and the Time of Initial Administration of Antibiotics 
With Outcomes of Peritonitis in Peritoneal Dialysis Patients: The 
PROMPT Study.,'' Kidney Int Rep. 2016 Jun 11;1(2):65-72. doi: 
10.1016/j.ekir.2016.05.003. PMID: 29142915; PMCID: PMC5678844.
---------------------------------------------------------------------------

    As we noted in both the CY 2022 ESRD PPS proposed rule (86 FR 
36346), and the CY 2023 ESRD PPS proposed rule (87 FR 38509) it was 
also not clear to us whether the CloudCath System would affect medical 
management of the patient because use of the technology may potentially 
detect turbidity changes in dialysate effluent so early, that, in some 
cases, health care providers may still decide to wait for confirmation 
via patient symptoms, cell count, or positive culture as stated in the 
ISPD guidelines on diagnosis.\70\ It is unclear

[[Page 67198]]

whether clinicians would begin treatment for peritonitis without 
observing patient symptoms, cloudy dialysate, or confirming cell count 
via fluid test or how turbidity information would be incorporated into 
clinical practice among physicians who may empirically treat 
asymptomatic patients with antibiotics while awaiting cell count and 
culture results to confirm a peritonitis diagnosis.
---------------------------------------------------------------------------

    \70\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: https://dx.doi.org/10.3747/pdi.2016.00078.
---------------------------------------------------------------------------

    We noted that the applicant stated that the first preliminary 
results of the CATCH study demonstrated that the CloudCath System 
detected PD-related peritonitis 33 to 367 hours prior to the time of 
detection from a clinical laboratory, and it also detected PD-related 
peritonitis 27 to 344 hours prior to participants presenting to a 
healthcare facility with symptoms of PD-related 
peritonitis.71 72 However, we noted that no evidence was 
submitted to show that clinicians would begin to treat suspected 
peritonitis if the CloudCath System alerted the patient and clinician 
of possible PD-related peritonitis that was too early to detect via any 
of the ISPD guidelines.\73\ In other words, we had not received 
evidence to demonstrate that the CloudCath System would affect medical 
management of the patient by replacing one of the ISPD guidelines for 
diagnosis.\74\ As two criteria are necessary for diagnosis of 
peritonitis (per ISPD guidelines noted by the applicant), it is unclear 
why the CloudCath System detection alone in the control arm (absent 
clinical manifestations such as symptomatic patients or cloudy 
effluent) is comparable as a diagnosis of peritonitis to patients with 
clinical manifestations plus laboratory evidence of peritonitis. In 
other words, we questioned whether a more appropriate comparison to 
demonstrate a time difference would be time to laboratory-confirmed 
peritonitis in both study arms, or time to antibiotic initiation 
following the CloudCath System notification versus antibiotic 
initiation following standard of care patient monitoring.
---------------------------------------------------------------------------

    \71\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report (NCT04515498), Jan 27, 2020.
    \72\ Ibid.
    \73\ Kam-Tao Li, Philip, et al., ``ISPD Peritonitis 
recommendations: 2016 Update on Prevention and Treatment,'' 
Peritoneal Dialysis International 2016; 36(5):481-508, June 9, 2016, 
available at: https://dx.doi.org/10.3747/pdi.2016.00078.
    \74\ Ibid.
---------------------------------------------------------------------------

    Further, we noted that we were concerned by the applicant's 
statements in response to the concerns we noted in the CY 2022 ESRD PPS 
proposed rule that the monitoring of changes in turbidity enabled by 
the CloudCath System does not require clinicians to deviate from their 
current diagnosis or treatment sequence. As stated previously, our 
regulations under Sec.  412.87(b)(1)(ii)(B) require evidence that use 
of the new medical service or technology to make a diagnosis affects 
the management of the patient. We requested information that 
demonstrates that the CloudCath System affects the management of the 
patient, including by impacting clinicians' diagnosis or treatment 
sequence.
    While the applicant updated the CY 2023 application to include more 
patient and site enrollment, CMS noted concerns that the CATCH trial is 
not designed to indicate potential changes in clinical practice in a 
way that would be helpful for substantial clinical improvement 
assessment. We stated in the CY 2023 ESRD PPS proposed rule that we 
welcomed additional information regarding whether use of CloudCath has 
demonstrated lower hospitalization rates, an increase in PD use, or 
decrease in peritoneal dialysis modality loss, or improved mortality 
for our analysis. We stated that any data on clinician and patient 
behavior while using the CloudCath System, for example by enabling 
CloudCath notifications or alarms in the CATCH Study, would be 
informative in our assessment.
    Finally, regarding the applicant's claim that the CloudCath 
System's remote monitoring capabilities help to assure patients that 
peritonitis could be detected and treated earlier, and that by 
alleviating the fear of peritonitis, the CloudCath System enables 
patients to either switch to or remain on home-PD, ultimately improving 
quality of life, we expressed concern there may be insufficient 
evidence to demonstrate that the CloudCath System improves patients' 
quality of life. The applicant referenced literature regarding health-
related quality of life in home dialysis patients as well as 
information regarding the challenges of managing PD patients 
remotely.75 76 77 However, we noted that we did not receive 
any data demonstrating improved quality of life or PD retention with 
the use of the CloudCath System, and stated that we would be interested 
in additional evidence to support this claim.
---------------------------------------------------------------------------

    \75\ Bonenkamp AA, van Eck van der Sluijs et al. Kidney 
Medicine, Health-Related Quality of Life in Home Dialysis Patients 
Compared to In-Center Hemodialysis Patients: A Systematic Review and 
Meta-analysis. Vol.2(2) P139-154.
    \76\ 25 Ronco C, Crepaldi C, Rosner MH (eds): Remote Patient 
Management in Peritoneal Dialysis. Contrib Nephrol. Basel, Karger, 
2019, vol 197, pp I-VI.
    \77\ Hansson JH, Finkelstein FO. Kidney Med. 2020 Sep 
1;2(5):529-531.
---------------------------------------------------------------------------

    We solicited public comments on whether the CloudCath System meets 
the substantial clinical improvement criteria for the TPNIES.
    We received multiple comments on the substantial clinical 
improvement claims made in the TPNIES application for the CloudCath 
System, ranging from commenters with concerns about the applicant's 
claims to comments in support of the application, including those from 
the applicant, patients, clinicians, ESRD facilities and professional 
organizations. The comments on the substantial clinical improvement 
claims, and our responses to the comments, are set forth below.
    Comment: We received a comment from the applicant in support of its 
application. The applicant included an updated analysis in support of 
its claim that the CloudCathTM System offers the ability to 
detect peritonitis earlier by more closely monitoring changes in 
turbidity of peritoneal dialysate effluent and provided responses to 
CMS concerns identified in the CY 2023 ESRD PPS proposed rule. We also 
received comments in support of the TPNIES approval from patients, 
clinicians, ESRD facilities, and professional organizations.
    With respect to the applicant's first claim, that the CloudCath 
System offers substantial clinical improvement by offering the ability 
to detect peritonitis earlier by more closely monitoring changes in 
turbidity of peritoneal dialysate effluent, the applicant submitted an 
updated analysis of the CATCH study. Per the applicant, as of March 10, 
2021, 12 individual participants experienced 14 peritonitis events 
meeting ISPD criteria. The applicant stated that the CloudCath System 
detected changes in all 14 peritonitis events of which 12 occurred 
after the initial use of the CloudCath System. The applicant further 
stated that two of the events occurred prior to the initial use of the 
CloudCath System and the CloudCath System detected changes in turbidity 
upon initial use. Per the applicant, of the 12 peritonitis events that 
occurred after the initial use, the CloudCath System detected the 
peritonitis events within a median of 108.42 hours prior to the time 
that

[[Page 67199]]

clinical laboratory results became available and detected changes in 
turbidity within a median of 97.04 hours prior to the time that the 
patient presented to medical providers for peritonitis-related symptoms 
under current standard of care.
    In response to CMS' concern that the studies submitted by the 
applicant do not observe how the CloudCath System affects the 
management of the patient, the applicant stated that since the 
CloudCath System enables clinicians to initiate, order and receive WBC 
count and differential laboratory results days earlier, and 
subsequently initiate appropriate treatment days earlier than the 
current standard of care, this delta in diagnosis and treatment 
initiation time represents a significant positive change in patient 
management.
    The applicant described a clinician work flow asserting that it 
would occur following a notification from the CloudCath System. Per the 
applicant, upon receiving a notification from the CloudCath System, a 
clinician should order a rapid WBC count and differential and that 
results would typically be available in 2 to 4 hours. The applicant 
stated that this would be considered the standard diagnostic workup for 
patients suspected of peritonitis before starting antimicrobial 
treatment. The applicant further clarified that the CloudCath System is 
not intended to be used as a replacement to bypass the need for 
laboratory diagnostics. The applicant further noted that if the results 
from the WBC count and differential return WBC >100/[mu]L with >50% 
polymorphonuclear leukocytes (PMN,) clinicians would have confidence to 
proceed with initiating antimicrobial treatment. As such, the applicant 
stated that the use of the CloudCath System would not result in any 
more unnecessary antimicrobial use than would occur with the current 
standard of care guidelines to initiate antibiotic treatment solely 
based on the presentation of cloudy effluent.
    The applicant also surveyed 18 physicians who confirmed via a 
consensus affidavit the anticipated workflow described by the 
applicant; the conclusion that the use of the CloudCath System would 
not result in increased unnecessary antimicrobial treatment; and that 
the use of the CloudCath System is expected to result in a positive 
change in patient management.
    We received several supporting comments from clinicians and a trade 
association regarding use of the CloudCath System as a monitoring 
system. Several physician commenters shared their experience with the 
CloudCath System, stating that the notification from the CloudCath 
System would allow them to achieve an earlier diagnosis by verifying 
the CloudCath System's results with results of peritoneal fluid cell 
counts and differentials before initiating antimicrobial treatment. A 
trade association stated that because of the severity of patient risk 
from peritonitis, current clinical guidelines provide physicians with 
flexibility to prescribe antibiotic treatment without advance receipt 
of a positive antibody cell culture, if other signs and symptoms are 
present. A physician commenter stated that an elevated turbidity score 
from the CloudCath System would help clinicians make empiric 
antimicrobial treatment decisions as early as possible while results of 
peritoneal fluid cell counts and differentials are pending. This same 
commenter noted that the practice would not increase antibiotic use as 
it falls in line with the way that other suspected infections are 
treated like bacteremia and urinary tract infections according to 
current sepsis guidelines.
    With regard to the concern about whether use of the CloudCath 
System has demonstrated improved clinical outcomes, including lower 
hospitalization rates, an increase in the use of PD, a decrease in PD 
modality loss, or improved mortality, the applicant claimed that 
studies have shown the benefits of home dialysis compared to in-center 
HD, such as survival, quality of life, decreased transportation costs, 
increased patient autonomy and clinical benefits such as enhanced blood 
pressure and phosphorus control. The applicant cited a study by 
Uchiyama et al. highlighting the ability of remote patient monitoring 
in patients undergoing automated PD to reduce cost, disease burden, 
clinical resources, hospitalizations, technique failures as well as 
improved treatment adherence and blood pressure control.\78\ The 
applicant stated that prioritizing PD is beneficial for patients, 
providers and payers in light of the findings that more frequent 
dialysis in the home setting is associated with improved clinical 
outcomes, such as improvement in blood pressure control with fewer 
antihypertensive medications, volume management, left ventricular 
hypertrophy, phosphate control, and fewer hospital days and 
hospitalizations.79 80 81 82 The consensus affidavit 
supported the claim that the CloudCath System is expected to result in 
a significant clinical improvement in outcomes related to patient 
survival and sustained use of the PD modality.
---------------------------------------------------------------------------

    \78\ Uchiyama, Kiyotaka et al. Effects of a remote patient 
monitoring system for patients on automated peritoneal dialysis: a 
randomized crossover controlled trial. International urology and 
nephrology, 1-9. 1 Apr. 2022, doi:10.1007/s11255-022-03178-5.
    \79\ Walker, Rachael C et al. Home hemodialysis: a comprehensive 
review of patient-centered and economic considerations. 
ClinicoEconomics and outcomes research: CEOR vol. 9 149-161. 16 Feb. 
2017, doi:10.2147/CEOR.S69340.
    \80\ Yu, Xueqing et al. Shared Decision-Making for a Dialysis 
Modality. Kidney international reports vol. 7,1 15-27. 30 Oct. 2021, 
doi:10.1016/j.ekir.2021.10.019.
    \81\ Cozzolino, Mario et al. COVID-19 pandemic era: is it time 
to promote home dialysis and peritoneal dialysis?. Clinical kidney 
journal vol. 14, Suppl 1 i6-i13. 2 Feb. 2021, doi:10.1093/ckj/
sfab023.
    \82\ Lockridge, Robert Jr et al. A Systematic Approach To 
Promoting Home Hemodialysis during End Stage Kidney Disease. 
Kidney360 vol. 1,9 993-1001. 8 Jul. 2020, doi:10.34067/
KID.0003132020.
---------------------------------------------------------------------------

    With regard to the concern that there may be insufficient evidence 
to demonstrate that the CloudCath System improves patients' quality of 
life, the applicant stated that at-home PD has been shown to improve 
health-related quality of life because it can be administered in the 
comfort of the patient's own home, commonly when they are sleeping 
rather than during the day such as in the case of in-center HD. The 
applicant further claimed that for many patients, this improves their 
quality of life by allowing them to remain in the workforce.
    Several commenters expressed appreciation for the CloudCath 
System's remote continuous monitoring feature. Individuals identifying 
as patients and clinicians stated that knowing that there is a system 
providing continuous monitoring support would give patients and the 
clinical team more confidence in patient oversight for PD than the 
current standard of care. Patient commenters stated that their 
healthcare providers would have the ability to react to peritonitis and 
other complications faster with the notification from the CloudCath 
System than if they were to monitor signs and symptoms by themselves.
    Response: We thank the applicant and other commenters for their 
input and have taken this information into consideration in our 
determination of whether the CloudCath System meets the TPNIES 
eligibility criteria at Sec.  413.236(b)(5) and Sec.  412.87(b)(1). We 
have responded in further detail to comments discussing the significant 
clinical improvement claims for the CloudCath System at the end of this 
section of the final rule.
    Comment: A commenter, a dialysis product and service provider, 
stated that the evidence presented in the TPNIES

[[Page 67200]]

application for the CloudCath System does not meet the substantial 
clinical improvement criterion. In referring to the evidence provided 
by the applicant, including the Briggs et al. study \83\ and the CATCH 
study,\84\ the commenter stated that the applicant had not presented 
evidence showing how use of the CloudCath System to detect peritonitis 
affects the management of the patient, as is required by the 
substantial clinical improvement criterion. For example, the commenter 
stated that in the CATCH study, neither the investigators nor subjects 
were aware of the CloudCath System's measurements and no clinical 
decision making was based upon readings from the CloudCath System. The 
commenter further stated that in the Briggs et. al. study, the authors 
comment that none of the data from the device was used for clinical 
decision[hyphen]making, which indicates that the study did not test how 
or if the CloudCath System offered the ability to diagnose a medical 
condition more rapidly and how use of the CloudCath System to make a 
diagnosis affected the management of the patient.
---------------------------------------------------------------------------

    \83\ Briggs, et al., ``Early Detection of Peritonitis in 
Patients Undergoing Peritoneal Dialysis: A Device and Cloud-Based 
Algorithmic Solution,'' unpublished report.
    \84\ CloudCath, ``A Prospective Clinical Study to Evaluate the 
Ability of the CloudCath System to Detect Peritonitis Compared to 
Standard of Care during In-Home Peritoneal Dialysis (CATCH),'' 
Preliminary Clinical Study Report, NCT04515498, Jan 27, 2020.
---------------------------------------------------------------------------

    The commenter also expressed concern regarding the Briggs et al. 
study, in which a large number of samples were false positives 
including already being on antibiotics for peritonitis as well as 
causes other than peritonitis. The commenter further stated that such a 
high false positive rate and the need to exclude patients already 
receiving treatment for peritonitis, who might have a resistant 
infection, could lead to inappropriate prescribing of antibiotics, 
increasing the risk of secondary infections or fungal infections.
    The commenter also expressed concerns with the applicant's claims 
that patients with a false positive for infection would not have 
received inappropriate use of antimicrobial therapy compared to the 
standard of care per ISPD guidelines. The commenter noted that if this 
were the case with the CloudCath System, then earlier intervention with 
antimicrobial therapy would never occur if the patient had not yet met 
at least 2 of the ISPD diagnostic criteria. As such, the commenter 
concluded that CloudCath does not have sufficient evidence that it 
offers substantial clinical improvement to the current standard of 
care.
    The commenter stated that there is no evidence that use of the 
CloudCath System would decrease future hospitalizations or physician 
visits or lead to a more rapid beneficial resolution of the disease 
process. The commenter stated that the Muthucumarana et al. study \85\ 
submitted by the applicant was not related to the CloudCath System and 
no data or evidence was provided that demonstrated that the CloudCath 
System would reduce time to treatment in patients.
---------------------------------------------------------------------------

    \85\ Muthucumarana, et al., ``The Relationship Between 
Presentation and the Time of Initial Administration of Antibiotics 
With Outcomes of Peritonitis in Peritoneal Dialysis Patients: The 
PROMPT Study.,'' Kidney Int Rep. 2016 Jun 11;1(2):65-72. doi: 
10.1016/j.ekir.2016.05.003. PMID: 29142915; PMCID: PMC5678844.
---------------------------------------------------------------------------

    Response: We appreciate the commenters' input regarding whether the 
CloudCath System meets the TPNIES innovation criterion at Sec.  
413.236(b)(5) and substantial clinical improvement criteria at Sec.  
412.87(b)(1).
    We acknowledge that the updates to the CATCH study submitted by the 
applicant provide additional evidence that the CloudCath System 
identifies nearly every case where peritonitis was ultimately 
diagnosed. While these additional cases did not include clinical 
vignettes, the patient presentations from earlier cases were reassuring 
that identified cases represent true instances of peritonitis. The 
finding that changes in turbidity were identified by the CloudCath 
System within a median of 97.04 hours prior to the time that the 
patient presented to medical providers for peritonitis-related symptoms 
suggests that the CloudCath System has the potential to produce an 
earlier diagnosis of peritonitis. We agree that early diagnosis is 
important because, as referenced by the applicant in the PROMPT study, 
each hour of delay in treating peritonitis is associated with 7% 
increased risk of PD failure and patient death. We also agree that the 
prevention of severe infection could lead to improved health outcomes 
and, for some patients, the ability to remain on peritoneal dialysis 
for longer.
    We understand from input provided by clinician commenters that 
clinicians might use the CloudCath System in place of clinical signs 
and symptoms of peritonitis when assessing for possible peritonitis and 
that many clinicians would not initiate antibiotics until peritonitis 
is confirmed through a cell count and differential of peritoneal fluid. 
CMS agrees that the use of the CloudCath System in this way would limit 
the potential for unnecessary antibiotic treatments due to false 
positive readings, although unnecessary laboratory testing with cell 
counts in otherwise asymptomatic patients might still result from high 
false positive rates. The applicant asserts, without study data, that 
the use of the CloudCath System would not result in any more 
unnecessary antimicrobial use than would occur with the current 
standard of care ISPD guidelines to initiate antibiotic treatment.
    We appreciate comments pertaining to patient experiences and the 
way in which monitoring via the CloudCath System may reassure patients 
and providers. We also acknowledge the information about the ways in 
which peritoneal dialysis improves quality of life, reduces the use of 
health care resources, improves health outcomes, and offers patients 
with autonomy, but note the absence of data demonstrating that the 
CloudCath System helps patients to continue using peritoneal dialysis.
    CMS is supportive of new and innovative supplies and equipment for 
renal dialysis services. However, we remain concerned that there is no 
evidence, as required under the substantial clinical improvement 
criteria at Sec.  412.87(b)(1)(ii)(B), that using the CloudCath System 
affects the management of the patient in a way that improves the 
diagnosis and treatment of peritonitis. Current evidence is mainly 
based off proof of principle studies. Despite new updates to the CATCH 
study, we note that, similar to previously reported findings, the 
updates do not include evidence that peritonitis was actually diagnosed 
or acted on sooner by clinicians. Importantly, the findings do not 
include information about whether the detection of peritonitis by the 
CloudCath System led to improvements in key health outcomes required 
for demonstrating substantial clinical improvement. Any additional data 
provided is still limited by the overall study design.
    The applicant has not provided clear evidence that using the 
CloudCath System affects the management of the patient by reducing 
time-to-treatment. With the CloudCath System alarm turned off, the 
studies did not evaluate patient or clinician behavior resulting from 
information generated by the CloudCath System. In the Briggs et al. 
study, CloudCath data was not used for clinical decision making. 
Similarly, in the CATCH study, neither participants nor investigators 
were aware of the CloudCath System's measurements. There are no studies 
addressing outcomes such as hospitalizations,

[[Page 67201]]

resolution of disease process, or healthcare use. While the PROMPT 
study refers to the dangers of a delay in treating peritonitis, it did 
not evaluate the CloudCath System.
    We acknowledge that the applicant, clinician affidavit, and other 
commenters provided input on how the CloudCath System could be used in 
a clinical setting. While clinician commenters offered input about the 
way in which clinicians might manage a patient following a CloudCath 
System notification, commenters provided multiple conflicting reports 
of how clinicians would use the technology. Comments from clinicians 
indicate a varied response: some may treat a patient empirically based 
on turbidity findings, while others may wait for rapid cell counts if 
available.
    In light of the first response (treating empirically based on 
turbidity), possible harm from the presence of false positives remains 
a serious concern. The applicant's submitted evidence does not 
convincingly refute the concern of possible false positives from the 
CloudCath System. Thus, clinicians who choose to prescribe antibiotics 
without waiting for confirmatory diagnostic tests such as a cell count 
have the potential for overprescribing antibiotics. Using the 
technology to make decisions about empiric treatment, might be 
especially likely to occur when patients cannot come to the dialysis 
unit for a peritoneal fluid collection or when laboratory results are 
not expedited.
    We remain concerned that if there is a high false positive rate, 
the device may inequitably result in certain vulnerable populations 
disproportionately receiving inappropriate antibiotics. In particular, 
beneficiaries living in underserved areas may not have access to a 
rapid cell count or quick turnaround of other confirmatory tests and 
could be particularly vulnerable to the potential harm of treating 
false positives. Clinicians in underserved areas may not have access to 
rapid cell counts and patients in these areas may be less likely to 
access rapid cell counts except through an Emergency Department. As 
such, more information about false positivity would be beneficial to 
better understand the ramifications of practice changes, and whether 
clinical benefits from more rapid detection outweigh costs from false 
positives. We note that demonstration of a low false positive rate 
could offset concerns for inappropriate antibiotic use, especially in 
underserved areas where rapid cell counts may not be available. As 
such, a low false positive rate is more likely to improve health 
equity.
    We acknowledge that many clinician commenters stated that they 
would not initiate empiric antibiotics without confirmatory testing. 
However, for these situations, the applicant did not present evidence 
that the CloudCath System would result in a quicker diagnosis or 
treatment of peritonitis. It is also unclear how much sooner patients 
would present to a healthcare provider in response to a positive 
CloudCath System reading when compared to traditional signs and 
symptoms of peritonitis. Evidence of clinician behavior, meaning data 
that captures the way in which the CloudCath System's notifications 
affect the management of the patient in the clinical setting, would 
help to address these uncertainties.
    Finally, we appreciate the patient letters describing the risks and 
anxieties of venturing out on home dialysis, mostly without the 
clinician oversight or accessibility that would be available to 
patients dialyzing in-center. While there is potential for the 
CloudCath System to improve quality of life by providing an added level 
of assurances, the applicant has not provided supporting evidence to 
demonstrate improvements in quality of life, which per Sec.  
412.87(b)(1)(ii)(C)(6), is one way that a new technology can 
demonstrate substantial clinical improvement.
    After carefully reviewing the application, the information 
submitted by the applicant addressing our concerns raised in the CY 
2023 ESRD PPS proposed rule, as well as the many comments submitted by 
the public, we have determined that the CloudCath System has not shown 
that it represents an advance that substantially improves, relative to 
renal dialysis services previously available, the treatment of Medicare 
beneficiaries. Therefore, we conclude that the CloudCath System does 
not meet the TPNIES innovation criteria under Sec.  
[thinsp]413.236(b)(5) and Sec.  [thinsp]412.87(b)(1).
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    Regarding the sixth TPNIES eligibility criterion in Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
stated that the CloudCath System is not a capital-related asset. We 
noted in the CY 2023 ESRD PPS proposed rule that the CloudCath System 
does not meet the definition of a capital-related asset under Sec.  
413.236(a)(2), because it is not an asset that the ESRD facility has an 
economic interest in through ownership and is subject to depreciation 
\86\ and we received no public comments on this criterion.
---------------------------------------------------------------------------

    \86\ See also CMS Provider Reimbursement Manual, Chapter 1, 
Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

    Final Rule Action: After a consideration of all the public comments 
received, we have determined that the evidence and public comments 
submitted are not sufficient to demonstrate that the CloudCath System 
meets all eligibility criteria to qualify for the TPNIES for CY 2023. 
As a result, the CloudCath System will not be paid for using the TPNIES 
per Sec.  413.236(d).
    We note that in the CY 2021 ESRD PPS final rule (85 FR 71412), CMS 
indicated that entities would have 3 years beginning on the date of FDA 
marketing authorization in which to submit their applications for the 
TPNIES. Based on the CloudCath System's FDA marketing authorization 
date of February 9, 2022, the applicant is eligible to apply for the 
TPNIES for CY 2024, CY 2025, or CY 2026, and CMS will review any new 
information provided for the particular CY rulemaking cycle.
b. SunWrapTM System
    Sun Scientific, Inc. submitted an application for the TPNIES for 
the SunWrapTM System for CY 2023. According to the 
applicant, the technology is comprised of a compression sleeve with a 
transparent air bladder and hand pump designed to provide static 
pneumatic compression to the forearm and/or upper arm following 
dialysis needle removal from the arteriovenous (AV) fistula access. The 
applicant explained that following HD, gauze is placed over the 
puncture sites as the needles are removed, and then the 
SunWrapTM System is placed around the arm with the 
transparent bladder positioned over the gauze-covered access site. Per 
the applicant, the SunWrapTM System is then inflated, 
compressing the site to stop bleeding. Per the applicant, the 
SunWrapTM System provides a sufficient source of pressure to 
compress the AV intervention puncture site and has adjustable 
compression at 20-30 mmHg and 30-40 mmHg. The applicant also stated 
that the inflation portion of the wrap is composed of completely 
transparent film, allowing for visualization of the puncture site(s) 
and ensuring that the hemostasis can be monitored. The applicant stated 
that the SunWrapTM System is easy to apply, safe, non-
invasive, requires minimal

[[Page 67202]]

training of only one tutorial, and has been proven to meet patient 
satisfaction and safety requirements after multiple trials.
    The applicant also submitted a SunWrapTM System brochure 
noting that the product is indicated for post-HD treatment needle 
puncture management for hemostasis of needle site and that it is 
contraindicated for use directly on an open wound. The applicant 
submitted the following listing of the SunWrapTM System's 
line of products: Upper Arm--Right Small, Upper Arm--Right Large, 
Forearm Right, Upper Arm--Left Small, Upper Arm--Left Large, Forearm 
Left, and MINI--Single Site.
    The applicant stated that the SunWrapTM System is meant 
to replace the current method of compression for bleeding control, 
which relies on the patient or skilled caregiver manually applying 
pressure to the puncture site for up to 15 minutes following HD. Per 
the applicant, inadequate or incorrect application of compression can 
result in discomfort, excessive bleeding, hematoma, fistula damage, and 
potentially even death. The applicant stated that use of the 
SunWrapTM System allows for more consistent application of 
compression, frees up the hands of the patient or skilled caregiver, 
and allows for simultaneous visual management of the needle site.
(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    Regarding the first TPNIES eligibility criterion in Sec.  
413.236(b)(1), that the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, compression to the HD access site 
following dialysis needle removal is a service that is furnished to 
individuals for the treatment of ESRD and essential for the delivery of 
maintenance dialysis. We received no public comments on whether the 
SunWrapTM System meets this criterion. We consider the 
SunWrapTM System to be a renal dialysis service under Sec.  
413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion in Sec.  
413.236(b)(2), that the item is new, meaning within 3 years beginning 
on the date of the FDA marketing authorization, the applicant did not 
submit an FDA marketing authorization date but instead, indicated that 
the SunWrapTM System is considered FDA Class I Exempt. We 
note that under FDA regulatory scheme, Class I exempt status is 
determined by FDA, which maintains on its website the listing of 
devices exempt from the premarket notification (510(k)) requirements. 
As described on the FDA website, Class I devices present minimal 
potential for harm to the user and are often simpler in design than 
Class II or Class III devices. Examples include enema kits and elastic 
bandages.\87\
---------------------------------------------------------------------------

    \87\ Food & Drug Administration. Learn if a Medical Device Has 
Been Cleared by FDA for Marketing. Available at: https://www.fda.gov/medical-devices/consumers-medical-devices/learn-if-medical-device-has-been-cleared-fda-marketing. Accessed on March 23, 
2022.
---------------------------------------------------------------------------

    As we discussed in the CY 2023 ESRD PPS proposed rule (87 FR 
38511), the applicant submitted the following information pertaining to 
Sun Scientific, Inc.'s registration and product classification: (1) a 
document labeled Class I Exempt Documentation and (2) listing, 
registration, and Firm Establishment Identifier (FEI) numbers for 
SunWrap. While the Class I Exempt Documentation lacked identifying 
product information such as the SunWrapTM System's product 
name(s) and date of the Class I Exempt status determination, we located 
supplemental information online. Sun-Scientific, Inc. is identified on 
the FDA website with Registration Number: 3008773774, FEI Number: 
3008773774, and Owner/Operator Number: 10034866.\88\ Twelve devices 
were identified with this Owner/Operator Number, but only the following 
two devices include the regulation number (880.5075) included in the 
application: Dressing, Compression--Aerowrap; SunWrap and Dressing, 
Compression--SunWrap.\89\
---------------------------------------------------------------------------

    \88\ U.S. Food & Drug Administration. Establishment Registration 
& Device Listing. Sun-Scientific Inc. Available at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/rl.cfm?rid=124922. 
Accessed on March 29, 2022.
    \89\ U.S. Food & Drug Administration. Establishment Registration 
& Device Listing. Sun-Scientific Inc. Available at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/rl.cfm?start_search=1&showList=1&establishmentName=®Num=&StateName=&CountryName=&OwnerOperatorNumber=10034866&OwnerOperatorName=&ProductCode=&DeviceName=&ProprietaryName=&establishmentType=&PAGENUM=10&SortColumn=EstablishmentName20%25ASC&RegistrationNumber=3008773774. 
Accessed on March 29, 2022.
---------------------------------------------------------------------------

    After a review of the information provided by the applicant, in the 
proposed rule, we noted the following concerns with regard to the 
newness criterion under Sec.  413.236(b)(2). Consistent with Sec.  
413.236(c), we stated that CMS would announce its final determination 
regarding whether the SunWrap\TM\ System meets the newness criterion 
and other eligibility criteria for the TPNIES in the CY 2023 ESRD PPS 
final rule.
    First, the applicant included a product brochure and product 
selection listing of 7 SunWrapTM System products and did not 
clearly indicate which of the 7 products are the subject of the CY 2023 
TPNIES application. In addition, it is not clear whether the listing 
and registration numbers provided apply to all 7 products. We requested 
that the applicant clarify these points.
    Second, while the applicant stated that the Sun WrapTM 
System is considered FDA Class I Exempt, as indicated in Sec.  
413.236(b)(2), to be eligible for the TPNIES, the applicant must apply 
within three years of the FDA marketing authorization date. While our 
primary concern is the lack of FDA marketing authorization, we also 
noted that the applicant did not clearly indicate the date of Class I 
Exempt status. Therefore, it is unclear whether the 
SunWrapTM System's Class I Exempt status is within the 
three-year window.
    We noted that manufacturers of devices that fall into a category of 
exempted Class I devices are not required to submit to FDA a premarket 
notification and obtain FDA clearance before marketing the device in 
the U.S. However, the manufacturer is required to register its 
establishment and list its device with FDA.\90\ Devices that receive 
FDA marketing authorization have met regulatory standards that provide 
a reasonable assurance of safety and efficacy for the devices. For 
exempt devices, FDA has determined that a premarket notification is not 
required to provide a reasonable assurance of safety and effectiveness 
for the devices. However, exempt devices still must comply with certain 
regulatory controls (known as ''general controls'') to provide a 
reasonable assurance of safety and effectiveness for such devices. Our 
intent in requiring applicants to receive FDA marketing authorization 
was to exclude devices that lack FDA marketing authorization. However, 
we welcomed public comment on these issues.
---------------------------------------------------------------------------

    \90\ Food & Drug Administration. Learn if a Medical Device Has 
Been Cleared by FDA for Marketing. Available at: https://www.fda.gov/medical-devices/consumers-medical-devices/learn-if-medical-device-has-been-cleared-fda-marketing. Accessed on March 23, 
2022.
---------------------------------------------------------------------------

    Comment: One commenter agreed with CMS regarding the lack of 
clarity as to which of the 7, in the family of the SunWrapTM 
System products, are the subject of the CY 2023 TPNIES application and 
with regard to the lack of a date that the product received Class 1 
Exempt status. The commenter also stated that the newness criterion 
delineates FDA marketing authorization as a requirement to apply for 
the TPNIES and that for CMS to extend the eligibility criterion beyond 
technologies with FDA marketing authorization (that

[[Page 67203]]

is, Class I Exempt status) would require future rulemaking. The 
commenter stated that CMS should clarify in future rulemaking whether 
devices that are considered FDA Class I Exempt are eligible for the 
TPNIES.
    Response: We thank the commenter for their comments regarding the 
newness criterion. We did not receive additional information from the 
applicant pertaining to our newness concerns. Therefore, it remains 
unclear as to which of the SunWrapTM System products are the 
subject of the TPNIES application. We also note that as indicated in 
the CY 2023 ESRD PPS proposed rule, devices that receive FDA marketing 
authorization have met regulatory standards that provide a reasonable 
assurance of safety and efficacy for the devices. We maintain that our 
intent in requiring applicants to receive FDA marketing authorization 
was to exclude devices that lack FDA marketing authorization (87 FR 
38511). Therefore, in the absence of evidence that the technology is 
new, meaning within 3 years beginning on the date of the FDA marketing 
authorization, the SunWrapTM System does not meet the TPNIES 
newness criterion under Sec.  413.236(b)(2).
(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    Regarding the third TPNIES eligibility criterion in Sec.  
413.236(b)(3), that the item is commercially available by January 1 of 
the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that the 
SunWrapTM System is currently commercially available. While 
we received no public comments on this criterion, and we continue to 
have questions about which of the 7 products are the subject of the 
TPNIES application, the SunWrapTM System appears to meet the 
commercial availability criterion.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    Regarding the fourth TPNIES eligibility criterion in Sec.  
413.236(b)(4) requiring that the applicant submit a complete HCPCS 
Level II code application by the HCPCS Level II application deadline of 
July 5, 2022, the applicant stated that it submitted that application 
on January 31, 2022. We received no public comment on whether the 
SunWrapTM System meets this criterion, however CMS received 
a HCPCS Level II application by the deadline. Therefore, we agree the 
applicant has met the HCPCS Level II application criterion.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With regard to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), as discussed in the CY 2023 ESRD PPS proposed rule (87 FR 
38511 through 38513), the applicant stated that the use of the 
SunWrapTM System significantly improves clinical outcomes 
relative to the current standard of care, which it identified as 
reliance on the patient or a skilled caregiver manually applying 
pressure to the puncture site for up to 15 minutes following HD.
    The applicant presented the following six substantial clinical 
improvement claims: (1) a reduction in at least one clinically 
significant adverse event; (2) a decreased rate of at least one 
subsequent diagnostic or therapeutic intervention; (3) a decreased 
number of future hospitalizations or physician visits; (4) a more rapid 
beneficial resolution of the disease process treatment; (5) an 
improvement in one or more activities of daily living; and (6) an 
improved quality of life.
    Regarding the first claim, a reduction in at least one clinically 
significant adverse event, the applicant stated that the 
SunWrapTM System potentially reduces the incidence of 
hematoma, fistula stenosis/thrombosis, and Fatal Vascular Access 
Hemorrhage (FVAH).
    Regarding the second claim, a decreased rate of at least one 
subsequent diagnostic or therapeutic intervention, the applicant stated 
that the SunWrapTM System potentially reduces the incidence 
of ER visits, estimated at $10,000 per visit, ultrasound assessment, or 
interventions for stenosis or thrombosis. The applicant also stated 
that the SunWrapTM System potentially reduces the incidence 
of hospital admissions that are estimated at $15,000 or more per 
admission. The applicant further stated that incident cases of ESRD are 
reaching nearly 21,000 annually, and that vascular access complications 
account for 16 to 25 percent of hospital admissions.\91\
---------------------------------------------------------------------------

    \91\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
https://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
---------------------------------------------------------------------------

    Regarding the third claim, a decreased number of future 
hospitalizations or physician visits, the applicant stated that the 
SunWrapTM System reduces ER visits due to bleeding and the 
potential for subsequent admission, saving approximately $10,000 per 
visit.\92\ The applicant also stated that the SunWrapTM 
System reduces the need for revascularization due to stenosis/
thrombosis.\93\
---------------------------------------------------------------------------

    \92\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
https://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
    \93\ Ibid.
---------------------------------------------------------------------------

    Regarding the fourth claim, a more rapid beneficial resolution of 
the disease process treatment, the applicant stated that the 
SunWrapTM System reduces the need for nurses to be tied up 
with manual compression therapy, maximizing their efforts around 
dialysis treatment. The applicant also stated that the 
SunWrapTM System adds a layer of assurance as patients 
transfer to home therapy, as compression is not reliant on patient or 
caregiver ability to provide compression consistent with care that 
occurs in the clinics. Per the applicant, the SunWrapTM 
System provides consistent compression to needle sites post-dialysis 
with the ability to visualize sites through a transparent window 
potentially reducing the incidence of unrecognized bleeding.
    Regarding the fifth claim, an improvement in one or more activities 
of daily living, the applicant stated that the SunWrapTM 
System could increase comfort levels of patients in the home setting 
and could help reduce fatigue-related compression interruption, and 
allow some normal activity while ensuring post-dialysis compression is 
provided, resulting in potential for improved patient satisfaction.
    Regarding the sixth claim, improved quality of life, the applicant 
stated that the SunWrapTM System allows the patient to 
become more autonomous and that the ability to have their hands free 
while stopping bleeding post-HD is beneficial. The applicant also 
stated that the potential reduction in fistula complications could 
improve quality of life on a broader scale.
    The applicant did not provide direct links to the supporting 
materials for each of the six claims, but rather referred more broadly 
to several sources of information as evidence of demonstrating 
substantial clinical improvement, including a U.S. Centers for Disease 
Control and Prevention fact sheet on Chronic Kidney Disease (CKD),\94\ 
case studies on fatal

[[Page 67204]]

hemorrhage from HD vascular access sites,\95\ and a case study of 
managing fistula complications in the Emergency Department.\96\ The 
applicant stated that there are 786,000 annual ESRD patients, 71 
percent are on dialysis and 29 percent have kidney transplants.\97\ 
Referring to Gage, et al, the applicant stated that 75 percent of AV 
fistulae and AV grafts required one or more interventions; stenosis and 
thrombosis were the most common complications diagnosed and treated (41 
percent and 16 percent respectively); and that potential needle-related 
complications accounted for 6 percent of this data set.\98\ The 
applicant also stated that a review of standard and early cannulation 
graft literature reveals that HD complications are similar across the 
graft types. The applicant further noted that in retrospective review 
articles, infection, hematoma, pseudoaneurysm, and bleeding occur at 
rates of up to 26 percent, 24 percent, 15 percent, and 14 percent, 
respectively.
---------------------------------------------------------------------------

    \94\ Centers for Disease Control and Prevention. Chronic Kidney 
Disease in the United States, 2021. Atlanta, GA: US Department of 
Health and Human Services, Centers for Disease Control and 
Prevention; 2021. Available at: https://www.cdc.gov/kidneydisease/pdf/Chronic-Kidney-Disease-in-the-US-2021-h.pdf. Accessed on March 
17, 2022.
    \95\ Jose, M., Marshall, M., Read, G., Lioufas, N., Ling, J., 
Snelling, P., Polkinghorne, K. (2017). Fatal dialysis vascular 
access hemorrhage. Am J Kidney Dis., 70(4), 570-575. Available at: 
https://www.sciencedirect.com/science/article/pii/S0272638617307497. 
Accessed on March 17, 2022.
    \96\ Simon, E. (2016). The dialysis patient: managing fistula 
complications in the emergency department. EMDocs. Available at: 
https://www.emdocs.net/dialysis-patient-managing-fistula-complications-emergency-department/. Accessed on March 17, 2022.
    \97\ Centers for Disease Control and Prevention. Chronic Kidney 
Disease in the United States, 2021. Atlanta, GA: US Department of 
Health and Human Services, Centers for Disease Control and 
Prevention; 2021. Available at: https://www.cdc.gov/kidneydisease/pdf/Chronic-Kidney-Disease-in-the-US-2021-h.pdf. Accessed on March 
17, 2022.
    \98\ Gage SM, Reichert H. Determining the incidence of needle-
related complications in hemodialysis access: We need a better 
system. J Vasc Access. 2021 Jul;22(4):521-532. doi: 10.1177/
1129729820946917. Epub 2020 Aug 18. PMID: 32811335. Available at: 
https://pubmed.ncbi.nlm.nih.gov/32811335/Accessed on March 17, 2022.
---------------------------------------------------------------------------

    The applicant also included a summary of what it described as 
evidence from an unpublished pilot study involving 54 patients in two 
vascular access laboratory sites, 23 and 31 patients from each site, 
respectively who required intervention on their AV fistula or graft 
access site.\99\ The applicant provided background information stating 
that patients require AV fistula or graft interventions for various 
reasons such as maintenance angioplasty, fistulogram, or thrombectomy. 
Per the applicant, the physician normally uses sutures to close the 
puncture site and after the procedure, the patients are monitored in 
the recovery room for a few hours before the sutures are removed or 
patients revisit the clinic for suture removal. The applicant stated 
that this suturing technique is frequently used because it is quick, 
straightforward, and has been the common practice. The applicant 
further indicated that suture removal poses a risk of infection. The 
applicant stated that during the study, the SunWrapTM System 
was applied for wound closure in place of suturing with an inflation 
pressure at 20-40 mmHg and hold-time at 20 to 30 minutes for most of 
the patients because most patients were punctured with a large note 
sheath size of 6-8 F. The applicant also stated that in ESRD 
facilities, the needle size is relatively smaller and less inflation 
pressure and shorter hold-times are needed to achieve hemostasis. As 
such, the applicant stated that the SunWrapTM System could 
be safely applied in the ESRD facility setting without extensive 
training.
---------------------------------------------------------------------------

    \99\ Summary points included in the application identified as: 
Sun-Wrap A Novel device for arteriovenous (AV) access hemostasis, 
Presented by Steven H.S. Tan, M.D. & Sundaram Ravikumar, M.D., FACS.
---------------------------------------------------------------------------

    The applicant noted two reported cases of immediate post-operative 
bleeding; one reported case (fistula) of thrombosis at 48 to 72 hours 
post-operatively; and three reported cases (two fistula and one graft) 
of thrombosis 30 days post-operatively. The applicant stated that there 
were no reported cases of post-operative bleeding, infection, and 
pseudoaneurysm at 48 to 72 hours.
    Per the applicant, the two cases of immediate post-operative 
bleeding were directly due to the SunWrapTM System. Per the 
applicant, the first case occurred during training in the initial phase 
of the study and there was no repetitive event after modification of 
the technique and timing of the application of the SunWrapTM 
System. We noted in the CY 2023 ESRD PPS proposed rule that the 
applicant did not specify the way in which the technique or timing of 
applying the SunWrapTM System were modified. The applicant 
stated that the second case was due to two distant puncture sites that 
exceeded the coverage for the SunWrapTM System. Per the 
applicant, in patients with two puncture sites that measure more than 
7.5 cm apart or if there is immediate bleeding, suturing is the 
treatment of choice.
    The applicant stated that the thrombosis cases identified (one case 
at 48 to 72 hours post-operatively and three cases 30-days post-
operatively) were not directly due to the SunWrapTM System. 
Per the applicant, the patients did not have any complications while on 
the SunWrapTM System and left the clinic safely after 
thorough monitoring in the recovery room. The applicant further stated 
that the patients underwent dialysis after the removal of the 
SunWrapTM System and stated that the dialysis may have been 
the major contributing factor for the thrombosis.
(b) CMS Assessment of Substantial Clinical Improvement Claims and 
Sources
    After a review of the information provided by the applicant, in the 
CY 2023 ESRD PPS proposed rule, we noted the following concerns with 
regard to the substantial clinical improvement criteria under Sec.  
413.236(b)(5) and Sec.  412.87(b)(1).
    The applicant stated that the SunWrapTM System has the 
potential to represent substantial clinical improvement. However, it is 
not clear whether or how the evidence submitted by the applicant 
supports the applicant's 6 substantial clinical improvement claims. We 
stated that it will be helpful for our evaluation if the applicant will 
directly link each claim to the relevant supporting information. The 
applicant provided summary points of a non-published, single pilot 
study of 54 patients treated with the SunWrapTM System at 
two vascular access laboratory sites. While the applicant provided a 
bullet-point summary of the study setting, complications, and a brief 
discussion of study data, the applicant did not provide details 
pertaining to study type, timeframe, patient demographics and 
endpoints. We noted that this study appears to involve patients treated 
with the SunWrapTM System for the purpose of controlling 
bleeding following interventional procedures involving an AV fistula or 
graft and does not involve use of the SunWrapTM System 
following HD treatment in the ESRD facility setting. We questioned the 
extent to which this data would be generalizable to the ESRD facility 
setting and stated that we would be interested in any data pertaining 
to the use the SunWrapTM System for the purpose of 
controlling bleeding in the ESRD facility setting; specifically, at the 
needle puncture sites following HD.
    We also noted that the applicant stated that the 
SunWrapTM System provides static pneumatic compression to 
the forearm and/or upper arm with a gauze bandage, following dialysis 
needle removal from the AV fistula access. We requested clarification 
as to whether the SunWrapTM System's indication for use is 
limited to patients with AV fistula access sites or if it is also 
indicated for use among patients with AV graft access sites.

[[Page 67205]]

    The applicant identified 6 cases of post-operative complications 
within the pilot study, stating that two were directly due to the 
SunWrapTM System and that the 4 remaining cases were 
unrelated to the SunWrapTM System, but did not offer data to 
substantiate this statement. In addition, the applicant stated that the 
SunWrapTM System has met patient satisfaction and safety 
requirements after multiple trials, but did not provide specific 
information in support of this statement within the application. We 
stated that we would appreciate additional information regarding these 
trials, as well as any additional data demonstrating that the 
SunWrapTM System represents an advance that substantially 
improves, relative to technologies previously available, the diagnosis 
or treatment of Medicare beneficiaries. For example, we stated that it 
would be useful to consider data comparing the SunWrapTM 
System's outcomes to outcomes of patients treated by manual compression 
at the puncture site following HD.
    The applicant referred to the SunWrapTM Mini, stating 
that it targets single puncture sites and may be useful for achieving 
hemostasis for puncture sites which are more than 7.5 cm apart, may be 
easier to use in ESRD facilities, and is currently in its initial phase 
of study. As noted previously in this section of the final rule, the 
applicant provided a listing of 7 SunWrapTM System products. 
We requested clarification as to which of the 7 SunWrapTM 
System products were included in the primary pilot study of 54 
patients. We welcomed public comment on these issues.
    Comment: We received several public comments regarding the 
substantial clinical improvement claims made in the TPNIES application 
for the SunWrapTM System. While one commenter offered 
general support of all technologies being considered for CY 2023 
TPNIES, including the SunWrapTM System, the remaining 
commenters expressed concerns.
    A few commenters stated that direct clinical evidence was not 
provided to support the applicant's claims of substantial clinical 
improvement. One commenter emphasized that each claim of substantial 
clinical improvement should be directly linked to supporting evidence.
    With respect to CMS' concern regarding the absence of data 
pertaining to the use of the SunWrapTM System in the ESRD 
facility setting, commenters agreed that specific data pertaining to 
the use the SunWrapTM System for the purpose of controlling 
bleeding at the needle puncture sites following HD in the ESRD facility 
setting would be needed to establish substantial clinical improvement. 
One commenter questioned whether the unpublished single pilot study 
would support the technology's intended use as a renal dialysis service 
given that it does not involve the use of the SunWrapTM 
System following HD treatment in the ESRD facility setting.
    One commenter stated that human holding of the needle site is the 
standard of care and allows variable pressure post needle removal, and 
that the SunWrapTM System does not allow for this variable 
adjustment. One commenter stated that patients who attempted to use the 
device post dialysis, experienced excessive bleeding. Another commenter 
stated the two cases of post-operative bleeding and four cases of 
thrombosis resulted in a complication rate of 11.1 percent compared to 
a more typical rate of 1.7 percent, and expressed concern that the 
SunWrapTM System potentially predisposes patients to greater 
risk of thrombosis after its use.
    Response: We appreciate the input provided by the commenters and 
agree that there is a lack of evidence that the SunWrapTM 
System controls bleeding at the needle puncture sites following HD in 
the ESRD facility setting. We also agree with the comments expressing 
uncertainty as to whether the use of the SunWrapTM System 
predisposes patients to greater risk of thrombosis after its use. 
Because we did not receive a public comment from the applicant 
addressing our concerns set forth in the CY 2023 ESRD PPS proposed rule 
(87 FR 38513), those concerns also remain. First, it is not clear 
whether the technology is indicated for use limited to patients with AV 
fistula access sites or if it is also indicated for use among patients 
with AV graft access sites. Second, it is unclear which of the 7 
SunWrapTM System products were included in the primary pilot 
study. Finally, we did not receive evidence that the 
SunWrapTM System met patient satisfaction and safety 
requirements after multiple trials nor did we receive data comparing 
the SunWrapTM System's outcomes to outcomes of patients 
treated by manual compression at the puncture site following HD. 
Therefore, we conclude that the SunWrapTM System does not 
meet the TPNIES innovation criteria under Sec.  413.236(b)(5) and Sec.  
412.87(b)(1).
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    Regarding the sixth TPNIES eligibility criterion in Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
did not address this criterion within its application. We received no 
public comments on this criterion. However, because the 
SunWrapTM System is not an asset that the ESRD facility has 
an economic interest in through ownership and is subject to 
depreciation, it is not a capital-related asset.\100\
---------------------------------------------------------------------------

    \100\ 42 CFR 413.236(a)(2); CMS Provider Reimbursement Manual, 
Chapter 1, Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

    Final Rule Action: After a consideration of all the public comments 
received, we have determined that the evidence and public comments 
submitted are not sufficient to demonstrate that the 
SunWrapTM System meets all eligibility criteria to qualify 
for the TPNIES for CY 2023. As a result, the SunWrapTM 
System will not be paid for using the TPNIES per Sec.  413.236(d).
c. THERANOVA 400 Dialyzer/THERANOVA 500 Dialyzer (THERANOVA)
    Baxter Healthcare Corporation (Baxter) submitted an application for 
the TPNIES for the THERANOVA 400 Dialyzer/THERANOVA 500 Dialyzer, 
collectively referred to as ``THERANOVA,'' for CY 2023. According to 
the applicant, THERANOVA is a new class of single-use dialyzer, 
featuring an innovative three-layer membrane structure that enables 
more comprehensive removal of certain harmful proteins known as large 
middle molecules (LMMs), while selectively maintaining essential 
proteins in the blood during HD, compared to conventional low-flux and 
high-flux dialyzers. The applicant noted that the `400' and `500' 
denote differences in surface area. The applicant stated that THERANOVA 
is used with standard HD machines, like most other high-flux dialyzers, 
but has unique membrane properties that allow for enhanced removal of 
LMM uremic toxins contributing to disease burden (cardiovascular 
disease, development of inflammation, and other comorbidities) while 
retaining appropriate levels of beneficial molecules such as albumin, 
coagulation factors, and immunoglobulins. As we noted in the CY 2023 
ESRD PPS proposed rule, Baxter previously submitted an application for 
the TPNIES for THERANOVA for CY 2021, as discussed in the CY 2021 ESRD 
PPS proposed rule (85 FR 42167 through 42177) and the

[[Page 67206]]

CY 2021 ESRD PPS final rule (85 FR 71444 through 71457).\101\
---------------------------------------------------------------------------

    \101\ As noted in the CY 2021 ESRD PPS final rule, we did not 
find the submitted evidence and public comments sufficient in 
meeting the substantial clinical improvement ``totality of the 
circumstances'' criterion at Sec.  412.87(b)(1)(i). Therefore, we 
determined that THERANOVA did not qualify for the TPNIES at that 
time (85 FR 71457).
---------------------------------------------------------------------------

    The applicant stated that THERANOVA is intended to treat kidney 
failure by expanded hemodialysis (HDx). The applicant noted that 
previous dialyzers were only able to remove toxins up to 25 kilodaltons 
(kDa), while HDx, enabled by the THERANOVA dialyzer, can remove 
molecules from 25 kDa to approximately 45 kDa. The applicant explained 
that patients with CKD have increasing difficulty removing these 
solutes as their kidneys fail. The applicant further explained that 
these non-protein bound uremic solutes can be divided into three main 
categories: (1) small molecules (SMs), <0.5 kDa, with effective removal 
by diffusion, (2) small and medium middle molecules (SMMMs), 0.5-<25 
kDa, with limited removal by diffusion, and (3) large middle molecules 
(LMMs), 25-60 kDa, which requires higher permeability membranes for 
effective and efficient removal.\102\ The applicant noted that evidence 
to date demonstrates a strong link between LMMs and the development of 
different outcome-related morbidities, and that uremia related to the 
retention of SMMMs/LMMs is associated with inflammation and 
cardiovascular events.103 104 105 The applicant stated that 
THERANOVA's innovative hollow fiber, medium cut-off (MCO) membrane 
shows a permeability profile close to that of the natural kidney and 
expands the range of uremic toxin removal beyond what is achieved with 
current membranes during regular HD.
---------------------------------------------------------------------------

    \102\ Baxter. Theranova 400/500 Instructions For Use. N50 648 
rev 003, 2017-05-29.
    \103\ Yilmaz MI, Carrero JJ, Axelsson J, Lindholm B, Stenvinkel 
P: Low-grade inflammation in chronic kidney disease patients before 
the start of renal replacement therapy: sources and consequences. 
Clin Nephrol 68:1-9,2007.
    \104\ Stenvinkel P. Can treating persistent inflammation limit 
protein energy wasting? Semin Dial. 2013;26(1):16-19. doi:10.1111/
sdi.12020.
    \105\ Akchurin OM, Kaskel Fl. Update on inflammation in chronic 
kidney disease. Blood Purif 2015; 39:84-92.
---------------------------------------------------------------------------

    The applicant stated that the design of THERANOVA allows for use on 
any HD machine, both in-center and home, made by Baxter or another 
manufacturer, by merely changing the dialyzer. The applicant stated 
that the membrane is compatible with standard fluid quality and does 
not require any additional fluid quality control measure.\106\
---------------------------------------------------------------------------

    \106\ Alvarez L, et al. Intradialytic Symptoms and Recovery Time 
in Patients on Thrice-Weekly In-Center Hemodialysis: A Cross-
sectional Online Survey, Kidney Med. 2020;2(2)125-130.
---------------------------------------------------------------------------

(1) Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    With respect to the first TPNIES eligibility criterion under Sec.  
413.236(b)(1), whether the item has been designated by CMS as a renal 
dialysis service under Sec.  413.171, maintenance dialysis treatments 
and all associated services, including historically defined dialysis-
related drugs, laboratory tests, equipment, supplies, and staff time, 
were included in the composite rate for renal dialysis services as of 
December 31, 2010 (75 FR 49036). While we received no public comments 
on whether THERANOVA meets this criterion, a dialyzer would be 
considered a supply essential for the delivery of maintenance dialysis 
and, therefore, we will consider THERANOVA to be a renal dialysis 
service under Sec.  413.171.
(2) Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion under Sec.  
413.236(b)(2), whether the item is new, meaning within 3 years 
beginning on the date of the FDA marketing authorization, the applicant 
stated that the THERANOVA received FDA marketing authorization for home 
use on August 28, 2020. We received no public comments on whether the 
THERANOVA meets the newness criterion. Based on information provided by 
the applicant, we agree that THERANOVA meets the newness criterion.
(3) Commercial Availability Criterion (Sec.  413.236(b)(3))
    With respect to the third TPNIES eligibility criterion under Sec.  
413.236(b)(3), whether the item is commercially available by January 1 
of the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that THERANOVA is 
commercially available in the U.S. We received no public comments on 
whether the THERANOVA meets this criterion. Based on the information 
provided by the applicant, THERANOVA meets the commercial availability 
criterion.
(4) HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    With respect to the fourth TPNIES eligibility criterion under Sec.  
413.236(b)(4), whether the applicant submitted a HCPCS Level II code 
application by the July 5, 2022 deadline, the applicant stated a HCPCS 
application was submitted on June 27, 2020. The applicant also 
indicated that it submitted a HCPCS Level II application for THERANOVA 
by the July 5, 2022, deadline. We received no other public comments on 
whether THERANOVA meets this criterion, however, we received a HCPCS 
Level II application by the deadline. Therefore, we agree the applicant 
has met the HCPCS Level II application criterion.
(5) Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(a) Substantial Clinical Improvement Claims and Sources
    With respect to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), the applicant stated that THERANOVA significantly 
improves clinical outcomes relative to the current standard of care for 
dialysis membranes. As discussed in the CY 2023 ESRD PPS proposed rule 
(87 FR 38513 through 38520), the applicant presented the following 
substantial clinical improvement claims: (1) decrease in the number of 
future hospitalization by up to 45 percent; (2) improved recovery time 
by up to 2 hours; (3) improved quality of life (QoL) as indicated by 
reduced pruritus, improvement in two Kidney Disease Quality of Life 
(KDQoL) survey domains, and improved London Evaluation of Illness 
(LEVIL) scores; (4) reduced restless leg syndrome by 10 percent or 
more; and (5) reduced rate of subsequent therapeutic interventions such 
as reduced need for and use of erythropoietin stimulating agents 
(ESAs), iron, and insulin. The applicant supported these claims with 
seven published papers, one paper accepted for publication, and one 
poster. Several of the studies were secondary analyses of the same 
trial data.
    With respect to the claim that THERANOVA decreases the number of 
future hospitalizations, the applicant noted that emergent need for 
hospitalization can be a serious and life-threatening event, especially 
for medically-fragile populations, and that hospitalization is a 
frequent and costly occurrence for the ESRD population. The applicant 
stated that an estimated 792,643 HD patient hospitalizations occur 
every year,\107\ with roughly 40

[[Page 67207]]

percent of new dialysis patients averaging nearly two hospitalizations 
per year.\108\ The applicant also stated that ESRD patients often have 
health impairments associated with their condition and other 
comorbidities that put them at greater risk for hospitalization, and at 
greater risk for adverse outcomes once hospitalized. The applicant 
stated that, for example, a recent study found that hospitalized ESRD 
patients on maintenance dialysis had higher odds of mortality after 
cardiopulmonary resuscitation (odds ratio, 1.24; 95 percent CI, 1.11 to 
1.3; p <0.001), compared to the general patient population.\109\ The 
applicant explained that the frequency and severity of hospitalizations 
in the ESRD patient population adds urgency to adopting innovative 
technologies that can help prevent hospitalization and associated 
morbidity and mortality.
---------------------------------------------------------------------------

    \107\ The applicant's information on the number of 
hospitalizations is based on a Moran Company analysis of the 
following sourced figure: `Average hospitalization rate' of 
hemodialysis patients captured from the United States Renal Data 
System (USRDS), 2020 Annual Data Report (ADR), End Stage Renal 
Disease, Chapter 4: Hospitalization, Figure 4.1a Adjusted 
hospitalization rates in prevalent Medicare beneficiaries with ESRD 
by treatment modality, 2009-2018.
    \108\ Nissenson AR, Improving Outcomes for ESRD Patients: 
Shifting the Quality Paradigm. CJASN Feb 2014, 9 (2) 430-434; DOI: 
10.2215/CJN.05980613 https://doi.org/10.2215/CJN.05980613.
    \109\ Saeed F, Adil MM, Malik AA, Schold JD, Holley JL, Outcomes 
of In-Hospital Cardiopulmonary Resuscitation in Maintenance Dialysis 
Patients. JASN Dec 2015, 26 (12) 3093-3101; DOI: 10.1681/
ASN.2014080766 https://doi.org/10.1681/ASN.2014080766.
---------------------------------------------------------------------------

    To support its claim that the use of THERANOVA decreases the number 
of future hospitalizations, the applicant referred to a poster by Tran 
et al. (2021), which was an abstract of a secondary analysis of a 
prospective, open-label, randomized controlled trial \110\ of 172 
patients (86 THERANOVA; 85 high-flux HD (HF-HD), with 1 patient not 
treated). As a post hoc analysis of a randomized controlled trial, the 
applicant stated that the objective of the study was to evaluate the 
association of HDx with the THERANOVA dialyzer with hospitalization 
rates, as compared to conventional HD. The applicant stated that 
patients were randomized and treated with either Theranova 400 or a 
conventional high-flux dialyzer in 21 U.S. study centers. The applicant 
noted that hospitalization was defined by the occurrence of any serious 
adverse event containing a hospitalization admission date, 
hospitalization rate was defined by treatment as total number of 
hospitalizations divided by total person-years of follow-up, and 
hospital length of stay was defined as number of days between admission 
and discharge. The applicant stated that this study found that the rate 
of hospitalizations for patients using THERANOVA was statistically 
significantly lower--45 percent--than those using HF-HD (IRR = 0.55; p 
= 0.0495).\111\
---------------------------------------------------------------------------

    \110\ Weiner D, et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
    \111\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
---------------------------------------------------------------------------

    The applicant also referred to a multi-center, observational 
retrospective, cohort study by Molano-Trivi[ntilde]o et al. (2022) that 
used propensity score matching assignment methods for 1,098 patients 
(534 HF-HD; 564 HDx with THERANOVA). The applicant stated that the 
objective of the study was to evaluate clinical effectiveness of 
THERANOVA versus HF-HD dialyzers, in terms of hospitalization rate and 
duration, cardiovascular event rate and survival in a HD cohort in 
Colombia. The applicant stated that adult HD patients (>90 days in HD) 
at Baxter Renal Care Services Colombia were included between September 
1, 2017 to November 30, 2017, with follow-up until 2 years. The 
applicant noted that inverse probability of treatment weighting on the 
propensity score was used to balance comparison groups on indicators of 
baseline socio-demographic and clinical characteristics, and that the 
investigators compared rates and duration of hospitalization and 
cardiovascular events using a negative binomial regression to estimate 
weighted incidence rate ratios (IRRs). The applicant stated that this 
study found a statistically significant lower hospitalization rate in 
the THERANOVA group, compared to the HF-HD group (IRR HDx with 
THERANOVA/HF-HD: 0.82, 95 percent CI 0.69 to 0.98; p = 0.03), without 
differences in hospitalization duration or survival.\112\
---------------------------------------------------------------------------

    \112\ Molano AP, Hutchison CA, Sanchez R, Rivera AS, Buitrago G, 
Dazzarola MP, Munevar M, Guerrero M, Vesga JI, Sanabria M, Medium 
Cut-Off Versus High-Flux Hemodialysis Membranes and Clinical 
Outcomes: A Cohort Study Using Inverse Probability Treatment 
Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
---------------------------------------------------------------------------

    The applicant also referred to two other papers to further support 
reductions in hospitalization and medication utilization. According to 
the applicant, Sanabria et al. (2021) was a multi-center, observational 
prospective cohort study of 81 patients (Year 1, HF-HD; Year 2, HDx 
with THERANOVA). In this study across 3 clinics, the applicant noted 
that 175 patients with ESRD on chronic HD were originally recruited, 
and 23 did not meet the eligibility criteria. The applicant stated that 
patients received HF-HD for at least 1 year and then switched to HDx 
and were followed up for 1 year. The applicant stated that patients 
were excluded if they discontinued therapy, changed provider, underwent 
kidney transplant, recovered kidney function, or changed to PD, another 
dialyzer, or another renal clinic. The applicant noted that only 81 
patients were eligible for analysis because 71 patients were lost to 
follow-up. The applicant stated that the study results demonstrated 
that the rate of hospitalizations per patient-year was lower twelve 
months after switching to HDx, from 0.77 (95 percent CI: 0.60-0.98, 61 
events) to 0.71 (95 percent CI: 0.55-0.92, 57 events), p = 0.6987. The 
applicant also reported that the study results demonstrated 
significantly reduced hospital day rate per patient-year, from 5.94 
days in the year prior to switching compared with 4.41 days after 
switching (p = 0.0001).\113\
---------------------------------------------------------------------------

    \113\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
---------------------------------------------------------------------------

    The applicant also cited Ariza et al. (2021), which the applicant 
noted analyzed the same study sample of 81 patients as Sanabria et al. 
(2021),\114\ discussed previously in this section, with the stated 
objective of examining new evidence linking HDx using THERANOVA with 
hospitalizations, hospital days, medication use, costs, and patient 
utility. The applicant stated that this retrospective study utilized 
data from the Renal Care Services medical records database in Colombia 
from 2017 to 2019. The applicant noted that the study data included 
years on dialysis, hospitalizations, medication use, and QoL measured 
by the KDQoL survey at the start of HDx, and 1 year after HDx. The 
applicant stated that generalized linear models were run comparing 
patients before and after switching to HDx. The applicant stated that 
the study results demonstrated that HDx was also significantly 
associated with lower hospital days per year (5.94 on HD vs. 4.41 on 
HDx), although not with the number of hospitalizations. The applicant 
stated that the results showed that HDx was statistically significantly 
associated with reduced hospitalization days.\115\
---------------------------------------------------------------------------

    \114\ Ibid.
    \115\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.

---------------------------------------------------------------------------

[[Page 67208]]

    With respect to the claim that THERANOVA is associated with 
improved recovery time by up to 2 hours, the applicant stated that the 
treatment intensity and recovery time for patients on HD is a 
significant burden. The applicant explained that patients might receive 
in-center HD 3 days a week for 3 to 5 hour sessions, or home HD. The 
applicant noted that following treatment, there is often a prolonged 
period before a patient recovers to pre-treatment function and energy 
levels, with many patients reporting that they feel tired and in need 
of rest or sleep. The applicant cited an estimate that 40 to 80 percent 
of patients receiving chronic HD face post-dialysis fatigue.\116\ The 
applicant also noted that patients who were highly fatigued had a 
significantly higher risk of adverse cardiovascular events (hazard 
ratio: 2.17; p <0.01).\117\ The applicant referred to the Dialysis 
Outcomes and Practice Patterns Study (DOPPS), which analyzed over 6,000 
HD patients from 12 countries in Europe, Japan, Canada, and the U.S. 
The applicant noted that 25 percent of patients required more than 6 
hours of recovery time, and that patient-reported recovery time was 
positively associated with rates of first hospitalization (adjusted 
hazard ratio [AHR] per additional hour of recovery time [RT], 1.03; 95 
percent CI, 1.02-1.04) and all-cause mortality (AHR, 1.05; 95 percent 
CI, 1.03-1.07).\118\ The applicant stated that improving recovery time 
is not only critical to averting hospitalization and increased risk of 
mortality, but also ensures that ESRD patients have meaningful QoL 
improvements.
---------------------------------------------------------------------------

    \116\ Bossola M, et al. Fatigue is associated with increased 
risk of mortality in patients on chronic hemodialysis. Nephron 2015; 
130:113-118.
    \117\ Koyama H, Fukuda S, Shoji T, Inaba M, Tsujimoto Y, Tabata 
T, Okuno S, Yamakawa T, Okada S, Okamura M, Kuratsune H, Fujii H, 
Hirayama Y, Watanabe Y, Nishizawa Y, Fatigue Is a Predictor for 
Cardiovascular Outcomes in Patients Undergoing Hemodialysis CJASN 
Apr 2010, 5 (4) 659-666; DOI: 10.2215/CJN.08151109.
    \118\ Rayner HC, et al. Recovery time, quality of life, and 
mortality in hemodialysis patients: The Dialysis Outcomes and 
Practice Patterns Study (DOPPS). Am J Kidney Dis 2014; 64:86-94.
---------------------------------------------------------------------------

    To support its claim of improved recovery time, the applicant 
referred to a single-center, single-arm, observational, retrospective, 
cohort study by Bolton et al. (2021) of 58 patients with HF-HD at 
baseline who switched to THERANOVA. The applicant stated that a 
dialysis unit performed regular assessments of patient-reported symptom 
burden, using the POS-S Renal Symptom questionnaire and the ``Recovery 
time from last dialysis session'' question as part of routine patient 
focused care. The applicant noted that of the 90 people who initially 
agreed to provide patient reported outcome measures (PROMs) data, the 
number of participants providing data at 3, 6, 9, and 12 months were 
80, 72, 68, and 59 respectively. The applicant concluded that a 
sustained clinically relevant reduction in post-dialysis recovery time 
was observed following the therapy switch. The applicant stated that 
the study results demonstrated that the percentage of patients 
reporting a recovery time greater than 360 minutes decreased from 36 
percent at baseline to 26 percent, 14 percent, 14 percent, and 9 
percent at 3, 6, 9, and 12 months, respectively. The applicant noted 
that additionally, there was a statistically significant improvement in 
median recovery time from a baseline of 210 minutes (IQR 7.5-600) to 60 
minutes after 6 months (0-210; p = 0.002), 60 minutes after 9 months 
(0-225; p <0.001), and 105 minutes after 12 months (0-180; p = 
0.001).\119\
---------------------------------------------------------------------------

    \119\ Bolton S, Gair R, Nilsson LG, Matthews M, Stewart L, 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas.2021;12:315-321 https://doi.org/10.2147/PROM.S325016.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA is associated with 
improved QoL, as indicated by reduced pruritus, improvement in two 
KDQoL survey domains, and improved London Evaluation of Illness (LEVIL) 
scores, the applicant described the background and significance of each 
indicator. The applicant noted that that pruritus can be uncomfortable 
and significantly interfere with ESRD patients' daily living 
activities. The applicant stated that pruritus that is severe or 
chronic can prevent ESRD patients from sleeping normally,\120\ and that 
in addition to causing sleep loss, pruritus can also cause anxiety and 
depression.\121\ The applicant also noted that prolonged scratching of 
itchy skin also leads to skin injury, scarring, and infection.\122\
---------------------------------------------------------------------------

    \120\ Mayo Clinic, Itchy skin (pruritus), available at https://www.mayoclinic.org/diseases-conditions/itchy-skin/symptoms-causes/syc-20355006.
    \121\ Ibid.
    \122\ Ibid.
---------------------------------------------------------------------------

    The applicant also explained that one of the most commonly used 
tools to assess kidney disease QoL in the U.S. is the KDQoL \123\ 
patient survey, which assesses patients' physical and mental well-
being, the burden of kidney disease, treatment-associated symptoms and 
problems, and the effects of kidney disease on daily life. The 
applicant noted that the survey assesses a patient's ability to 
accomplish desired tasks, levels of depression and anxiety, the ability 
to participate in social activities, and some daily life activities.
---------------------------------------------------------------------------

    \123\ RAND Corporation, Kidney Disease Quality of Life 
Instrument (KDQOL), available at https://www.rand.org/health-care/surveys_tools/kdqol.html.
---------------------------------------------------------------------------

    The applicant also referenced the LEVIL survey, which measures 
patient-reported outcomes and evaluates well-being, energy level, sleep 
quality, bodily pain, appetite, and shortness of breath. Per the 
applicant, the survey is validated, and scores are correlated with 
acute hospital admissions, abnormal fluid status, and vascular access 
events.\124\
---------------------------------------------------------------------------

    \124\ Pittman Z, et al. Collection of daily patient reported 
outcomes is feasible and demonstrates differential patient 
experience in chronic kidney disease. Hemodialysis International, 
2017; 21:265-273.
---------------------------------------------------------------------------

    To support its claim of improved pruritus and improvement in two 
KDQoL survey domains, the applicant referred to a prospective, open-
label, randomized control trial by Lim, Park, et al. (2020). This study 
randomized patients to either Theranova 400 or a high-flux dialyzer. 
Forty-nine HD patients (24 using THERANOVA; 25 using a high-flux 
dialyzer) completed the study. Per the applicant, QoL was assessed at 
baseline and after 12 weeks of treatment using the KDQoL Short Form-36, 
and pruritus was assessed using a questionnaire and visual analog 
scale. The applicant stated that the study concluded that laboratory 
markers, including serum albumin, did not differ between the two groups 
after 12 weeks, though removals of kappa and lambda free light chains 
were greater for THERANOVA than high-flux dialyzer. The applicant noted 
that the results showed that the THERANOVA group had lower mean scores 
for morning pruritus distribution (1.29  0.46 vs. 1.64 
 0.64, p = 0.034) and frequency of scratching during sleep 
(0.25  0.53 vs. 1.00  1.47, p = 0.023), 
compared to the high-flux group. The applicant also stated that in the 
same study, the THERANOVA group also had statistically significant 
higher scores (indicating better QoL) in KDQoL domains for physical 
functioning (75.2  20.8 vs. 59.8  30.1, p = 
0.042) and physical role (61.5  37.6 vs. 39.0  
39.6, p = 0.047), compared to the high-flux group.\125\
---------------------------------------------------------------------------

    \125\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.

---------------------------------------------------------------------------

[[Page 67209]]

    To support its claim of improved QoL scores, the applicant referred 
to a study by Penny et al. (2021). According to the applicant, this was 
a single-center interventional pilot study with 28 patients established 
on maintenance HD. The single-arm study consisted of 2-week observation 
(baseline at conventional HF-HD) followed by 12 weeks of HDx. The study 
also had an extension phase; where patients had a 2-week baseline 
period, followed by 24 weeks of HDx, and then an 8-week washout period 
in which patients returned to HF-HD to assess the presence of any 
carryover effect. The applicant stated that health-related quality of 
life (HRQoL) was assessed using the dynamic PROM instrument, LEVIL, 
twice weekly. The applicant noted that 22 patients completed all study 
procedures to contribute to the full 12-week analysis. The applicant 
stated that the study results demonstrated that 73 percent of 
participants who had low overall health-related QoL at baseline with 
HF-HD (mean, 51.5  10.2; range, 36.1-69.3) had a 
statistically significant improvement at 8 weeks after switching to HDx 
(mean, 64.6  16.2; p = 0.001) and at 12 weeks (67.2  16.9; p = 0.001). The applicant stated that the study also found 
that all participants had a statistically significant improvement in 
`feeling washed out/drained' from baseline with HF-HD (mean, 40.3 
 20.5; range, 8.7-67.4) to HDx at 8 weeks (59.9  22.8; p = 0.001) and at 12 weeks (64.7  19.6; p 
<0.001). The applicant noted that likewise, 73 percent of study 
participants assessed on their `feeling of general well-being' had a 
statistically significant improvement from baseline with HF-HD (mean, 
43  14.1; range, 19.7-69.5) to HDx at 8 weeks (65.2  21.9; p <0.001) and at 12 weeks (66.3  17.7; p = 
0.002). Additionally, the applicant stated that 73 percent of study 
participants who experienced poor `sleep quality' had a statistically 
significant improvement from baseline with HF-HD (37.2  
20.1; range, 7.2-66.2) after 4 weeks with HDx (mean, 52.8  
26.7; p = 0.01), and continually improved at 8 weeks (57  
22.2; p = 0.002) and 12 weeks (61.7  24.5; p <0.001).\126\
---------------------------------------------------------------------------

    \126\ Penny J, Jarosz P, Salerno F, Lemoine S, McIntyre CW. 
Impact of Expanded Hemodialysis Using Medium Cut-off Dialyzer on 
Quality of Life: Application of Dynamic Patient-Reported Outcome 
Measurement Tool. Kidney Medicine. Published 2021, Jul. 29. https://doi.org/10.1016/j.xkme.2 021.05.010.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA is associated with 
reducing restless leg syndrome (RLS) by 10 percent or more, the 
applicant stated that RLS is another common and debilitating side 
effect of long-term dialysis. The applicant noted that an estimated 6.6 
percent to 62 percent of patients on long-term dialysis therapy suffer 
from RLS,\127\ with one study suggesting 20 to 25 percent of ESRD 
patients demonstrated overt (moderate to severe) RLS.\128\ The 
applicant stated that extreme discomfort of RLS worsens during periods 
of physical inactivity and at night,\129\ contributing to sleep loss 
and sleep deprivation in ESRD patients, and that loss of sleep carries 
over into the day for many patients, leaving them feeling lethargic and 
preventing them from fully engaging in daily activities. The applicant 
also noted that a study found that RLS among HD patients is associated 
with a significant increase in new cardiovascular events, that these 
events increased with the severity of RLS, and that HD patients with 
RLS had a higher risk of mortality than their non-RLS peers.\130\ The 
applicant also described an additional study that found RLS was 
associated with significantly higher risk of developing cardiovascular 
events, strokes, and all-cause mortality among ESRD patients.\131\ The 
applicant explained that RLS is treated with many medications such as 
dopamine antagonists, benzodiazepines, anti-epileptics, iron dextran, 
Vitamin C, and intradialytic aerobic exercise--all of which produce 
side effects and only provide limited improvement in RLS symptoms.\132\ 
The applicant stated that medical interventions for RLS in dialysis 
populations have not been particularly effective, are costly, and may 
contribute to polypharmacy and adverse drug reactions in a population 
already at risk.\133\
---------------------------------------------------------------------------

    \127\ Kavanagh D, et al. Restless legs syndrome in patients on 
dialysis Am J Kidney Dis. 2004 May;43(5):763-71.
    \128\ Winkelman JW, Chertow GM, Lazarus JM. Restless legs 
syndrome in end-stage renal disease. Am J Kidney.
    \129\ Kavanagh D, et al. Restless legs syndrome in patients on 
dialysis Am J Kidney Dis. 2004 May;43(5):763-71.
    \130\ La Manna G, et al. Restless legs syndrome enhances 
cardiovascular risk and mortality in patients with end-stage kidney 
disease undergoing long-term haemodialysis treatment. Nephrol Dial 
Transplant.2011;26(6):1976-83.
    \131\ Lin CH, et al. Restless legs syndrome is associated with 
cardio/cerebrovascular events and mortality in end-stage renal 
disease. Eur J Neurol. 2015;22(1):142-9.
    \132\ Gopaluni S, Sherif M, Ahmadouk NA. Interventions for 
chronic kidney disease-associated restless legs syndrome. Cochrane 
Database Syst Rev 2016; 11: CD010690.
    \133\ Gopaluni S, Sherif M, Ahmadouk NA. Interventions for 
chronic kidney disease-associated restless legs syndrome. Cochrane 
Database Syst Rev 2016; 11: CD010690.
---------------------------------------------------------------------------

    To support its claim that THERANOVA is associated with reducing 
RLS, the applicant referred to a multi-center, observational 
prospective cohort study by Alarcon et al. (2021) which assessed 992 
individuals with HF-HD at baseline, who switched to THERANOVA and were 
observed over a 12-month period. The applicant explained that changes 
in KDQoL 36-Item Short Form Survey domains, Dialysis Symptom Index 
(DSI), and RLS 12 months after switching to THERANOVA were compared 
with the patient baseline responses on high-flux dialyzers. Per the 
applicant, the study found a significant decrease in the proportion of 
patients diagnosed with RLS from 22.1 percent at baseline to 12.5 
percent at 6 months, and 10 percent at 12 months (p <0.0001). 
Additionally, the applicant stated that a post hoc comparison showed 
statistically significant differences between each pair of repeated 
observations (baseline vs. 6 months: p <0.0001; baseline vs. 12 months: 
p <0.0001; 6 vs. 12 months: p = 0.003).\134\
---------------------------------------------------------------------------

    \134\ Alarcon JC, Bunch A, Ardila F, et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
---------------------------------------------------------------------------

    With respect to the claim that THERANOVA reduces the rate of 
subsequent therapeutic interventions, such as the use of ESAs, iron, 
and insulin, the applicant stated that almost all dialysis patients and 
those with CKD experience anemia as a side effect of their treatment, 
which contributes negative clinical outcomes such as weakness, 
irregular heartbeat, shortness of breath, dizziness and 
lightheadedness, chest pain, and headaches.\135\ The applicant stated 
that anemia significantly impairs QoL for dialysis patients and 
requires additional treatment, and that ESAs are a widely used 
treatment that mitigates anemia by enabling the body to produce more 
red blood cells. The applicant stated that reductions in ESA treatment 
can preserve or enhance patient QoL and can generate savings to the 
Medicare program.
---------------------------------------------------------------------------

    \135\ Mayo Clinic's overview of anemia, available at https://www.mayoclinic.org/diseases-conditions/anemia/symptoms-causes/syc-20351360.
---------------------------------------------------------------------------

    With regard to iron supplementation, the applicant noted that iron 
supplements are another important treatment for patients with renal 
failure and anemia. The applicant explained that iron deficiency occurs 
more frequently among patients with ESRD because of an increase in 
external losses of iron, a decreased ability to store iron in the body, 
and potential deficits in

[[Page 67210]]

intestinal iron absorption.\136\ The applicant stated that reductions 
in iron treatment can preserve or enhance patient QoL and can generate 
savings to the Medicare program.\137\
---------------------------------------------------------------------------

    \136\ Fishbane S, Maesaka JK, Iron management in end-stage renal 
disease, American Journal of Kidney Diseases, Volume 29, Issue 3, 
1997, Pages 319-333, ISSN 0272-6386, Accessed at: https://doi.org/10.1016/S0272-6386(97)90192-X.
    \137\ Estimated cost to Medicare based on The Moran Company, an 
HMA Company analysis calculated using 2020 ESRD claims with IV iron 
valued at ASP+6%.
---------------------------------------------------------------------------

    Finally, with regard to insulin use, the applicant stated that 
diabetes is a common comorbidity in ESRD patients,\138\ and many ESRD 
patients require additional insulin administration. The applicant 
stated that through reductions in insulin use, Medicare could realize 
cost savings of $3,949 annually per diabetes patient.\139\
---------------------------------------------------------------------------

    \138\ Approximately one in three adults with diabetes also have 
CKD. See CDC, Diabetes and Chronic Kidney Disease, https://www.cdc.gov/diabetes/managing/diabetes-kidney-disease.html.
    \139\ Average cost per patient for insulin taken from KFF report 
on Part D spending, available at https://www.kff.org/medicare/issue-brief/how-much-does-medicare-spend-on-insulin/.
---------------------------------------------------------------------------

    To support its claim of reduced rate of subsequent therapeutic 
interventions such as reduced need for and use of ESAs, iron, and 
insulin, the applicant referred to three sources. The first source, 
Lim, Jeon, et al. (2020), was a secondary analysis of a prospective, 
open-label, randomized controlled trial by Lim, Park, et al. 
(2020).\140\ Lim, Park, et al. (2020) was previously described. 
According to the applicant, the primary outcome of the secondary 
analysis was the change in erythropoietin resistance index (ERI; U/kg/
wk/g/dL) between baseline and 12 weeks. The applicant stated that the 
study found statistically significant decreases in ESA dose, weight-
adjusted ESA dose, and erythropoiesis resistance index for THERANOVA 
patients, compared to the high-flux dialyzer group at 12 weeks (p 
<0.05). The applicant also stated that there was a statistically 
significant higher serum iron level in the THERANOVA group at 12 weeks 
(iron [[mu]g/dL]: 72.1  25.4 vs. 55.9  25.0), 
(p = 0.029), indicating an improvement in iron metabolism as a 
potential clinical marker for the reduced need of iron 
supplementation.\141\
---------------------------------------------------------------------------

    \140\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \141\ Lim JH, Jeon Y, Yook JM, et al. Medium cut-off dialyzer 
improves erythropoiesis stimulating agent resistance in a hepcidin-
independent manner in maintenance hemodialysis patients: results 
from a randomized controlled trial. Sci Rep. 2020;10(1):16062. 
Published 2020 Sep 29. doi:10.1038/s41598-020-73124-x.
---------------------------------------------------------------------------

    The applicant also referred to the Sanabria et al. (2021) study, 
previously described, of 81 patients (Year 1, HF-HD; Year 2, HDx with 
THERANOVA). The applicant stated the study concluded that there was a 
statistically significant reduction in the mean dose of ESA after 
switching from HF-HD to HDx with THERANOVA (p = 0.0361).\142\ The 
applicant also stated that the study found a statistically significant 
reduction in the mean dose of intravenous iron from 73.46 mg/month with 
HF-HD to 66.36 mg/month with HDx with THERANOVA (p = 0.003).\143\
---------------------------------------------------------------------------

    \142\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
    \143\ Ibid.
---------------------------------------------------------------------------

    Finally, the applicant referred to the Ariza et al. (2021) study, 
described previously in this section of the final rule. The applicant 
stated that study authors found a statistically significant reduction 
in the dosage per patient per year of ESA in international units from 
181,318 with HF-HD (95 percent CI: 151,647-210,988) to 168,124 with HDx 
with THERANOVA (95 percent CI: 138,452-197,794; p <0.01) as well as a 
statistically significant reduction in dosage per patient per year of 
iron in milligrams from 959 with HF-HD (95% CI: 760-1158) to 759 with 
HDx (95 percent CI: 560-958; p <0.01).\144\ The applicant also stated 
that the study found a statistically significant reduction in dosage 
per patient per year of insulin in international units from 5383 with 
HF-HD (95 percent CI: 3274-7490) to 3434 with HDx with THERANOVA (95 
percent CI: 1327-5543; p <0.01).\145\
---------------------------------------------------------------------------

    \144\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \145\ Ibid.
---------------------------------------------------------------------------

    The applicant also referred to CMS' final determination and public 
comments regarding its CY 2021 TPNIES application, as summarized in the 
CY 2021 ESRD PPS final rule (85 FR 71453 through 71458). The applicant 
stated that stakeholders largely provided favorable comments and 
supported TPNIES approval for THERANOVA. The applicant noted that in 
particular, physicians who used THERANOVA and had direct patient 
experience with the product strongly supported the application.\146\ 
The applicant also noted that some stakeholders, however, expressed 
concerns about THERANOVA's CY 2021 TPNIES application. Specifically, 
the applicant stated that commenters noted that the supporting studies 
had small sample sizes that did not represent the U.S. patient 
population, and that the duration of the studies was too short. The 
applicant also stated that some stakeholders expressed a belief that 
HDx with THERANOVA may result in decreased albumin levels, potentially 
causing harm to patients. The applicant stated that with the updated 
and additional information provided in its CY 2023 application, the 
applicant has addressed these concerns.
---------------------------------------------------------------------------

    \146\ See for example, Dr. Peter Stenvinkel (Karolinska 
University Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0038; Dr. Vincenzo Cantaluppi (Novara University Hospital) 
at https://beta.regulations.gov/comment/CMS-2020-0079-0066; Dr. 
Colin Hutchison (Central Hawkes Bay Health Centre) at https://beta.regulations.gov/comment/CMS-2020-0079-0065; Dr. Andrew 
Davenport (Royal Free Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0037; Dr. Mario Cozzolino (University of 
Milan) at https://beta.regulations.gov/comment/CMS-2020-0079-0062; 
Dr. Jang-Hee Cho (Kyungpook National University Hospital) at https://beta.regulations.gov/comment/CMS-2020-0079-0061.
---------------------------------------------------------------------------

    The applicant stated that all substantial clinical improvement 
claims included in its CY 2023 application are now supported by at 
least one study that has undergone full peer review and has been 
published, or accepted for publication and is being prepared for 
publishing. The applicant explained that the application's supporting 
studies feature statistically significant findings and have a range of 
appropriate sample sizes, such as Molano-Trivi[ntilde]o et al., n = 
1,098,\147\ and Alarcon et al., n = 992,\148\ previously described. The 
applicant explained that additionally, many studies evaluated 
THERANOVA's impacts over an extended period, including year-long 
evaluations after patients transitioned from conventional therapy to 
HDx therapy, for example, Sanabria et al.\149\ and Ariza et al.,\150\

[[Page 67211]]

previously described. The applicant stated that it considers the 
studies supporting the application and their findings to be applicable 
and generalizable to the U.S. Medicare population, and that this 
generalizability is bolstered by the additional U.S.-specific 
information and findings. The applicant stated that while it does not 
believe that results in sample populations would significantly differ 
from results in the U.S. patient population, the application also now 
includes additional evidence that directly addressed U.S. patients, 
including: a new study on U.S. hospitalization rates; new survey data 
from U.S. patients, health care providers, and payers, which 
demonstrated THERANOVA's value, clinical improvements, and QoL 
enhancements; \151\ and includes new testimonials in support of the 
TPNIES application for THERANOVA from U.S. kidney care providers: a 
nephrologist with 10 years of experience, dialysis nurse with 15 years 
of experience, and a pediatric dialysis nurse practitioner with over 10 
years of experience. The applicant noted that the survey data came from 
three separate double-blinded surveys presented to each respondent 
group with information about THERANOVA's benefits and then assessed 
reactions--including patients' interest in switching from their current 
HD therapy to THERANOVA's HDx therapy, the likelihood that health care 
providers would recommend THERANOVA to patients and colleagues, and 
payers' evaluations of THERANOVA's potential to generate value for 
their health plans and patient enrollees. The applicant noted that 
overall, patients overwhelmingly wanted to use THERANOVA, health care 
providers strongly indicated that they would recommend THERANOVA to 
patients and peers, and payers identified several of THERANOVA's 
improvements as generating value. The applicant stated that the peer-
validated studies, and additional evidence that further addresses the 
U.S. patient population, provide the support necessary to conclude that 
THERANOVA is a substantial clinical improvement over existing 
technologies.
---------------------------------------------------------------------------

    \147\ Molano AP, Hutchison CA, Sanchez R, Rivera AS, Buitrago G, 
Dazzarola MP, Munevar M, Guerrero M, Vesga JI, Sanabria M, Medium 
Cut-Off Versus High-Flux Hemodialysis Membranes and Clinical 
Outcomes: A Cohort Study Using Inverse Probability Treatment 
Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
    \148\ Alarcon JC, Bunch A, Ardila F, et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \149\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
    \150\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621- 627. https://doi.org/10.1111/1744-9987.13620.
    \151\ Patient Preference for a Future Dialyzer Study, prepared 
by Beghou Consulting on behalf of Baxter International. Survey 
results; December 2021.
---------------------------------------------------------------------------

    The applicant also stated that in addition to THERANOVA's 
demonstrated effectiveness, additional evidence demonstrates 
THERANOVA's safety. The applicant explained that in the time since it 
submitted the CY 2021 TPNIES application to CMS, FDA reviewed 
THERANOVA's randomized, controlled clinical IDE trial and additional 
evidence supporting THERANOVA's safety and effectiveness, and granted 
marketing authorization. The applicant stated that the IDE trial 
demonstrated that THERANOVA's HDx therapy provides superior removal of 
harmful LMMs while maintaining adequate serum albumin levels.\152\ The 
applicant noted that FDA's comprehensive review and subsequent approval 
of THERANOVA establishes THERANOVA's safety and effectiveness for its 
intended use: treatment of chronic kidney failure.
---------------------------------------------------------------------------

    \152\ Weiner D, et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
---------------------------------------------------------------------------

(b) CMS Assessment of Substantial Clinical Improvement Claims and 
Sources
    As discussed in the CY 2023 ESRD PPS proposed rule (87 FR 38513), 
we noted that the applicant submitted the full, published peer-reviewed 
papers for several of the abstracts, posters, and incomplete 
manuscripts that were previously submitted with its CY 2021 TPNIES 
application,153 154 155 156 157 158 and the remaining 
evidence submitted with the CY 2023 application was new. We identified 
the following concerns regarding THERANOVA and the substantial clinical 
improvement eligibility criteria for the TPNIES.
---------------------------------------------------------------------------

    \153\ Alarcon JC, Bunch A, Ardila F, et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \154\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621-627. https://doi.org/10.1111/1744-9987.13620.
    \155\ Bolton S, Gair R, Nilsson LG, Matthews M, Stewart L, 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas.2021;12:315-321 https://doi.org/10.2147/PROM.S 325016.
    \156\ Lim JH, Jeon Y, Yook JM, et al. Medium cut-off dialyzer 
improves erythropoiesis stimulating agent resistance in a hepcidin-
independent manner in maintenance hemodialysis patients: results 
from a randomized controlled trial. Sci Rep. 2020;10(1):16062. 
Published 2020 Sep 29. doi:10.1038/s41598-020-73124-x.
    \157\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \158\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
---------------------------------------------------------------------------

    With respect to the applicant's claim that THERANOVA leads to 
reduced hospitalization rates, we noted that the applicant included 
studies from the previous submission and supplemented with newer 
studies, such as the Tran et. al. (2021) poster abstract. We noted that 
the poster abstract was a post hoc analysis of a previous open-label 
study,\159\ which had an average follow-up period of 4.5 months in the 
THERANOVA group. We questioned whether this short time period is 
sufficient to see changes in hospitalization from interventions aimed 
at increasing clearance of uremic toxins. We stated that it may be 
helpful to see if this outcome is sustained in longer term follow-
up.\160\
---------------------------------------------------------------------------

    \159\ Weiner D, et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
    \160\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
---------------------------------------------------------------------------

    We also noted that, although authors in the Molano et. al. (2022) 
study used inverse probability treatment weighting (IPTW), the study 
was unblinded and could influence treatment decisions in the group 
using the THERANOVA dialyzer. Moreover, we noted that patients seemed 
healthier in the THERANOVA arm, and had more fistulas, fewer catheters, 
and higher Karnofsky indices. We also noted that the THERANOVA arm had 
more intensive dialysis at baseline and throughout the duration of the 
study (Kt/V of 1.7 vs. 1.6), suggestive of more intensive small 
molecule clearance and more intensive dialysis overall. Therefore, we 
stated that it is unclear whether the outcome differences between the 
two arms could be due to factors other than the dialyzer type. We 
questioned whether IPTW would be sufficient to overcome these biases, 
especially the Kt/V bias, which persisted even after the baseline 
period.\161\
---------------------------------------------------------------------------

    \161\ Molano AP, Hutchison CA, Sanchez R, Rivera AS, Buitrago G, 
Dazzarola MP, Munevar M, Guerrero M, Vesga JI, Sanabria M, Medium 
Cut-Off Versus High-Flux Hemodialysis Membranes and Clinical 
Outcomes: A Cohort Study Using Inverse Probability Treatment 
Weighting, Kidney Medicine (2022), doi: https://doi.org/10.1016/j.xkme.2022.100431.
---------------------------------------------------------------------------

    In addition, we noted that the studies by Ariza et. al. (2021) 
\162\ and Sanabria

[[Page 67212]]

et. al. (2021),\163\ using the same study sample population, were 
limited by absence of a control group, and had non-significant 
differences in hospitalization rate between baseline HF-HD and after 
switching to HDx: 0.77 (95 percent CI: 0.60-0.98, 61 events) to 0.71 
(95 percent CI: 0.55-0.92, 57 events), p = 0.6987.
---------------------------------------------------------------------------

    \162\ Ariza, JG, Walton, SM, Suarez, AM, Sanabria, M, Vesga, JI. 
An initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021; 25: 621-627. https://doi.org/10.1111/1744-9987.13620.
    \163\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron 2021;145:179-187. doi: 
10.1159/000513328.
---------------------------------------------------------------------------

    With respect to the applicant's claim that THERANOVA leads to 
improved QoL, we noted that in the study by Lim, Park, et. al. (2020), 
it is unclear if these findings could result from chance alone, when 
considering the many QoL outcomes examined, due to multiple-hypothesis 
testing concerns. In particular, we noted that differences associated 
with use of THERANOVA were statistically significant in only 2 out of 
26 QoL outcomes assessed, and in both cases the p-value was greater 
than 0.04. We also noted that although the THERANOVA group had lower 
mean scores for morning pruritus distribution (p = 0.034), there was a 
non-significant difference in afternoon pruritis distribution between 
the two groups (p = 0.347).\164\
---------------------------------------------------------------------------

    \164\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
---------------------------------------------------------------------------

    Overall, we noted that most of studies in the updated evidence 
submitted for the CY 2023 application are open-label and observational, 
which may potentially bias results. We also noted that many of the 
studies are single-arm studies that do not employ a control group, 
which may make it difficult to determine if observed improvements in 
clinical outcomes are due to the use of THERANOVA or if the 
improvements may have also occurred with previously available dialysis 
membranes.165 166 167 168
---------------------------------------------------------------------------

    \165\ Bolton S, Gair R, Nilsson LG, Matthews M, Stewart L, 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas.2021;12:315-321 https://doi.org/10.2147/PROM.S 325016.
    \166\ Penny J, Jarosz P, Salerno F, Lemoine S, McIntyre CW. 
Impact of Expanded Hemodialysis Using Medium Cut-off Dialyzer on 
Quality of Life: Application of Dynamic Patient-Reported Outcome 
Measurement Tool. Kidney Medicine. Published 2021, Jul. 29. https://doi.org/10.1016/j.xkme.2 021.05.010.
    \167\ Alarcon JC, Bunch A, Ardila F, et al. Impact of Medium 
Cut-Off Dialyzers on Patient-Reported Outcomes: COREXH Registry. 
Blood Purification. 2021; 50(1):110-118. DOI: 10.1159/000508803. 
PMID: 33176299.
    \168\ Lim JH, Jeon Y, Yook JM, et al. Medium cut-off dialyzer 
improves erythropoiesis stimulating agent resistance in a hepcidin-
independent manner in maintenance hemodialysis patients: results 
from a randomized controlled trial. Sci Rep. 2020;10(1):16062. 
Published 2020 Sep 29. doi:10.1038/s41598-020-73124-x.
---------------------------------------------------------------------------

    We invited public comment as to whether THERANOVA meets the TPNIES 
substantial clinical improvement criteria.
    We received many comments on the substantial clinical improvement 
claims made in the TPNIES application for THERANOVA, ranging from 
commenters with concerns about the claims, including clinicians and 
dialyzer companies, to comments in support of the application from 
clinicians, patients, and the applicant. The comments pertaining to the 
substantial clinical improvement claims made by the applicant, and our 
responses to the comments, are set forth below.
    Comment: We received a comment from the applicant in support of the 
TPNIES approval for THERANOVA. The applicant reiterated its substantial 
clinical improvement claims; submitted additional evidence in support 
of its claims; provided responses to CMS concerns identified in the CY 
2023 ESRD PPS proposed rule; and included a discussion pertaining to 
albumin loss associated with THERANOVA.
    In reiterating its substantial clinical improvement claims, the 
applicant stated that THERANOVA demonstrated reduced hospitalization 
rate by up to 45%, improved recovery time by up to 2 hours, improved 
quality of life in two Kidney Disease Quality of Life (KDQoL) survey 
domains, reduced pruritus, demonstrated improvement in London 
Evaluation of Illness (LEVIL) survey scores, reduced prevalence of 
restless leg syndrome, reduced the need and use of erythropoietin 
stimulating agents (ESAs), reduced the need for iron, and reduced the 
need for insulin.
    The applicant submitted additional evidence, including a peer-
reviewed article by Blackowicz et al.,\169\ that was a follow-on to the 
Tran et al. abstract \170\ to demonstrate a statistically significant 
lower hospitalization rate in the cohort using THERANOVA compared to 
the cohort using a high flux dialyzer (IRR = 0.55; p = 0.042). The 
applicant noted that this new study affirms the initial findings in the 
Tran et al. abstract,\171\ determining that the all-cause 
hospitalization rate was 45% lower with THERANOVA as compared to HD 
with a high-flux dialyzer (IRR = 0.55; p = 0.042). The applicant also 
noted a $6,098 lower average annual cost of hospitalization for the 
THERANOVA group compared to the conventional high-flux dialyzer group.
---------------------------------------------------------------------------

    \169\ Blackowicz MJ, Falzon L, Beck W, Tran H, Weiner DE. 
Economic evaluation of expanded hemodialysis with the Theranova 400 
dialyzer: A post hoc evaluation of a randomized clinical trial in 
the United States. Hemodial Int. 2022 Jul;26(3):449-455. 
doi:10.1111/hdi.13015. Epub 2022 Apr 19. PMID: 35441486.
    \170\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
    \171\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract #1070. Published 2021 
Jan 28.
---------------------------------------------------------------------------

    The applicant submitted a peer-reviewed follow-on \172\ to the 
Molano-Trivi[ntilde]o et al. abstract \173\ stating that it found a 
statistically significant lower hospitalization rate in the THERANOVA 
group compared to the high-flux dialyzer group. The applicant stated 
its belief that this new study affirms the initial findings in the 
Molano-Trivi[ntilde]o abstract and confirms the reduced hospitalization 
rate finding.
---------------------------------------------------------------------------

    \172\ Molano A, et al. Medium Cutoff Versus High-Flux 
Hemodialysis Membranes and Clinical Outcomes: A Cohort Study Using 
Inverse Probability Treatment Weighting, Kidney Med. 4(4):100431. 
Published online February 7, 2022. Doi:10.1016/j.xkme.2022.100431.
    \173\ Molano-Trivi[ntilde]o A, Sanabria M, Vesga J, Buitrago G, 
S[aacute]nchez R, Rivera A. MO880: Effectiveness of Medium Cut- Off 
vs. High Flux Dialyzers: A Propensity Score Matching Cohort Study, 
Nephrology Dialysis Transplantation, Vol. 36, Issue Sup. 1, 2021, 
May. gfab100.005, https://doi.org/10.1093/ndt/gfab 100.005.
---------------------------------------------------------------------------

    In response to the CMS question of whether the average follow-up 
period of 4.5 months is sufficient to see changes in hospitalization, 
the applicant stated that Blackowicz et al.,\174\ affirmed findings in 
the Tran et al. abstract \175\ and stated that if the study had not 
been long enough, it would not have reached statistical significance on 
the hospitalization rate endpoint. The applicant also stated that the 
ability of the study to detect a statistically significant difference 
in hospitalization events throughout the study period

[[Page 67213]]

suggests a sufficiently large magnitude of effect in hospitalization 
events and that a study with longer follow-up periods would likely 
affirm this difference in hospitalization rates.
---------------------------------------------------------------------------

    \174\ Blackowicz MJ, Falzon L, Beck W, Tran H, Weiner DE. 
Economic evaluation of expanded hemodialysis with the Theranova 400 
dialyzer: A post hoc evaluation of a randomized clinical trial in 
the United States. Hemodial Int. 2022 Jul;26(3):449-455. doi: 
10.1111/hdi.13015. Epub 2022 Apr 19. PMID: 35441486.
    \175\ Tran H, Falzon L, Bernardo A, Beck W, Blackowicz M. 
Reduction in all-cause Hospitalization Events Seen in a Randomized 
Controlled Trial Comparing Expanded Hemodialysis vs High-Flux 
Dialysis. Annual Dialysis Conference. Abstract # 1070. Published 
2021 Jan 28.
---------------------------------------------------------------------------

    The applicant described an ongoing prospective interventional 
control trial currently being conducted in Canada to assess THERANOVA's 
impact on patient quality of life versus HD with a high flux 
dialyzer.\176\ The applicant stated that the investigator expanded the 
trial and is currently recruiting U.S. participants. The primary 
outcomes assessed are changes in symptoms burden and health-related 
quality of life (HRQoL) using a dynamic patient-reported outcome 
measurement (PROM) tool [London Evaluation of Illness (LEVIL)]. 
Patients receiving HD with a high-flux dialyzer at baseline are 
switched to THERANOVA and assessed at regular intervals. The applicant 
stated that 48 patients are enrolled in the Canadian arm and also 
outlined preliminary results. The applicant stated that when comparing 
baseline measurements using a high flux dialyzer to THERANOVA at the 
three-month interval, the investigator's preliminary analysis shows a 
statistically significant improvement in overall HRQoL (p = 0.03), 
energy levels (p = 0.006), sleep quality (p = 0.003) and pruritus (p = 
0.008). Additionally, 83 percent of the study population had a 10 
percent or greater directional improvement in at least one of 11 
symptom domains studied, including `recovery time,' `energy,' 
`pruritus,' `sleep quality,' `general well-being,' `bodily pain,' and 
`restless leg syndrome.'
---------------------------------------------------------------------------

    \176\ NCT03640858; clinicaltrials.gov.
---------------------------------------------------------------------------

    In response to the CMS concern regarding Lim et al.,\177\ as to 
whether the quality of life improvement findings could result from 
chance alone due to multiple-hypothesis testing, the applicant stated 
that the study analyzed all KDQoL domains validated in the literature 
and that comprehensive statistical analysis of all the individual KDQoL 
domains must contend with similar potential multiple-hypothesis testing 
concerns.
---------------------------------------------------------------------------

    \177\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
---------------------------------------------------------------------------

    In response to the CMS concern regarding Lim et al.,\178\ regarding 
the non-significant difference in afternoon pruritus distribution, the 
applicant stated that quality of life improvement findings, including 
improvement in two KDQoL survey domains and reduced morning pruritus 
distribution, are supported by findings in Penny et al.\179\ which 
achieved high levels of significance (for example, p <0.001), 
suggesting that these results would remain statistically significant 
even after applying a correction for multiple hypothesis testing.
---------------------------------------------------------------------------

    \178\ Lim JH, Park Y, Yook JM, et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \179\ Penny J, Jarosz P, Salerno F, Lemoine S, McIntyre CW. 
Impact of Expanded Hemodialysis Using Medium Cut-off Dialyzer on 
Quality of Life: Application of Dynamic Patient-Reported Outcome 
Measurement Tool. Kidney Medicine. Published 2021, Jul. 29. https://doi.org/10.1016/j.xkme.2 021.05.010.
---------------------------------------------------------------------------

    In response to the CMS concern regarding differences in baseline 
characteristics of the two groups in Molano et al.,\180\ the applicant 
stated that the study employed inverse probability of treatment 
weighting (IPTW) which re-adjusts characteristics across the two groups 
to increase similarities and mitigate differences and that FDA 
recognizes the utility of inverse probability weighting as a 
statistical method to control for potential bias.
---------------------------------------------------------------------------

    \180\ Molano-Trivi[ntilde]o A, Sanabria M, Vesga J, Buitrago G, 
S[aacute]nchez R, Rivera A. MO880: Effectiveness of Medium Cut- Off 
vs. High Flux Dialyzers: A Propensity Score Matching Cohort Study, 
Nephrology Dialysis Transplantation, Vol. 36, Issue Sup. 1, 2021, 
May. gfab100.005, https://doi.org/10.1093/ndt/gfab 100.005.
---------------------------------------------------------------------------

    In response to the CMS concern regarding the design of several 
studies included in the THERANOVA application, the applicant stated 
that observational study designs inform how interventions work in a 
real-world setting and provide results with a larger sample size and 
greater generalizability to the target patient population over a longer 
period of time. The applicant also noted that conducting randomized 
control trial (RCT) studies in the ESRD patient population remains a 
continuing challenge and that major RCT studies conducted in dialysis 
populations run into challenges due to unexpectedly low event rates and 
high dropout and crossover rates. The applicant stated that these 
challenges make it difficult to generate large enough sample sizes to 
establish efficacy for RCT study designs within dialysis populations 
and that there is a risk that randomization does not evenly distribute 
observable characteristics without large enough sample sizes.
    In support of its data with historical controls, the applicant 
stated that self-controlled case studies (SCCS), whereby individuals 
act as their own control, could be used to generate statistical 
inferences with relatively small sample sizes and are effective for 
highly complex and heterogenous patient populations, like patients with 
ESRD who have multiple comorbidities. The applicant stated that an SCCS 
provides an opportunity to control for unobservable characteristics in 
a real-world setting, as long as time does not serve as a confounding 
characteristic since the same patient serves as control and treatment. 
The applicant reiterated that supporting evidence from SCCS studies in 
the CY 2023 THERANOVA TPNIES application is a significant strength, 
given the sustained improvements over time, as ESRD patients typically 
have a rapidly deteriorating health profile and that similar results 
were found in multiple SCCS studies, in different environments and at 
different times making it very unlikely that unobservable confounders 
might be credited with the observed change.
    Finally, the applicant referred to FDA affirmation that THERANOVA 
is safe and effective for its intended use. Per the applicant, studies, 
such as Molano et al.\181\ show no difference in serum albumin levels 
for THERANOVA compared to high-flux dialyzers and that a randomized 
controlled study showed that the albumin loss associated with THERANOVA 
is considerably less than the transperitoneal albumin losses seen in 
peritoneal dialysis.\182\
---------------------------------------------------------------------------

    \181\ Molano A, et al. Medium Cutoff Versus High-Flux 
Hemodialysis Membranes and Clinical Outcomes: A Cohort Study Using 
Inverse Probability Treatment Weighting, Kidney Med. 4(4):100431. 
Published online February 7, 2022. Doi: 10.1016/j.xkme.2022.100431.
    \182\ Kirsch AH, Lyko R, Nilsson LG, et al. Performance of 
hemodialysis with novel medium cut-off dialyzers [published 
correction appears in Nephrol Dial Transplant. 2021 Jul 
23;36(8):1555-1556]. Nephrol Dial Transplant. 2017;32(1):165-172. 
doi:10.1093/ndt/gfw310.
---------------------------------------------------------------------------

    We also received many comments from clinicians and patients 
supporting the THERANOVA application for TPNIES for CY 2023. Some 
comments from individuals identifying as patients noted improved energy 
associated with the use THERANOVA and expressed a general desire for 
more innovative products and concerns in paying for the dialyzer. Other 
comments were from individuals identifying as clinicians providing 
general support, expressing a desire for more innovation, and 
reiterating evidence and data from the application.
    Response: We thank the commenters for their input and have taken 
this information into consideration in our determination of whether 
THERANOVA meets the eligibility criteria at Sec.  413.236(b)(5) and 
Sec.  412.87(b)(1). We

[[Page 67214]]

have responded in further detail to comments discussing the significant 
clinical improvement claims for THERANOVA at the end of this section of 
the final rule.
    Comment: We received many comments from clinicians and dialyzer 
companies with concerns about the applicant's substantial clinical 
improvement claims. One commenter described weaknesses in the evidence 
that was used to support the applicant's claims of improved recovery 
time, improved quality of life, and reduced restless leg syndrome. The 
commenter reiterated and supported CMS' earlier concerns about quality 
of evidence. The commenter highlighted the studies by Bolton et al., 
Lim et al., Alarcon et al., Sanabria et al., and Ariza et 
al.,183 184 185 186 187 noting that they were small in size, 
retrospective, had high withdrawal rates, based on a single-site, 
unblinded, uncontrolled, occurred outside the U.S., had Type I errors, 
and/or short-duration. Specifically, with Bolton et al., the commenter 
stated that it is also unclear when medium cutoff membrane dialyzers 
replaced high flux dialyzers as the standard of care and if the 
comparison was appropriate.
---------------------------------------------------------------------------

    \183\ Bolton S, Gair R, Nilsson LG, Matthews M, Stewart L, 
McCullagh N. Clinical Assessment of Dialysis Recovery Time and 
Symptom Burden: Impact of Switching Hemodialysis Therapy Mode. 
Patient Relat Outcome Meas. 2021;12:315-321 https://doi.org/10.2147/PROM.S 325016.
    \184\ Lim J.H., Park Y., Yook J.M., et al. Randomized controlled 
trial of medium cut-off versus high-flux dialyzers on quality of 
life outcomes in maintenance hemodialysis patients. Nature Sci Rep. 
2020;10(1):7780. Published 2020 May 8. doi:10.1038/s41598-020-64622-
z.
    \185\ Alarcon J, Bunch A, Ardila F, Zuniga E, Vesga J, Rivera A, 
Sanchez R, Sanabria M. Real world evidence on the impact of expanded 
hemodialysis (HDx) therapy on Patient Reported Outcomes (PROs): 
CPREXH Registry (in submission).
    \186\ Sanabria RM, Hutchison CA, Vesga JI, Ariza JG, Sanchez R, 
Suarez AM. Expanded Hemodialysis and Its Effects on Hospitalizations 
and Medication Usage: A Cohort Study. Nephron. 2021;145(2):179-187. 
doi: 10.1159/000513328.
    \187\ Ariza JG, Walton SM, Suarez AM, Sanabria M, Vesga JI. An 
initial evaluation of expanded hemodialysis on hospitalizations, 
drug utilization, costs, and patient utility in Colombia. Ther Apher 
Dial. 2021 Oct;25(5):621-627. doi: 10.1111/1744-9987.13620.
---------------------------------------------------------------------------

    The commenter also stated that with regard to 
quality[hyphen]of[hyphen]life outcomes, there was no difference in the 
Palliative Care Outcome Scale Symptoms Renal total symptom score at 12 
months in poor mobility, difficulty sleeping, pain, shortness of 
breath, drowsiness, restless legs, skin changes, constipation, poor 
appetite or diarrhea. The commenter also stated that the Lim et al. 
study did not analyze change from baseline. The commenter stated that 
because the Weiner et. al. study was the only randomized control trial 
of health-related quality of life with medium cutoff dialyzers 
conducted in the U.S., it believed it to be the most relevant patient 
population but stated that no differences among groups (high flux vs. 
medium cutoff) were seen in any of the measures.\188\
---------------------------------------------------------------------------

    \188\ Weiner D, et al. Efficacy and Safety of Expanded 
Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Controlled Trial, CJASN15: 1310-1319, 2020. doi: 10.2215/
CJN.01210120.
---------------------------------------------------------------------------

    A commenter stated that the two new publications, Blackowicz et al. 
and Molano et al., do not establish THERANOVA as clinically superior to 
other dialyzers in outcomes related to hospitalization. This commenter 
noted that the Blackowicz et al. analysis included causes of 
hospitalization that can be considered unrelated to dialysis and all 
occurred in the non-THERANOVA group. With the small sample size, these 
five hospitalizations are highly influential. However, once 
hospitalizations for causes unrelated to dialysis were removed, the 
reduction in hospitalization rate was not statistically significant 
between the study groups. The commenter also stated that the Molano et 
al. study was conducted in Columbia and may not be generalizable to the 
Medicare population. Additionally, the commenter noted issues with the 
unblinded and observational nature of the study leading to potential 
patient selection bias. Additional criticisms involved unbalanced 
patient characteristics between study groups and patients in the high 
flux (non[hyphen]THERANOVA) group had comorbid conditions that may not 
have been accounted for in the weighting. The commenter agreed with CMS 
that patients in the THERANOVA group appeared to have more intensive 
dialysis at baseline with higher blood and dialysate flows compared to 
the high[hyphen]flux group, facilitating better removal of uremic 
toxins overall.
    The commenter submitted its own meta-analysis and stated that it 
found the number of studies, availability of data, and quality of 
available studies were not sufficient to make a conclusion on any 
benefit or detriment of the use of medium cutoff dialyzers in chronic 
HD patients. The commenter stated that with regard to the patient 
reported outcome data considered by the analysis, the observational 
studies showed varying results. The commenter also stated that studies 
without a comparator group may be prone to bias and thus, difficult to 
interpret. The commenter cited a randomized clinical trial conducted in 
the U.S. on medium cutoff dialyzers and stated that it found no 
difference in quality of life.\189\
---------------------------------------------------------------------------

    \189\ Weiner DE, Falzon L, Skoufos L, Bernardo A, Beck W, Xiao 
M, Tran H. Efficacy and Safety of Expanded Hemodialysis with the 
Theranova 400 Dialyzer: A Randomized Controlled Trial. Clin J Am Soc 
Nephrol. 2020 Sep 7;15(9):1310-1319. doi: 10.2215/CJN.01210120. Epub 
2020 Aug 25. PMID: 32843372; PMCID: PMC7480550.
---------------------------------------------------------------------------

    The same commenter voiced concerns about the overall evidence in 
support of the applicant's substantial clinical improvement claims, 
noting that the CY 2023 application relies largely on the same studies 
as the application that was submitted for CY 2021. The commenter cited 
its own meta[hyphen]analysis comparing hospital admissions and 
patient[hyphen]reported outcomes, including quality of life, between 
patients dialyzed with THERANOVA versus high[hyphen]flux (HF) dialyzers 
from published literature. The commenter stated that existing data was 
too weak and heterogenous to conduct such an analysis. The commenter 
also stated that the meta-analysis demonstrated lack of clinical 
benefit.
    Finally, the commenter raised concerns about the use of patient 
survey data included in the CY2023 application, stating it did not 
believe weak evidentiary sources should be dispositive or substitute 
for high quality clinical evidence. The commenter stated that such 
information may be a useful supplement, but it cautioned CMS against 
relying on it too heavily.
    Several commenters expressed concerns about albumin loss. One 
stated that the applicant presented no compelling information to 
address CMS' previously articulated concerns regarding albumin loss and 
its impact on patient health outcomes. One commenter cited several 
sources pertaining to albumin loss 190 191 192 and stated 
that these studies support the use of high[hyphen]flux, as opposed to 
medium cutoff dialyzers, in patients with hypoalbuminemia because of 
higher protein removal with medium cutoff compared to high flux 
membranes.
---------------------------------------------------------------------------

    \190\ Kalantar[hyphen]Zadeh K, Ficociello LH, Bazzanella J, 
Mullon C, Anger MS. Slipping Through the Pores: Hypoalbuminemia and 
Albumin Loss During Hemodialysis. Int J Nephrol Renovasc Dis. 2021 
Jan 20;14:11-21. doi:10.2147/IJNRD.S291348. PMID: 33505168; PMCID: 
PMC7829597.
    \191\ Zhou M, Ficociello LH, Mullon C, Mooney A, Williamson D, 
Anger MS. Real[hyphen]World Performance of High[hyphen]Flux 
Dialyzers in Patients With Hypoalbuminemia. ASAIO J. 2022 Jan 
1;68(1):96-102. doi:10.1097/MAT.0000000000001511. PMID: 34172639; 
PMCID: PMC8700293.
    \192\ https://www.asn-online.org/education/kidneyweek/archives/KW21Abstracts.pdf.
---------------------------------------------------------------------------

    Response: We appreciate the commenters' input regarding whether 
THERANOVA meets the TPNIES innovation criterion at Sec.  413.236(b)(5)

[[Page 67215]]

and substantial clinical improvement criteria at Sec.  412.87(b)(1).
    We acknowledge the additional data supplied by the applicant 
regarding claims for reduced hospitalization, as well as expansion of 
an ongoing trial on quality of life, and the challenges associated with 
generating adequate sample sizes with randomized and matched cohorts. 
The updated studies on hospitalizations (Blackowicz et al. and Molano 
et al.) that have now been published in peer reviewed journals included 
important details about the study design and population that were not 
available in the previously-submitted abstracts.
    Despite this additional information, we remain concerned with 
potential bias in both studies. While Blackowicz et al, demonstrated a 
statistically significant reduction in hospitalizations among patients 
randomized to the THERANOVA membrane, the study was unblinded and was 
complicated by a high dropout rate in both the treatment and control 
groups. Because the choice to hospitalize patients can be subjective, 
the lack of blinding to the investigators introduces potential bias 
that weakens the quality of evidence. Some of the patients who did not 
complete the study might have otherwise contributed important 
information, such as patients who did not complete the study due to 
missed treatments or adverse events. The published study results focus 
on a marginally significant p-value that does not account for the 
testing of multiple outcomes. We also note that a small number of 
hospitalizations unrelated to dialysis have outsized statistical weight 
and may weaken the claim that the dialyzer plausibly reduces 
hospitalizations. Rather, we question whether the difference in 
hospitalizations may be better explained by the study design or 
potential spurious results due to small sample size.
    The follow-on study by Molano et al. addresses some of the 
limitations from Blackowicz et al. Compared to the Blackowicz et al. 
study, this study included more patients and followed patients over a 
longer time period. However, patients were not randomized and there 
remains a possibility of bias due to imbalances between the comparison 
groups. For example, patients in the high flux dialyzer group had 
comorbidities that may not have been accounted for by the weighting. 
Even if the patient groups were balanced on baseline characteristics, 
it appears that the two groups were treated differently throughout the 
duration of the study, with the medium cutoff membrane group receiving 
more intensive dialysis. Furthermore, the results from Molano et. al. 
and comments reflecting clinician experience practicing outside the 
United States may not be generalizable to dialysis as practiced in the 
United States.
    While the applicant responded to the issue of short-term outcomes 
in hospitalization by stating that statistical significance was reached 
at 4.5 months, suggestive of a sufficiently large magnitude of effect, 
we clarify that based on the evidence provided, and in the absence of a 
longer-term study, it is not clear whether the observed rapid reduction 
in hospitalizations may be better explained by bias in the study 
design. More specific information about the types of hospitalizations 
that were reduced (for example, cardiovascular, nutrition or immune 
related admissions) would help to address this concern by linking 
reductions in hospitalizations to proposed mechanisms of disease 
related to middle molecules. It would then be helpful to see if 
hospitalizations remain significantly different between the two groups 
after removing hospitalizations that were unlikely related to the 
dialyzer membrane. We also have secondary concerns about statistical 
significance. After correcting for multiple hypothesis testing, as is 
standard in high-quality clinical trials, the significance is 
borderline. We also agree with one commenter that some of the 
hospitalization differences appear to be driven by non-dialysis related 
hospitalizations.
    As the applicant noted, inverse probability weighting can account 
for differences in observed features between the treatment and matched 
control groups. However, the approach does not correct for two 
additional sources of bias. First, the possibility of unobserved 
differences between the groups remains. The tables included in the 
published study do not describe the comparison groups prior to matching 
and do not provide the information needed to identify evidence of this 
potential source of bias. And second, the finding that Kt/V throughout 
the duration of the study was significantly different between the 
matched groups (higher in the medium cutoff dialyzer group) is 
suggestive of potential imbalances in unobserved features. Moreover, 
because the medium cutoff dialyzer group systematically received more 
intensive dialysis, we cannot deduce whether improved outcomes are 
attributable to the THERANOVA membrane itself or more intensive 
dialysis. Even an RCT where one arm systematically received more 
dialysis would not be able to resolve this potential bias. A comparison 
of the two dialyzers, where both arms receive equivalent small-molecule 
clearance (i.e., equivalent Kt/V urea, which should be unaffected by 
the intervention) may be helpful in addressing this concern.
    We also note that the Penny et al. article referenced by the 
applicant had several limitations including small in size, single-
center, non-U.S., and lacking a control group. Future studies of 
patient reported outcomes could provide support by verifying that the 
specific domains identified in initial exploratory analyses represent 
areas where the new technology improves aspects of quality of life and/
or pruritis and by comparing patients treated with the intervention to 
a control population.
    With respect to the issue of multiple-hypothesis testing and non-
significant differences in afternoon pruritus in Lim et al., we agree 
with the applicant that multiple outcomes would be a concern in any 
study that examines multiple quality-of-life domains. However, this 
does not address the specific concern. The statistics literature 
provides multiple strategies to correct p-values for multiple 
statistical tests. Additionally, as stated above, the Penny et al. 
article does not provide sufficient corroboration of the finding due to 
its own limitations. Future studies could provide reassurance by 
verifying that the specific domains identified in these initial 
exploratory analyses represent areas where the new technology improves 
quality of life. As the applicant notes, these studies should be robust 
to concerns about multiple statistical testing (given the multiple 
quality-of-life domains) and could attempt to minimize bias by 
providing comparison to an appropriate control group.
    Although crossover trials have some advantages as noted by the 
applicant (primarily in that they use the same patient as an internal 
control group), we also would like to clarify that crossover trials 
could be designed to overcome study design flaws that may introduce 
bias. First, the trial should consider blinding participants and study 
coordinators, since an unblinded crossover trial that assesses 
subjective outcomes is prone to observer and recall bias. Second, 
because regression to the mean is common particularly with quality-of-
life studies that depend on survey responses, crossover trials should 
consider employing randomization, where patients are randomly assigned 
to the sequence of crossover intervention. Finally, we note that in the 
renal literature especially, high-quality crossover trials have been 
effectively employed to demonstrate the

[[Page 67216]]

physiological benefits of a dialysis-related intervention.
    In accordance with TPNIES policy and Sec.  412.87(b)(1)(i), we 
consider the totality of the circumstances when making a determination 
that a new renal dialysis equipment or supply represents an advance 
that substantially improves, relative to renal dialysis services 
previously available, the diagnosis or treatment of Medicare 
beneficiaries. In addition, per 412.87(b)(1)(iii), CMS considers a 
range of evidence from published or unpublished information sources, 
including other appropriate information sources not otherwise listed 
under Sec.  412.87(b)(1)(iii).
    After carefully reviewing the application, the information 
submitted by the applicant addressing our concerns raised in the CY 
2023 ESRD PPS proposed rule, as well as the many comments submitted by 
the public, we have determined that THERANOVA has not shown that it 
represents an advance that substantially improves, relative to renal 
dialysis services previously available, the treatment of Medicare 
beneficiaries. For the reasons discussed previously, we conclude that 
THERANOVA does not meet the TPNIES innovation criteria under Sec.  
[thinsp]413.236(b)(5) and Sec.  [thinsp]412.87(b)(1).
(6) Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    With respect to the sixth TPNIES eligibility criterion under Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, the applicant 
did not address this criterion within its application. However, 
THERANOVA does not meet the definition of a capital-related asset, as 
defined in Sec.  413.236(a)(2), because it is not an asset that the 
ESRD facility has an economic interest in through ownership and is 
subject to depreciation.\193\ We welcomed comments on THERANOVA's 
status as a non-capital-related asset.
---------------------------------------------------------------------------

    \193\ See also: CMS Provider Reimbursement Manual, Chapter 1, 
Section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

    The applicant stated that THERANOVA is not an asset that the ESRD 
facility has an economic interest in through ownership, and THERANOVA 
is not subject to depreciation. Based on the information provided by 
the applicant, we agree THERANOVA does not meet the definition of a 
capital-related asset, as defined in Sec.  413.236(a)(2).
    Final Rule Action: After a consideration of all the public comments 
received, we have determined that the evidence and public comments 
submitted are not sufficient to demonstrate that THERANOVA meets all 
eligibility criteria to qualify for the TPNIES for CY 2023. As a 
result, THERANOVA will not be paid for using the TPNIES per Sec.  
413.236(d). We note that in the CY 2021 ESRD PPS final rule (85 FR 
71412), CMS indicated that entities would have 3 years beginning on the 
date of FDA marketing authorization in which to submit their 
applications for the TPNIES. Based on the THERANOVA FDA marketing 
authorization date of August 28, 2020, the applicant is eligible to 
apply for the TPNIES for CY 2024, and CMS would review any new 
information provided for the CY 2024 rulemaking cycle.

D. Continuation of Approved Transitional Add-On Payment Adjustments for 
New and Innovative Equipment and Supplies for CY 2023

    In this section of the final rule, we provide a table that 
identifies the one item that was approved for the TPNIES for CY 2022 
\194\ and which is still in the TPNIES payment period, as specified in 
Sec.  413.236(d)(1), for CY 2023. CMS will continue paying for this 
item using the TPNIES for CY 2023. This table also identifies the 
item's HCPCS coding information as well as the payment adjustment 
effective date and end date.
---------------------------------------------------------------------------

    \194\ 86 FR 61889 through 61906.
    [GRAPHIC] [TIFF OMITTED] TR07NO22.015
    
E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for New Renal Dialysis Drugs or Biological Products for CY 
2023

    Under Sec.  413.234(c)(1), a new renal dialysis drug or biological 
product that is considered included in the ESRD PPS base rate is paid 
the TDAPA for 2 years. In December 2021, CMS approved 
KORSUVATM (difelikafalin) for the TDAPA under the ESRD PPS, 
effective April 1, 2022. Implementation instructions are specified in 
CMS Transmittal 11295,\195\ dated March 15, 2022, and available at: 
https://www.cms.gov/files/document/r11295CP.pdf.
---------------------------------------------------------------------------

    \195\ CMS Transmittal 11295 rescinded and replaced CMS 
Transmittal 11278, dated February 24, 2022.
---------------------------------------------------------------------------

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

[[Page 67217]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.016

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

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

[[Page 67218]]

    As discussed in the CY 2019 and CY 2020 ESRD PPS final rules, for 
new renal dialysis drugs and biological products that fall into an 
existing ESRD PPS functional category, the TDAPA helps ESRD facilities 
to incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provides additional 
payments for such associated costs, and promotes competition among the 
products within the ESRD PPS functional categories, while focusing 
Medicare resources on products that are innovative (83 FR 56935; 84 FR 
60654). For new renal dialysis drugs and biological products that do 
not fall within an existing ESRD PPS functional category, the TDAPA is 
a pathway toward a potential base rate modification (83 FR 56935).
    For the complete history of the TDAPA policy, including the pricing 
methodology, please see the CY 2016 ESRD PPS final rule (80 FR 69023 
through 69024), CY 2019 ESRD PPS final rule (83 FR 56932 through 
56948), and CY 2020 ESRD PPS final rule (84 FR 60653 through 60681).
2. Current Issues and Concerns of Interested Parties
    In the CY 2019 ESRD PPS final rule, we discussed that a commenter 
stated concern over beneficiary access issues at the end of the TDAPA 
period. We responded by noting the drug or biological product will 
become eligible under the outlier policy after the TDAPA period if it 
is not considered to be a composite rate drug. We stated that we expect 
that if a beneficiary is responding well to a drug or biological 
product paid for using the TDAPA that they will continue to have access 
to that therapy after the TDAPA period ends (83 FR 56941). Since 2019, 
dialysis associations and pharmaceutical representatives have expressed 
concerns to CMS about payment following the TDAPA period for new renal 
dialysis drugs and biological products that are paid for using the 
TDAPA. They stated that unless money is added to the ESRD PPS base rate 
for these drugs and biological products, similar to what occurred with 
calcimimetics (85 FR 71406 through 71410), then it is unlikely that 
ESRD facilities will be able to sustain the expense of these drugs and 
biological products when the TDAPA period ends. Further, they cautioned 
that uncertainty about payment could affect ESRD facility adoption of 
these drugs and biological products during the TDAPA period. To date, 
calcimimetics are the only renal dialysis drugs or biological products 
that have been paid for using the TDAPA and incorporated into the ESRD 
PPS bundled payment following the TDAPA payment period. There have been 
no other renal dialysis drugs or biological products that have 
completed their TDAPA payment period, and as a result CMS does not yet 
have data on other drugs or biological products to evaluate the 
specific risks and access challenges that interested parties have 
raised.
    As mentioned in the CY 2019 (83 FR 56941) and CY 2020 (84 FR 60672 
and 60693) ESRD PPS final rules, many commenters suggested a rate-
setting exercise at the end of TDAPA for all new renal dialysis drugs 
and biological products. We responded by noting that we do not believe 
adding dollars to the ESRD PPS base rate would be appropriate for new 
drugs that fall into the ESRD PPS functional categories given that the 
purpose of the TDAPA for these drugs is to help ESRD facilities 
incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provide additional 
payments for such associated costs, and promote competition among the 
products within the ESRD PPS functional categories. In addition, we 
explained that the ESRD PPS base rate already includes money for renal 
dialysis drugs and biological products that fall within an existing 
ESRD PPS functional category. Under a PPS, Medicare makes payments 
based on a predetermined, fixed amount that reflects the average 
patient, and there will be patients whose treatment costs at an ESRD 
facility will be more or less than the ESRD PPS payment amount. A 
central objective of the ESRD PPS and of prospective payment systems in 
general is for facilities to be efficient in their resource use.
    In the CY 2023 ESRD PPS proposed rule, we presented this 
information and noted that price changes to the ESRD PPS bundled 
payment are updated annually by the ESRDB market basket, which includes 
a pharmaceuticals cost category weight, as noted in section 
II.B.1.a.(1)(b) of this final rule. In addition, we noted that our 
analysis of renal dialysis drugs and biological products paid for under 
the ESRD PPS has found costs and utilization to have decreased over 
time relative to market basket growth for some high volume formerly 
separately billable renal dialysis drugs. Therefore, we stated that we 
believed that any potential methodology for an add-on payment 
adjustment in these circumstances should adapt to changes in price and 
utilization over time.
3. Suggestions for Possible Methodologies for an Add-On Payment 
Adjustment for Certain Renal Dialysis Drugs and Biological Products 
Within an Existing Functional Category
    Section 1881(b)(14)(D)(iv) of the Act provides that the ESRD PPS 
may include such other payment adjustments as the Secretary determines 
appropriate, such as a payment adjustment--(I) for pediatric providers 
of services and renal dialysis facilities; (II) by a geographic index, 
such as the index referred to in paragraph (12)(D), as the Secretary 
determines to be appropriate; and (III) for providers of services or 
renal dialysis facilities located in rural areas. In response to the 
patient access concerns discussed previously in this section of the 
final rule, in the CY 2023 ESRD PPS proposed rule (87 FR 38522 through 
38523), we stated that we were considering whether it would be 
appropriate to establish an add-on payment adjustment for certain renal 
dialysis drugs and biological products in existing ESRD PPS functional 
categories after their TDAPA period ends. We noted that any add-on 
payment adjustment would be subject to the Medicare Part B beneficiary 
co-insurance payment under the ESRD PPS. In the CY 2023 ESRD PPS 
proposed rule, we discussed several methods that could be used to 
develop an add-on payment adjustment for these drugs and biological 
products. As noted in the proposed rule, the methods presented below 
differ in terms of which formerly separately billable renal dialysis 
drugs and biological products will be considered for a potential add-on 
payment adjustment. We noted that under these potential options, we 
would apply a reconciliation methodology only when an add-on payment 
adjustment will align resource use with payment for a renal dialysis 
drug or biological product in an existing ESRD PPS functional category.
     Reconcile the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in the expenditure per treatment across all 
other formerly separately billable renal dialysis drugs and biological 
products. For example, if the reduction in the cost of all formerly 
separately billable renal dialysis drugs and biological products per 
treatment excluding the renal dialysis drug or biological product that 
was paid for using the TDAPA is $5 and the cost per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA is $10, the add-on payment adjustment per

[[Page 67219]]

treatment would be $10 minus $5, which is $5. The reductions in 
formerly separately billable renal dialysis drug and biological 
products expenditures per treatment would be calculated by using the 
difference between these expenditures in the most recent year with 
claims data available and these expenditures in the current base year 
for the ESRDB market basket, which is CY 2020 as discussed in section 
II.B.1.a.(1)(c) of this final rule. For example, if the rule year for 
which we are calculating the add-on payment adjustment is CY 2023 and 
the base year for the ESRDB market basket is CY 2020, the reduction in 
formerly separately billable renal dialysis drugs and biological 
products expenditures would be the difference between these 
expenditures in CY 2021 (the year with the most recent claims data) and 
those in CY 2020.
     Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs or biological products, where such 
reduction can be empirically attributed to the renal dialysis drug or 
biological product that was paid for using the TDAPA. For example, if 
the utilization of the renal dialysis drug or biological product that 
was paid for using the TDAPA was found to be statistically associated 
with reduction in expenditure of one drug in an ESRD PPS functional 
category amounting to $1 per treatment, and the cost per treatment of 
the renal dialysis drug or biological product that was paid for using 
the TDAPA is $10, the add-on payment adjustment per treatment would be 
$10 minus $1, which is $9.
     Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs that fall into one or more ESRD PPS 
functional categories, where such expenditure reduction is data-driven, 
based on end action effect, to be attributable to the renal dialysis 
drug or biological product that was paid for using the TDAPA. Such a 
data-driven determination would be made by CMS. For example, if the 
cost per treatment of the renal dialysis drug or biological product 
that was paid for using the TDAPA is $10 and the reduction in the 
expenditure for other clinically related formerly separately billable 
renal dialysis drugs is $0.50 per treatment, the add-on payment 
adjustment would be $10 minus $0.50, which is $9.50.
     Only use the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA. For example, if the per treatment cost of the renal dialysis 
drug or biological product that was paid for using the TDAPA is $10, 
this would be the amount of the add-on payment adjustment.
4. Summary of Request for Information on an Add-On Payment Adjustment 
After the TDAPA Period Ends
    In the CY 2023 ESRD PPS proposed rule (87 FR 38464), we sought 
comment on options regarding an add-on payment adjustment for certain 
renal dialysis drugs and biological products in existing ESRD PPS 
functional categories after the TDAPA period ends. We issued a request 
for information (RFI) to seek feedback from the public on whether an 
add-on payment adjustment would be needed, what the appropriate 
criteria would be for determining whether renal dialysis drugs or 
biological products should receive such an adjustment, and what 
methodology would be most appropriate for calculating such an 
adjustment.
5. Summary of Comments Received
    We received 27 public comments in response to our RFI, including 
from large, small, and non-profit dialysis organizations; an advocacy 
organization; a coalition of dialysis organizations; a large non-profit 
health system; and MedPAC. A high-level description of these comments 
is included in the following subsections of this CY 2023 ESRD PPS final 
rule. We will provide more detailed information about the commenters' 
recommendations in a future posting on the CMS website located at the 
following link: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Educational_Resources.
    While we will not respond to these comments in this CY 2023 ESRD 
PPS final rule, we intend to take them into consideration during 
potential future policy development. We thank the commenters for their 
detailed and thoughtful comments.
a. Need for Establishing an Add-On Payment Adjustment
    We received 23 comments that supported CMS establishing an add-on 
payment adjustment for new renal dialysis drugs and biological products 
in existing ESRD PPS functional categories after the TDAPA period ends. 
Most commenters expressed their belief that an add-on payment 
adjustment of this nature is necessary to support the adoption of new 
renal dialysis drugs and biological products. Numerous commenters 
expressed support for using an add-on payment adjustment to improve 
patient access to innovative drugs. MedPAC opposed this type of add-on 
payment adjustment by stating that it would undermine competition with 
existing drugs in the ESRD PPS bundled payment and encourage higher 
launch prices.
b. Criteria for Receiving Add-On Payment Adjustment
    Most commenters supported CMS allowing all new renal dialysis drugs 
and biological products to be eligible to receive an add-on payment 
adjustment after the TDAPA period ends. MedPAC recommended that CMS 
limit the add-on payment adjustment to new renal dialysis drugs and 
biological products that show a substantial clinical improvement 
compared with existing products reflected in the ESRD PPS bundled 
payment. Several commenters, including a trade association, also 
recommended that CMS consider applying a similar add-on payment 
adjustment for the equipment, supplies, and capital-related assets that 
are paid for under the TPNIES.
c. Calculating an Add-On Payment Adjustment
    Several commenters supported reconciling the expenditure of the new 
renal dialysis drug or biological product with any reduction in 
expenditures for other formerly separately billable renal dialysis 
drugs that are clinically or statistically related to the introduction 
of the new renal dialysis drug in the bundle. Several commenters 
expressed their belief that the FDA-approved label for primary 
indication should be used to determine clinical association, rather 
than end-action effect. MedPAC expressed opposition to calculating any 
add-on payment adjustment for new renal dialysis drugs and biological 
products in existing ESRD PPS functional categories after the TDAPA 
period ends, but noted that if an add-on payment adjustment were 
applied, it would be appropriate to use an offset, similar to the 
approach used with the TPNIES, to avoid duplicative payment for renal 
dialysis services already included in the ESRD PPS base rate.
d. Public Comments on the TDAPA and TPNIES
    We received several comments regarding the TDAPA and TPNIES 
policies, including new payment adjustments and length of the payment 
period. Commenters urged CMS to apply the TPNIES and TDAPA for at least 
three years to allow for two full

[[Page 67220]]

years of data collection, and then increase the base rate to reflect 
the value of any improved outcomes for patients, including improved 
quality of life, once the TDAPA or TPNIES period ends. An LDO also 
suggested that the TDAPA payment amount be restored to the original ASP 
+ 6 percent amount. Commenters also suggested that we create a pathway 
for incorporation of new clinical diagnostic laboratory tests related 
to the treatment of ESRD, either through an expansion of the TPNIES or 
the adoption of a parallel, Transitional Laboratory Add-on Payment 
Adjustment (TLAPA). We thank the commenters for their input. We did not 
include any proposals on these topics in the CY 2023 ESRD PPS proposed 
rule, and therefore we believe these comments are out of scope for this 
rulemaking. However, we will consider these comments for potential 
future refinements to ESRD PPS payment policies.

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

1. Background
    CMS is committed to achieving equity in health care for our 
beneficiaries by recognizing and working to redress inequities in our 
policies and programs that serve as barriers to access to care and 
quality health outcomes. CMS policy objectives, including its 
commitment to advancing health equity which stands as the first pillar 
of the CMS Strategic Plan \196\ and reflect the goals of the Biden 
administration, as stated in Executive Order 13985.\197\
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    \196\ https://www.cms.gov/cms-strategic-plan.
    \197\ https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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    In this final rule, ``health equity means the attainment of the 
highest level of health for all people, where everyone has a fair and 
just opportunity to attain their optimal health regardless of race, 
ethnicity, disability, sexual orientation, gender identity, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes.'' \198\
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    \198\ https://www.cms.gov/pillar/health-equity.
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    Numerous studies have shown that among Medicare beneficiaries, 
individuals belonging to a racial or ethnic minority group often 
experience delays in care, receive lower quality of care, report 
dissatisfactory experiences of care, and experience more frequent 
hospital readmissions and procedural complications than white patients 
and patients with higher levels of 
income.199 200 201 202 203 204 When compared to FFS 
beneficiaries not receiving renal dialysis services, FFS beneficiaries 
receiving renal dialysis are disproportionately young, male, Black/
African-American, low income as measured by dually eligible Medicare 
and Medicaid status, have disabilities, and reside in an urban setting 
\205\ In the CY 2023 ESRD PPS proposed rule (87 FR 38464), we requested 
information on advancing health equity under the ESRD PPS, including an 
additional request focused on health disparities faced by pediatric 
ESRD patients within the ESRD PPS (87 FR 38523 through 38529).
---------------------------------------------------------------------------

    \199\ Martino, SC, Elliott, MN, Dembosky, JW, Hambarsoomian, K, 
Burkhart, Q, Klein, DJ, Gildner, J, and Haviland, AM. Racial, 
Ethnic, and Gender Disparities in Health Care in Medicare Advantage. 
Baltimore, MD: CMS Office of Minority Health. 2020.
    \200\ Guide to Reducing Disparities in Readmissions. CMS Office 
of Minority Health. Revised August 2018. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Readmissions_Guide.pdf.
    \201\ Singh JA, Lu X, Rosenthal GE, Ibrahim S, Cram P. Racial 
disparities in knee and hip total joint arthroplasty: an 18-year 
analysis of national Medicare data. Ann Rheum Dis. 2014 Dec; 
73(12):2107-15.
    \202\ Rivera-Hernandez M, Rahman M, Mor V, Trivedi AN. Racial 
Disparities in Readmission Rates among Patients Discharged to 
Skilled Nursing Facilities. J Am Geriatr Soc. 2019 Aug;67(8):1672-
1679.
    \203\ Joynt KE, Orav E, Jha AK. Thirty-Day Readmission Rates for 
Medicare Beneficiaries by Race and Site of Care. JAMA. 
2011;305(7):675-681.
    \204\ Tsai TC, Orav EJ, Joynt KE. Disparities in surgical 30-day 
readmission rates for Medicare beneficiaries by race and site of 
care. Ann Surg. Jun 2014;259(6):1086-1090.
    \205\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2022.pdf.
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2. Summary of Requests for Information on Health Equity Issues Within 
the ESRD PPS
    We received comments on these issues from approximately 13 
commenters that directly and indirectly addressed these RFI topics. 
Below we provide a short synopsis of the comments for each of the RFI 
topics discussed in the CY 2023 ESRD PPS proposed rule. We will provide 
a more detailed summary of the comments received on this RFI on the CMS 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/Educational_Resources.html. While we will 
not respond to these comments here, we will take them into 
consideration during future policy development. We thank the commenters 
for their detailed and thoughtful comments.
a. Refinements To Mitigate Health Disparities
    CMS requested information on what kind of refinements to the ESRD 
PPS payment policy could mitigate health disparities and promote health 
equity. In response, many commenters expressed support for CMS's 
efforts to reduce disparities and improve equity in the delivery of 
ESRD care. One commenter noted that traditional incentives for health 
care providers and payers to deliver high quality care efficiently may 
require change so that incentives are applied fairly and do not 
undermine access to care. Commenters offered a number of suggestions, 
including: add-on payments and other adjustments to the facility payor 
mix to provide for social work staffing and complex care coordination; 
add-on payments for higher percentages of dual eligible home dialysis 
patients and patients with housing or food insecurities; and an 
extension of kidney disease patient education services benefits to 
Medicare beneficiaries are who not yet on dialysis but who have Stage V 
CKD as well as to those within the first 6 months of ESRD. A few 
commenters supported adoption of a payment model similar to the CMS's 
ESRD Treatment Choices (ETC) Model to improve health equity; one 
commenter advocated for allowing facility-employed social workers, 
dieticians, and others to work with physicians to provide KDE services 
to beneficiaries. One commenter suggested that CMS expand equitable 
access to life-saving dialysis care by issuing guidance to all states 
to encourage expansion of Emergency Medicaid to undocumented people 
with kidney failure.
b. Comorbidities
    CMS asked whether specific comorbidities should be examined when 
calculating the case-mix adjustment that would better represent the 
ESRD population and help address health disparities. Several commenters 
provided feedback on the role of comorbidities on the health outcomes 
of ESRD patients and recommendations around the use of comorbidities in 
the ESRD PPS. Several commenters opined that the current comorbidity 
case mix adjusters are methodologically unsound and should be 
eliminated from the ESRD PPS. One commenter explained that its analysis 
showed effects of comorbidities on resource utilization for separately 
billable items, independent of the onset of dialysis, and noted that 
costs are higher for patients with comorbidities during the first 4 
months

[[Page 67221]]

of treatment. One commenter suggested development of patient-level 
adjusters to account for patients with left ventricular assist device, 
tracheostomy, cardiomyopathy with ejection fraction at or under 20, 
significant mental health conditions, non-weight bearing transfers, and 
patients who chose to skip >50 percent of treatments in a given month. 
A few commenters remarked upon the role of mental health and 
neurological conditions (for example, cognitive impairment), noting 
that such conditions affect patients' ability to function and adhere to 
care regimens. Two commenters referenced research produced by MedPAC 
and The Moran Company as resources to inform CMS policy on 
comorbidities and claims adjustment.
c. Subpopulations
    CMS requested comment about specific subpopulations whose needs may 
not adequately accounted for by the current ESRD PPS payment policy and 
should be evaluated for potential health disparities. Several 
commenters remarked upon the large percentage of ESRD patients who are 
dual eligible and who have higher costs of care despite similar 
utilization. Several commenters supported the inclusion of social 
determinants of health (SDOH) measures identified by CMS in the CY 2023 
ESRD PPS proposed rule as health-related social needs (HRSN): food 
insecurity, housing instability, transportation problems, utility help 
needs, interpersonal safety, mental health needs, and non-English 
speaking. Other commenters spoke to the lack of caregiver support, the 
burden of caregiver fatigue, and concerns about storage and supplies 
management as factors contributing to health disparities, including the 
lack of access to home dialysis. Another commenter noted the lack of 
health literacy as a contributing factor to disparities. One commenter 
cited the lack of high-speed internet as a contributor to disparities 
in telehealth access and thus in access to home dialysis.
    CMS also asked how existing data sources could be used to better 
identify unmet needs among specific subpopulations that could result in 
health disparities. In response, one commenter noted that mental health 
conditions are coded using ICD-10 codes and should be available in 
claims data. The same commenter also suggested that CMS develop and use 
Z codes to track SDOH, but, until these were operational, CMS might 
instead use dual eligible status or Area Deprivation Index (ADI) and 
Social Vulnerability Index (SVI) at the 9-digit ZIP code level. The 
commenter noted that frequent address changes in CMS claims for a given 
patient might indicate housing instability. One commenter recommended 
screening for CKD using the CMS-2728 patient registration form.
d. Demographic Information and Social Determinants of Health
    CMS asked for comments suggesting ways to address, define, collect, 
and use accurate and standardized, self-identified demographic 
information (including information on race and ethnicity, disability, 
sexual orientation, gender identity, socioeconomic status, geography, 
and language preference) for the purposes of reporting, stratifying 
data by population, and other data collection efforts that would 
mitigate disparities and refine ESRD PPS payment policy. In response, 
commenters indicated support for collecting SDOH, but also cautioned 
against the accompanying increased administrative burden on staff. A 
provider advocacy organization suggested working with facilities 
already tracking SDOH through electronic medical records and then 
engaging vendors to extract the data. A large dialysis organization 
advocated for a voluntary pilot study to (1) support the uniform 
collection and analysis of patient-level SDOH data and (2) test 
interventions. A few commenters suggested the use of Z codes to collect 
data on common SDOH such as housing and food insecurity and minimal 
caregiver support. One commenter advocated for CMS's use of the HRSN 
screening tool and mental health variables to identify subgroups in 
need; the commenter also suggested looking to past studies on HRSNs 
from the early 1980s and how these were used to develop DRGs for data 
on empirical estimates of the additional costs from HRSNs. One 
commenter noted its own success with SDOH collection and suggested that 
CMS look to the standardized data collection methods described in the 
2009 Institute of Medicine reporting on standardized collection of 
race, ethnicity, and language data.
e. Revisions to Case-Mix Categories in the ESRD PPS
    CMS sought comment on what revisions to case-mix categories in the 
ESRD PPS could be made to better represent underserved populations. One 
commenter recommended that CMS adopt a payment adjustment for ESRD 
facilities treating a large proportion of patients with SDOH challenges 
that would be similar to the Disproportionate Share Hospital (DSH) 
payment available to hospitals under the IPPS. One commenter suggested 
CMS use the Complication or Comorbidity (CC) or a Major Complication or 
Comorbidity (MCC) approach, as used in IPPS. That is, the existing 
categories could be modified to include two or three levels of HRSNs as 
modifiers, with higher levels of HRSNs being associated with higher 
payments. The commenter noted that this approach would leave the basic 
case-mix system unchanged but would add a HRSN concept exactly 
analogous to the CC modifier--an additional, orthogonal factor that 
contributes to cost and can contribute to payment.
f. Renal Dialysis Technologies, Treatments, and Clinical Tools
    CMS asked for comment regarding what actions CMS could potentially 
consider under the ESRD PPS to help prevent or mitigate potential bias 
in renal dialysis technologies, treatments, or clinical tools that rely 
on clinical algorithms. One commenter suggested that CMS work with the 
HHS Office for Civil Rights to address health literacy issues and 
improve education materials. Another commenter suggested that CMS 
incorporate the use of peer mentors and navigators to assist in 
education of ESRD patients as well as to help with minority recruitment 
into primary care settings and nephrology training. Similarly, one 
commenter suggested that CMS incentivize medical students to pursue 
nephrology. A non-profit dialysis center discouraged CMS from over-
adjusting for SDOH in a way that would move the payment system away 
from bundled payments and towards an FFS approach and accordingly in 
their view undermine the ESRD PPS.
3. Responses to the Request for Information on Health Equity Issues 
Within the ESRD PPS Focusing on Pediatric Payment

[[Page 67222]]

a. Pediatric Dialysis Overview \206\
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    \206\ ESRD TEP Summary Report of TEP held on December 10-11, 
2020, p. 18-19. https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    Compared to the Medicare dialysis adult population, the Medicare 
dialysis pediatric population is much smaller, comprising approximately 
0.14 percent of the total ESRD patient population in 2019. Pediatric 
facilities have higher direct patient care labor expenditures than 
adult facilities. CMS has continued to hear concerns from organizations 
associated with pediatric dialysis about underpayment of pediatric 
renal dialysis services under the current ESRD PPS payment model. Some 
organizations emphasized that pediatric renal dialysis services require 
significantly different staffing and supply needs from those of adults. 
Most of these organizations agree there is a need for more finely tuned 
cost data for pediatric dialysis. Many of these organizations support 
CMS efforts to explore ways to improve collecting pediatric-specific 
data to better characterize the necessary resources and associated 
costs of delivering pediatric ESRD care. During the December 2020 TEP, 
some panelists provided suggestions for the pediatric dialysis payment 
adjustment.\207\
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    \207\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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b. Summary of Comments
    CMS plans to continue working with health care providers, the 
public, and other key interested parties on these important issues to 
identify policy solutions that achieve the goals of attaining health 
equity for all patients. In the CY 2023 ESRD PPS proposed rule, we 
requested comments on improving CMS's ability to detect and reduce 
health disparities within the ESRD PPS for pediatric patients receiving 
renal dialysis services. Our goal in publishing the RFI in the CY 2023 
ESRD PPS proposed rule was to solicit input on topics such as 
circumstances and health inequities unique to the pediatric dialysis 
population, possible refinements to the ESRD PPS payment policy to 
mitigate health disparities for this population, the possible inclusion 
of a specific payment modifier on the claim indicating pediatric 
dialysis, and putting more emphasis on pediatric comorbidities.
    We received comments on these issues from approximately 10 
commenters that directly and indirectly addressed the RFI topics stated 
in the previous paragraph. Below we provide a short synopsis of the 
comments for each of the topics discussed in the CY 2023 ESRD PPS 
proposed rule. We will provide a more detailed summary of the comments 
received on this RFI on the CMS website: https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/Educational_Resources.html.
    Some commenters stated that they appreciated that CMS acknowledges 
the unique and complex care needs of the pediatric dialysis patient 
population that typically requires a much higher intensity of labor-
related services and additional supplies. These unique and complex care 
needs contribute to the higher cost of pediatric ESRD and CKD care. 
Some commenters thanked CMS for our continued engagement with them 
regarding this specialized population.
    All commenters stated that they agree there are health disparities 
faced by pediatric patients receiving dialysis that are different than 
adults receiving dialysis. Some commenters reiterated the health 
disparities faced by Black pediatric dialysis patients, noting that 
Black pediatric patients are disproportionally impacted by CKD overall. 
Some commenters pointed to data showing Black children receiving 
dialysis are more likely to be on hemodialysis than White patients and 
wait longer, and are less likely, to receive a kidney transplant. These 
differences are significant because home dialysis, and ultimately 
transplant, are the preferred treatments for ESRD in the pediatric 
population. While outside the scope of the RFI, a few commenters 
expressed concern with the algorithms, including race as a factor, used 
to match kidneys of deceased donors to pediatric kidney transplant 
recipients, noting it may negatively impact overall access to 
transplantation for children. Commenters also pointed to socioeconomic 
and demographic factors that contribute to the disparity of Black 
children receiving transplants.
c. Factors Affecting the Cost of Pediatric Dialysis Treatment and the 
Need for Data Collection
    Almost all the commenters discussed economic determinants of health 
and SDOH. They pointed to factors such as lack of adequate housing, 
nutrition, and transportation as problems these children face that 
contribute to the disparity for this sub-population. Housing insecurity 
was one of the SDOH discussed in the comments. Nutritional concerns 
were another topic of discussion by several commenters. Some commenters 
highlighted the need to address food insecurity and access to 
nutritional foods to address disparities and advance health equity. 
SDOH are not currently collected as part in the ESRD PPS case mix 
adjustment model, but commenters noted their value in accessing the 
care needs of the pediatric dialysis population.
    In addition to discussing SDOH, interested parties expressed 
concern that there is other information not currently collected that 
affects the true costs of pediatric dialysis treatment within the ESRD 
PPS. For example, they stated that other existing medical conditions 
are not factored into case-mix adjustment for pediatric patients, nor 
are the costs associated with the type of specialized treatment 
required by the youngest patients and those with developmental and 
other disabilities and special needs. All the commenters suggested 
factors to consider for the pediatric patient level case-mix adjuster. 
Commenters requested CMS consider the additional unreported expenses 
for the key support personnel responsible for addressing the unique 
challenges related to cognitive, physical, and developmental 
disabilities in these patients.
    In the CY 2023 ESRD PPS proposed rule (87 FR 38464), CMS asked 
whether a pediatric dialysis payment should include a specific payment 
modifier on the claim so that costs for providing pediatric dialysis 
can be further delineated with alternative payment sub-options. Some 
commenters supported the inclusion of a modifier; others supported the 
formation of a separate pediatric ESRD PPS.
    Response: We appreciate all the comments on and interest in this 
topic. We believe that this input is very valuable in the continuing 
development of our ESRD payment policy as we work to address health 
disparities in the pediatric dialysis population. We will continue to 
take the comments into account as we work on improving CMS's ability to 
detect and reduce health disparities within the ESRD PPS for pediatric 
patients receiving renal dialysis services. While we will not be 
responding to specific comments submitted in response to this RFI, we 
intend to use this input to inform future policy development. CMS would 
propose any potential changes to payment policies through a separate 
notice and comment rulemaking.

[[Page 67223]]

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

A. Background

    The Trade Preferences Extension Act of 2015 (TPEA) (Pub. L. 114-27) 
was enacted on June 29, 2015, and amended the Act to provide coverage 
and payment for dialysis furnished by an ESRD facility to an individual 
with acute kidney injury (AKI). Specifically, section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA amended section 1834 of the Act by adding a subsection (r) to 
provide payment, beginning January 1, 2017, for renal dialysis services 
furnished by renal dialysis facilities or providers of services paid 
under section 1881(b)(14) of the Act to individuals with AKI at the 
ESRD PPS base rate, as adjusted by any applicable geographic adjustment 
applied under section 1881(b)(14)(D)(iv)(II) of the Act and adjusted 
(on a budget neutral basis for payments under section 1834(r) of the 
Act) by any other adjustment factor under section 1881(b)(14)(D) of the 
Act that the Secretary elects.
    In the CY 2017 ESRD PPS final rule, we finalized several coverage 
and payment policies to implement subsection (r) of section 1834 of the 
Act and the amendments to section 1881(s)(2)(F) of the Act, including 
the payment rate for AKI dialysis (81 FR 77866 through 77872 and 
77965). We interpret section 1834(r)(1) of the Act as requiring the 
amount of payment for AKI dialysis services to be the base rate for 
renal dialysis services determined for a year under the ESRD PPS base 
rate as set forth in Sec.  413.220, updated by the ESRD bundled market 
basket percentage increase factor minus a productivity adjustment as 
set forth in Sec.  413.196(d)(1), adjusted for wages as set forth in 
Sec.  413.231, and adjusted by any other amounts deemed appropriate by 
the Secretary under Sec.  413.373. We codified this policy in Sec.  
413.372 (81 FR 77965).

B. Summary of the Proposed Provisions, Public Comments, and Responses 
to Comments on the CY 2023 Payment for Renal Dialysis Services 
Furnished to Individuals With AKI

    The proposed rule, titled ``Medicare Program; End-Stage Renal 
Disease Prospective Payment System, Payment for Renal Dialysis Services 
Furnished to Individuals with Acute Kidney Injury, End-Stage Renal 
Disease Quality Incentive Program, and End-Stage Renal Disease 
Treatment Choices Model'' (87 FR 38464 through 38586), referred to as 
the ``CY 2023 ESRD PPS proposed rule,'' appeared in the June 28, 2022 
version of the Federal Register, with a comment period that ended on 
August 22, 2022. In that proposed rule, we proposed to update the AKI 
dialysis payment rate for CY 2023. We received 13 public comments on 
our proposal from a coalition of dialysis organizations, a non-profit 
dialysis association, a device manufacturer, a network of dialysis 
organizations and regional offices, a home dialysis advocacy 
organization, a home dialysis stakeholder alliance, a professional 
association, a professional organization of nephrologists, two trade 
associations, a national organization of patients and kidney healthcare 
professionals, a coalition of healthcare organizations, and a large 
dialysis organization.
    In this final rule, we provide a summary of each proposed 
provision, a summary of public comments received and our responses to 
them, and the policies we are finalizing for CY 2023 payment for renal 
dialysis services furnished to individuals with AKI.

C. Annual Payment Rate Update for CY 2023

1. CY 2023 AKI Dialysis Payment Rate
    The payment rate for AKI dialysis is the ESRD PPS base rate 
determined for a year under section 1881(b)(14) of the Act, which is 
the finalized ESRD PPS base rate, including the applicable annual 
productivity-adjusted market basket payment update, geographic wage 
adjustments, and any other discretionary adjustments, for such year. We 
note that ESRD facilities have the ability to bill Medicare for non-
renal dialysis items and services and receive separate payment in 
addition to the payment rate for AKI dialysis.
    As discussed in section II.B.1.d of this final rule, the CY 2023 
ESRD PPS base rate is $265.57, which reflects the application of the CY 
2023 wage index budget-neutrality adjustment factor of 0.999730 and the 
CY 2023 ESRDB market basket increase of 3.1 percent reduced by the 
productivity adjustment of 0.1 percentage point, that is, 3.0 percent. 
Accordingly, we are finalizing a CY 2023 per treatment payment rate of 
$265.57 for renal dialysis services furnished by ESRD facilities to 
individuals with AKI. This payment rate is further adjusted by the wage 
index, as discussed in the next section of this final rule.
2. Geographic Adjustment Factor
    Under section 1834(r)(1) of the Act and regulations at Sec.  
413.372, the amount of payment for AKI dialysis services is the base 
rate for renal dialysis services determined for a year under section 
1881(b)(14) of the Act (updated by the ESRDB market basket and reduced 
by the productivity adjustment), as adjusted by any applicable 
geographic adjustment factor applied under section 
1881(b)(14)(D)(iv)(II) of the Act. Accordingly, we apply the same wage 
index under Sec.  413.231 that is used under the ESRD PPS and discussed 
in section II.B.1.b of this final rule. The AKI dialysis payment rate 
is adjusted by the wage index for a particular ESRD facility in the 
same way that the ESRD PPS base rate is adjusted by the wage index for 
that facility (81 FR 77868). Specifically, we apply the wage index to 
the labor-related share of the ESRD PPS base rate that we utilize for 
AKI dialysis to compute the wage adjusted per-treatment AKI dialysis 
payment rate. As stated previously, we are finalizing a CY 2023 AKI 
dialysis payment rate of $265.57, adjusted by the ESRD facility's wage 
index. The wage index floor increase (discussed in section II.B.1.b.(3) 
of this final rule) and the permanent 5-percent cap on wage index 
decreases (discussed in section II.B.1.b.(2) of this final rule) that 
we are finalizing the ESRD PPS will apply in the same way to AKI 
dialysis payments to ESRD facilities.
    The comments and our responses to the comments on our AKI dialysis 
payment proposal are set forth below.
    Comment: Many commenters, including two trade associations, a 
national organization of patients and kidney healthcare professionals, 
a coalition of healthcare organizations, a home dialysis stakeholder 
alliance, a non-profit dialysis association, and a large dialysis 
organization, requested that CMS change Medicare AKI policies to 
include at-home hemodialysis and peritoneal dialysis for AKI 
beneficiaries. Some commenters also sought to have the ESRD PPS cover 
staff-assisted dialysis at home, patient education, and home training 
sessions. A few commenters advocated for home dialysis waivers that 
would extend to outpatient AKI dialysis under the current PHE for 
COVID-19. Several commenters reported that they were finding home 
dialysis to be a safe and effective modality, as many patients with AKI 
have received home dialysis under a waiver applicable to acute hospital 
care delivered at home under

[[Page 67224]]

CMS' Hospitals Without Walls program. Many commenters also advocated 
for the home dialysis modality, arguing that home dialysis options for 
AKI patients would advance health equity, noting that Black people are 
more likely than White people to experience AKI.
    Response: We thank the commenters for their input. We did not 
include any proposals on these topics in the CY 2023 ESRD PPS proposed 
rule, and therefore we believe these comments are out of scope for this 
rulemaking. However, we will consider these comments for future 
refinements to AKI payment policies. We note that currently CMS will 
only pay for renal dialysis services at an ESRD facility for patients 
with AKI, and we did not propose to change this policy in the CY 2023 
ESRD proposed rule. Current AKI dialysis payment policy was implemented 
under the CY 2017 ESRD PPS final rule (81 FR 77866 through 77872, and 
77965). Over the years, we have received several comments regarding the 
site of renal dialysis services for Medicare beneficiaries with AKI. We 
have solicited comments in the recent past, including in the CY 2022 
ESRD PPS proposed rule (86 FR 36322, 36408), when we requested 
information regarding potentially modifying the site of renal dialysis 
services for patients with AKI and payment for AKI in the home setting. 
CMS continues to believe that this population requires close medical 
supervision by qualified staff during their dialysis treatment.
    Comment: A few commenters, including a coalition of dialysis 
organizations and a large dialysis organization, urged CMS to share 
information about any specific data elements and monitoring plans, as 
well as the data it is collecting and analyzing while monitoring the 
AKI benefit.
    Response: We appreciate the commenters' support for continued 
claims data monitoring and analysis. These issues were not the subject 
of proposals for CY 2023 and therefore are out of scope for this 
rulemaking. However, we note that we have been monitoring the trends of 
AKI beneficiaries in ESRD facilities and acute inpatient hemodialysis. 
This has included quantification of drugs, laboratory tests and other 
services provided on acute inpatient dialysis claims. We also examine 
other diagnoses recorded before an acute inpatient dialysis claim. We 
continue to analyze costs, utilization, patient characteristics, sites 
of service, as well as data for COVID-19 patients who have experienced 
AKI. The results of the data analysis will be shared in the future in 
public use files on the ESRD PPS website and we plan to engage with 
interested parties further on this issue.
    Final Rule Action: We are finalizing the AKI payment rate as 
proposed, that is, the AKI payment rate is based on the finalized ESRD 
PPS base rate. Specifically, the final CY 2023 ESRD PPS base rate is 
$265.57. Accordingly, we are finalizing a CY 2023 per treatment payment 
rate of $265.57 for renal dialysis services furnished by ESRD 
facilities to individuals with AKI.

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

A. Background

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

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

1. Measure Suppression Policy for the Duration of the COVID-19 PHE
    In the CY 2022 ESRD PPS final rule, we finalized a measure 
suppression policy for the duration of the COVID-19 Public Health 
Emergency (PHE) (86 FR 61910 through 61913). We stated that we had 
previously identified the need for flexibility in our quality programs 
to account for the impact of changing conditions that are beyond 
participating facilities' control. We identified this need because we 
would like to ensure that facilities are not affected negatively when 
their quality performance suffers, not due to the care provided, but 
due to external factors, such as the COVID-19 PHE.
    Specifically, we finalized a policy for the duration of the PHE for 
COVID-19 that enables us to suppress the use of measure data for 
scoring and payment adjustments if we determine that circumstances 
caused by the COVID-19 PHE have affected the measures and the resulting 
Total Performance Scores (TPSs) significantly. We also finalized the 
adoption of Measure Suppression Factors which will guide our 
determination of whether to suppress an ESRD QIP measure for one or 
more program years where the baseline or performance period of the 
measure overlaps with the PHE for COVID-19. The finalized Measure 
Suppression Factors are as follows:
     Measure Suppression Factor 1: Significant deviation in 
national performance on the measure during the COVID-19 PHE, which 
could be significantly better or significantly worse compared to 
historical performance during the immediately preceding program years.
     Measure Suppression Factor 2: Clinical proximity of the 
measure's focus to the relevant disease, pathogen, or health impacts of 
the COVID-19 PHE.
     Measure Suppression Factor 3: Rapid or unprecedented 
changes in:
    ++ clinical guidelines, care delivery or practice, treatments, 
drugs, or related protocols, or equipment or diagnostic tools or 
materials; or
    ++ the generally accepted scientific understanding of the nature or 
biological pathway of the disease or pathogen, particularly for a novel 
disease or pathogen of unknown origin.
     Measure Suppression Factor 4: Significant national 
shortages or rapid or unprecedented changes in:
    ++ healthcare personnel;
    ++ medical supplies, equipment, or diagnostic tools or materials; 
or
    ++ patient case volumes or facility-level case mix.
    We also stated that we will still provide confidential feedback 
reports to facilities on their measure rates on all measures to ensure 
that they are made aware of the changes in performance rates that we 
have observed. We also stated that we will publicly report suppressed 
measure data with appropriate caveats noting the limitations of the 
data due to the PHE for COVID-19. We strongly believe that publicly 
reporting these data will balance our responsibility to provide

[[Page 67225]]

transparency to consumers and uphold safety while ensuring that 
hospitals are not unfairly scored or penalized through payment under 
the ESRD QIP.
    We did not propose any changes to the measure suppression policy.
2. Suppression of Seven ESRD QIP Measures for PY 2023
a. Background
    COVID-19 has had significant negative health effects--on 
individuals, communities, nations, and globally. Consequences for 
individuals who have COVID-19 include morbidity, hospitalization, 
mortality, and post-COVID conditions (also known as long COVID). As of 
early March 2022, over 78 million COVID-19 cases, 4.5 million new 
COVID-19 related hospitalizations, and 900,000 COVID-19 deaths have 
been reported in the U.S.\208\ Provisional life expectancy data for CY 
2020 showed that COVID-19 reduced life expectancy by 1.5 years overall, 
with the estimated impact disproportionately affecting minority 
communities.\209\ According to this analysis, the estimated life 
expectancy reduction for Black and Latino populations is three times 
the estimate when comparing to the white population.\210\ With a death 
toll surpassing that of the 1918 influenza pandemic, COVID-19 is the 
deadliest disease in American history.\211\
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    \208\ https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/.
    \209\ Arias E, Tejada-Vera B, Ahmad F, Kochanek KD. Provisional 
life expectancy estimates for 2020. Vital Statistics Rapid Release; 
no 15. Hyattsville, MD: National Center for Health Statistics. July 
2021. DOI: https://dx.doi.org/10.15620/cdc:107201.
    \210\ Andrasfay, T., & Goldman, N. (2021). Reductions in 2020 
U.S. life expectancy due to COVID-19 and the disproportionate impact 
on the Black and Latino populations. Proceedings of the National 
Academy of Sciences of the United States of America, 118(5), 
e2014746118. https://www.pnas.org/content/118/5/e2014746118.
    \211\ Branswell, Helen. Covid overtakes 1918 Spanish flu as 
deadliest disease in U.S. history. STAT. September 20, 2021. 
Available at: https://www.statnews.com/2021/09/20/covid-19-set-to-overtake-1918-spanish-flu-as-deadliest-disease-in-american-history/.
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    Additionally, impacts of the pandemic continued to accelerate in 
2021 as compared with 2020. The Delta variant of COVID-19 (B.1.617.2) 
surfaced in the United States in early-to-mid 2021. Studies have shown 
that the Delta variant was up to 60 percent more transmissible than the 
previously dominant Alpha variant in 2020.\212\ Further, in November 
2021, the number of COVID-19 deaths for 2021 surpassed the total deaths 
for 2020. According to Centers for Disease Control and Prevention (CDC) 
data, the total number of deaths involving COVID-19 reached 385,453 in 
2020 and 451,475 in 2021.\213\ With this increased transmissibility and 
morbidity associated with the Delta variant, we remain concerned about 
using measure data that is significantly impacted by COVID-19 for 
scoring and payment purposes for the PY 2023 program year.
---------------------------------------------------------------------------

    \212\ Allen H, Vusirikala A, Flannagan J, et al. Increased 
Household Transmission of COVID-19 cases associated with SARS-CoV-2 
Variant of Concern B.1.617.2: a national case-control study. Public 
Health England. 2021.
    \213\ https://www.cdc.gov/nchs/nvss/vsrr/covid19/index.htm.
---------------------------------------------------------------------------

    In the CY 2022 ESRD PPS final rule (86 FR 61913 through 61917), we 
finalized the suppression of the following measures for the PY 2022 
program year:
     Standardized Hospitalization Ratio (SHR) clinical measure
     Standardized Readmission Ratio (SRR) clinical measure
     Long-Term Catheter Rate clinical measure
     In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS) Survey Administration clinical 
measure
    Since the publication of the CY 2022 ESRD PPS final rule, we have 
conducted analyses on all ESRD QIP measures to determine whether and 
how COVID-19 has impacted the validity of the data used to calculate 
these measures for PY 2023. Our findings from these analyses are 
discussed below. Based on those analyses, in the CY 2023 ESRD PPS 
proposed rule (87 FR 38531 through 38538), we proposed to suppress the 
following measures for PY 2023:
     SHR clinical measure (under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years);
     SRR clinical measure (under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years);
     Long-Term Catheter Rate clinical measure (under Measure 
Suppression Factor 1, Significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse compared to historical performance during 
the immediately preceding program years);
     In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS) Survey Administration clinical 
measure (under Measure Suppression Factor 1, Significant deviation in 
national performance on the measure during the COVID-19 PHE, which 
could be significantly better or significantly worse compared to 
historical performance during the immediately preceding program years; 
and Measure Suppression Factor 4, Significant national shortages or 
rapid or unprecedented changes in:
    ++ healthcare personnel; or
    ++ patient case volumes or facility-level case mix);
     Percentage of Prevalent Patients Waitlisted (PPPW) 
clinical measure (under Measure Suppression Factor 1, Significant 
deviation in national performance on the measure during the COVID-19 
PHE, which could be significantly better or significantly worse 
compared to historical performance during the immediately preceding 
program years; and Measure Suppression Factor 4, Significant national 
shortages or rapid or unprecedented changes in:
    ++ patient case volumes or facility-level case mix); and
     Kt/V Dialysis Adequacy clinical measure (under Measure 
Suppression Factor 1, Significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse compared to historical performance during 
the immediately preceding program years).
    Although we had previously finalized that the mTPS for PY 2023 
would be 57, as well as an associated payment reduction scale (85 FR 
71471), we proposed in the CY 2023 ESRD PPS proposed rule to update the 
mTPS and payment reduction scale to reflect our proposal to suppress 
six measures for PY 2023, which together constitute nearly half of the 
ESRD QIP measure set (87 FR 38532). We also proposed to amend 42 CFR 
413.178(a)(8) to state that the definition of the mTPS does not apply 
to PY 2023. The measures that we proposed to score for PY 2023 were the 
Clinical Depression Screening and Follow-Up reporting measure, the 
Standardized Fistula Rate clinical measure, the Hypercalcemia clinical 
measure, the Standardized Transfusion Ratio (STrR) reporting measure, 
the Ultrafiltration Rate reporting measure, the Medication 
Reconciliation for Patients Receiving Care at Dialysis Facilities 
(MedRec) reporting measure, the National Healthcare Safety Network 
(NHSN) Bloodstream Infection (BSI)

[[Page 67226]]

clinical measure, and the NHSN Dialysis Event reporting measure. In the 
CY 2023 ESRD PPS proposed rule, we stated that the proposed re-
calculated mTPS for PY 2023 will be 80. We also stated that if one or 
more of our measure suppression proposals is not finalized, then we 
would revise the mTPS for PY 2023 so that it includes all measures that 
we finalize for scoring for PY 2023 (87 FR 38532). We also proposed to 
codify these proposals in our regulations by adding a new 42 CFR 
413.178(i), which will specify that we will calculate a measure rate 
for each of the suppressed measures, but will not score facility 
performance on those suppressed measures or include them in the 
facility's TPS for PY 2023. We stated that proposed Sec.  413.178(i) 
would also define the mTPS for PY 2023 as the total performance score 
that an ESRD facility would receive if, during the baseline period, it 
performed at the 50th percentile of national ESRD facility performance 
on the measures described in proposed Sec.  413.178(i)(2). We note that 
Sec.  413.178(i) is updated in this final rule to reflect our 
additional suppression of the Standardized Fistula Rate clinical 
measure for PY 2023, which we discuss in IV.B.2.d of this final rule. 
As discussed in section IV.C of this final rule, we are also finalizing 
our proposal to calculate the performance standards for PY 2023 using 
CY 2019 data, and we are finalizing our proposal to revise our 
regulations at Sec.  413.178(d)(2) to reflect this finalized policy.
    We continue to be concerned about the impact of the COVID-19 PHE, 
but we are encouraged by the rollout of COVID-19 vaccinations and 
treatment for those diagnosed with COVID-19 and we believe that 
facilities are better prepared to treat patients with COVID-19. Our 
measure suppression policy focuses on a short-term, equitable approach 
during this unprecedented PHE, and was not intended for indefinite 
application. Additionally, we want to emphasize the long-term 
importance of incentivizing quality care tied to payment. The ESRD QIP 
is an example of our long-standing effort to link payments to health 
care quality in the dialysis facility setting.\214\
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    \214\ CMS has also partnered with the CDC in a joint Call to 
Action on safety, which is focused on our core goal to keep patients 
safe. Fleisher et al. (2022). New England Journal of Medicine. 
Article available here: https://www.nejm.org/doi/full/10.1056/NEJMp2118285?utm_source=STAT+Newsletters&utm_campaign=8933b7233e-MR_COPY_01&utm_medium=email&utm_term=0_8cab1d7961-8933b7233e-151759045.
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    We understand that the COVID-19 PHE is ongoing and unpredictable in 
nature, however, we believe that 2022 has a more promising outlook in 
the fight against COVID-19. As we enter the third year of the pandemic, 
health care providers have gained experience managing the disease, 
surges of COVID-19 infection, and adjusting to supply chain 
fluctuations. In 2022 and the upcoming years, we anticipate continued 
availability and increased uptake in the use of vaccinations,\215\ 
including the availability and use of vaccination for young children 
ages 5 to 11, who were not eligible for vaccination for the majority of 
2021 and for whom only 32 percent had received at least one dose as of 
February 23, 2022.216 217 Additionally, FDA has expanded 
availability of at-home COVID-19 treatment, having issued the first 
emergency use authorizations (EUAs) for two oral antiviral drugs for 
the treatment of COVID-19 in December 2021.218 219 Finally, 
the Biden-Harris Administration has mobilized efforts to distribute 
home test kits,\220\ N-95 masks,\221\ and increase COVID-19 testing in 
schools,\222\ providing more treatment and testing to the American 
people. Therefore, our goal is to continue resuming the use of all 
measure data for scoring and payment adjustment purposes beginning with 
the PY 2024 ESRD QIP. That is, for PY 2024, for each facility, we will 
plan to calculate measure scores for all of the measures in the ESRD 
QIP measure set for which the facility reports the minimum number of 
cases. We will then calculate a TPS for each eligible facility and use 
the established methodology to determine whether the facility will 
receive a payment reduction for the given payment year. We understand 
that the PHE for COVID-19 is ongoing and unpredictable in nature, and 
we would continue to assess the impact of the PHE on measure data used 
for the ESRD QIP.
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    \215\ Schneider, E. et al. (2022). The Commonwealth Fund. 
Responding to Omicron: Aggressively Increasing Booster Vaccinations 
Now Could Prevent Many Hospitalizations and Deaths. Available at: 
https://www.commonwealthfund.org/blog/2022/responding-omicron.
    \216\ KFF, Update on COVID-19 Vaccination of 5-11 Year Olds in 
the U.S., https://www.kff.org/coronavirus-covid-19/issue-brief/update-on-covid-19-vaccination-of-5-11-year-olds-in-the-u-s/.
    \217\ https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-infections/children-and-covid-19-vaccination-trends/.
    \218\ U.S. Food and Drug Administration. (2021). Coronavirus 
(COVID-19) Update: FDA Authorizes First Oral Antiviral for Treatment 
of COVID-19. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-first-oral-antiviral-treatment-covid-19.
    \219\ U.S. Food and Drug Administration. (2021). Coronavirus 
(COVID-19) Update: FDA Authorizes Additional Oral Antiviral for 
Treatment of COVID-19 in Certain Adults. Available at: https://
www.fda.gov/news-events/press-announcements/coronavirus-covid-19-
update-fda-authorizes-additional-oral-antiviral-treatment-covid-19-
certain#:~:text=Today%2C%20the%20U.S.%20Food%20and,progression%20to%2
0severe%20COVID%2D19%2C.
    \220\ The White House. (2022). Fact Sheet: The Biden 
Administration to Begin Distributing At-Home, Rapid COVID-19 Tests 
to Americans for Free. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/14/fact-sheet-the-biden-administration-to-begin-distributing-at-home-rapid-covid-19-tests-to-americans-for-free/.
    \221\ Miller, Z. 2021. The Washington Post. Biden to give away 
400 million N95 masks starting next week Available at: https://www.washingtonpost.com/politics/biden-to-give-away-400-million-n95-masks-starting-next-week/2022/01/19/5095c050-7915-11ec-9dce-7313579de434_story.html.
    \222\ The White House. (2022). FACT SHEET: Biden-Harris 
Administration Increases COVID-19 Testing in Schools to Keep 
Students Safe and Schools Open. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/12/fact-sheet-biden-harris-administration-increases-covid-19-testing-in-schools-to-keep-students-safe-and-schools-open/.
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    We received public comments on our measure suppression proposals, 
and we respond to them below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023. Several commenters expressed support 
for the proposed measure suppressions because national performance has 
been distorted due to the impact of the PHE. One commenter noted that 
the substantial impact of the PHE on ESRD patients due to increased 
risk of infection, reinfection, and complications from COVID-19 is also 
underscored by the workforce shortage.
    Response: We thank commenters for their support.
    Comment: A few commenters supported the policy to publicly report 
suppressed measure data and PY 2023 performance scores with appropriate 
caveats.
    Response: We thank commenters for their support.
    Comment: Several commenters recommended that CMS suppress all 
measures for PY 2023. A few commenters requested that CMS suppress all 
ESRD QIP measures for PY 2023 due to current economic conditions, 
workforce shortages, and continued challenges stemming from the impact 
of the COVID-19 PHE on facilities. One commenter suggested that 
remaining ESRD QIP measures could be suppressed under Measure 
Suppression Factor 4 due to severe staffing and supply shortages that 
impacted facilities in CY 2021.
    Response: We thank the commenters for their recommendation and 
acknowledge commenters' concerns

[[Page 67227]]

regarding economic conditions, workforce shortages, and continued 
challenges due to the COVID-19 PHE. However, we disagree with these 
commenters that measure suppression is necessary for all ESRD QIP 
measures for PY 2023 because our analyses do not indicate that all ESRD 
QIP measures are eligible for suppression under our previously 
finalized Measure Suppression Factors. Following publication of the CY 
2023 ESRD PPS proposed rule, we considered public comments and updated 
our analyses to determine whether measure suppression continued to be 
appropriate for the measures we proposed to suppress, and also whether 
measure suppression was warranted for any of the measures we did not 
propose to suppress in the proposed rule. With the exception of the 
Standardized Fistula Rate clinical measure, which we are finalizing for 
suppression as discussed in section IV.B.2.d of this final rule, we 
concluded that the remaining non-suppressed measures have not been 
affected by the COVID-19 PHE such that measure suppression would be 
warranted under our previously finalized Measure Suppression Factors. 
For example, our analyses of measure score distributions for non-
suppressed measures for PY 2023 indicate that they are generally 
consistent with historical measure score distributions for those 
measures. Therefore, we concluded that non-suppressed measures did not 
experience significant deviation in national performance during the 
COVID-19 PHE in PY 2023 and would not be eligible for measure 
suppression under Measure Suppression Factor 1. Nothing in our analyses 
indicated that these measures would be eligible for measure suppression 
under Measure Suppression Factor 2, clinical proximity of the measure's 
focus to the relevant disease, pathogen, or health impacts of the 
COVID-19 PHE, or Measure Suppression Factor 3, rapid or unprecedented 
changes in clinical guidelines, care delivery or practice, treatments, 
drugs, or related protocols, or equipment or diagnostic tools or 
materials, or the generally accepted scientific understanding of the 
nature or biological pathway of the disease or pathogen, particularly 
for a novel disease or pathogen of unknown origin. Although Measure 
Suppression Factor 4 permits measure suppression where there have been 
significant national shortages or rapid or unprecedented changes in 
healthcare personnel, such as in the ICH CAHPS measure and the PPPW 
clinical measure (as discussed in IV.B.2.e and IV.B.2.f of this final 
rule), our analyses did not indicate that the remaining measures were 
significantly impacted due to such changes. We note that general 
changes in economic conditions are not justifications for measure 
suppression under our previously finalized measure suppression policy. 
Although we appreciate the continuing impact of the COVID-19 PHE on 
facilities in CY 2021, we believe that facilities have had time to 
adjust to the new COVID-19 health care landscape and should be scored 
on those measures which our analyses have indicated were not 
significantly impacted by the COVID-19 PHE in CY 2021. We disagree with 
the commenter's suggestion that all remaining ESRD QIP measures could 
be suppressed due to severe staffing and supply shortages in CY 2021. 
Although we are aware of anecdotal reports indicating the impact of 
staffing and supply shortages on facilities, our analyses did not 
support measure suppression under Measure Suppression Factor 4 for non-
suppressed measures.
    Comment: One commenter recommended that CMS suppress the NHSN BSI 
clinical measure under Measure Suppression Factor 3 due to changes in 
clinical guidelines and care delivery in response to the COVID-19 PHE. 
The commenter noted that the COVID-19 PHE has created challenges in 
care delivery and treatment related to catheter removal and fistula 
insertion, which has led to the use of more catheters and increased 
likelihood of infection.
    Response: Suppressing the NHSN BSI clinical measure would not be 
appropriate under Measure Suppression Factor 3 based on our analyses. 
To be eligible for measure suppression under Measure Suppression Factor 
3, there must be rapid or unprecedented changes in clinical guidelines, 
care delivery or practice, treatments, drugs, or related protocols, or 
equipment or diagnostic tools or materials, or the generally accepted 
scientific understanding of the nature or biological pathway of the 
disease or pathogen, particularly for a novel disease or pathogen of 
unknown origin. Our analyses did not indicate the existence of such an 
impact on the number of new positive blood culture events based on 
blood cultures drawn as an outpatient or within one calendar day after 
a hospital admission, nor is such impact reflected in measure score 
distributions for the NHSN BSI clinical measure for PY 2023. Although 
challenges in care delivery and treatment related to catheter removal 
and arteriovenous fistula (AVF) creation may have resulted in an 
increased likelihood of patient infection in certain cases, our 
analyses did not indicate that either of those circumstances directly 
resulted in patients developing more bloodstream infections due to the 
COVID-19 PHE.
    Comment: One commenter recommended that CMS suppress the 
Ultrafiltration Rate reporting measure, noting that the Ultrafiltration 
Rate measure requires input of a Kt/V date and the Kt/V Dialysis 
Adequacy measure is proposed for suppression for PY 2023. The commenter 
expressed concern that this will impact a provider's ability to report 
the Ultrafiltration Rate measure and therefore the Ultrafiltration Rate 
reporting measure should also be suppressed.
    Response: We disagree that it is necessary to suppress the 
Ultrafiltration Rate reporting measure because the measure 
specifications include data that are also used to calculate the Kt/V 
Dialysis Adequacy clinical measure. Although we proposed (and are 
finalizing below) that we would suppress the Kt/V Dialysis Adequacy 
measure for PY 2023 for use in scoring, facilities will still be 
required to report data on that measure (as well as on all other PY 
2023 suppressed measures), including the Kt/V date. Therefore, the 
suppression of the Kt/V Dialysis Adequacy clinical measure should not 
impact a facility's ability to complete the data submission 
requirements for the Ultrafiltration Rate reporting measure.
    Comment: One commenter recommended that CMS also suppress the 
Hypercalcemia clinical measure for PY 2023, stating that it does not 
make sense to score the measure in light of CMS's proposal to convert 
the Hypercalcemia clinical measure to a reporting measure beginning 
with PY 2025. The commenter also stated that the Hypercalcemia measure 
should be suppressed under Measure Suppression Factor 4 due to 
shortages in prescription drugs needed to treat hypercalcemia.
    Response: We disagree with the commenter's suggestion that we 
should suppress the Hypercalcemia clinical measure in PY 2023 because 
we proposed to convert that measure to a reporting measure beginning 
with PY 2025. Whether a measure is a clinical measure or a reporting 
measure is irrelevant to whether suppression is warranted under our 
previously finalized measure suppression policy, which enables us to 
suppress the use of measure data for scoring and payment purposes if we 
determine that circumstances caused by the COVID-19 PHE have affected a 
given measure. Our analyses indicate that facility

[[Page 67228]]

performance on the Hypercalcemia clinical measure was not significantly 
impacted by the COVID-19 PHE in CY 2021 for PY 2023, as the scoring 
simulations for the Hypercalcemia clinical measure showed that measure 
performance was consistent with performance from previous years. 
Therefore, the measure would not be eligible for measure suppression 
under Measure Suppression Factor 1. We did not observe any data for CY 
2021 indicating a proximate relationship between bone mineral 
metabolism to the health impacts of the COVID-19 PHE. Therefore, the 
measure would not be eligible for measure suppression under Measure 
Suppression Factor 2. To be eligible for measure suppression under 
Measure Suppression Factor 3, there must be rapid or unprecedented 
changes in clinical guidelines, care delivery or practice, treatments, 
drugs, or related protocols, or equipment or diagnostic tools or 
materials, or the generally accepted scientific understanding of the 
nature or biological pathway of the disease or pathogen, particularly 
for a novel disease or pathogen of unknown origin. Our data showed that 
measure performance remained high and did not indicate the existence of 
such an impact on the number of patient-months with 3-month rolling 
average of total uncorrected serum or plasma calcium greater than 10.2 
mg/dL or missing, nor is such impact reflected in measure score 
distributions for the Hypercalcemia clinical measure for PY 2023. 
Finally, we did not observe that the measure was affected by 
significant national shortages or rapid or unprecedented changes in 
patient-case volumes or facility-level case mix to be eligible for 
suppression under Measure Suppression Factor 4. Therefore, we concluded 
that suppression of the Hypercalcemia clinical measure is not warranted 
under any of our previously finalized Measure Suppression Factors.
    Comment: Many commenters recommended that, in addition to measure 
suppression, CMS suspend scoring and payment penalties for PY 2023 
similar to the special scoring and payment policy for PY 2022. Several 
commenters recommended that CMS avoid enforcing penalties for the PY 
2023 ESRD QIP due to continued challenges faced by facilities during 
the COVID-19 PHE, such as current economic conditions, workforce 
shortages, patient reluctance to seek care for fear of COVID-19 
infection, and increased rates of kidney failure because of COVID-19. A 
few commenters expressed concern that the PHE has impacted facilities' 
ability to report data and that the decreased data submissions will 
skew data results. One commenter also cited data integrity issues in 
EQRS as a reason for suspending penalties in PY 2023. A few commenters 
suggested that suspending scoring and penalties for PY 2023 will align 
with the approach taken by the Hospital Value-Based Purchasing (VBP) 
Program, stating that the scoring methodology will not accurately 
reflect facility performance during the COVID-19 PHE.
    Response: We thank the commenters for their suggestions, but we 
disagree that a special scoring and payment policy for PY 2023 is 
necessary. Although we finalized a special scoring and payment rule for 
PY 2022 in the CY 2022 ESRD PPS final rule, we note that the 
circumstances surrounding that policy were quite different. First, the 
PY 2022 performance period was shortened by an ECE granted by CMS 
during the beginning of the COVID-19 PHE, which allowed dialysis 
facilities to focus on pandemic response instead of reporting quality 
measure data for the first and second quarter CY 2020 data. Second, in 
light of data submission issues associated with the transition to EQRS, 
we were concerned about the amount of reliable CY 2020 data that would 
be available for scoring. In CY 2021 for PY 2023, although some of the 
measures are still impacted by the PHE, we believe that facilities have 
had time to begin adjusting to the new COVID-19 health care landscape 
and should be scored on those measures which our analyses have 
indicated were not significantly impacted by the PHE. Our analyses 
indicate that data submissions for non-suppressed measures have not 
decreased so significantly such that they will skew data results, and 
that we have resolved any issues with EQRS that could impact the 
integrity of the data for PY 2023 and for subsequent years going 
forward. Regarding the comments recommending that we suspend scoring 
and payment to align with other VBP programs, we note that although 
certain VBP programs included special scoring and payment rules for FY 
2023 in the FY 2023 IPPS/LTCH PPS final rule, we believe the 
circumstances are different for the ESRD QIP. In the CY 2023 ESRD PPS 
proposed rule, we proposed to suppress less than half of the total 
measures in the ESRD QIP measure set for PY 2023 and facilities will 
still be eligible to be scored on measures in three out of the four 
total domains (87 FR 38531 through 38538). By contrast, the Hospital 
VBP Program suppressed more than half of the measures in its program 
and hospitals would only be eligible to be scored on measures in two 
out of the four total domains (87 FR 49094 through 49105). Although we 
are now suppressing half of the current ESRD QIP measures with the 
additional suppression of the Standardized Fistula Rate measure, which 
we discuss in section IV.B.2.d of this final rule, facilities will 
still be eligible to be scored on measures in three out of the four 
total domains.
    Comment: Several commenters expressed concern that scoring 
facilities on non-suppressed measures will not produce a meaningful 
representation of a facility's quality performance due to a skewed TPS, 
resulting in unfair penalties for facilities. A few commenters 
expressed concern on the proposal to recalculate the mTPS for non-
suppressed measures for PY 2023. One commenter noted that 80 is a very 
high mTPS especially in light of the ongoing pandemic and that 
resulting PY 2023 penalties for clinics may be higher than they would 
otherwise be with a full measure set. A few commenters noted that the 
impact of the suppressed measures on the mTPS would skew the scoring of 
non-suppressed measures by significantly shifting the weight of 
measures such as the Clinical Depression reporting measure, the 
Standardized Fistula Rate measure, and the STrR reporting measure. One 
commenter also expressed concern with the resulting increased weights 
of the Hypercalcemia measure and the NHSN BSI clinical measure in 
scores for PY 2023.
    Response: Although we acknowledge these commenters' concerns, we 
believe that it is appropriate to score facilities on non-suppressed 
measures. We are not suppressing these particular measures because our 
analyses have indicated that they were not significantly impacted by 
the COVID-19 PHE to fit within the scope of our measure suppression 
policy, as applied to PY 2023. Scoring a facility on non-suppressed 
measures will provide meaningful information to patients and caregivers 
regarding that facility's performance on those non-suppressed measures. 
Therefore, we believe that it is appropriate to finalize our proposal 
to update the mTPS for PY 2023 so that it only includes non-suppressed 
measures. We note that, with the additional suppression of the 
Standardized Fistula Rate clinical measure as discussed in section 
IV.B.2.d of this final rule, the recalculated mTPS for PY 2023 will be 
83. We provide the updated payment reduction scale for PY 2023 in Table 
16 below:

[[Page 67229]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.017

    Although the recalculated mTPS for PY 2023 is higher than we 
proposed in the proposed rule, we estimate that fewer facilities will 
receive payment reductions for PY 2023. We anticipate that only 
approximately 10.5 percent of facilities will receive payment 
reductions for PY 2023 with the recalculated mTPS of 83. For 
comparison, in the CY 2021 ESRD PPS final rule, we estimated that 
approximately 24.2 percent of facilities would receive payment 
reductions for PY 2023 based on our previously finalized mTPS of 57 (85 
FR 71480). Although we acknowledge that certain measures may be 
weighted more heavily due to the reduced measure set, we do not believe 
this will result in facilities being unfairly penalized for their 
performance on those measures because our analyses indicate that 
facility performance on those measures remains high.
    Comment: One commenter expressed support for CMS's intention to 
resume the use of all measure data for the PY 2024 ESRD QIP, and noted 
its appreciation for CMS's flexibilities in response to the PHE thus 
far.
    Response: We thank the commenter for its support.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to amend 42 CFR 413.178(a)(8) to state that the 
definition of the mTPS does not apply to PY 2023. Additionally, we are 
finalizing the addition of a new Sec.  413.178(i). The version of Sec.  
413.178(i) that we are finalizing is different than the proposed Sec.  
413.178(i) due to our additional suppression of the Standardized 
Fistula Rate clinical measure for PY 2023, which we discuss in IV.B.2.d 
of this final rule. Section 413.178(i) will specify that we will 
calculate a measure rate for each of the suppressed measures listed in 
Sec.  413.178(i)(1), but will not score facility performance on those 
suppressed measures or include them in the facility's TPS for PY 2023. 
Section 413.178(i) will also specify that we will score facility 
performance on each of the non-suppressed measures listed in Sec.  
413.178(i)(2).
b. Suppression of the SHR Clinical Measure for PY 2023
    In the proposed rule, we proposed to suppress the SHR clinical 
measure for the PY 2023 program year under Measure Suppression Factor 
1, Significant deviation in national performance on the measure during 
the COVID-19 PHE, which could be significantly better or significantly 
worse as compared to historical performance during the immediately 
preceding program years (87 FR 38532 through 38533). We referred 
readers to the CY 2022 ESRD PPS final rule for previous analysis on the 
impact of the COVID-19 PHE on SHR clinical measure performance (86 FR 
61914 through 61915). The SHR clinical measure is an all-cause, risk-
standardized rate of hospitalizations during a 1-year observation 
window. The standardized hospitalization ratio is defined as the ratio 
of the number of hospital admissions that occur for Medicare ESRD 
dialysis patients treated at a particular facility to the number of 
hospitalizations that will be expected given the characteristics of the 
facility's patients and the national norm for facilities. This measure 
is calculated as a ratio but can also be expressed as a rate. The 
intent of the SHR clinical measure is to improve health care delivery 
and care coordination to help reduce unplanned hospitalization among 
ESRD patients.
    In the CY 2023 ESRD PPS proposed rule, we stated that based on our 
analysis of Medicare dialysis patient data from January 2021 through 
September 2021, we found that hospitalizations involving patients 
diagnosed with COVID-19 resulted in higher mortality rates, higher 
rates of discharge to hospice or skilled nursing facilities, and lower 
rates of discharge to home than hospitalizations involving patients who 
were not diagnosed with COVID-19 (87 FR 38533). Specifically, the 
hospitalization rate for Medicare dialysis patients diagnosed with 
COVID-19 was up to three times greater than the hospitalization rate 
during the same period for Medicare dialysis patients who were not 
diagnosed with COVID-19, which is much greater than the relative risk 
of hospitalization for any other comorbidity. Similar to our analysis 
in the CY 2022 ESRD PPS final rule (86 FR 61915), we stated our belief 
that this indicates that COVID-19 has had a significant impact on the 
hospitalization rate for dialysis patients. Because COVID-19 Medicare 
dialysis patients are at significantly greater risk of hospitalization, 
and the SHR clinical measure was not developed to account for the 
impact of COVID-19 on this patient population, we stated that we 
continue to be concerned about the effects of the observed COVID-19 
hospitalizations on the SHR clinical measure. We also noted that the 
waves of the Delta and Omicron variants during 2021 affected different 
regions of the country at different rates depending on factors like 
time of year, geographic density, State and local policies, and health 
care system capacity.223 224

[[Page 67230]]

Because of the increased hospitalization risk associated with COVID-19 
and the Medicare dialysis patient population, we stated our concern 
that these regional differences in COVID-19 rates have led to distorted 
hospitalization rates such that we could not reliably make national, 
side-by-side comparisons of facility performance on the SHR clinical 
measure.
---------------------------------------------------------------------------

    \223\ Cuadros DF, Miller FD, Awad S, Coule P, MacKinnon NJ. 
Analysis of Vaccination Rates and New COVID-19 Infections by US 
County, July-August 2021. JAMA Netw Open. 2022;5(2):e2147915. 
doi:10.1001/jamanetworkopen.2021.47915.
    \224\ Iuliano AD, Brunkard JM, Boehmer TK, et al. Trends in 
Disease Severity and Health Care Utilization During the Early 
Omicron Variant Period Compared with Previous SARS-CoV-2 High 
Transmission Periods--United States, December 2020-January 2022. 
MMWR Morb Mortal Wkly Rep 2022;71:146-152. DOI: https://dx.doi.org/10.15585/mmwr.mm7104e4external icon.
---------------------------------------------------------------------------

    We also analyzed data from January 2020 through September 2021, 
which indicates that hospitalization \225\ and mortality rates \226\ 
were 6 times higher in the ESRD population. Although our initial 
measure suppression analysis focused on CY 2020 and CY 2021 data and we 
only had partial CY 2021 data available at the time of the proposed 
rule, our updated analyses indicate that the remaining 2021 data 
continued to show similar trends. Not only are there effects on 
patients diagnosed with COVID-19, but our data indicates that the 
presence of the virus continued to strongly affect hospital admission 
patterns of dialysis patients through December 2021.
---------------------------------------------------------------------------

    \225\ https://www.cms.gov/files/document/medicare-covid-19-data-snapshot-services-through-2021-08-21.pdf.
    \226\ Turgutalp, K., Ozturk, S., Arici, M. et al. Determinants 
of mortality in a large group of hemodialysis patients hospitalized 
for COVID-19. BMC Nephrol 22, 29 (2021). https://doi.org/10.1186/s12882-021-02233-0.
---------------------------------------------------------------------------

    Following emergence of the Delta variant in 2021, we noted that we 
have also observed disproportionate increases in COVID-19 cases and 
related deaths among ESRD beneficiaries. Similarly, emergence of the 
Omicron variant in December 2021 was followed by another mortality 
spike. Because the COVID-19 pandemic generally, and the Delta and 
Omicron waves specifically, swept through geographic regions of the 
country unevenly, we stated that we were additionally concerned that 
facilities in different regions of the country would have been affected 
differently throughout 2021, thereby skewing measure performance and 
affecting national comparability. Based on the impact of COVID-19 on 
SHR results, including the continued deviation in measurement, we 
stated our belief that the SHR clinical measure meets our criteria for 
Factor 1 where performance data would significantly deviate from 
historical data performance and would be considered unreliable. 
Therefore, we believed that the resulting performance measurement on 
the SHR clinical measure would not be sufficiently reliable or valid 
for use in the ESRD QIP for scoring and payment adjustment purposes.
    In the proposed rule, we stated our belief that the SHR clinical 
measure is an important part of the ESRD QIP measure set. However, we 
were concerned that the COVID-19 PHE will continue affecting measure 
performance on the current SHR clinical measure such that we will not 
be able to score facilities fairly or equitably on it for PY 2023. We 
proposed to continue to collect the measure's claims data from 
participating facilities so that we can monitor the effect of the 
circumstances on quality measurement and determine the appropriate 
policies in the future. We also proposed to continue providing 
confidential feedback reports to facilities as part of program 
activities to ensure that they are made aware of the changes in 
performance rates that we observe. We noted our intent to publicly 
report PY 2023 data where feasible and appropriately caveated.
    In the CY 2022 ESRD PPS final rule, we stated that we were 
currently exploring ways to adjust effectively for the systematic 
effects of the COVID-19 PHE on hospital admissions for the SHR clinical 
measure (86 FR 61915). We discussed our technical specifications update 
to the SHR clinical measure to risk-adjust for patients with a history 
of COVID-19 in section IV.B.3 of the CY 2023 ESRD PPS proposed rule (87 
FR 38538).
    We welcomed public comment on our proposal to suppress the SHR 
clinical measure for PY 2023. The comments we received and our 
responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the SHR clinical measure. Several commenters expressed support for the 
proposed measure suppression because national performance has been 
distorted due to the impact of the COVID-19 PHE.
    Response: We thank commenters for their support. Since the 
publication of the proposed rule, an updated analysis showed a 
continued deviation in SHR clinical measure performance throughout CY 
2021. We believe that this updated analysis confirms our earlier 
concerns regarding the impact of the COVID-19 PHE on national 
performance and justifies suppression of the SHR clinical measure under 
Measure Suppression Factor 1.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the SHR clinical measure for PY 
2023. We will also publicly report the data with appropriate caveats.
c. Suppression of the SRR Clinical Measure for PY 2023
    In the proposed rule, we proposed to suppress the SRR clinical 
measure for the PY 2023 program year under Measure Suppression Factor 
1, significant deviation in national performance on the measure during 
the COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years (87 FR 38533 through 38534). We referred 
readers to the CY 2022 ESRD PPS final rule for previous analysis on the 
impact of the COVID-19 PHE on SRR clinical measure performance (86 FR 
61915 through 61916). The SRR clinical measure assesses the number of 
readmission events for the patients at a facility, relative to the 
number of readmission events that will be expected based on overall 
national rates and the characteristics of the patients at that facility 
as well as the number of discharges. The intent of the SRR clinical 
measure is to improve care coordination between ESRD facilities and 
hospitals to improve communication prior to and post discharge.
    In the proposed rule, we stated that based on our analysis, we have 
found that index discharge hospitalizations involving dialysis patients 
diagnosed with COVID-19 resulted in lower readmissions and higher 
mortality rates within the first 7 days in 2021. We used index 
hospitalizations occurring from January 2020 through August 2021 to 
identify eligible index hospitalizations and unplanned hospital 
readmissions. Focusing on the partial year data for 2021, we found that 
total hospital readmissions, average number of index discharges, and 
average number of readmissions were lower than in full-year data for 
2018 and 2019. We noted that our analysis of 2020 data revealed that 
overall average readmission rates were similar to pre-COVID years, but 
that hospitalization in COVID-19 patients resulted in very different 
outcomes, with increased in-hospital and early post-discharge death and 
increased discharge to subacute rehabilitation facilities. We stated 
that although our measure suppression focuses on CY 2021 data and we 
only have partial CY 2021 data available at this time, we believed that 
the remaining 2021 data will continue to show similar trends. Our 
analysis of partial year data for 2021 found that

[[Page 67231]]

average re-admission rates were slightly lower overall compared to 2018 
and 2019. Although we noted that we were still analyzing the data for 
2021, we believed that similar to 2020, these competing outcomes of 
index hospitalization continued to have a significant effect on 
readmission rates, affecting interpretation of hospitalization outcomes 
between COVID-associated and non-COVID events. Based on this 
demonstrated association between recent COVID-19 infection and altered 
patterns of hospitalization and readmission compared to those for non-
infected ESRD patients, we remained concerned about the effects of 
these observations on the calculations for the SRR clinical measure. We 
noted that our preliminary analyses only looked at data through August 
2021, which would not fully capture readmission data from the Delta or 
Omicron surges of the COVID-19 PHE. Based on the impact of COVID-19 on 
SRR results, including the continued deviation in measurement, we 
stated our belief that the SRR clinical measure meets our criteria for 
Factor 1 where performance data would significantly deviate from 
historical data performance and would be considered unreliable. 
Therefore, we believed that the resulting performance measurement on 
the SRR clinical measure would not be sufficiently reliable or valid 
for use in the PY 2023 ESRD QIP for scoring and payment adjustment 
purposes. Since the proposed rule, our updated analyses found that 
COVID-19 infection continued to impact the SRR clinical measure 
throughout CY 2021.
    In the proposed rule, we stated our belief that the SRR clinical 
measure is an important part of the ESRD QIP Program measure set. 
However, we remained concerned that the PHE for the COVID-19 pandemic 
continued to affect measure performance on the current SRR clinical 
measure such that we would not be able to score facilities fairly or 
equitably on it for PY 2023. Additionally, we proposed continuing to 
collect the measure's claims data from participating facilities so that 
we can monitor the effect of the circumstances on quality measurement 
and determine the appropriate policies in the future. We would also 
continue to provide confidential feedback reports to facilities as part 
of program activities to ensure that they are made aware of the changes 
in performance rates that we observe. We noted our intent to publicly 
report PY 2023 data where feasible and appropriately caveated.
    In the CY 2022 ESRD PPS final rule, we stated that we were 
currently exploring ways to adjust effectively for the systematic 
effects of the COVID-19 PHE on hospital admissions for the SRR clinical 
measure (86 FR 61916). We discussed our technical specifications update 
to the SRR clinical measure to risk-adjust for patients with a history 
of COVID-19 in section IV.B.3 of the CY 2023 ESRD PPS proposed rule (87 
FR 38538).
    We welcomed public comment on our proposal to suppress the SRR 
clinical measure for PY 2023. The comments we received and our 
responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the SRR clinical measure. Several commenters expressed support for the 
proposed measure suppression because national performance has been 
distorted due to the impact of the COVID-19 PHE.
    Response: We thank commenters for their support. Since the 
publication of the proposed rule, an updated analysis showed a 
continued deviation in SRR clinical measure performance throughout CY 
2021. We believe that this updated analysis confirms our earlier 
concerns regarding the impact of the COVID-19 PHE on national 
performance and justifies suppression of the SRR clinical measure under 
Measure Suppression Factor 1.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the SRR clinical measure for PY 
2023. We will also publicly report the data with appropriate caveats.
d. Suppression of the Long-Term Catheter Rate Clinical Measure for PY 
2023
    In the proposed rule, we proposed to suppress the Long-Term 
Catheter Rate clinical measure for PY 2023 program year under Measure 
Suppression Factor 1, significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse as compared to historical performance 
during the immediately preceding program years (87 FR 38534 through 
38535). We referred readers to the CY 2022 ESRD PPS final rule for 
previous analysis on the impact of the COVID-19 PHE on the Long-Term 
Catheter Rate clinical measure for PY 2022 (86 FR 61917).
    In the CY 2018 ESRD PPS final rule, we finalized the inclusion of 
the Hemodialysis Vascular Access: Long-Term Catheter Rate clinical 
measure in the ESRD QIP measure set beginning with the PY 2021 program 
(82 FR 50778). The Long-Term Catheter Rate clinical measure is defined 
as the percentage of adult hemodialysis patient-months using a catheter 
continuously for three months or longer for vascular access. The 
measure is based on vascular access data reported in CMS' ESRD Quality 
Reporting System (EQRS) (previously, CROWNWeb) and excludes patient-
months where a patient has a catheter in place and has a limited life 
expectancy. The measure evaluates the vascular access type used to 
deliver hemodialysis. The intent of the Long-Term Catheter Rate 
clinical measure is to improve health care delivery and patient safety.
    In the CY 2023 ESRD PPS proposed rule, we stated that our analysis 
based on the available data indicated that long-term catheter use rates 
increased significantly during the COVID-19 PHE (87 FR 38534). Average 
long-term catheter rates were averaging around 12 percent during the 
period CY 2017 through early CY 2020. As we noted in the CY 2022 ESRD 
PPS final rule, we observed an increase in long-term catheter rates 
during the pandemic in CY 2020, with rates reaching a peak of 14.7 
percent in June 2020 and declining slightly to 14.3 percent in July and 
August 2020 (86 FR 61917). After remaining around 12 percent for 3 
consecutive years, in the CY 2022 ESRD PPS final rule we stated that we 
view a sudden 2 percent increase in average long-term catheter rates as 
a significant deviation compared to historical performance during 
immediately preceding years (86 FR 61917). In the CY 2023 ESRD PPS 
proposed rule, we noted that since then, we have observed a steady rate 
increase throughout CY 2021, with unadjusted catheter rates reaching a 
peak of 17.9 percent in September 2021 (87 FR 38534). By contrast, the 
unadjusted catheter rates in CY 2019 peaked at 12 percent. We stated 
our belief that the steep increase in catheter rates during CY 2021 
indicates a significant deviation in performance on the Long-Term 
Catheter Rate clinical measure. We were concerned that the COVID-19 PHE 
continued to impact the ability of ESRD patients to seek treatment from 
medical providers regarding their catheter use, either due to 
difficulty accessing treatment due to COVID-19 precautions at health 
care facilities, or due to increased patient reluctance to seek medical 
treatment because of risk of COVID-19 precautions at health care 
facilities, or due to increased patient reluctance to seek medical 
treatment because of risk of COVID-19 exposure and increased associated 
health risks,

[[Page 67232]]

and that these contributed to the significant increase in long-term 
catheter use rates.
    We stated our belief that the Long-Term Catheter Rate clinical 
measure is an important part of the ESRD QIP measure set. However, we 
were concerned that the PHE for COVID-19 affected measure performance 
on the current Long-Term Catheter Rate clinical measure such that we 
would not be able to score facilities fairly or equitably on it for PY 
2023. Additionally, we stated that participating facilities would 
continue to report the measure's data to CMS so that we could monitor 
the effect of the circumstances on quality measurement and determine 
the appropriate policies in the future. We noted that we would also 
continue to provide confidential feedback reports to facilities as part 
of program activities to ensure that they are made aware of the changes 
in performance rates that we observe. We also stated our intent to 
publicly report PY 2023 data where feasible and appropriately caveated.
    We welcomed public comment on our proposal to suppress the Long-
Term Catheter Rate clinical measure for PY 2023. The comments we 
received and our responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the Long-Term Catheter Rate clinical measure. Several commenters 
expressed support for the proposed measure suppression because national 
performance has been distorted due to the impact of the COVID-19 PHE.
    Response: We thank commenters for their support. Since the 
publication of the proposed rule, an updated analysis showed a 
continued deviation in Long-Term Catheter Rate clinical measure 
performance throughout CY 2021. We believe that this updated analysis 
confirms our earlier concerns regarding the impact of the COVID-19 PHE 
on national performance and justifies suppression of the Long-Term 
Catheter Rate clinical measure under Measure Suppression Factor 1.
    Comment: Several commenters recommended that CMS also suppress the 
Standardized Fistula Rate measure, expressing concern that performance 
on the Standardized Fistula Rate measure is directly linked to the 
Long-Term Catheter Rate measure that was proposed for suppression and 
noting that the same factors impacting the Long-Term Catheter Rate 
measure also impacted the Standardized Fistula Rate measure because the 
COVID-19 PHE impacted patient access to vascular access related 
procedures. A few commenters noted that vascular access procedures were 
halted and slowed due to the PHE, which meant that patients were not 
able to access fistula-related procedures or treatment, leading to an 
increase in long-term catheter use and a decrease in the placement of 
fistulas. A few commenters requested that CMS suppress the Standardized 
Fistula Rate measure under Measure Suppression Factor 1 because the 
measure experienced a significant deviation in national performance 
during the pandemic. One commenter recommended that CMS suppress the 
Standardized Fistula Rate measure under Measure Suppression Factor 4, 
due to shortages in healthcare personnel. The commenter stated that due 
to the personnel shortage, facilities have had challenges finding 
available vascular surgeons for fistula placements.
    Response: We thank commenters for their feedback. Although we 
initially considered proposing suppression of the Standardized Fistula 
Rate measure, we concluded at the time we developed the proposed rule 
that the measure should not be suppressed under any of the Measure 
Suppression Factors based on the data available at that time. However, 
since the proposed rule, we have updated our analyses and have reviewed 
newly available updated measure data that captures national fistula 
rates over the entirety of CY 2021. Based on these updated data, as 
described in Tables 17, 18, and 19 below, we have concluded that the 
Standardized Fistula Rate clinical measure should be suppressed PY 2023 
under Measure Suppression Factor 1, significant deviation in national 
performance on the measure during the PHE for COVID-19, which could be 
significantly better or significantly worse as compared to historical 
performance during the immediately preceding program years. Table 17 
shows that we have found significant (p-value <0.001) deviation in 
national fistula rates in CY 2021 compared to CY 2019. Table 18 shows 
the significant decline in national fistula rates over the course of CY 
2021, which we believe aligns with COVID-19 surges throughout that 
year. Finally, Table 19 shows the relationship between long-term 
catheter rates and standardized fistula rates during CY 2021--that is, 
as catheter rates increased, fistula rates correspondingly decreased. 
We believe these updated analyses, which now capture national fistula 
rates for all of CY 2021, support the suppression of both vascular 
access type measures under Measure Suppression Factor 1.
[GRAPHIC] [TIFF OMITTED] TR07NO22.018


[[Page 67233]]


[GRAPHIC] [TIFF OMITTED] TR07NO22.019

[GRAPHIC] [TIFF OMITTED] TR07NO22.020

    Although we did not propose suppression of the Standardized Fistula 
Rate measure in the CY 2023 ESRD PPS proposed rule, we believe that the 
circumstances caused by the COVID-19 PHE that have significantly 
affected the Long-Term Catheter Rate clinical measure have also 
affected Standardized Fistula Rate clinical measure and resulting 
performance score. The same barriers to surgical care for catheter 
reduction also prevented patients from receiving surgical care for AV 
Fistulas. During various times throughout the COVID-19 PHE, vascular 
access procedures were halted and slowed in many areas around the 
country as COVID-19 volumes surged. The lack of procedures likely meant 
that fistulas were not created in many cases. For those patients who 
received an AV fistula, some were not able to undergo procedures 
required to assist in the maturation of the fistula. In other 
instances, patients whose access failed were not able to access the 
services to repair them. All of these factors led to an increase in 
long-term catheter use and a decrease in the placement of fistulas 
during CY 2021, as indicated by the data shown in Tables 17 and 19 
above, resulting in significant deviation in national performance on 
both measures during the PHE for COVID-19 in PY 2023. Therefore, we 
believe that suppression of the Standardized Fistula Rate measure in 
this final rule is appropriate under Measure Suppression Factor 1.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the Long-Term Catheter Rate 
clinical measure for PY 2023. We are also finalizing the suppression of 
the Standardized Fistula Rate clinical measure for PY 2023. We will 
also publicly report the data for these measures with appropriate 
caveats.
e. Suppression of the ICH CAHPS Clinical Measure for PY 2023
    In the CY 2023 ESRD PPS proposed rule, we proposed to suppress the 
ICH CAHPS measure for the PY 2023 program year under Measure 
Suppression Factor 1, significant deviation in national performance on 
the measure during the PHE for COVID-19, which could be significantly 
better or significantly worse as compared to historical performance 
during the immediately preceding program years and Measure Suppression 
Factor 4, significant national shortages or rapid or unprecedented 
changes in healthcare personnel and patient case mix (87 FR 38535 
through 38536). We stated that we would calculate facilities' ICH CAHPS 
measure rates, but we would not use these measure rates to generate 
achievement or improvement points for this measure. Participating 
facilities would continue to report the measure data to CMS so that we 
can monitor the effect of the circumstances on quality

[[Page 67234]]

measurement and consider appropriate policies in the future. We noted 
that we would continue to provide confidential feedback reports to 
facilities as part of program activities to allow facilities to track 
the changes in performance rates that we observe. We also stated our 
intent to publicly report CY 2021 measure rate data where feasible and 
appropriately caveated. As we noted in section IV.B.1 of the proposed 
rule, we believe that publicly reporting suppressed measure data is an 
important step in providing transparency and upholding the quality of 
care and safety for consumers (87 FR 38531).
    In the CY 2022 ESRD PPS final rule (86 FR 61916 through 61917), we 
finalized our proposal to suppress the ICH CAHPS clinical measure for 
the PY 2022 program year under Measure Suppression Factor 1, 
Significant deviation in national performance on the measure during the 
COVID-19 PHE, which could be significantly better or significantly 
worse compared to historical performance during the immediately 
preceding program years. Based on our analysis of CY 2020 ICH CAHPS 
data, we finalized our proposal to suppress the ICH CAHPS clinical 
measure for PY 2022 because we found a significant decrease in response 
scores as compared to previous years. In the CY 2023 ESRD PPS proposed 
rule, we noted that our most recent analysis that included Spring 2021 
ICH CAHPS data showed a continued deviation in ICH CAHPS scores (87 FR 
38535).
    The ICH CAHPS clinical measure is scored based on three composite 
measures and three global ratings.\227\ Global ratings questions employ 
a scale of 0 to 10, worst to best; each of the questions within a 
composite measure use either ``Yes'' or ``No'' responses, or response 
categories ranging from ``Never'' to ``Always'' to assess the patient's 
experience of care at a facility. Facility performance on each 
composite measure is determined by the percent of patients who choose 
``top-box'' responses (that is, most positive or ``Always'') to the ICH 
CAHPS survey questions in each domain. The ICH CAHPS survey is 
administered twice yearly, once in the spring and once in the fall.
---------------------------------------------------------------------------

    \227\ Groupings of questions and composite measures can be found 
at https://ichcahps.org/Portals/0/SurveyMaterials/ICH_Composites_English.pdf.
---------------------------------------------------------------------------

    In the proposed rule, we stated that our most recent data indicated 
that, although the number of participating facilities that submitted 
data had increased from pre-COVID-19 levels, the number of completed 
interviews had dropped dramatically. For example, in Spring and Fall 
2019, facilities reported 98,868 and 96,255 completed interviews, 
respectively. By contrast, in Spring and Fall 2021, only 82,987 and 
61,930 completed interviews were submitted, respectively. In other 
words, although a larger number of facilities are submitting ICH CAHPS 
data, fewer patients within each of those facilities are completing 
interviews and, as a result, a fewer number of facilities are meeting 
the survey minimum to be included in the measure for ESRD QIP scoring 
purposes because of the continuing impact of the PHE.
    We stated our belief that these data may also reflect a rapid and 
unprecedented change in healthcare personnel, as staffing shortages may 
have had an impact on some of the top box rating scores.
    During the course of the PHE, an unprecedented number of healthcare 
personnel have left the workforce or ended their employment in 
healthcare settings.\228\ This healthcare personnel shortage worsened 
in 2021, with hospitals across the United States reporting 296,466 days 
of critical staffing shortages, an increase of 86 percent from the 
159,320 days of critical staffing shortages hospitals reported in 
2020.\229\ Although we noted that there was no specific data regarding 
the healthcare personnel shortages in facilities, reports indicated 
that facilities have experienced similar staffing shortages.\230\ 
Healthcare workers, especially those in areas with higher infection 
rates, have reported serious psychological symptoms, including anxiety, 
depression, and burnout.231 232
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    \228\ Health Affairs, COVID-19's Impact on Nursing Shortages, 
The Rise of Travel Nurses, and Price Gouging (Jan. 28, 2022), 
https://www.healthaffairs.org/do/10.1377/forefront.20220125.695159/.
    \229\ https://healthdata.gov/Hospital/COVID-19-Reported-Patient-Impact-and-Hospital-Capa/g62h-syeh.
    \230\ National Kidney Foundation, COVID-19 and its Impact on 
Kidney Patients Utilizing U.S. Dialysis Centers (Jan. 18, 2022), 
https://www.kidney.org/news/covid-19-and-its-impact-kidney-patients-utilizing-u-s-dialysis-centers. See also, Becker's Hospital Review, 
Supply shortages disrupt dialysis care in Texas (Jan. 28, 2022), 
https://www.beckershospitalreview.com/supply-chain/supply-shortages-disrupt-dialysis-care-in-texas.html. WBIW, Pandemic causing supply 
shortages for dialysis patients, staffing shortage for providers 
(Feb. 22, 2022), https://www.wibw.com/2022/02/22/pandemic-causing-supply-shortages-dialysis-patients-staffing-shortage-providers/. 
Spectrum News, Worker shortage sends dialysis patients scrambling 
for treatment (October 4, 2021), https://spectrumlocalnews.com/nys/hudson-valley/news/2021/10/01/worker-shortage-sends-dialysis-patients-scrambling-for-treatment.
    \231\ Kriti Prasad, Colleen McLoughlin, Martin Stillman, Sara 
Poplau, Elizabeth Goelz, Sam Taylor, Nancy Nankivil, Roger Brown, 
Mark Linzer, Kyra Cappelucci, Michael Barbouche, Christine A. 
Sinsky. Prevalence and correlates of stress and burnout among U.S. 
healthcare workers during the COVID-19 pandemic: A national cross-
sectional survey study. EClinicalMedicine, Volume 35. 2021. 100879. 
ISSN 2589-5370. https://doi.org/10.1016/j.eclinm.2021.100879.
    \232\ Vizheh, M., Qorbani, M., Arzaghi, S.M. et al. The mental 
health of healthcare workers in the COVID-19 pandemic: A systematic 
review. J Diabetes Metab Disord 19, 1967-1978 (2020). https://doi.org/10.1007/s40200-020-00643-9.
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    Additionally, in the proposed rule we noted that reports of staff 
shortages have varied widely geographically. In January 2021, half of 
the hospitals in New Mexico and over 40 percent of the hospitals in 
Vermont, Rhode Island, West Virginia, and Arizona reported staffing 
shortages.\233\ Conversely, in that same week, less than 10 percent of 
hospitals in Washington, DC, Connecticut, Alaska, Illinois, New York, 
Maine, Montana, Idaho, Texas, South Dakota, and Utah reported staffing 
shortages. We stated our belief that these staffing shortages reported 
by hospitals were similar to those experienced by facilities, and that 
the shortages experienced by ESRD facilities may be even worse due to 
the highly specialized nature of nephrology staff. Given the wide 
variance in reported staffing shortages, and the impact staffing 
shortages may have on ICH CAHPS top box rating scores, we believed our 
proposal to suppress the ICH CAHPS measure fairly addresses the 
geographic disparity in the impact of the COVID-19 PHE on participating 
facilities.
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    \233\ U.S. News, States With the Biggest Hospital Staffing 
Shortages (Jan. 13, 2022), https://www.usnews.com/news/health-news/articles/2022-01-13/states-with-the-biggest-hospital-staffing-shortages (citing data from the HHS, CDC, and Assistant Secretary 
for Preparedness and Response Community Profile Report, updated 
frequently and available here: https://healthdata.gov/Health/COVID-19-Community-Profile-Report/gqxm-d9w9).
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    Due to the emergence of COVID-19 variants, such as the Delta and 
Omicron variants that have arisen from COVID-19 and our belief that 
facilities have experienced worsening staffing shortages in Q3 and Q4 
2021,234 235 we anticipated that Fall 2021 data would 
continue to demonstrate a deviation in national performance such that 
scoring this measure would not allow us to reliably make national, 
side-by-side comparisons of facility performance on the ICH CAHPS 
measure. We stated our

[[Page 67235]]

belief that suppressing this measure for the PY 2023 would address 
concerns about the potential unintended consequences of penalizing 
facilities for deviations in measure performance resulting from the 
impact of the COVID-19 PHE.
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    \234\ Bloomberg, U.S. Hospital Staff Shortages Hit Most in a 
Year on Covid Surge, https://www.bloomberg.com/news/articles/2022-01-05/one-in-five-u-s-hospitals-face-staffing-shortages-most-in-year 
(citing HHS data).
    \235\ Fresenius Medical Care Press Release, Statement regarding 
COVID-19 related supply and staff shortages. Available at: https://fmcna.com/company/covid-19-resource-center/.
---------------------------------------------------------------------------

    Therefore, we proposed to suppress the ICH CAHPS measure for the PY 
2023 ESRD QIP under Measure Suppression Factors 1 and 4.
    We welcomed public comment on this proposal. The comments we 
received and our responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the ICH CAHPS clinical measure. Several commenters expressed support 
for the proposed measure suppression because national performance has 
been distorted due to the impact of the COVID-19 PHE.
    Response: We thank commenters for their support. Since the 
publication of the proposed rule, an updated analysis including Fall 
2021 ICH CAHPS data showed a continued deviation in ICH CAHPS scores, 
with completed survey numbers declining by more than 20,000 from the 
previous Spring 2021 survey administration. We believe that this 
updated analysis confirms our earlier concerns regarding the impact of 
the COVID-19 PHE on national performance and justifies suppression of 
the ICH CAHPS measure under Measure Suppression Factor 1.
    Comment: One commenter recommended that CMS not suppress the ICH 
CAHPS measure because the survey requires no staff time as it is 
administered outside the dialysis facility. One commenter disagreed 
with the rationale for suppressing the ICH CAHPS measure under Measure 
Suppression Factor 4, believing the labor shortages are not solely 
attributed to COVID-19, but rather a workforce demographic shift.
    Response: Although the administration of the survey itself may not 
require staff time, facilities are scored based on the patient's 
responses reflecting the patient's experience of care at the facility, 
the substance of which is significantly impacted by staffing levels and 
staff capacity to attend to patients. For example, the ICH CAHPS asks 
patients questions such as, ``In the last 3 months, how often did the 
dialysis center staff spend enough time with you?'' \236\ We believe 
that patients receiving care at facilities experiencing staffing 
shortages are more likely to respond negatively to such questions about 
their experience of care. Although we acknowledge that commenter may be 
correct in its assessment that overall staffing shortages may not be 
solely attributed to the COVID-19 PHE, we believe that the PHE was an 
important catalyst related to the workforce demographic shifts in CY 
2021. Since the performance on the ICH CAHPS measure is directly 
impacted by staffing shortages because it measures the patient's 
experience of care with regards to facility staff, suppressing the ICH 
CAHPS measure based on staffing shortages is appropriate under Measure 
Suppression Factor 4.
---------------------------------------------------------------------------

    \236\ https://ichcahps.org/Portals/0/SurveyMaterials/ICH_Composites_English.pdf.
---------------------------------------------------------------------------

    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the ICH CAHPS measure for PY 2023. 
We will also publicly report the data with appropriate caveats.
f. Suppression of the PPPW Clinical Measure for PY 2023
    In the proposed rule, we proposed to suppress the PPPW clinical 
measure for PY 2023 under Measure Suppression Factor 1, Significant 
deviation in national performance on the measure during the COVID-19 
PHE, which could be significantly better or significantly worse as 
compared to historical performance during the immediately preceding 
program years, as well as under Measure Suppression Factor 4, 
significant national shortages or rapid or unprecedented changes in 
patient case volumes or facility-level case mix (87 FR 38536 through 
38537).
    The PPPW clinical measure is a process measure that assesses the 
percentage of patients at each facility who were on the kidney or 
kidney-pancreas transplant waitlist averaged across patients prevalent 
on the last day of each month during the performance period. Given the 
importance of kidney transplantation to patient survival and quality of 
life, as well as the variability in waitlist rates among facilities, we 
adopted the PPPW clinical measure in the CY 2019 ESRD PPS final rule to 
encourage facilities to coordinate care with transplant centers to 
waitlist patients (83 FR 57003 through 57008).
    In the CY 2022 ESRD PPS final rule (86 FR 61914), several 
commenters recommended that CMS suppress the PPPW clinical measure, 
noting that the COVID-19 PHE had a significant negative impact on 
transplant surgeries, referrals, and waitlists, as well as other 
related areas. A few commenters also noted that waitlist additions 
significantly decreased during the COVID-19 PHE. At the time, we 
responded that our analysis of the relevant data available at the time 
of the proposed rule indicated temporal declines in waitlist removal 
among prevalent patients and similarly a decline in waitlisting and 
transplants in incident ESRD patients in March 2020 through May 2020 
compared to prior years. We also observed that trends generally 
returned to normal starting in June and July 2020 and reflected data 
similar to prior years. However, we also indicated that we would 
continue to monitor and review the data and will consider proposing in 
a future rulemaking to suppress one or more individual ESRD QIP 
measures for a future ESRD QIP payment year if we conclude that 
circumstances caused by the COVID-19 PHE have affected those measures 
and the resulting TPSs based on CY 2021 data.
    After reviewing data for the PPPW clinical measure for CY 2021, in 
the CY 2023 ESRD PPS proposed rule, we stated that we believed that 
circumstances caused by the COVID-19 PHE had affected our ability to 
make reliable national, side-by-side comparisons of facility 
performance on the PPPW measure. Recent analyses indicated that measure 
performance had declined over the course of the COVID-19 PHE. Although 
the initial disruptions in care and associated effects on the PPPW 
measure at the beginning of the COVID-19 PHE initially stabilized, we 
noted that we have since observed a continuous decrease in the levels 
of PPPW clinical measure performance. We believed this decrease was 
indicative overall of the significant impact of the COVID-19 PHE on the 
measure. For example, in January 2019, the monthly PPPW rate was 19 
percent. By contrast, the monthly PPPW rate for December 2021 was 16.9 
percent, which we believed reflects a significant deviation in national 
performance on the measure. We stated that we have also observed that a 
greater number of facilities would receive lower scores in PY 2023 as 
compared to PY 2022, reflecting poorer performance overall on the 
measure. For example, our simulations indicated that the percentage of 
facilities receiving scores lower than 5 (out of 10; a higher score 
reflects better performance) had increased at almost every data point. 
Notably, the percentage of facilities estimated to receive a score of 
0, 1, or 2 increased the most between the PY 2022 and PY 2023, 
indicating that facilities were more likely to receive a lower score in 
PY 2023. Moreover, the percentage of facilities receiving scores higher 
than 5 on the PPPW clinical measure in PY 2023 had decreased at

[[Page 67236]]

each data point. Given the correlation between decreasing scores and 
the pandemic's impact on care delivery and patient ability to access 
the appropriate level of care in light of COVID-19 precautions, we 
stated our belief that the COVID-19 PHE continued to have a significant 
impact on the PPPW clinical measure during CY 2021.
    In the proposed rule, we stated that our analysis of the available 
data indicates that the COVID-19 PHE has had significant effects on the 
PPPW clinical measure and would result in significant deviation in 
national performance on the measure during the COVID-19 PHE. We noted 
that not only were there effects on patients diagnosed with COVID-19, 
but the presence of the virus strongly affected treatment patterns of 
dialysis patients in CY 2020 and continued to do so in CY 2021, and we 
were concerned that similar effects would be seen in the balance of the 
2021 calendar year as the PHE had continued. Because the Delta variant 
and the Omicron variant surged through geographic regions of the 
country unevenly, we stated our concern that facilities in different 
regions of the country would have been affected differently throughout 
the 2021 year, thereby skewing measure performance and affecting 
national comparability due to significant and unprecedented changes in 
patient case volumes or facility-level case mix. Given the limitations 
of the data available to us for CY 2021, we believed the resulting 
performance measurement on the PPPW clinical measure would not be 
sufficiently reliable or valid for use in the ESRD QIP for scoring and 
payment adjustment purposes.
    In the proposed rule, we stated our belief that the PPPW clinical 
measure is an important part of the ESRD QIP measure set. However, we 
were concerned that the ongoing COVID-19 PHE had affected measure 
performance on the current PPPW clinical measure such that we would not 
be able to score facilities fairly or equitably on it. Additionally, we 
noted that we would continue to collect the measure's data from 
participating facilities so that we could monitor the effect of the 
circumstances on quality measurement and determine the appropriate 
policies in the future. We would also continue to provide confidential 
feedback reports to facilities as part of program activities to ensure 
that they are made aware of the changes in performance rates that we 
observe. We also stated our intent to publicly report PY 2023 data 
where feasible and appropriately caveated.
    We noted that we were currently exploring ways to adjust 
effectively for the systematic effects of the COVID-19 PHE on the PPPW 
clinical measure. However, we stated that we were still working to 
improve these COVID-19 adjustments and verify the validity of a 
potential modified version of the PPPW clinical measure as additional 
data become available. As an alternative, we considered whether we 
could exclude patients with a diagnosis of COVID-19 from the PPPW 
clinical measure cohort, but we determined suppression would provide 
additional time and months of data for us to more thoroughly evaluate a 
broader range of alternatives. We noted that we want to ensure that the 
measure reflects care provided to ESRD patients and we were concerned 
that excluding otherwise eligible patients may not accurately reflect 
the care provided, particularly given the unequal distribution of 
COVID-19 patients across facilities over time.
    We welcomed public comment on our proposal to suppress the PPPW 
clinical measure for PY 2023. The comments we received and our 
responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the PPPW clinical measure. Several commenters expressed support for the 
proposed measure suppression because national performance has been 
distorted due to the impact of the COVID-19 PHE.
    Response: We thank commenters for their support. Since the 
publication of the proposed rule, an updated analysis showed a 
continued deviation in PPPW clinical measure performance throughout CY 
2021. We believe that this updated analysis confirms our earlier 
concerns regarding the impact of the COVID-19 PHE on national 
performance and justifies suppression of the PPPW clinical measure.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the PPPW clinical measure for PY 
2023. We will also publicly report the data with appropriate caveats.
g. Suppression of the Kt/V Dialysis Adequacy Clinical Measure for PY 
2023
    In the proposed rule, we proposed to suppress the Kt/V Dialysis 
Adequacy clinical measure for PY 2023 program year under Measure 
Suppression Factor 1, Significant deviation in national performance on 
the measure during the COVID-19 PHE, which could be significantly 
better or significantly worse as compared to historical performance 
during the immediately preceding program years (87 FR 38537 through 
38538). We referred readers to the CY 2022 ESRD PPS final rule for 
previous analysis on the overall impact of the COVID-19 PHE on ESRD 
quality measure performance (86 FR 61910 through 61913).
    The Kt/V Dialysis Adequacy clinical measure is the percentage of 
all patient months for patients whose delivered dose of dialysis 
(either hemodialysis or peritoneal dialysis) met the specified 
threshold during the reporting period. The Kt/V Dialysis Adequacy 
clinical measure is defined as a measure of dialysis sufficiency where 
K is dialyzer clearance, t is dialysis time, and V is total body water 
volume. The measure evaluates the success of achieving the delivered 
dialysis dose. The intent of the Kt/V measure is to improve health care 
delivery by providing facilities with evidence-based parameters for 
optimizing ESRD patient outcomes over time.
    In the CY 2022 ESRD PPS final rule (86 FR 61910), several 
commenters recommended that CMS suppress the Kt/V Dialysis Adequacy 
clinical measure, noting that the COVID-19 PHE had a significant impact 
on catheter rates, which has a corresponding impact on the Kt/V 
measure, as patients with catheters will have lower Kt/V rates. One 
commenter also noted the Kt/V Dialysis Adequacy clinical measure should 
be suppressed under Suppression Factor 1, due to significant deviation 
in national measure performance. At the time, we responded there was 
not sufficient data to determine whether suppression was appropriate 
for the Kt/V Dialysis Adequacy clinical measure. Although performance 
on the Kt/V Dialysis Adequacy clinical measure deviated temporarily, 
our analysis indicated that Kt/V rates stabilized shortly thereafter 
and reflected measure performance similar to prior years. Based on our 
analysis at the time, Kt/V rates in CY 2020 were similar to rates in CY 
2019 until April where they dropped by an average of 0.4 percent. 
However, beginning in June 2020, Kt/V rates were the same as or higher 
than national average rates in March 2020.
    After reviewing data for the Kt/V Dialysis Adequacy clinical 
measure for CY 2020 and CY 2021, in the CY 2023 ESRD PPS proposed rule 
we stated that we believed that circumstances caused by the COVID-19 
PHE had affected the measure and the resulting TPS (87 FR 38537). 
Although the initial disruptions of care at the beginning of the COVID-
19 PHE, associated with multiple transient changes to factors that 
contribute to dialysis adequacy (Kt/V), were temporary, we noted that 
we had observed continued deviations in Kt/V

[[Page 67237]]

clinical measure performance over the past 2 years and we believed that 
this was indicative of the significant impact of the COVID-19 PHE on 
the measure. Notably, delays in hemodialysis treatment, due to COVID-19 
infection or logistical challenges with care delivery, exacerbated ESRD 
sequelae including hyperkalemia, uremic encephalopathy, and fluid 
volume overload.\237\ The confluence of these factors likely 
contributed to declines in Kt/V clinical measure performance.
---------------------------------------------------------------------------

    \237\ Connerney, M., Sattar, Y., Rauf, H., Mamtani, S., Ullah, 
W., Michaelson, N., Dhamrah, U., Lal, N., Latchana, S., & Stern, A. 
S. (2021). Delayed hemodialysis in COVID-19: Case series with 
literature review. Clinical nephrology. Case studies, 9, 26-32. 
https://doi.org/10.5414/CNCS110240.
---------------------------------------------------------------------------

    In the proposed rule, we noted that our simulations comparing PY 
2022 scoring distributions with estimated PY 2023 scoring distributions 
showed that the percentage of facilities receiving scores less than 7 
(out of 10; a higher score reflects better performance) had increased 
at almost every data point, whereas the percentage of facilities 
receiving scores higher than 7 had decreased at almost every data 
point. The percentage of facilities receiving a score of score of 0, 1, 
2, 3, or 4 increased the most between the 2 years, indicating that 
facilities are more likely to receive a lower score in PY 2023. Given 
the correlation between decreasing scores and the pandemic's impact on 
care delivery and patient ability to access the appropriate level of 
care in light of COVID-19 precautions,\238\ we stated our belief that 
the COVID-19 PHE continued to have a significant impact on the Kt/V 
clinical measure during CY 2021.
---------------------------------------------------------------------------

    \238\ National Kidney Foundation, COVID-19 and its Impact on 
Kidney Patients Utilizing U.S. Dialysis Centers (Jan. 18, 2022), 
https://www.kidney.org/news/covid-19-and-its-impact-kidney-patients-utilizing-u-s-dialysis-centers.
---------------------------------------------------------------------------

    We noted that our analysis of the available data indicated that the 
COVID-19 PHE has had significant effects on the Kt/V Dialysis Adequacy 
clinical measure for ESRD patients and would result in significant 
deviation in national performance on the measure during the COVID-19 
PHE, which could be significantly worse as compared to historical 
performance during the immediately preceding program years. Because the 
Delta variant and Omicron variant surged through geographic regions of 
the country unevenly, we were concerned that facilities in different 
regions of the country had been affected differently throughout the 
2021 calendar year, resulting in skewing of measure performance and 
affecting national comparability due to significant and unprecedented 
changes in patient case volumes or facility-level case mix. We noted 
that our scoring simulations indicated that a high percentage of 
facilities would receive a score of zero for PY 2023. Given the 
limitation of the data available to us for CY 2021, we believed the 
resulting performance measurement of the Kt/V Dialysis Adequacy 
clinical measure would not be sufficiently reliable or valid for use in 
the ESRD QIP for scoring and payment adjustment purposes.
    In the proposed rule, we stated our belief that the Kt/V Dialysis 
Adequacy clinical measure is an important part of the ESRD QIP measure 
set. However, we were concerned that the ongoing COVID-19 PHE had 
affected measure performance on the current Kt/V Dialysis Adequacy 
clinical measure such that we would not be able to score facilities 
fairly or equitably on it. Moreover, we noted that we would continue to 
collect the measure's data from participating facilities so that we 
could monitor the effect of the COVID-19 PHE circumstances on quality 
measurement and determine the appropriate policies in the future. We 
would also continue to provide confidential feedback reports to 
facilities as part of program activities to ensure that they are made 
aware of the changes in performance rates that we observe. We also 
stated our intent to publicly report PY 2023 data where feasible and 
appropriately caveated.
    We noted that we were currently exploring ways to adjust 
effectively for the systematic effects of the COVID-19 PHE on the Kt/V 
Dialysis Adequacy clinical measure. However, we were still working to 
improve these COVID-19 adjustments and verify the validity of a 
potential modified version of the Kt/V Dialysis Adequacy clinical 
measure as additional data become available.
    We welcomed public comment on our proposal to suppress the Kt/V 
Dialysis Adequacy clinical measure for PY 2023. The comments we 
received and our responses are set forth below.
    Comment: Many commenters expressed support for our proposal to 
suppress six measures for PY 2023, including our proposal to suppress 
the Kt/V Dialysis Adequacy clinical measure. Several commenters 
expressed support for the proposed measure suppression because national 
performance has been distorted due to the impact of the COVID-19 PHE. 
One commenter expressed support for our proposal to suppress the Kt/V 
Dialysis Adequacy clinical measure, noting that the PHE significantly 
limited the availability of vascular access procedures and many of the 
limitations that contributed to this persist today, including staffing 
shortages, fewer locations which has resulted in more blood stream 
infections, hospitalizations, and mortality.
    Response: We thank commenters for their support.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to suppress the Kt/V Dialysis Adequacy clinical 
measure for PY 2023. We will also publicly report the data with 
appropriate caveats.
3. Technical Measure Specification Updates To Include a Covariate 
Adjustment for COVID-19 for the SHR and SRR Measures Beginning With PY 
2025
    In the CY 2013 ESRD PPS final rule, we finalized a subregulatory 
process to incorporate technical measure specification updates into the 
measure specifications we have adopted for the ESRD QIP (77 FR 67475 
through 67477).
    In the CY 2023 ESRD PPS proposed rule, we stated that as we 
continue to evaluate the effects of COVID-19 on the ESRD QIP measure 
set, we have observed both short-term effects on both hospital 
admissions and readmissions (87 FR 38538). In addition, we discussed 
that for some patients COVID-19 continues to have lasting effects, 
including but not limited to fatigue, cough, palpitations, and others 
potentially related to organ damage, post viral syndrome, and post-
critical care syndrome.\239\ We noted that these clinical conditions 
could affect a patient's risk of complications following an index 
admission or readmission and, as a result, impact a facility's 
performance on the SHR clinical measure or the SRR clinical measure. To 
account for case mix among facilities, the current risk adjustment 
approach for these measures included covariates for clinical 
comorbidities that are relevant and have relationships with the 
outcome, for example patient history of diabetes or obesity. Therefore, 
to adequately account for patient case mix, we stated that we were 
further modifying the technical measure specifications for the SHR and 
SRR measures to include a covariate adjustment for patient history of 
COVID-19. We stated that we believed these changes were technical in 
nature because they did not substantively change the measures 
themselves and,

[[Page 67238]]

therefore, were not required to be implemented through rulemaking.
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    \239\ Raveendran, A.V., Jayadevan, R. and Sashidharan, S., Long 
COVID: An overview. Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8056514/. Accessed on December 15, 2021.
---------------------------------------------------------------------------

    In the proposed rule, we stated that this inclusion of the 
covariate adjustment for patient history of COVID-19 would be effective 
beginning with the PY 2025 program year for the SHR clinical measure 
and the SRR clinical measure, and we would also apply this adjustment 
for purposes of calculating the performance standards for that program 
year. As discussed in section IV.E.1.b, we proposed to convert the STrR 
reporting measure to a clinical measure beginning with PY 2025. In the 
proposed rule, we noted that we were also considering whether it would 
be appropriate to add a covariate adjustment for patient history of 
COVID-19 to the STrR clinical measure, beginning with PY 2025, and will 
announce that technical update, if appropriate, at a later date.
    For more information on the application of covariate adjustments, 
including the technical updates we announced in the proposed rule, 
please see the Technical Specifications for ESRD QIP Measures 
(available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/061_TechnicalSpecifications) and 
the CMS ESRD Measures Manual (available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/06_MeasuringQuality).
    The comments we received and our responses are set forth below.
    Comment: Several commenters expressed support for including a 
covariate to adjust for patient history of COVID-19 in the SHR and SRR 
measures, noting the significant impact of the COVID-19 PHE on these 
measures. A few commenters recommended that CMS include the adjustment 
before PY 2025 if possible.
    Response: We thank the commenters for their support. Although we 
considered implementing the technical measure specification updates 
before PY 2025, we ultimately concluded that PY 2025 was the earliest 
year feasible for including the covariate adjustment due to data 
collection timelines.
    Comment: One commenter requested that CMS provide more information 
about the measures' technical specifications and how patient 
information regarding COVID-19 may be obtained. One commenter requested 
that CMS make available supporting analytics so that interested parties 
may review the impact of such a covariate on model performance.
    Response: We will provide more information about the measures' 
technical specifications, including the updated specifications for the 
SHR and SRR clinical measures that include the covariate adjustments, 
in the CMS ESRD Measures Manual for the 2023 Performance Period, which 
will be available following publication of the CY 2023 ESRD PPS final 
rule at https://www.cms.gov/files/document/esrd-measures-manual-v80.pdf. As discussed in the Measures Manual, patient information 
regarding COVID-19 may be obtained from Medicare claims. We will 
determine the feasibility of making supporting analytics available for 
interested parties to review to model the impact of such a covariate on 
a facility's performance.

C. Updates to the Performance Standards Applicable to the PY 2023 
Clinical Measures

    In the CY 2023 ESRD PPS proposed rule (87 FR 38538), we stated that 
our current policy is to automatically adopt a performance and baseline 
period for each year that is 1 year advanced from those specified for 
the previous payment year (84 FR 60728). We noted that under this 
policy, CY 2021 is currently the performance period and CY 2020 is the 
baseline period for the PY 2023 ESRD QIP. However, we also stated that 
under the nationwide ECE that we granted in response to the COVID-19 
PHE, first and second quarter data for CY 2020 are excluded from 
scoring for purposes of the ESRD QIP (85 FR 54829 through 54830). 
Accordingly, in the CY 2022 ESRD PPS final rule (86 FR 61922 through 
61923), for PY 2024, we finalized calculating performance standards 
using CY 2019 data due to concerns about using partial year data (86 FR 
61922 through 61923). Similarly, in the CY 2023 ESRD PPS proposed rule, 
we stated that we were concerned that it would be difficult to assess 
performance standards for PY 2023 based on partial year data. We noted 
that our preliminary analysis indicated that the effect of the excluded 
data could create inflated performance standards for PY 2023 and we 
would potentially be required to use these for future payment years due 
to the requirement that the prior year's standard cannot be higher than 
the current year's standard. This may skew achievement and improvement 
thresholds for facilities and therefore may result in performance 
standards that do not accurately reflect levels of achievement and 
improvement.
    Our current policy substitutes the performance standard, 
achievement threshold, and/or benchmark for a measure for a performance 
year if final numerical values for the performance standard, 
achievement threshold, and/or benchmark are worse than the numerical 
values for that measure in the previous year of the ESRD QIP (82 FR 
50764). We stated that we adopted this policy because we believe that 
the ESRD QIP should not have lower performance standards than in 
previous years and therefore, adopted flexibility to substitute the 
performance standard, achievement threshold, and benchmark in 
appropriate cases.
    Although the lower performance standards would be substituted with 
those from the prior year, the higher performance standards would be 
used to set performance standards for certain measures, even though 
they would be based on partial year data. We stated that we continued 
to be concerned that this may create performance standards for certain 
measures that would be difficult for facilities to attain with 12 
months of data.
    Therefore, we proposed to calculate the performance standards for 
PY 2023 using CY 2019 data, which are the most recently available full 
calendar year of data we can use to calculate those standards. Due to 
the impact of CY 2020 data that are excluded from the ESRD QIP for 
scoring purposes, we stated our belief that using CY 2019 data for 
performance standard setting purposes is appropriate. We also proposed 
to amend 42 CFR 413.178(d)(2) to reflect both our proposed updates 
applicable to the PY 2023 performance standards, as well as our 
previously finalized update to the PY 2024 performance standards.
    We welcomed public comments on this proposal. The comments we 
received and our responses are set forth below.
    Comment: Several commenters expressed support for our proposal to 
use CY 2019 data for PY 2023 performance standards, noting that data 
collected during the COVID-19 PHE have been skewed. One commenter also 
supported the proposal to use CY 2019 data to calculate PY 2023 
performance standards due to the impact of the shift to the EQRS data 
system. One commenter expressed support for our proposal to calculate 
performance standards for PY 2023 using CY 2019 data but emphasized 
that CY 2019 data does not reflect the impacts of the COVID-19 PHE on 
facilities.
    Response: We thank commenters for their support. We acknowledge the 
commenter's observation that CY 2019 data does not reflect the impacts 
of the COVID-19 PHE on facilities. However, we note that one of the 
reasons we adopted our measure suppression policy for the duration of 
the COVID-19 PHE was to help minimize the impacts on

[[Page 67239]]

performance standards for certain measures that have been significantly 
affected by the COVID-19 PHE, which we believe will improve the 
comparability of pre-COVID-19 data from CY 2019 for purposes of 
calculating PY 2023 performance standards.
    Comment: A few commenters noted the difficulty in creating 
reasonable benchmarks when comparing a facility's performance during 
the COVID-19 PHE to performance before the COVID-19 PHE and expressed 
concern that using pre-pandemic CY 2019 data as a baseline for 
assessing COVID-19 era data is not an appropriate comparison. One 
commenter pointed out the impact of measure suppressions on the number 
of clinical measures eligible for PY 2023 scoring. One commenter stated 
that comparing PY 2023 performance using CY 2019 baseline data would be 
inappropriate because the COVID-19 PHE has resulted in decreased 
patient adherence to treatment and has increased the complexity of ESRD 
patient care. One commenter expressed concern with CMS's proposal to 
use CY 2019 as the baseline year for the PY 2023 ESRD QIP because the 
combination of the COVID-19 PHE and CMS's focus on home dialysis has 
impacted the mix of patients at in-center ESRD facilities, which the 
commenter believes would make it difficult to compare performance in CY 
2019 to performance in 2021. This commenter encouraged CMS to evaluate 
the impact of the COVID-19 PHE and increases in home dialysis use on 
the individual quality measures and adjust performance targets 
accordingly. One commenter recommended that CMS consider alternative 
approaches for updating the performance standards for PY 2023, such as 
suspending use of a baseline comparison this year and re-establish a 
new ``post-COVID'' baseline next year using the CY 2021 data or 
simulating early COVID-19 PHE data using 2019 data and then using these 
data as the baseline for PY 2023.
    Response: We appreciate the commenters' concerns. We believe that 
the use of CY 2019 data as a baseline for assessing COVID-19 era data 
is an appropriate comparison in light of our measure suppression policy 
and the suppression of individual measures thereunder. We adopted our 
measure suppression policy to minimize the impact of the COVID-19 PHE 
on facility performance, and for PY 2023, we are suppressing certain 
measures that we believe were significantly impacted by the COVID-19 
PHE. We did not suppress measures that we believe were not 
significantly impacted by the COVID-19 PHE. Given our determinations 
that these measures were not significantly impacted by the COVID-19 
PHE, we believe that performance on these measures is generally 
comparable to CY 2019 performance, and therefore we believe those 
measures are appropriate to include in the calculation of PY 2023 
performance standards for scoring purposes as comparable to CY 2019 
pre-pandemic data. We note that this is a temporary update to our 
performance standards calculations made in response to an unprecedented 
PHE, and the impact is limited to those few clinical measures for which 
measure suppression was not warranted for PY 2023. We believe these 
updates are necessary to mitigate the impact of the ECE that CMS 
granted in response at the beginning of the COVID-19 PHE, as well as 
the COVID-19 PHE itself, on PY 2023 and PY 2024 performance standards 
calculations. However, we intend to resume our previously finalized 
performance standards methodology beginning with PY 2025, which will 
consist of ``post-COVID-19'' measure data. We appreciate that 
suppressed measures may have an impact on TPS scores for PY 2023. 
However, we believe that it is appropriate to score facilities on non-
suppressed measures. Although the recalculated mTPS for PY 2023 may be 
higher, we believe that fewer facilities will be penalized as a result, 
particularly given that we are finalizing suppression of the 
Standardized Fistula Rate clinical measure for PY 2023, which we 
discuss in section IV.B.2.d of this final rule. We are finalizing for 
suppression the measures which we have identified as being 
significantly impacted by the COVID-19 PHE in CY 2021 for PY 2023. We 
also note that rapid or unprecedented changes to patient case volumes 
or facility-level case mix, either due to decreased adherence to 
treatment or changes to dialysis modality as a result of the COVID-19 
PHE, would be considered for measure suppression under Measure 
Suppression Factor 4. Our analyses indicate that the patient case 
volumes and facility-level case mix were not significantly impacted in 
those measures that we are not suppressing for PY 2023 and therefore 
does not inhibit the use of CY 2019 data as the baseline for purposes 
of calculating PY 2023 performance standards. Finally, we appreciate 
the commenter's recommendations for alternative approaches to PY 2023 
performance standards, but believe that our proposed approach is the 
most feasible option at this time.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to calculate the performance standards for PY 
2023 using CY 2019 data. We are also finalizing our proposal to amend 
42 CFR 413.178(d)(2) to reflect both our finalized updates applicable 
to the PY 2023 performance standards, as well as our previously 
finalized update to the PY 2024 performance standards.

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

    In the CY 2017 ESRD PPS final rule, we adopted the SHR clinical 
measure under the authority of section 1881(h)(2)(B)(ii) of the Act (81 
FR 77906 through 77911). The SHR clinical measure is a National Quality 
Forum (NQF)-endorsed all-cause, risk-standardized rate of 
hospitalizations during a 1-year observation window. The standardized 
hospitalization ratio is defined as the ratio of the number of hospital 
admissions that occur for Medicare ESRD dialysis patients treated at a 
particular facility to the number of hospitalizations that would be 
expected given the characteristics of the facility's patients and the 
national mean for facilities. In the CY 2015 ESRD PPS final rule, we 
adopted the SRR clinical measure under the authority of section 
1881(h)(2)(B)(ii) of the Act (79 FR 66174 through 66182). The 
standardized readmission ratio is defined as the ratio of the number of 
observed unplanned 30-day hospital readmissions to the number of 
expected unplanned 30-day hospital readmissions. Both the SHR clinical 
measure and the SRR clinical measure are calculated as a ratio, but can 
also be expressed as a rate.
    In the CY 2023 ESRD PPS proposed rule, we noted that 
hospitalization and readmission rates vary across facilities even after 
adjustment for patient characteristics, suggesting that 
hospitalizations and readmissions might be influenced by facility 
practices (87 FR 38539). Both an adjusted facility-level standardized 
hospitalization ratio and an adjusted facility-level standardized 
readmissions ratio, accounting for differences in patients' 
characteristics, play an important role in identifying potential 
quality issues, and help facilities provide cost-effective quality 
health care to help reduce admissions or readmissions to the hospital 
for dialysis patients as well as limit escalating medical costs. We 
stated that we have weighted scoring of the SHR clinical measure and 
the SRR clinical measure to reflect the importance of the measures on 
the quality of patient care. In the CY 2019 ESRD PPS final rule, the 
SHR clinical

[[Page 67240]]

measure and the SRR clinical measure each accounted for 14 percent of 
the TPS (83 FR 56992). In CY 2019, with average weights of more than 15 
percent (after reweighting of missing measures), the SHR clinical 
measure and the SRR clinical measure were the two measures with the 
largest weight in calculating the TPS for each facility.
    In the CY 2013 ESRD PPS final rule, we finalized a subregulatory 
process to incorporate technical measure specification updates into the 
measure specifications we have adopted for the ESRD QIP (77 FR 67475 
through 67477). In the CY 2023 ESRD PPS proposed rule, we announced 
that we are updating the technical specifications to revise how we 
express the results of the SHR clinical measure and the SRR clinical 
measure so that those results are expressed as a Risk-Standardized 
Hospitalization Rate (RSHR) and a Risk-Standardized Readmission Rate 
(RSRR), respectively (87 FR 38539). We noted that interested parties 
had previously expressed concern that the SHR clinical measure and the 
SRR clinical measure were difficult to interpret and track facility 
performance over time when expressed as ratios, and had recommended 
expressing those ratios as rates when scoring. We stated that although 
there are widespread national improvements in hospitalization rates and 
readmission rates, individual facilities may not see their own 
improvement reflected if their measure results are reflected as ratios 
because SHR and SRR measures effectively standardize the ratios to 1.0 
each calendar year and all facilities' ratios are calculated using 
national-level performance in each calendar year. We noted that another 
concern interested parties raised was that the ratios were difficult to 
understand and it was difficult to determine how to use these ratios 
for quality improvement efforts.
    In light of these concerns, we stated that we were updating the 
technical specifications to change the scoring methodology for the SRR 
clinical measure and the SHR clinical measure such that a facility's 
results are expressed as a rate in the performance period that is 
compared directly to its rate in the baseline period. We noted that, in 
response to public comments indicating a perception that overall 
facility performance on ESRD QIP measures was recently improving as 
payment reductions were increasing, we assessed trends in facility 
performance through 2019 to examine facility performance on the SHR 
clinical measure and the SRR clinical measure over time. We also 
calculated the RSHR and the RSRR. We calculated the RSHR by multiplying 
SHR by the national observed hospitalization rate (per patient-year at 
risk) in the calendar year. Similarly, we multiplied the SRR by the 
national observed readmission rate (per index discharge) in the 
calendar year to determine the RSRR. Both ESRD QIP and Dialysis 
Facility Reports (DFR) data were used in these analyses. Data from ESRD 
QIP were available from CYs 2018 to 2019 for the SRR clinical measure 
and from CYs 2015 to 2019 for the SHR clinical measure. Additionally, 
we used data from the publicly available DFRs from CYs 2010 to 2018 for 
the SHR clinical measure and from CYs 2014 to 2018 for the SRR clinical 
measure to compare to the ESRD QIP calculations.
    We stated our belief that these changes were technical in nature 
because they did not substantively change the measures themselves and, 
therefore, were not required to be implemented through rulemaking. Our 
analysis found that expressing the measure performance as a rate 
instead of a ratio would communicate the same information in a clearer 
way. After the SHR clinical measure and the SRR clinical measure were 
added to the ESRD QIP measure set, that SHR and SRR distributions were 
similar from year to year. We noted that median SHR has consistently 
remained below 1.0, while median SRR has remained around 1.0 each year. 
RSHR and RSRR have remained stable since then as well. We stated that 
these trends showed that as ESRD QIP payment reductions were increasing 
from PY 2018 to PY 2020 (corresponding to CY 2016 to CY 2018 facility 
performance for most measures), we did not find evidence of overall 
declines in risk-adjusted hospitalization and readmission rates. 
Furthermore, in recent years, the national readmission or 
hospitalization rates have been relatively stable or slightly 
increasing. Therefore, we stated that revising how we express SHR or 
SRR measure results to be expressed as RSHR or RSRR, respectively, each 
year would not result in higher ESRD QIP scores.
    Our analysis found that expressing the SHR clinical measure and SRR 
clinical measure results as rates would reflect the same level of 
measure performance as expressing those results as ratios, and we 
stated our belief that expressing the measure results as rates would 
help providers and patients better understand a facility's performance 
on the measures, and would be more intuitive for a facility to track 
its performance from year to year.
    Further, we noted that this technical update would also more 
closely align with the measure result calculation methodology for the 
ESRD QIP with that used in the Dialysis Facility Compare Star Ratings 
Program. For star ratings calculations, an adjustment factor is applied 
for the standardized ratio measures, accounting for differences in 
population event rates between the baseline period and evaluation 
period data, so that an adjusted evaluation period ratio (a proxy for 
rate converted from ratio) value reflects the same value it would have 
in the baseline period.\240\ We provided the currently finalized 
performance standards for the PY 2024 SHR and SRR clinical measures in 
Table 16 of the proposed rule, and the revised PY 2024 performances 
standards for the updated SHR and SRR clinical measures in Table 17 of 
the proposed rule (87 FR 38540). They are described in Table 20 and 
Table 21 in this final rule.
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    \240\ The University of Michigan Kidney Epidemiology and Cost 
Center. (2018). Technical Notes on the Dialysis Facility Compare 
Quality of Patient Care Star Rating Methodology for the October 2018 
Release. Available at: https://dialysisdata.org/sites/default/files/content/Methodology/Updated_DFC_Star_Rating_Methodology_for_October_2018_Release.pdf.

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[[Page 67241]]

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[GRAPHIC] [TIFF OMITTED] TR07NO22.022

    We welcomed public comments on this technical update. The comments 
we received and our responses are set forth below.
    Comment: Several commenters expressed support for expressing SHR 
and SRR results as rates, noting that this will allow for better year-
over-year comparability at the facility level. A few commenters 
expressed appreciation for the technical updates because they will help 
to increase providers' and patients' understanding of the measures and 
will provide a clearer picture of facility performance.
    Response: We thank commenters for their support.
    Comment: A few commenters recommended that CMS use a consistent 
denominator to allow for comparability year-over-year at the facility 
level so that facilities may take steps to improve their performance. A 
few commenters recommended that CMS adopt the adjustment factor used in 
the Star Rating Program, which would translate the adjusted rates in 
the performance year to the same scale as those in the baseline year. 
These commenters expressed the belief that this approach will help with 
year-over-year comparability. One commenter expressed concern that SHR 
and SRR rates may be difficult to interpret due to a lack of 
understanding of how the denominator is calculated and inability to 
understand actual facility performance.
    Response: As described in the proposed rule, the methodology for 
converting ratios to rates that we will move to in the ESRD QIP is 
equivalent to the methodology used in Dialysis Facility Compare (DFC) 
reporting. Specifically, in the Star Rating calculation under the DFC 
program, the ratio for the performance year is multiplied by the 
adjustment factor (national rate for performance year/national rate for 
the base year). In both the ESRD QIP and the DFC, this methodology 
results in rates that give credit for national changes in additional to 
individual facility changes that differ from the national rate change.
    Regarding the comments about interpretability of the measure 
calculations, we note that the SHR and SRR have been used in public 
reporting and the ESRD QIP for multiple years. Both the DFC and the 
ESRD QIP programs have descriptions of how the measure is calculated 
and how to interpret the measure results for a given dialysis 
facility's results. Information that would help with understanding how 
the measures are calculated, such as the inclusion of various risk-
adjustments and other factors contributing to denominator calculations, 
is generally available as part of the public displays and other 
information tools that CMS makes publicly available. Given the multiple 
sources of information available at various levels of detail, we 
believe that interpretation of results for both the SHR clinical 
measure and the SRR clinical should be achievable for most or all 
interested parties.
    Comment: One commenter recommended that this policy apply to other 
standardized ratio measures as well.
    Response: We thank the commenter for its recommendation, and note 
that we are incorporating a similar methodology as part of our proposal 
to convert the Standardized Transfusion Ratio (STrR) reporting measure 
to a

[[Page 67242]]

clinical measure beginning in PY 2025, as discussed in section IV.E.1.b 
of this final rule.

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

1. PY 2025 ESRD QIP Measure Set
    Under our current policy, we retain all ESRD QIP measures from year 
to year unless we propose through rulemaking to remove them or 
otherwise provide notification of immediate removal if a measure raises 
potential safety issues (77 FR 67475). Accordingly, the PY 2025 ESRD 
QIP measure set would include the same 14 measures as the PY 2024 ESRD 
QIP measure set (85 FR 71465 through 71466). In section IV.E.1.a of the 
proposed rule, we also proposed to adopt a COVID-19 Vaccination 
Coverage among Healthcare Personnel (HCP) reporting measure beginning 
in PY 2025 (87 FR 38542 through 38544). In section IV.E.1.b of the 
proposed rule, we proposed to convert the STrR reporting measure to a 
clinical measure beginning in PY 2025 (87 FR 38544 through 38545), and 
in section IV.E.1.c of the proposed rule, we proposed to convert the 
Hypercalcemia clinical measure to a reporting measure beginning in PY 
2025 (87 FR 38545 through 38546). These measures are described in Table 
18 in the proposed rule (87 FR 38541), and are described in Table 22 in 
this final rule. For the most recent information on each measure's 
technical specifications for PY 2025, we refer readers to the CMS ESRD 
Measures Manual for the 2022 Performance Period.\241\
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    \241\ https://www.cms.gov/files/document/esrd-measures-manual-v70.pdf.
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BILLING CODE 4120-01-P

[[Page 67243]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.023

BILLING CODE 4120-01-C
    We discuss our proposal to adopt the COVID-19 Vaccination Coverage 
among HCP reporting measure, our proposal to convert the STrR reporting 
measure to a

[[Page 67244]]

clinical measure, and our proposal to convert the Hypercalcemia 
clinical measure to a reporting measure in the following sections.
a. Adoption of the COVID-19 Vaccination Coverage Among HCP Reporting 
Measure Beginning With the PY 2025 ESRD QIP
(1) Background
    On January 31, 2020, the Department of Health and Human Services 
(HHS) issued a declaration of a public health emergency related to 
COVID-19,\242\ caused by a novel coronavirus, SARS-CoV-2. COVID-19 is a 
contagious respiratory infection \243\ that can cause serious illness 
and death. Older individuals and those with underlying medical 
conditions are considered to be at higher risk for more serious 
complications from COVID-19.\244\
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    \242\ U.S. Dept of Health and Human Services, Office of the 
Assistant Secretary for Preparedness and Response. (2020). 
Determination that a Public Health Emergency Exists. Available at: 
https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
    \243\ Centers for Disease Control and Prevention. (2020). Your 
Health: Symptoms of Coronavirus. Available at: https://www.cdc.gov/coronavirus/2019-ncov/symptoms-testing/symptoms.html.
    \244\ Ibid.
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    COVID-19 has had significant negative health effects--on 
individuals, communities, and the nation as a whole. Consequences for 
individuals who have COVID-19 include morbidity, hospitalization, 
mortality, and post-COVID conditions (also known as long COVID). As of 
March 16, 2022, over 79 million COVID-19 cases, over 4.5 million new 
COVID-19 related hospitalizations, and almost 965,000 COVID-19 deaths 
have been reported in the U.S.\245\
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    \245\ https://covid.cdc.gov/covid-data-tracker#datatracker-home.
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    According to available data, COVID-19 spreads when an infected 
person breathes out droplets and very small particles that contain the 
virus. These droplets and particles can be breathed in by other people 
or land on their eyes, noses, or mouth, and in some circumstances may 
contaminate surfaces they touch.\246\ According to the CDC, those at 
greatest risk of infection are persons who have had prolonged, 
unprotected close contact (that is, within 6 feet for 15 minutes or 
longer) with an individual with confirmed SARS-CoV-2 infection, 
regardless of whether the individual has symptoms.\247\ Although 
personal protective equipment (PPE) and other infection-control 
precautions can reduce the likelihood of transmission in health care 
settings, COVID-19 can spread between HCP and patients, or from patient 
to patient, given the close contact that may occur during the provision 
of care.\248\ The CDC has emphasized that health care settings can be 
high-risk places for COVID-19 exposure and transmission.\249\
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    \246\ Centers for Disease Control and Prevention. (2022). How 
COVID-19 Spreads. Accessed on October 16, 2022 at: https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/how-covid-spreads.html.
    \247\ Centers for Disease Control and Prevention. (2021). When 
to Quarantine. Accessed on April 2, 2021 at: https://www.cdc.gov/coronavirus/2019-ncov/if-you-are-sick/quarantine.html.
    \248\ Centers for Disease Control and Prevention. (2021). 
Interim U.S. Guidance for Risk Assessment and Work Restrictions for 
Healthcare Personnel with Potential Exposure to COVID-19. Accessed 
on April 2 at: https://www.cdc.gov/coronavirus/2019-ncov/hcp/faq.html#Transmission.
    \249\ Dooling, K, McClung, M, et al. ``The Advisory Committee on 
Immunization Practices' Interim Recommendations for Allocating 
Initial Supplies of COVID-19 Vaccine--United States, 2020.'' Morb 
Mortal Wkly Rep. 2020; 69(49): 1857-1859. Available at: https://www.cdc.gov/mmwr/volumes/69/wr/mm6949e1.htm.
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    Vaccination is a critical part of the nation's strategy to 
effectively counter the spread of COVID-19 and ultimately help restore 
societal functioning.\250\ On December 11, 2020, FDA issued the first 
Emergency Use Authorization (EUA) for a COVID-19 vaccine in the 
U.S.\251\ Subsequently, FDA issued EUAs for additional COVID-19 
vaccines \252\ and, after a rigorous review process, granted approval 
to two vaccines.\253\
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    \250\ Centers for Disease Control and Prevention. (2020). COVID-
19 Vaccination Program Interim Playbook for Jurisdiction Operations. 
Accessed on April 3, 2021 at: https://www.cdc.gov/vaccines/imz-managers/downloads/COVID-19-Vaccination-Program-Interim_Playbook.pdf.
    \251\ U.S. Food and Drug Administration. (2020). Pfizer-BioNTech 
COVID-19 Vaccine EUA Letter of Authorization. Available at https://www.fda.gov/media/150386/download. (as reissued on October 12, 
2022).
    \252\ U.S. Food and Drug Administration. (2020). Moderna COVID-
19 Vaccine EUA Letter of Authorization. Available at https://www.fda.gov/media/144636/download (as reissued on October 12, 2022); 
U.S. Food and Drug Administration. (2021). Janssen COVID-19 Vaccine 
EUA Letter of Authorization. Available at https://www.fda.gov/media/146303/download (as reissued on May 5, 2022). U.S. Food and Drug 
Administration. (2022). Novavax COVID-19 Vaccine, Adjuvanted EUA 
Letter of Authorization. Available at https://www.fda.gov/media/159902/download (as reissued September 12, 2022).
    \253\ FDA Approves First COVID-19 Vaccine, Available at https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine. Spikevax and Moderna COVID-19 Vaccine, Available 
at: https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/spikevax-and-moderna-covid-19-vaccine.
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    In the CY 2023 ESRD PPS proposed rule, we stated our belief that it 
is important to incentivize and track HCP vaccination for COVID-19 in 
facilities through quality measurement to protect health care workers, 
patients, and caregivers, and to help sustain the ability of these 
facilities to continue serving their communities throughout the PHE and 
beyond (87 FR 38542). We recognized the importance of COVID-19 
vaccination, and noted that we have finalized proposals to include a 
COVID-19 HCP vaccination measure in quality reporting programs for 
other care settings, such as the Inpatient Psychiatric Facility Quality 
Reporting Program (86 FR 42633 through 42640), the Hospital Inpatient 
Quality Reporting Program (86 FR 45374 through 45382), the PPS-Exempt 
Cancer Hospital Quality Reporting (PCHQR) Program (86 FR 45428 through 
45434), the Long-Term Care Hospital Quality Reporting Program (LTCH 
QRP) (86 FR 45438 through 45446), the Inpatient Rehabilitation Facility 
Quality Reporting Program (IRF QRP) (86 FR 42385 through 42396), and 
the Skilled Nursing Facility Quality Reporting Program (86 FR 42480 
through 42489).
    HCP are at risk of carrying COVID-19 infection to patients, 
experiencing illness or death themselves as a result of contracting 
COVID-19, and transmitting COVID-19 to their families, friends, and the 
general public. For further information regarding the importance of 
vaccination among HCP, we refer readers to the ``Omnibus COVID-19 
Health Care Staff Vaccination,'' an interim final rule with comment 
that was issued on November, 11, 2021, requiring COVID-19 vaccination 
of eligible staff at health care facilities that participate in the 
Medicare and Medicaid programs (such as facilities participating in 
ESRD QIP) (86 FR 61556 through 615560). In the proposed rule, we stated 
our belief that facilities should track the level of vaccination among 
their HCP as part of their efforts to assess and reduce the risk of 
transmission of COVID-19 within their facilities. HCP vaccination can 
potentially reduce illness that leads to work absence and limit 
disruptions to care.\254\ Data from influenza vaccination demonstrates 
that provider uptake of the vaccine is associated with that provider 
recommending vaccination to patients,\255\ and we noted that we believe 
that HCP COVID-19 vaccination in facilities could similarly increase

[[Page 67245]]

uptake among that patient population. We also stated our belief that 
publishing the HCP vaccination rates would be helpful to many patients, 
including those who are at high-risk for developing serious 
complications from COVID-19 such as dialysis patients, as they choose 
facilities from which to seek treatment. We noted that patients 
undergoing hemodialysis face greater risk for adverse health outcomes 
if they contract COVID-19 and during the Delta and Omicron surges of 
2021, increases in case rates were directly proportionate to 
vaccination rates at the county level across the United 
States.256 257 Under CMS' Meaningful Measures Framework, the 
COVID-19 HCP Vaccination measure would address the quality priority of 
``Promoting Effective Prevention and Treatment of Chronic Disease'' 
through the Meaningful Measures Area of ``Preventive Care.''
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    \254\ Centers for Disease Control and Prevention. Overview of 
Influenza Vaccination among Health Care Personnel. October 2020. 
(2020) Accessed March 16, 2021 at: https://www.cdc.gov/flu/toolkit/long-term-care/why.htm.
    \255\ Measure Applications Partnership Coordinating Committee 
Meeting Presentation. March 15, 2021. (2021) Accessed March 16, 2021 
at: https://www.qualityforum.org/Project_Pages/MAP_Coordinating_Committee.aspx.
    \256\ Cuadros DF, Miller FD, Awad S, Coule P, MacKinnon NJ. 
Analysis of Vaccination Rates and New COVID-19 Infections by US 
County, July-August 2021. JAMA Netw Open. 2022;5(2):e2147915. 
doi:10.1001/jamanetworkopen.2021.47915.
    \257\ Iuliano AD, Brunkard JM, Boehmer TK, et al. Trends in 
Disease Severity and Health Care Utilization During the Early 
Omicron Variant Period Compared with Previous SARS-CoV-2 High 
Transmission Periods--United States, December 2020-January 2022. 
MMWR Morb Mortal Wkly Rep 2022;71:146-152. DOI: https://dx.doi.org/10.15585/mmwr.mm7104e4external icon.
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(2) Overview of Measure
    The COVID-19 Vaccination Coverage among HCP measure is a process 
measure developed by the CDC to track COVID-19 vaccination coverage 
among HCP in non-long-term care facilities such as ESRD facilities.
    The denominator is the number of HCP eligible to work in the ESRD 
facility for at least one day during the reporting period (as described 
in section IV.E.1.a.(5)) excluding persons with contraindications to 
COVID-19 vaccination that are described by the CDC.258 259
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    \258\ Centers for Disease Control and Prevention. 
Contraindications and precautions. (2021) Accessed January 7, 2022 
at: https://www.cdc.gov/vaccines/covid-19/info-by-product/clinical-considerations.html#Contraindications.
    \259\ Centers for Disease Control and Prevention. Measure 
Specification: NHSN COVID-19 Vaccination Coverage Updated August 
2021. (2021) Accessed March 29, 2022 at: https://www.cdc.gov/nhsn/pdfs/nqf/covid-vax-hcpcoverage-508.pdf.
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    The numerator is the cumulative number of HCP eligible to work in 
the ESRD facility for at least one day during the reporting period (as 
described in section IV.E.1.a.(5)) and who received a complete 
vaccination course against COVID-19 using an FDA-authorized or approved 
vaccine for COVID-19. A completed primary series vaccination course may 
require one or more doses depending on the specific vaccine 
used.260 261 We stated that vaccination coverage is defined, 
for purposes of this measure, as the percentage of HCP eligible to work 
at the facility for at least 1 day who received a complete vaccination 
course against COVID-19. The specifications for this measure are 
available at https://www.cdc.gov/nhsn/nqf/.
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    \260\ Measure Applications Partnership Coordinating Committee 
Meeting Presentation. March 15, 2021. (2021) Accessed March 16, 2021 
at: https://www.qualityforum.org/Project_Pages/MAP_Coordinating_Committee.aspx.
    \261\ Centers for Disease Control and Prevention. The National 
Healthcare Safety Network (NHSN) Safety Manual: Weekly COVID-19 
Vaccination Protocol for Healthcare Personnel. Accessed October 14, 
2022 at: https://www.cdc.gov/nhsn/pdfs/hps/covidvax/protocol-hcp-508.pdf.
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(3) Review by the Measure Applications Partnership
    The COVID-19 Vaccination Coverage among HCP measure was included on 
the publicly available ``List of Measures under Consideration for 
December 21, 2020'' (MUC List), a list of measures under consideration 
for use in various Medicare programs.\262\ When the Measure 
Applications Partnership (MAP) Hospital Workgroup convened on January 
11, 2021, it reviewed measures on the MUC List including the COVID-19 
Vaccination Coverage among HCP measure. The MAP Hospital Workgroup 
recognized that the proposed measure represents a promising effort to 
advance measurement for an ongoing and evolving national pandemic and 
that it would bring value to the ESRD QIP measure set by providing 
transparency about an important COVID-19 intervention to help prevent 
infections in HCP and patients.\263\ The MAP Hospital Workgroup also 
stated that collecting information on COVID-19 vaccination coverage 
among HCP, and providing feedback to facilities, would allow facilities 
to benchmark coverage rates and improve coverage in their facility. The 
MAP Hospital Workgroup further noted that reducing rates of COVID-19 in 
HCP may reduce transmission among a patient population that is highly 
susceptible to illness and disease, and also reduce instances of staff 
shortages due to illness.\264\
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    \262\ National Quality Forum. List of Measures Under 
Consideration for December 21, 2020. Accessed at: https://www.cms.gov/files/document/measures-under-consideration-list-2020-report.pdf on January 29 2021.
    \263\ Measure Applications Partnership. MAP Preliminary 
Recommendations 2020-2021. Accessed on January 24, 2021 at: https://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \264\ Ibid.
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    In its preliminary recommendations, the MAP Hospital Workgroup did 
not support this measure for rulemaking, subject to potential for 
mitigation.\265\ To mitigate its concerns, the MAP Hospital Workgroup 
believed that the measure needed well-documented evidence, finalized 
specifications, testing, and NQF endorsement prior to 
implementation.\266\ Subsequently, the MAP Coordinating Committee 
reviewed the COVID-19 HCP Vaccination measure and the preliminary 
recommendation of the Hospital Workgroup, and decided to recommend 
conditional support for rulemaking contingent on CMS bringing the 
measure back to the MAP once the specifications were further 
refined.\267\ In its final report, the MAP further noted that the 
measure would add value to the ESRD QIP measure set by providing 
visibility into an important intervention to limit COVID-19 infections 
in HCP and the ESRD patients for whom they provide care.\268\
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    \265\ Ibid.
    \266\ Ibid.
    \267\ Measure Applications Partnership. 2020-2021 MAP Final 
Recommendations. Accessed on February 23, 2021 at: https://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \268\ Measure Applications Partnership. 2020-2021 MAP Final 
Recommendations. Accessed on February 23, 2021 at: https://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
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    In response to the MAP's request that CMS return with the measure 
once the specifications are further refined, we met with the MAP 
Coordinating Committee accompanied by the CDC on March 15, 2021 to 
address vaccine availability, the alignment of the COVID-19 HCP 
Vaccination measure as closely as possible with the Influenza HCP 
vaccination measure (NQF #0431) specifications, and the definition of 
HCP used in the measure. At this meeting, with the CDC, we also 
presented preliminary findings from ongoing testing of the numerator of 
COVID-19 Vaccination Coverage among HCP measure, which showed that the 
numerator data should be feasible and reliable.\269\ Testing of the 
numerator, the number of HCP vaccinated, involved a comparison of 
vaccination data reported to the CDC by long-term care facilities 
(LTCFs) through the CDC's National Healthcare Safety Network (NHSN) 
with data reported to the CDC through the

[[Page 67246]]

Federal pharmacy partnership program for delivering vaccination to LTC 
facilities. In the proposed rule, we noted that these two data 
collection systems are independent but show high correlation. In 
initial analyses of the first month of vaccination from December 2020 
to January 2021, the number of HCP vaccinated in approximately 1,200 
facilities was highly correlated between these two systems with a 
correlation coefficient of nearly 90 percent in the second two weeks of 
reporting.\270\ Because of the high correlation across a large number 
of facilities, including ESRD facilities, and the high number of HCP 
within those facilities receiving at least one dose of the COVID-19 
vaccine, in the proposed rule we stated our belief that these data 
indicate the measure is feasible and reliable for use in the ESRD QIP.
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    \269\ For more information on testing results and other measure 
updates, please see the Meeting Materials (including Agenda, 
Recording, Presentation Slides, Summary, and Transcript) of the 
March 15, 2021 meeting available at https://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367.
    \270\ Ibid.
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    (4) NQF Endorsement
    Section 1881(h)(2)(B)(i) of the Act states that subject to 
subparagraph (ii), any measure specified by the Secretary for the ESRD 
QIP must have been endorsed by the entity with a contract under section 
1890(a) of the Act. The National Quality Forum (NQF) currently holds 
this contract. Under section 1881(h)(2)(B)(ii) of the Act, in the case 
of a specified area or medical topic determined appropriate by the 
Secretary for which a feasible and practical measure has not been 
endorsed by the entity with a contract under section 1890(a) of the 
Act, the Secretary may specify a measure that is not so endorsed as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    In the proposed rule, we noted that the proposed COVID-19 
Vaccination Coverage among HCP measure was not NQF endorsed. The CDC, 
in collaboration with CMS, submitted the measure for consideration in 
the NQF Fall 2021 measure cycle.
    Because this measure was not NQF-endorsed at the time we issued the 
proposed rule, we stated that we considered whether there were other 
available measures that assess COVID-19 vaccination rates among HCP. We 
noted that we found no other feasible and practical measures on the 
topic of COVID-19 vaccination among HCP, therefore the exception in 
section 1881(h)(2)(B)(ii) of the Act applied. We stated our belief that 
it was important to propose this measure as quickly as feasible to 
address the ongoing COVID-19 pandemic and to prepare for potential 
future waves of COVID-19 variants, including the potential continued 
negative impact of COVID-19 infection on the ESRD patient population as 
well as HCP staffing shortages due to COVID-19 infection among staff.
(5) Data Collection, Submission, and Reporting
    We proposed quarterly reporting deadlines for the ESRD QIP and a 
12-month performance period. Facilities would report the measure 
through the NHSN web-based surveillance system.\271\ Facilities 
currently use the NHSN web-based system to report two ESRD QIP 
measures, the NHSN Bloodstream Infection (BSI) clinical measure and the 
NHSN Dialysis Event reporting measure.
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    \271\ Centers for Disease Control and Prevention. Surveillance 
for Weekly HCP COVID-19 Vaccination. Accessed at: https://www.cdc.gov/nhsn/hps/weekly-covid-vac/ on January 7, 2022.
---------------------------------------------------------------------------

    To report this measure, we proposed that facilities would collect 
the numerator and denominator for the COVID-19 Vaccination Coverage 
among HCP measure for at least one self-selected week during each month 
of the reporting quarter and submit the data to the NHSN Healthcare 
Personal Safety (HPS) Component before the quarterly deadline to meet 
ESRD QIP requirements. While it would be ideal to have HCP vaccination 
data for every week of each month, in the proposed rule we stated that 
we were mindful of the time and resources that facilities would need to 
report the data. Thus, in collaboration with the CDC, we determined 
that data from at least one week of each month would be sufficient to 
obtain a reliable snapshot of vaccination levels among a facility's 
healthcare personnel while balancing the costs of reporting. If a 
facility submits more than one week of data in a month, the most recent 
week's data would be used to calculate the measure, as we believed the 
most recent week's data would provide the most currently available 
information. For example, if first and third week data are submitted, 
third week data would be used. If first, second, and fourth week data 
are submitted, fourth week data would be used. Each quarter, we 
proposed that the CDC would calculate a single quarterly COVID-19 HCP 
vaccination coverage rate for each facility, which would be calculated 
by taking the average of the data from the three weekly rates submitted 
by the facility for that quarter. We stated that we would publicly 
report the most recent quarterly COVID-19 HCP vaccination coverage rate 
as calculated by the CDC.
    As described in section IV.E.1.a.(2) of the proposed rule (87 FR 
38543), facilities would report the number of HCP eligible to have 
worked at the facility during the self-selected week that the facility 
reports data for in NHSN (denominator) and the number of those HCP who 
have received a complete course of a COVID-19 vaccination (numerator) 
during the same self-selected week.
    We welcomed public comment on our proposal to add a new measure, 
COVID-19 Vaccination Coverage among HCP, to the ESRD QIP measure set 
beginning with PY 2025. The comments we received and our responses are 
set forth below.
    Comment: Several commenters expressed support for our proposal to 
add the COVID-19 Vaccination Coverage among HCP reporting measure to 
the ESRD QIP beginning with PY 2025. Several commenters expressed 
support for CMS's proposal to adopt the COVID-19 HCP Vaccination 
Coverage among HCP reporting measure, noting the importance of 
incentivizing and tracking HCP vaccination to protect health care 
workers, patients, and caregivers. A few commenters noted that although 
facilities have worked to reduce the risk of COVID-19 through 
vaccination efforts, more support from Federal agencies is needed to 
address significant opposition to vaccines that still exists in certain 
parts of the country. One commenter supported inclusion of the COVID-19 
Vaccination Coverage among HCP reporting measure in the PY 2025 ESRD 
QIP to ensure consistency with other CMS programs.
    Response: We thank these commenters for their support.
    Comment: Although several commenters expressed support conceptually 
for the COVID-19 Vaccination Coverage among HCP reporting measure 
because tracking and reporting COVID-19 vaccination rates at facilities 
is important, these commenters expressed concern that the measure was 
not appropriate for the ESRD QIP. One commenter noted that currently 
all eligible dialysis HCP are required to be vaccinated against COVID-
19 under CMS's Omnibus COVID-19 Health Care Staff Vaccination Interim 
Final Rule. A few commenters recommended that CMS include the COVID-19 
Vaccination Coverage among HCP reporting measure in Dialysis Facility 
Compare (DFC). A few commenters noted that facilities are already 
required to report vaccination data and expressed concern that 
including a COVID-19 Vaccination Coverage among HCP reporting measure 
in the ESRD QIP would be duplicative and would impose an unnecessary

[[Page 67247]]

reporting burden for facilities. A few commenters stated that the 
COVID-19 Vaccination Coverage among HCP measure was not appropriate for 
the ESRD QIP because they believe that tracking HCP vaccination status 
will not improve quality of ESRD care.
    Response: We thank commenters for their input. We believe that the 
COVID-19 Vaccination Coverage among HCP reporting measure is 
appropriate for inclusion in the ESRD QIP. Although all eligible HCP 
are required to be vaccinated against COVID-19 under CMS's Omnibus 
COVID-19 Health Care Staff Vaccination Interim Final Rule (86 FR 
61555), including the COVID-19 Vaccination Coverage among HCP reporting 
measure in the ESRD QIP will provide patients and their caregivers with 
information regarding the rates of HCP COVID-19 vaccination at 
individual facilities, and such information will help them make 
informed treatment decisions. We further believe that the COVID-19 
Vaccination Coverage among HCP reporting measure will not create a new, 
ESRD QIP specific reporting burden for the majority of facilities 
because they are already reporting the same information via the ESRD 
Network program or to comply with State reporting requirements. To the 
extent the adoption of this measure for the ESRD QIP imposes a new 
reporting burden on some facilities, we believe the importance of 
collecting and reporting data on COVID-19 vaccination coverage among 
HCP is sufficiently beneficial to outweigh this burden. We are also 
collaborating with the CDC to minimize reporting burden to the extent 
feasible where facilities separately report the data to the CDC for 
other monitoring purposes. Finally, we strongly believe that tracking 
HCP vaccination status will have an impact on the quality of ESRD care. 
ESRD patients are more vulnerable to experiencing complications as a 
result of a COVID-19 infection. We believe that encouraging HCP 
vaccination against COVID-19 will help to protect HCP and the ESRD 
patients they care for by reducing the risk of COVID-19 transmission in 
facilities.
    Comment: A few commenters requested that CMS define HCP for 
purposes of this measure to exclude HCP outside an organization's 
workforce, noting difficulties in tracking vaccination rates among HCP 
who are not in the scope of a provider's workforce. One commenter 
recommended that CMS allow facilities to exclude from the count staff 
with no direct in-person patient contact at any time. One commenter 
recommended that CMS consider allowing an attestation of vaccination 
status from the employer of contracted personnel to satisfy reporting 
obligations under the COVID-19 Vaccination Coverage among HCP reporting 
measure. This commenter expressed concern with the proposed COVID-19 
Vaccination Coverage among HCP reporting measure because the required 
level of detail for NHSN reporting is greater than the detail it 
receives from such contractors regarding vaccination status. The 
commenter also expressed concern that its internal systems lack 
capacity to collect and store vendor data regarding individual 
vaccination status, noting that storing data for outside contractors 
increases the risk of data breaches, and compliance with the NHSN's 
level of specificity would require additional resources that may 
detract from the quality of patient care. Finally, the commenter noted 
that CMS has access to contracted vendor data through other channels.
    Response: We acknowledge commenters' concerns regarding reporting 
burden associated with the specifications of this measure specifically 
around the definition of HCP. We note that given the highly infectious 
nature of the virus that causes COVID-19, we believe it is important to 
encourage all personnel within the facility, regardless of patient 
contact, role, or employment type, to receive the COVID-19 vaccination 
to prevent outbreaks within the facility which may affect resource 
availability and have a negative impact on patient access to care. We 
also note that CDC's guidance for entering data requires submission of 
HCP count at the facility level, and the measure requires reporting 
consistent with that guidance.\272\ The decision to include or exclude 
HCP from the facility's HCP vaccination counts should be based on 
whether individuals meet the specified NHSN criteria and are physically 
working in a location that is considered any part of the facility that 
is being monitored.\273\ Additionally, the CDC has provided a number of 
resources including a tool called the Data Tracking Worksheet for 
COVID-19 Vaccination among Healthcare Personnel to help facilities log 
and track the number of HCP who are vaccinated for COVID-19. Facilities 
would enter COVID vaccination data for each HCP in the tracking 
worksheet, and select a reporting week, and the data to be entered into 
the NHSN will automatically be calculated on the Reporting 
Summary.\274\
---------------------------------------------------------------------------

    \272\ Centers for Disease Control and Prevention. Measure 
Specification: NHSN COVID-19 Vaccination Coverage. Available at: 
https://www.cdc.gov/nhsn/pdfs/nqf/covid-vax-hcpcoverage-508.pdf.
    \273\ Centers for Disease Control and Prevention. CMS Reporting 
Requirements FAQs. Accessed September 7, 2022 at: https://www.cdc.gov/nhsn/PDFs/CMS/faq/FAQs-CMS-Reporting-Requirements.pdf.
    \274\ Data Tracking Worksheet for COVID-19 Vaccination among 
Healthcare Personnel, available at: https://www.cdc.gov/nhsn/hps/weekly-covid-vac/.
---------------------------------------------------------------------------

    Comment: A few commenters sought clarification on how CMS will 
define ``complete vaccination course'' as well as the length of time 
CMS will give HCP to get boosters or new vaccines.
    Response: HCP should be counted as vaccinated if they received 
COVID-19 vaccination any time from when it first became available in 
December 2020. A completed vaccination course, which is defined for 
purposes of this measure as the primary vaccination series, may require 
one or more doses depending on the specific vaccine used. The NHSN 
application automatically calculates the total value for ``Any 
completed COVID-19 vaccine series.'' This is the cumulative number of 
HCP who completed any COVID-19 vaccine series (dose 1 and dose 2 of 
COVID-19 vaccines requiring two doses for completion or one dose of 
COVID-19 vaccines requiring only one dose for completion) at the 
facility or elsewhere (for example, a pharmacy). For surveillance 
purposes, facilities are required to enter data in the NHSN application 
on the number of HCP who have received an additional or booster dose of 
the COVID-19 vaccine.\275\ As vaccination protocols continue to evolve, 
we will work with the CDC to update relevant measure specifications as 
necessary.
---------------------------------------------------------------------------

    \275\ https://www.cdc.gov/nhsn/pdfs/hps/covidvax/protocol-hcp-508.pdf.
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    Comment: A few commenters recommended that CMS exclude from the 
measure any HCP who have been granted a religious belief exemption 
under an individual facility's policies.
    Response: The measure denominator excludes HCP who were determined 
to have a medical contraindication, defined as: severe allergic 
reaction (for example, anaphylaxis) after a previous dose or to a 
component of the COVID-19 vaccine or an immediate allergic reaction of 
any severity to a previous dose or known (diagnosed) allergy to a 
component of the vaccine. Religious or personal beliefs are not 
approved exemptions for purposes of the COVID-19 Vaccination Coverage 
among HCP reporting measure. Under the measure specifications, any HCP 
who decline vaccination because of religious or

[[Page 67248]]

philosophical exemptions should be categorized as declined vaccination.
    Comment: One commenter recommended that CMS seek NQF endorsement 
for this measure and develop a validation process for the measure prior 
to inclusion in the ESRD QIP.
    Response: Although NQF endorsement was pending at the time we 
issued the proposed rule, the NQF endorsed this measure in July 
2022.\276\ We will also work with the CDC on developing a validation 
process.
---------------------------------------------------------------------------

    \276\ National Quality Forum, QPS Tool. Quarterly Reporting of 
COVID-19 Vaccination Coverage among Healthcare Personnel (NQF 
#3636). July 26, 2022. Available at https://www.qualityforum.org/QPS/QPSTool.aspx.
---------------------------------------------------------------------------

    Comment: One commenter expressed concern that the reporting 
frequency would increase burden and therefore recommended that 
reporting be required no more than twice per year.
    Response: We disagree that the reporting frequency is overly 
burdensome and that facilities should report twice per year instead of 
quarterly because we believe that important public health initiatives 
outweigh this burden. We proposed that facilities report at least one 
self-selected week during each month of the reporting quarter and 
submit the data to the NHSN HPS Component before the quarterly 
deadline. We note that the majority of facilities are already reporting 
these data on a weekly or monthly basis under the ESRD Network program 
or due to existing state reporting requirements. We proposed that for 
each quarter, the CDC would calculate a single quarterly COVID-19 HCP 
vaccination coverage rate for each facility by taking the average of 
the data from the three weekly rates submitted by the facility for that 
quarter. CMS will publicly report each quarterly COVID-19 HCP 
vaccination coverage rate as calculated by the CDC. Consistent monthly 
vaccination reporting by facilities will help patients and their 
caregivers identify facilities that have potential issues with vaccine 
confidence or slow uptake among staff.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to add the COVID-19 Vaccination Coverage among 
HCP reporting measure to the ESRD QIP measure set beginning with PY 
2025.
b. Updates to the Standardized Transfusion Ratio (STrR) Reporting 
Measure Beginning With PY 2025
    Under section 1881(h)(2)(A)(iv)(I) of the Act, the ESRD QIP has a 
statutory requirement to include an anemia management measure in the 
Program's measure set, and the STrR reporting measure currently 
satisfies that statutory requirement. In the CY 2015 ESRD PPS final 
rule (79 FR 66192 through 66197), we finalized the adoption of the STrR 
clinical measure to address gaps in the quality of anemia management, 
beginning with the PY 2018 ESRD QIP. The NQF endorsed a revised version 
of the STrR clinical measure in 2016, and in the CY 2018 ESRD PPS final 
rule (82 FR 50771 through 50774), we adopted the revised version of the 
STrR clinical measure beginning with the PY 2021 ESRD QIP.
    Commenters to the CY 2019 ESRD PPS proposed rule raised concerns 
about the validity of the modified STrR measure (NQF #2979) finalized 
for adoption beginning with PY 2021 (83 FR 56993 through 56994). 
Commenters specifically stated that due to the new level of coding 
specificity required under the ICD-10-CM/PCS coding system, many 
hospitals were no longer accurately coding blood transfusions. The 
commenters further stated that because the STrR clinical measure was 
calculated using hospital data, the rise of inaccurate blood 
transfusion coding by hospitals had negatively affected the validity of 
the STrR measure (83 FR 56993 through 56994).
    In the CY 2020 ESRD PPS final rule (84 FR 60720 through 60723), we 
finalized our proposal to convert the STrR clinical measure to a 
reporting measure while we examined these validity concerns. 
Accordingly, we finalized that, beginning with PY 2022, we would score 
the STrR measure so that facilities that meet previously finalized 
minimum data and eligibility requirements would receive a score on the 
STrR reporting measure based on the successful reporting of data, not 
on the values actually reported. We stated our desire to ensure that 
the Program's scoring methodology results in fair and reliable STrR 
measure scores because those scores are linked to facilities' TPS and 
possible payment reductions. We also stated our belief that the most 
appropriate way to continue fulfilling the statutory requirement to 
include a measure of anemia management in the Program while ensuring 
that facilities are not adversely affected during our continued 
examination of the measure was to convert the STrR clinical measure to 
a reporting measure.
    In November 2020, the NQF renewed its endorsement of the STrR 
clinical measure after performing an ad hoc review based on updates we 
made to the measure's specifications to address coding and validity 
concerns. Under the revised STrR clinical measure, inpatient 
transfusion events are identified using a broader definition that 
includes revenue center codes only, ICD procedure codes (alone or with 
revenue codes), or value codes alone or in combination. In the CY 2023 
ESRD PPS proposed rule, we stated our belief that these updates would 
result in identification of a greater number of inpatient transfusion 
events compared to the previously implemented STrR clinical measure (87 
FR 38545). In addition, we noted that the revised STrR clinical measure 
would effectively mitigate a provider coding bias that was exacerbated 
by the conversion from ICD-9 to ICD-10 code sets in late CY 2015.
    In light of the NQF's endorsement and adoption of the updated STrR 
clinical measure specifications, we proposed to convert the STrR 
reporting measure to the revised STrR clinical measure using the 
revised specifications that were endorsed by the NQF (87 FR 38545). We 
stated our belief that previous validity concerns have been adequately 
examined and addressed, that facilities have had sufficient time to 
gain experience with the updated measure specifications through 
reporting the updated measure for Dialysis Facility Compare, and 
converting back to the STrR clinical measure would be consistent with 
our intent to more closely align with NQF measure specifications where 
feasible (84 FR 60724).
    In addition to our proposal to convert the STrR reporting measure 
to a clinical measure, we also proposed to update the scoring 
methodology for the STrR clinical measure so that facilities that meet 
previously finalized minimum data and eligibility requirements would 
receive a score on the STrR clinical measure based on the actual 
clinical values reported by the facility, rather than the successful 
reporting of the data. We also proposed to express the proposed STrR 
clinical measure as a rate, rather than as a ratio. We stated our 
belief that converting the STrR clinical measure to be expressed as a 
rate would help providers and patients better understand a facility's 
performance on the measures and would be more intuitive for a facility 
to track its performance from year to year. To assess the impact of 
expressing STrR measure results as rates, we multiplied the facility 
level STrR by the national average transfusion rate. Our analysis found 
that the difference between the distribution of STrR measure scores 
expressed as a ratio and expressed as a rate was generally less than 1 
percent. Therefore, in the proposed rule we stated our belief that 
expressing STrR measure results as a rate would not result in different 
ESRD QIP scores. This

[[Page 67249]]

approach would also align with our technical updates to the SHR 
clinical measure and the SRR clinical measure, as discussed in section 
IV.D of the CY 2023 ESRD PPS proposed rule (87 FR 38539 through 38540).
    We welcomed public comment on our proposals. The comments we 
received and our responses are set forth below.
    Comment: One commenter supported our proposal to convert the STrR 
reporting measure to a clinical measure for PY 2025. However, this 
commenter urged CMS to do so only until the STrR measure can be 
replaced with a measure of hemoglobin (Hb) <10 g/dL measure, which 
commenter stated is supported by current evidence as the most 
actionable and operationally feasible anemia management measure for 
dialysis providers.
    Response: We thank the commenter for its support. Although we are 
not aware of current data that clearly establishes a minimum hemoglobin 
threshold that reliably maximizes the primary outcomes of survival, 
hospitalization, and quality of life for most patients, we will 
reassess the feasibility of replacing the STrR clinical measure with a 
hemoglobin measure as part of our future measure development work as 
new evidence becomes available.
    Comment: One commenter requested that CMS provide more information 
regarding the proposed STrR clinical measure, including the scoring 
methodology. One commenter requested that CMS increase transparency in 
transfusion data by providing facilities with a monthly transfusions 
data set to model the measure and make improvements based on that data.
    Response: The STrR clinical measure is a ratio (which, like the SHR 
and SRR clinical measures, would be expressed as a rate) of the number 
of eligible red blood cell transfusion events observed in patients 
dialyzing at a facility, to the number of eligible transfusion events 
that would be expected under a national norm, after accounting for the 
patient characteristics within each facility. Eligible transfusions are 
those that do not have any claims pertaining to the comorbidities 
identified for exclusion, in the one year look back period prior to 
each observation window. This measure is calculated as a ratio but can 
also be expressed as a rate. We are finalizing this scoring methodology 
in this final rule as part of the finalized STrR clinical measure and 
will provide more details regarding technical specifications in the 
updated Measures Manual.
    We appreciate commenter's request for increased transparency in 
transfusion data and will take its recommendation to provide facilities 
with a monthly transfusions data set to model the measure and make 
improvements based on that data under consideration.
    Comment: Several commenters did not support our proposal to convert 
the STrR reporting measure to a clinical measure, recommending that the 
STrR remain a reporting measure. Several commenters expressed concern 
that facilities will be unfairly penalized as a result of our proposal 
to convert the STrR reporting measure to a clinical measure, noting 
that although patients often receive non-ESRD-related transfusions, 
hospitals will code non-ESRD transfusions erroneously due to 
differences in coding practices. A few commenters requested that CMS 
release data showing how previous coding and validity concerns were 
addressed, noting that measure inaccuracies could negatively impact 
patient care. Several commenters remained concerned about the STrR's 
continued use in the ESRD QIP because facilities do not have access to 
transfusion data and may have difficulty obtaining the information. 
Several commenters noted that the measure tracks hospital decision-
making rather than facility activities and that facilities often do not 
have access to STrR information because it is maintained by hospitals. 
Without access to this relevant measure-related data, commenters stated 
that facilities are not able to act to improve measure performance. One 
commenter expressed concern that converting the STrR reporting measure 
to a clinical measure may discourage facilities from treating patients 
with an increased likelihood of transfusion.
    Response: We believe that these concerns expressed by commenters 
have been mitigated by the recent NQF-endorsed revisions to the STrR 
clinical measure. For hospital inpatients, the previous version of the 
STrR clinical measure relied on a restricted transfusion event 
identification algorithm. The measure utilized only those reported 
transfusion events that include ICD procedure codes, ICD procedure 
codes with revenue center codes, or value codes. For the revised STrR 
clinical measure that is currently NQF-endorsed, inpatient transfusion 
events are identified using a broader definition that includes revenue 
center codes only, ICD procedure codes (alone or with revenue codes), 
or value codes alone or in combination. This revision will result in 
identification of a greater number of inpatient transfusion events 
compared to the currently implemented STrR. In addition, the revision 
will effectively mitigate a provider coding bias that was exacerbated 
by the conversion from ICD-9 to ICD-10 code sets in late CY 2015. 
Identification of outpatient transfusion events is identical in the two 
STrR versions, as the ICD-9 to ICD-10 transition does not impact 
outpatient transfusion claims submission (outpatient claims rely on 
HCPCS procedure codes instead). The NQF website's QPS Tool is a public 
tool which allows users to search for information on all endorsed 
measures, including the STrR clinical measure.\277\ We refer commenters 
to this website for further information on how previous coding and 
validity concerns in the previous version of the STrR clinical measure 
were addressed in the revised STrR clinical measure. Additional 
information regarding the STrR clinical measure is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP.
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    \277\ https://www.qualityforum.org/QPS/QPSTool.aspx.
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    Although we appreciate commenters' concerns regarding the role of 
hospitals in the STrR clinical measure, we note that hospitals and 
facilities often work together to coordinate aspects of ESRD patient 
care. Anemia is a complication of end-stage renal disease that can be 
avoided if a patient's dialysis facility is undertaking proper anemia 
management. When anemia is not managed, patients are subjected to 
unnecessary transfusions that increase morbidity and mortality. The 
STrR measure is calculated using data reported by hospitals because 
poor anemia management results in transfusions that most often occur in 
hospitals and not dialysis facilities.
    Comment: A few commenters expressed concern regarding the proposed 
STrR clinical measure, and recommended replacing it with the Hgb<10 g/
dL measure. A few commenters strongly urged CMS to adopt a Hgb<10 g/dL 
measure, stating that such a measure will more accurately reflect a 
facility's anemia management performance. These commenters also noted 
that the Hgb<10 g/dL measure would provide more transparency than the 
STrR measure so that facilities have more actionable information 
regarding anemia management, resulting in a greater positive effect on 
patient care and outcomes. A few commenters further noted that the STrR 
has not had much of an impact on hemoglobin levels and recommended that 
CMS prioritize finding a more appropriate anemia management measure as 
it shifts toward

[[Page 67250]]

more patient-reported outcome measures.
    Response: As we discussed in the CY 2020 ESRD PPS final rule, use 
of a hemoglobin threshold measure has been previously considered and 
was not implemented based on several concerns (84 FR 60722). First, 
studies reporting results of anemia management in chronic dialysis 
settings typically result in hemoglobin distributions with relatively 
large outcome variation, creating concern that attempts at achievement 
of a specific target will result in a substantial minority of treated 
patients either well above or below the target at any point in time. 
Given the significant concerns about potential clinical risks of 
overtreatment with Erythropoietin stimulating agents (ESAs), 
implementation of a hemoglobin threshold could result in increased risk 
of ESA-related complication for the subset of patients above the 
threshold. One major consequence of under treatment is increased 
transfusion risk. Emphasis on minimizing avoidable transfusions in this 
population focuses on avoiding a major consequence of under-treatment 
without explicitly contributing to the risks associated with over-
treatment with ESAs. This approach is consistent with the Food and Drug 
Administration (FDA) guidance for use of ESAs in this population. In 
addition, the available literature has not clearly established a 
minimum hemoglobin threshold that reliably maximizes the primary 
outcomes of survival, hospitalization, and quality of life for most 
patients. However, we will review new evidence as it becomes available 
to reassess the feasibility of replacing the STrR clinical measure with 
a hemoglobin measure as part of our future measure development work.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to convert the STrR reporting measure to a 
clinical measure. We are also finalizing our proposal to update the 
scoring methodology for the STrR clinical measure so that facilities 
that meet previously finalized minimum data and eligibility 
requirements would receive a score on the STrR clinical measure based 
on the actual clinical values reported by the facility. We are also 
finalizing our proposal to express the STrR clinical measure results as 
a rate.
c. Conversion of the Hypercalcemia Clinical Measure to a Reporting 
Measure Beginning With PY 2025
    Section 1881(h)(2)(A)(iv)(II) of the Act states that the measures 
specified for the ESRD QIP must include, to the extent feasible, 
measures of bone mineral metabolism. Abnormalities of bone mineral 
metabolism are exceedingly common and contribute significantly to 
morbidity and mortality in patients with advanced Chronic Kidney 
Disease (CKD). Many studies have associated disorders of mineral 
metabolism with mortality, fractures, cardiovascular disease, and other 
morbidities. Therefore, in the CY 2014 ESRD PPS final rule (78 FR 72200 
through 72203), we adopted the Hypercalcemia clinical measure as part 
of the ESRD QIP measure set, which we believed would encourage adequate 
management of bone mineral metabolism and disease in patients with 
ESRD.
    In the CY 2023 ESRD PPS proposed rule, we noted that in recent 
years, we have received numerous public comments expressing concern 
about the role and weight of the Hypercalcemia clinical measure in the 
ESRD QIP (87 FR 38545). We noted that many interested parties have 
indicated that they believe the measure is topped out, pointing out 
that the NQF has placed the measure in Reserve Status because of high 
facility performance and minimal room for improvement. As a result, the 
ability to distinguish meaningful differences in performance between 
facilities is substantially reduced because small random variations in 
measure rates can result in different scores. Others have expressed 
concern about whether the Hypercalcemia clinical measure is the best 
measure in the bone mineral metabolism domain to impact patient 
outcomes.
    Considering these persistent concerns expressed by interested 
parties, we stated in the proposed rule that we are currently examining 
the continued viability of the Hypercalcemia clinical measure as part 
of the ESRD QIP measure set. We also acknowledged that there may be 
other measures of bone mineral metabolism that are more informative or 
effective than the Hypercalcemia clinical measure, such as the serum 
phosphorus measure.\278\
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    \278\ CMS ESRD QIP PY 2020 Final Measure Technical 
Specifications. Accessed May 18, 2022 at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/Downloads/PY-2020-Technical-Specification.pdf.
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    In the proposed rule, we stated that although recent annual measure 
analyses have indicated that the Hypercalcemia clinical measure may not 
be fully topped out based on the statistical criteria that we adopted 
in the CY 2015 ESRD PPS final rule (79 FR 66174), they also indicate 
that the measure is very close to being topped out (87 FR 38545). We 
noted that, under our previously adopted methodology, a clinical 
measure is considered to be topped out if national measure data show 
(1) statistically indistinguishable performance levels at the 75th and 
90th percentiles; and (2) a truncated coefficient of variation (TCV) of 
less than or equal to 0.1. To determine whether a clinical measure is 
topped out, we initially focus on the top distribution of facility 
performance on each measure and note if their 75th and 90th percentiles 
are statistically indistinguishable. Then, to ensure that we properly 
account for the entire distribution of scores, we analyze the truncated 
coefficient of variation (TCV) for the measure. Based on a 2017 
analysis using CY 2015 CROWNWeb measure data, the Hypercalcemia 
clinical measure did not meet both conditions. Although the TCV was 
less than 1 percent, the difference between the 75th percentile (0.91) 
was statistically distinguishable from the 90th percentile (0.32). 
However, given that the TCV was so low and was calculated by removing 
the lower and upper 5th percentiles, we stated our belief that it was 
possible that certain outliers in the 90th percentile could have skewed 
the statistically distinguishable part of the topped out analysis. In 
other words, although the Hypercalcemia clinical measure was not 
considered topped out based on our previously adopted methodology, we 
believed that it was very close to being topped out based on the 
available data and were concerned that small differences in measure 
performance may disproportionately impact a facility's score on the 
measure.
    Therefore, we proposed to convert the Hypercalcemia clinical 
measure to a reporting measure beginning in PY 2025 while we explore 
possible replacement measures that would be more clinically meaningful 
for purposes of quality improvement. We also proposed to update the 
scoring methodology so that facilities that meet previously finalized 
minimum data and eligibility requirements would receive a score on the 
Hypercalcemia reporting measure based on the successful reporting of 
the data, rather than the actual clinical values reported by the 
facility. Facilities would be scored using the following equation, 
beginning in PY 2025:

[[Page 67251]]

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If finalized, we stated that the Hypercalcemia reporting measure would 
be in our Reporting Measure Domain, which we discussed in section 
IV.E.2 of the proposed rule.
    We welcomed public comments on our proposal to convert the 
Hypercalcemia clinical measure to a reporting measure, beginning in PY 
2025. The comments we received and our responses are set forth below.
BILLING CODE 4120-01-C
    Comment: Several commenters expressed support for the proposal to 
convert the Hypercalcemia measure to a reporting measure, noting that 
the measure is topped out and does not provide meaningful information 
to patients or care providers. One commenter supported the proposal to 
convert the Hypercalcemia clinical measure into a reporting measure, 
noting that this measure is important for monitoring but that 
facilities cannot control their performance on the measure. One 
commenter supported conversion of the Hypercalcemia clinical measure to 
a reporting measure because it will reduce burden for a condition in 
which interventions are beyond providers' control.
    Response: We thank the commenters for their support.
    Comment: Several commenters recommended that CMS replace the 
hypercalcemia measure with the Serum Phosphorus measure, noting that it 
is a more informative and effective measure of bone mineral metabolism 
and that physicians rely on the serum phosphorus measure to make 
clinical decisions. One commenter recommended replacing the 
Hypercalcemia measure with the Serum Phosphorus measure in ESRD QIP 
because it better aligns with the requirements of the Protecting Access 
to Medicare Act of 2014 (PAMA) for CMS to include measures of relevance 
for oral-only drugs in the ESRD QIP, and it encourages coordination of 
care among an ESRD patient's providers to ensure that phosphorus levels 
are regularly assessed for purposes of phosphorus management. One 
commenter recommended that CMS replace the hypercalcemia measure with a 
new measure of appropriate use of secondary hyperparathyroidism (SHPT) 
medications to reduce excessive PTH levels according to current 
clinical guidelines. A few commenters recommended that CMS consider 
only feasible measures that are more clinically meaningful for purposes 
of quality improvement.
    Response: We thank the commenters for their recommendations and 
will take them under consideration. As noted in the proposed rule, we 
are currently examining the continued viability of the Hypercalcemia 
clinical measure as part of the ESRD QIP measure set and acknowledge 
that there may be other measures of bone mineral metabolism that are 
more informative or effective than the Hypercalcemia clinical measure, 
such as the Serum Phosphorus measure.
    Comment: A few commenters recommended that CMS remove the 
Hypercalcemia measure from the ESRD QIP measure set entirely. One 
commenter recommended that the hypercalcemia measure should be 
suppressed in the interim while CMS finds a more appropriate measure of 
bone mineral metabolism. This commenter stated that, although 
converting Hypercalcemia to a reporting measure would alleviate the 
measure's impact on a facility's score, a facility should not have to 
report on a measure that lacks significance.
    Response: We are considering the long-term viability of the 
Hypercalcemia measure and examining possible alternative measures to 
replace the Hypercalcemia measure in the ESRD QIP. If we do propose to 
remove the Hypercalcemia measure from the ESRD QIP measure set in 
future rulemaking, we will also propose to replace it with a different 
bone mineral metabolism measure. We disagree with the commenter's 
recommendation to suppress the Hypercalcemia measure in the interim, 
and note that our measure suppression policy only enables us to 
suppress the use of measure data for scoring and payment adjustments if 
we determine that circumstances caused by the COVID-19 PHE have 
affected the measures and the resulting Total Performance Scores (TPSs) 
significantly, as guided by the measure suppression factors we have 
finalized. Our analyses indicate that facility performance on the 
Hypercalcemia clinical measure was not significantly impacted by the 
COVID-19 PHE in CY 2021, as the scoring simulations for the 
Hypercalcemia clinical measure showed that measure performance was 
consistent with performance from previous years. Our analyses also did 
not show that there were significant changes in measure performance on 
the Hypercalcemia clinical measure, proximity between the measure's 
focus to the health impacts of the COVID-19 PHE, rapid or unprecedented 
changes in clinical guidelines or care delivery or practice, or 
significant national shortages or rapid or unprecedented changes in 
patient-case volumes or facility-level case mix. Therefore, we 
concluded that suppression of the Hypercalcemia clinical measure is not 
warranted under any of our previously finalized Measure Suppression 
Factors. We also disagree that the Hypercalcemia measure lacks 
significance. Although the Hypercalcemia clinical measure may be close 
to being topped out, we believe the measure still encourages adequate 
management of bone mineral metabolism and disease in patients with ESRD 
and thus is appropriately included in the ESRD QIP measure set at this 
time.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to convert the Hypercalcemia clinical measure 
to a reporting measure, beginning with the PY 2025 ESRD QIP.
2. Revisions To Measure Domains and to the Domain and Measure Weights 
Used To Calculate the Total Performance Score (TPS) Beginning With the 
PY 2025 ESRD QIP
    In the CY 2019 ESRD PPS final rule (83 FR 56991 through 56992), we 
finalized revisions to the ESRD QIP measure domains. Specifically, we 
eliminated the Reporting Domain and reorganized the Clinical Domain 
into three distinct domains: Patient & Family Engagement Domain, Care 
Coordination Domain, and Clinical Care Domain. We stated that adopting 
these topics as separate domains would result in a measure set that is 
more closely aligned with the priority areas in the Meaningful Measures 
Framework.\279\ We also continued use of the Patient Safety Domain, 
which aligns with the Meaningful Measures Framework priority to make 
care safer by reducing harm caused in the delivery of care. In that 
rule, we finalized our proposal to eliminate the Reporting Measure 
Domain from the ESRD QIP scoring methodology, beginning in PY 2021, 
because there would no longer be any measures in that domain as a 
result of

[[Page 67252]]

our finalized proposals to reassign the Ultrafiltration Rate and 
Clinical Depression Screening and Follow-Up Reporting measures to the 
Clinical Care Measure Domain and the Care Coordination Measure Domain, 
respectively (83 FR 56991 through 56997).
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    \279\ CMS website, Meaningful Measures Framework. Available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.
---------------------------------------------------------------------------

    In the CY 2019 ESRD PPS final rule, we also stated our intent to 
reassess how the finalized ESRD QIP measure domains and domain weights 
affect TPSs awarded under the Program in the future (83 FR 56995). We 
take numerous factors into account when determining appropriate domain 
and measure weights, including clinical evidence, opportunity for 
improvement, clinical significance, and patient and provider burden. We 
also consider criteria previously used to determine appropriate domain 
and measures weights, including: (1) The number of measures and measure 
topics in a proposed domain; (2) how much experience facilities have 
had with the measures and measure topics in a proposed domain; and (3) 
how well the measures align with CMS's highest priorities for quality 
improvement for patients with ESRD (79 FR 66214) (that is, the 
Meaningful Measures Framework priorities, which includes our preferred 
emphasis on patient outcomes).
    In the CY 2023 ESRD PPS proposed rule, we stated that currently, 
ESRD QIP measures are weighted and distributed across four measure 
domains: Patient & Family Engagement, Care Coordination, Clinical Care, 
and Safety (87 FR 38546). Based on changes to the measure set since PY 
2021, including adoption of the Medication Reconciliation (MedRec) 
reporting measure, the PPPW clinical measure, and the measure-related 
proposals we are finalizing in this final rule, we have reassessed the 
impact of the ESRD QIP measure domains and domain weights on TPSs, and 
we believe it is necessary to increase incentives for improving 
performance by increasing the weights on measures where there is the 
most room for improvement, especially on patient clinical outcomes. 
Therefore, we proposed to create a new Reporting Measure Domain which 
would include the four current reporting measures in the ESRD QIP 
measure set, as well as the proposed COVID-19 HCP Vaccination reporting 
measure and the proposed Hypercalcemia reporting measure. We noted that 
we proposed to convert the STrR reporting measure to a clinical 
measure, as discussed in section IV.E.1.b of the proposed rule, and as 
a result, we proposed that the proposed STrR clinical measure would be 
placed in the Clinical Care Measure Domain (87 FR 38546).
    We also proposed to update the domain weights and individual 
measure weights in the Care Coordination Domain, Clinical Care Domain, 
and Safety Domain accordingly to accommodate the new Reporting Measure 
Domain and individual reporting measures therein. As the ESRD QIP 
measure set has evolved over the years, we stated our belief that this 
would help to address concerns regarding the impact of individual 
measure performance on a facility's TPS, while also further 
incentivizing improvement on clinical measures. For a comparison of 
current and proposed measure domains and weighting, please see Table 19 
and Table 20 in the CY 2023 ESRD PPS proposed rule (87 FR 38547), which 
we include in this final rule as Table 23 and Table 24.
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[[Page 67253]]


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    We welcomed public comment on our proposal to create a new 
Reporting Domain and to update the existing domains and measure weights 
used to calculate the TPS, beginning with PY 2025. The comments we 
received and our responses are set forth below.
    Comment: Several commenters expressed support for our proposal to 
create a reporting measure domain and reweight measures and measure 
domains.
    Response: We thank commenters for their support.
    Comment: A few commenters expressed concern with our proposal to 
create a new reporting measure domain and re-weight existing measure 
domains, stating that CMS should instead aim to reduce the number of 
measures in the ESRD QIP and weight the remaining measures to align 
with clinical value and importance to patients so that they are 
meaningful.
    Response: We agree with commenters that the weights should reflect 
clinical value and meaningfulness to patients, which we took into 
account in developing our proposal. We believe that the proposed 
measure domains and weights will provide facilities with more 
meaningful incentives to improve performance on measures that align 
with clinical value and importance to patients. Although we aim to 
minimize facility burden as much as feasible, we disagree that reducing 
the number of measures in the ESRD QIP should be a goal, absent 
justification under our previously finalized measure removal policy (83 
FR 56983 through 56985). We note that we have developed the ESRD QIP 
measure set specifically to ensure that facilities focus on the most 
relevant clinical topics that will lead to improved quality of care and 
better outcomes for patients.
    Comment: A few commenters expressed concern regarding our proposal 
to update domain weights and our proposal to update individual weights 
within those domains. One commenter expressed concern with our proposal 
to weight the reporting measure domain at 10 percent, noting that 
reporting measures currently account for 18 percent of a facility's 
TPS. This commenter recommended that the reporting measure domain 
should be worth at least 18 percent of a facility's total score, 
emphasizing the critical role of reporting measures in a facility's 
quality of care provided to patients. One commenter recommended that 
each measure domain should have equal weight because it would support 
the CMS National Quality Strategy goal of alignment among value-based 
purchasing programs and would further highlight the importance of 
patient experience and person-centered care. One commenter was 
particularly concerned with the weight of the ICH CAHPS and the STrR, 
believing that the measures were too heavily weighted and that the 
resulting TPS would not accurately reflect a facility's performance. 
One commenter recommended that CMS weight the Long-Term Catheter Rate 
measure greater than the Standardized Fistula Rate measure to support a 
``catheters last'' approach to improve patient outcomes. This commenter 
also recommended that CMS work with the kidney care community to 
develop more appropriate weights. One commenter expressed support for 
increasing the PPPW measure weight, but noted that dialysis facilities 
should be more strongly encouraged to refer clinically appropriate 
patients for transplant evaluation by strengthening regulatory 
incentives for the referral source.
    Response: Although we will take these recommendations into 
consideration for future rulemaking, we believe that the proposed 
Reporting Measure Domain weights are appropriate to support high 
quality health care on all ESRD QIP measures. We will also take 
commenters'

[[Page 67254]]

recommendations regarding specific measure weights into consideration 
for future rulemaking, but believe that the proposed weights are 
appropriate at this time to incentivize quality improvement in more 
actionable clinical measures. That is, we believe it is appropriate to 
assign greater weights to those clinical measures that have more room 
for quality improvement and therefore may help to ensure better patient 
outcomes. We note the ICH CAHPS measure weight will remain the same at 
15 percent, which we continue to believe is an appropriate weight for 
incentivizing facility performance on a measure of a patient's 
experience of care. Although the STrR clinical measure weight will 
increase from 10 percent to 12 percent, we believe this incremental 
increase appropriately reflects the importance of anemia management in 
the ESRD QIP. We believe a combined vascular access type measure topic, 
weighted at 12 percent, makes sense to accommodate the different 
vascular access needs of patients. We appreciate commenter's support 
for increasing the weight of the PPPW clinical measure and will 
continue to consider ways to further incentivize transplant referrals 
where clinically appropriate.
    Comment: One commenter expressed concern that changing the weight 
of ESRD QIP measures may increase burden and confusion among facilities 
and providers.
    Response: We appreciate commenter's feedback, but we disagree that 
changing the weight would increase burden or confusion among facilities 
and providers. We believe that changing the weights of ESRD QIP 
measures as proposed will better inform facilities' ability to improve 
performance on more actionable clinical measures and will result in 
more meaningful patient outcomes. In addition, we will engage in 
education and outreach activities to communicate information about the 
updated weights as well as other measure and program changes being 
finalized in this rule.
    Comment: One commenter urged CMS to re-base performance for the 
first year after the COVID-19 PHE to ensure the impact of the PHE is 
accurately accounted for and that measure performance is accurately 
assessed going forward. One commenter recommended that CMS should have 
a reassessment plan for all measures and that home dialysis-only 
programs be reassessed for measure weights because some current domains 
would no longer be applicable.
    Response: We thank commenters for their suggestions and will take 
them into consideration for future rulemaking.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to create a new Reporting Domain and to update 
the domains and measure weights used to calculate the TPS, beginning 
with PY 2025. We are finalizing the proposed domain and measure weights 
described in Table 24 of this final rule.
3. Performance Standards for the PY 2025 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as required by section 1881(h)(4)(B) of the Act, and must 
be established prior to the beginning of the performance period for the 
year involved, as required by section 1881(h)(4)(C) of the Act. We 
refer readers to the CY 2013 ESRD PPS final rule (76 FR 70277) for a 
discussion of the achievement and improvement standards that we have 
established for clinical measures used in the ESRD QIP. We define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively.
    In the CY 2022 ESRD PPS final rule (86 FR 61927), we set the 
performance period for the PY 2025 ESRD QIP as CY 2023 and the baseline 
period as CY 2021. We note that, for the seven measures we are 
suppressing for the PY 2023 ESRD QIP, we would continue to use CY 2019 
data as the baseline period for those measures. We believe that this is 
consistent with our established policy to use the prior year's 
numerical values for the performance standards if the most recent full 
CY's final numerical values are worse. In the proposed rule, we 
estimated the performance standards for the PY 2025 clinical measures 
in Table 21 using data from CY 2019, which was the most recent data 
available (87 FR 38548). We are updating these standards for the non-
suppressed measures, using CY 2021 data, in this final rule, in Table 
25 below.

[[Page 67255]]

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    In addition, we summarize in Table 26 existing requirements for 
successful reporting on reporting measures in the PY 2025 ESRD QIP.
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[[Page 67256]]

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[[Page 67257]]


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4. Eligibility Requirements for the PY 2025 ESRD QIP
     Our current minimum eligibility requirements for scoring the ESRD 
QIP measures are described in Table 27. We did not propose any changes 
to these eligibility requirements for the PY 2025 ESRD QIP in the 
proposed rule.
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[[Page 67258]]


BILLING CODE 4120-01-C
5. Payment Reduction Scale for the PY 2025 ESRD QIP
    Under our current policy, a facility does not receive a payment 
reduction for a payment year in connection with its performance under 
the ESRD QIP if it achieves a TPS that is at or above the minimum TPS 
(mTPS) that we establish for the payment year. We have defined the mTPS 
in our regulations at 42 CFR 413.178(a)(8) as, with respect to a 
payment year, the TPS that an ESRD facility would receive if, during 
the baseline period it performed at the 50th percentile of national 
performance on all clinical measures and the median of national ESRD 
facility performance on all reporting measures.
    Our current policy, which is codified at 42 CFR 413.177 of our 
regulations, also implements the payment reductions on a sliding scale 
using ranges that reflect payment reduction differentials of 0.5 
percent for each 10 points that the facility's TPS falls below the mTPS 
(76 FR 634 through 635).
    In the proposed rule, we stated that for PY 2025, based on 
available data, a facility must meet or exceed a mTPS of 55 to avoid a 
payment reduction (87 FR 38552). We noted that the mTPS estimated in 
the proposed rule is based on data from CY 2019 instead of the PY 2025 
baseline period (CY 2021) because CY 2021 data were not yet available.
    We refer readers to Table 25 of this final rule for the PY 2025 
finalized performance standards for each clinical measure. We stated in 
the CY 2023 ESRD PPS proposed rule that under our current policy, a 
facility that achieves a TPS below 55 would receive a payment reduction 
based on the TPS ranges indicated in Table 24 of the proposed rule (87 
FR 38552).
    Table 28 of this final rule is a reproduction of Table 24 from the 
CY 2023 ESRD PPS proposed rule.
    We stated our intention to update the mTPS for PY 2025, as well as 
the payment reduction ranges for that payment year, in this CY 2023 
ESRD PPS final rule.
    We have now finalized the payment reductions that will apply to the 
PY 2025 ESRD QIP using updated CY 2021 data. The mTPS for PY 2025 will 
be 55, and the finalized payment reduction scale is shown in Table 29.

F. Updates for the PY 2026 ESRD QIP

1. Continuing Measures for the PY 2026 ESRD QIP
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    In the CY 2023 ESRD PPS proposed rule, we stated that, under our 
previously adopted policy, the PY 2025 ESRD QIP measure set would also 
be used for PY 2026 (87 FR 38552). We did not propose to adopt any new 
measures beginning with the PY 2026 ESRD QIP.

[[Page 67259]]

2. Performance Period for the PY 2026 ESRD QIP
    In the CY 2023 ESRD PPS proposed rule, we stated our continued 
belief that 12-month performance and baseline periods provide us 
sufficiently reliable quality measure data for the ESRD QIP (87 FR 
38552). Under this policy, we would adopt CY 2024 as the performance 
period and CY 2022 as the baseline period for the PY 2026 ESRD QIP.
    We did not propose any changes to this policy.
3. Performance Standards for the PY 2026 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as required by section 1881(h)(4)(B) of the Act, and must 
be established prior to the beginning of the performance period for the 
year involved, as required by section 1881(h)(4)(C) of the Act. We 
refer readers to the CY 2012 ESRD PPS final rule (76 FR 70277) for a 
discussion of the achievement and improvement standards that we have 
established for clinical measures used in the ESRD QIP. We define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively.
A. Performance Standards for Clinical Measures in the PY 2026 ESRD QIP
    In the CY 2023 ESRD PPS proposed rule, we stated that at the time, 
we did not have the necessary data to assign numerical values to the 
achievement thresholds, benchmarks, and 50th percentiles of national 
performance for the clinical measures because we did not have CY 2021 
data (87 FR 38552). We stated our intent to publish these numerical 
values, using CY 2021 data, in this CY 2023 ESRD PPS final rule. We 
provide the estimated performance standards for the PY 2026 ESRD QIP 
clinical measures, using applicable CY 2021 data, in Table 30 of this 
final rule.
    We note that these performance standards may be updated in the CY 
2024 ESRD PPS final rule based on CY 2022 data.

[[Page 67260]]

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b. Performance Standards for the Reporting Measures in the PY 2026 ESRD 
QIP
    In the CY 2019 ESRD PPS final rule, we finalized the continued use 
of existing performance standards for the Screening for Clinical 
Depression and Follow-Up reporting measure, the Ultrafiltration Rate 
reporting measure, the NHSN Dialysis Event reporting measure, and the 
MedRec reporting measure (83 FR 57010 through 57011). We would continue 
use of these performance standards in PY 2026. In sections IV.E.1.c and 
IV.E.1.a of this final rule, we are finalizing our proposals to convert 
the Hypercalcemia clinical measure to a reporting measure and to add 
the COVID-19 Vaccination Coverage among HCP reporting measure to the 
ESRD QIP measure set beginning with PY 2025, and will include these in 
the performance standards for reporting measures in the PY 2026 ESRD 
QIP.
4. Scoring the PY 2026 ESRD QIP
a. Scoring Facility Performance on Clinical Measures
    In the CY 2014 ESRD PPS final rule, we finalized policies for 
scoring performance on clinical measures based on achievement and 
improvement (78 FR 72215 through 72216). In the CY 2019 ESRD PPS final 
rule, we finalized a policy to continue use of this methodology for 
future payment years (83 FR 57011) and we codified these

[[Page 67261]]

scoring policies at 42 CFR 413.178(e). In section IV.E.1.b of this 
final rule, we are finalizing our proposal to update our scoring 
methodology beginning with PY 2025.
b. Scoring Facility Performance on Reporting Measures
    Our policy for scoring performance on reporting measures is 
codified at 42 CFR 413.178(e), and more information on our scoring 
policy for reporting measures can be found in the CY 2020 ESRD PPS 
final rule (84 FR 60728). We previously finalized policies for scoring 
performance on the NHSN Dialysis Event reporting measure in the CY 2018 
ESRD PPS final rule (82 FR 50780 through 50781), as well as policies 
for scoring the MedRec reporting measure and Clinical Depression 
Screening and Follow-up reporting measure in the CY 2019 ESRD PPS final 
rule (83 FR 57011). We also previously finalized the scoring policy for 
the STrR reporting measure in the CY 2020 ESRD PPS final rule (84 FR 
60721 through 60723). In the CY 2021 ESRD PPS final rule, we finalized 
our updated scoring methodology for the Ultrafiltration Rate reporting 
measure (85 FR 71468 through 71470). In section IV.E.1.c of this final 
rule, we are finalizing our proposal to update our scoring methodology 
as part of our policy to convert the Hypercalcemia clinical measure to 
a reporting measure beginning with PY 2025. We are also finalizing our 
proposal to adopt a scoring methodology as part of our policy to add 
the COVID-19 Vaccination Coverage among HCP reporting measure to the 
ESRD QIP measure set beginning with PY 2025, as discussed in section 
IV.E.1.a of this final rule.
5. Weighting the Measure Domains and the TPS for PY 2026
    Under our current policy, we assign the Patient & Family Engagement 
Measure Domain a weight of 15 percent of the TPS, the Care Coordination 
Measure Domain a weight of 30 percent of the TPS, the Clinical Care 
Measure Domain a weight of 40 percent of the TPS, and the Safety 
Measure domain a weight of 15 percent of the TPS.
    In the CY 2019 ESRD PPS final rule, we finalized a policy to assign 
weights to individual measures and a policy to redistribute the weight 
of unscored measures (83 FR 57011 through 57012). In the CY 2020 ESRD 
PPS final rule, we finalized a policy to use the measure weights we 
finalized for PY 2022 for the PY 2023 ESRD QIP and subsequent payment 
years, and also to use the PY 2022 measure weight redistribution policy 
for the PY 2023 ESRD QIP and subsequent payment years (84 FR 60728 
through 60729).
    In section IV.E.2 of this final rule, we are finalizing our 
proposal to add a new Reporting Measure Domain, and we are finalizing 
our proposed new weights for the four existing measure domains, 
beginning in PY 2025. We provide the updated measure weights and 
domains and the TPS for PY 2026 in this final rule in Table 24.

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

1. Request for Information on Quality Indicators for Home Dialysis 
Patients
    In the proposed rule, we sought public comments on potential 
indicators of quality for patients who receive dialysis at home to 
support the use of home dialysis for ESRD patients where it is 
appropriate (87 FR 38553 through 38554). While home-based dialysis may 
not meet the needs of every patient, we stated that home dialysis has 
clear benefits for those who are suitable candidates. Often, it may be 
more convenient for many ESRD patients, and survivability rates for 
home dialysis are comparable to those of transplant recipients and in-
center hemodialysis.\280\
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    \280\ ASPE Report, Advancing American Kidney Health, p. 24. 
Available at https://aspe.hhs.gov/system/files/pdf/262046/AdvancingAmericanKidneyHealth.pdf.
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    There are two general types of dialysis: hemodialysis (HD), in 
which an artificial filter outside of the body is used to clean the 
blood; and peritoneal dialysis (PD), in which the patient's peritoneum, 
covering the abdominal organs, is used as the dialysis membrane. HD is 
conducted at an ESRD facility, usually three times a week, or at a 
patient's home, often at a greater frequency. PD most commonly occurs 
at the patient's home. (Although PD can be furnished within an ESRD 
facility, it is very rare. For purposes of this RFI, we consider PD to 
be exclusively a home modality.) Assuming that either modality would be 
clinically appropriate, whether a patient selects HD or PD may depend 
on a number of factors, such as patient education before dialysis 
initiation, social and care partner support, socioeconomic factors, and 
patient perceptions and preference.281 282
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    \281\ Stack AG. Determinants of Modality Selection among 
Incident US Dialysis Patients: Results from a National Study. 
Journal of the American Society of Nephrology. 2002; 13: 1279-1287. 
Doi 1046-6673/1305-1279.
    \282\ Miskulin DC, et al. Comorbidity and Other Factors 
Associated With Modality Selection in Incident Dialysis Patients: 
The CHOICE Study. American Journal of Kidney Diseases. 2002; 39(2): 
324-336. Doi 10.1053/ajkd.2002.30552.
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    When Medicare began coverage for individuals with ESRD in 1973, 
more than 40 percent of dialysis patients in the U.S. were on home 
hemodialysis (HHD). More favorable reimbursement for outpatient 
dialysis and the introduction in the 1970s of continuous ambulatory 
peritoneal dialysis, which required less intensive training, 
contributed to a relative decline in HHD utilization.\283\ Overall, the 
proportion of home dialysis patients in the U.S. declined from 1988 to 
2012, with the number of home dialysis patients increasing at a slower 
rate relative to the total number of all dialysis patients. As cited in 
a U.S. Government Accountability Office (GAO) report, according to U.S. 
Renal Data System (USRDS) data, approximately 16 percent of the 104,000 
dialysis patients in the U.S. received home dialysis in 1988; however, 
by 2012, the rates of HHD and PD utilization were 2 and 9 percent, 
respectively.\284\
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    \283\ Blagg CR. A Brief History of Home Hemodialysis. Annals in 
Renal Replacement Therapy. 1996; 3: 99-105.
    \284\ United States Government Accountability Office. End Stage 
Renal Disease: Medicare Payment Refinements Could Promote Increased 
Use of Home Dialysis (GAO-16-125). October 2015.
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    Currently, the majority of ESRD patients receiving dialysis receive 
HD in an ESRD facility. At the end of 2016, 63.1 percent of all 
prevalent ESRD patients--meaning patients already diagnosed with ESRD--
in the U.S. were receiving HD, 7.0 percent were being treated with PD, 
and 29.6 percent had a functioning kidney transplant.\285\ Among HD 
cases, 98.0 percent used in-center HD, and 2.0 percent used HHD.\286\ 
In the proposed rule, we noted that once they are stable on a specific 
modality, patients are infrequently aware that they are able to change 
modalities. In 2018, 72 percent of Black ESRD patients received in-
center hemodialysis versus only 57 percent of White patients. This data 
point may indicate that a greater number of white ESRD patients receive 
home dialysis than Black patients.\287\
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    \285\ United States Renal Data System, Annual Data Report, 2018. 
Volume 2. Chapter 1: Incidence, Prevalence, Patient Characteristics, 
and Treatment Modalities. https://www.usrds.org/2018/view/v2_01.aspx.
    \286\ United States Renal Data System, Annual Data Report, 2018. 
Volume 2. Chapter 1: Incidence, Prevalence, Patient Characteristics, 
and Treatment Modalities. https://www.usrds.org/2018/view/v2_01.aspx.
    \287\ National Kidney Foundation. https://www.kidney.org/news/newsroom/fsindex. Accessed 11/15/2021.
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    Research suggests that dialyzing at home is associated with lower 
overall medical expenditures than dialyzing in-center. Key factors that 
may be related

[[Page 67262]]

to lower expenditures include potentially lower rates of infection 
associated with dialysis treatment, fewer hospitalizations, cost 
differentials between PD and HD services and supplies, and lower 
operating costs for dialysis providers for providing home 
dialysis.288 289 290 291 292
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    \288\ Walker R, Marshall MR, Morton RL, McFarlane P, Howard K. 
The cost-effectiveness of contemporary home hemodialysis modalities 
compared with facility hemodialysis: A systematic review of full 
economic evaluations. Nephrology. 2014; 19: 459-470 doi: 10.1111/
nep.12269.
    \289\ Walker R, Howard K, Morton R. Home hemodialysis: A 
comprehensive review of patient-centered and economic 
considerations. ClinicoEconomics and Outcomes Research. 2017; 9: 
149-161.
    \290\ Howard K, Salkeld G, White S, McDonald S, Chadban S, Craig 
J, Cass A. The cost effectiveness of increasing kidney 
transplantation and home-based dialysis. Nephrology. 2009; 14: 123-
132 doi: 10.1111/j.1440-1797.2008.01073.x.
    \291\ Quinn R, Ravani P, Zhang X, Garg A, Blake P, Austin P, 
Zacharias JM, Johnson JF, Padeya S, Verreli M, Oliver M. Impact of 
Modality Choice on Rates of Hospitalization in Patients Eligible for 
Both Peritoneal Dialysis and Hemodialysis. Peritoneal Dialysis 
International. 2014; 34(1): 41-48 doi: 10.3447/pdi.2012.00257.
    \292\ Sinnakirouchenan R, Holley, J. Peritoneal Dialysis Versus 
Hemodialysis: Risks, Benefits, and Access Issues. Advances in 
Chronic Kidney Disease. 2011; 18(6): 428-432. doi: 10.1053/
j.ackd.2011.09.001.
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    In the proposed rule, we stated our belief that increasing rates of 
home dialysis has the potential to not only reduce Medicare 
expenditures, but also to preserve or enhance the quality of care for 
ESRD beneficiaries. In fact, recent studies show substantial support 
among nephrologists and patients for dialysis treatment at 
home.293 294 295 296 297 Although some measures in the ESRD 
QIP apply to home dialysis facilities, certain measures do not apply to 
facilities that have high rates of home dialysis. For example, home 
dialysis facilities are generally not eligible for scoring on the ICH-
CAHPS measure, the Long-Term Catheter Rate clinical measure, the 
Standardized Fistula Rate measure, and the NHSN BSI clinical measure. 
Therefore, many of these facilities are eligible for fewer measures 
than facilities that provide in-center hemodialysis only. As increasing 
numbers of ESRD patients use home dialysis therapies,\298\ we stated 
our interest in learning more about potential indicators of quality of 
care for home dialysis patients that are not currently being captured 
by the ESRD QIP. Therefore, we sought comments on strategies to monitor 
and assess the quality of care delivered to patients who receive 
dialysis at home. We also sought comments on how to support more 
equitable access to home dialysis across different ESRD patient 
populations.
---------------------------------------------------------------------------

    \293\ Rivara MB, Mehrotra R. The Changing Landscape of Home 
Dialysis in the United States. Current Opinion in Nephrology and 
Hypertension.2014; 23(6):586-591.doi:10.1097/MNH0000000000000066.
    \294\ Mehrotra R, Chiu YW, Kalantar-Zadeh K, Bargman J, Vonesh 
E. Similar Outcomes With Hemodialysis and Peritoneal Dialysis in 
Patients With End-Stage Renal Disease. Archives of Internal 
Medicine. 2011; 171(2): 110-118. Doi:10.1001/archinternmed.2010.352.
    \295\ Ghaffarri A, Kalantar-Zadeh K, Lee J, Maddux F, Moran J, 
Nissenson A. PD First: Peritoneal Dialysis as the Default Transition 
to Dialysis Therapy. Seminars in Dialysis. 2013; 26(6): 706-713. 
doi: 10.1111/sdi.12125.
    \296\ Ledebo I, Ronco C. The best dialysis therapy? Results from 
an international survey among nephrology professionals. Nephrology 
Dialysis Transplantation.2008;6:403-408.doi:10.1093/ndtplus/sfn148.
    \297\ Schiller B, Neitzer A, Doss S. Perceptions about renal 
replacement therapy among nephrology professionals. Nephrology News 
& Issues. September 2010; 36-44.
    \298\ United States Renal Data System, 2018 Annual Data Report. 
Available at https://www.usrds.org/2018/view/v2_01.aspx.
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    We received comments in response to this request for information 
and have summarized them here.
    Comment: Many commenters expressed strong support for our efforts 
to support home dialysis through the ESRD QIP, noting that home 
dialysis can be medically effective and provide a potentially higher 
quality of life for ESRD patients and that monitoring the quality of 
care for home dialysis patients will have a meaningful impact on 
increasing utilization of home dialysis.
    Several commenters recommended CMS develop a home dialysis patient 
experience of care survey that would capture feedback from patients on 
home dialysis. A few commenters noted the importance of a quality-of-
life measure that accounts for the unique issues that are associated 
with dialyzing at home. One commenter recommended that CMS develop a 
new instrument to develop a patient experience survey which would 
include questions that specifically measure patient experience of home 
dialysis care, including components of in-center dialysis, patient 
training on home medical equipment, supplies, and safety, as well as 
communication with and access to health care providers. One commenter 
noted that any potential survey should be rigorously tested to ensure 
validity and reliability. One commenter further recommended that as a 
preliminary step, CMS could report a measure of Activities of Daily 
Living, which is closely linked to quality of life.
    A few commenters observed the importance of comparing home dialysis 
patient experiences to in-center patient experiences because measuring 
home dialysis patient experiences and comparing those experiences to 
those of in-center patients will become increasingly important as the 
home dialysis patient population grows, and as results and familiarity 
with the survey tool are gained. One commenter recommended that CMS 
pursue and incorporate patient-reported home dialysis experiences into 
a QIP measure because measuring patients' experiences and being able to 
compare those experiences to those of in-center patients will become 
increasingly important and because tracking retention on home dialysis 
including transferring from one home modality to another is critical to 
understanding shifts in home dialysis care. One commenter recommended 
that CMS use distinct hemodialysis and peritoneal dialysis adequacy 
measures endorsed by the NQF so that patients, caregivers, and care 
providers can access performance on specific dialysis modality types to 
make informed decisions about modality choice.
    Several commenters supported a home dialysis rate measure, which 
commenters believe will help encourage facilities to place patients 
suitable for home dialysis on this modality. A few commenters 
recommended that CMS adopt a home dialysis retention rate measure 
(excluding transplant and mortality) to ensure that facilities are 
incentivized to support home dialysis patients and proactively address 
barriers such as patient comfort with dialysis technology and supply 
management.
    Several commenters supported a home dialysis retention measure 
because it is important to maintaining existing home patients on home 
therapy. A few commenters stated that home dialysis patient retention 
measures are helpful quality indicators and can help facilities 
identify how to better support their home dialysis patients. One 
commenter recommended that CMS capture home dialysis retention by 
modality because this focus would create improvement in addressing 
transition management, which is a significant challenge to home 
dialysis utilization. This commenter recommended that CMS consider 
transition to in-center HD, transplant, and mortality as the three 
components of measuring home dialysis retention by modality. A few 
commenters recommended a retention measure that could help assess the 
quality of home training and help incentivize facilities to take steps 
to manage patient and care partner burnout. One commenter recommended 
CMS include routine assessment of family caregivers involved in 
dialysis patients' care as a

[[Page 67263]]

quality indicator. One commenter recommended that CMS should measure 
home dialysis retention and home patients' experiences in the ESRD QIP 
because a critical measure of success for home dialysis is avoiding 
``drop-out'' or permanent conversion to in-center dialysis.
    A few commenters recommended that CMS adopt the home dialysis rate 
and home dialysis retention measures developed by the Kidney Care 
Quality Alliance (KCQA). One commenter expressed caution that the 
current health care system is not adequately prepared for an influx in 
home dialysis treatment, which may lead to negative patient impacts and 
technique failure rates. This commenter stated that the home dialysis 
rate and retention measures have been developed to promote steady 
growth in home dialysis uptake and retention to minimize potential 
unintended or adverse consequences that may occur with unchecked, rapid 
growth in home dialysis without proper monitoring and assessment of the 
quality of care. One commenter requested that CMS examine home dialysis 
retention through adopting measures such as CMS's Standardized Modality 
Switch Ratio for Incident Dialysis Patients (SMoSR). This commenter 
recommended that these measures exclude facilities with fewer than 11 
eligible patients to ensure an adequate sample size.
    A few commenters recommended that CMS adopt the Home Dialysis Care 
Experience instrument as a patient-reported experience of care measure 
to measure home dialysis patient experience. One commenter recommended 
a measure of home dialysis patient satisfaction, but expressed concern 
that the Home Dialysis Care Experience measure does not capture 
outcomes or the patient experience.
    A few commenters recommended that CMS further explore the role of 
telehealth in providing care to home dialysis patients, noting that 
telehealth and in-home training may help support prospective home 
dialysis patients who may not have reliable access to transportation. A 
few commenters recommended that CMS consider the benefits associated 
with remote monitoring, including patient engagement and outcomes, as 
well as caregiver experience. One commenter also recommended that 
quality indicators for home dialysis should account for the benefits of 
ongoing remote monitoring and its enablement of real-time trending and 
interventions.
    A few commenters observed that lower levels of health literacy are 
barriers to equitable access to home dialysis. A few commenters 
recommended that CMS consider efforts aimed at timely CKD screening and 
education for patients, particularly those in communities of color, to 
promote more equitable access to home dialysis across different patient 
populations. A few commenters recommended that CMS establish standard 
requirements for care providers to discuss dialysis modality options 
with patients early on, preferably prior to beginning dialysis, so that 
patients have sufficient time and resources to make an informed 
decision about their treatment options. A few commenters recommended 
that the KDE benefit be expanded to allow more patients to access KDE 
services and permit more providers to provide the services. One 
commenter suggested that such services could be provided through 
telehealth platforms, and encouraged the passage of ``The Chronic 
Kidney Disease Improvement in Research and Treatment Act of 2021'' to 
further such efforts. One commenter recommended including kidney 
disease screening in the ``Welcome to Medicare'' preventive visit as it 
would help with early detection of CKD and allow patients and providers 
to slow progression and discuss treatment modalities.
    Several commenters noted that many barriers exist to equitable 
access to home dialysis, including social determinants of health-
related challenges such as lack of support, space, transportation, and 
access to facilities providing home dialysis as an option. A few 
commenters made suggestions aimed at supporting home dialysis patients 
so they feel comfortable with the process of doing dialysis at home. 
One commenter recommended that patients should be trained to do their 
own home dialysis treatments in an in-center setting before going home 
so that they feel comfortable with that additional responsibility and 
can be more self-sufficient, which would also reduce the burden on 
dialysis staff. One commenter recommended that CMS stipulate specific 
guidance in providing clinician support to patients during their first 
year of home dialysis because that support is critical to the overall 
success of the home dialyzer. One commenter recommended that CMS bring 
back staff-assisted home dialysis with clear parameters and guidelines 
because it has been shown to achieve higher rates of home dialysis and 
has the highest rate of retention.
    A few commenters stated that financial barriers exist to equitable 
access to home dialysis, including the inability to afford costs 
associated with home dialysis. A few commenters recommended that, to 
address barriers to health equity and broaden access to home dialysis, 
CMS offer payment options for modifications a patient may need to make 
to their home environment to support home dialysis care. A few 
commenters also suggested that CMS remove financial barriers to home 
dialysis, such as eliminating copays for home dialysis training or 
exploring opportunities to provide financial support for staff-assisted 
home dialysis. One commenter recommended that CMS work with community 
and patient advocates to address financial concerns faced by patients 
so that patients understand their rights. One commenter noted the 
financial burden associated with home dialysis, such as increased water 
bills due to the use of a reverse osmosis machine, and the need for 
additional supplies to handle associated medical waste.
    A few commenters noted that, to address existing barriers to 
equitable access to home dialysis, the government must expand access to 
CKD screening, incentivize specialization in nephrology, treat and 
educate patients on CKD earlier on, and address a patient's specific 
concerns regarding home dialysis that may impact a patient's decision-
making. One commenter recommended that CMS provide coverage for nurse 
or caregiver services to support home dialysis patients. One commenter 
requested that CMS allow more flexibility in Medicare program rules to 
enable providers to work more closely with patients to overcome 
barriers to home dialysis, many of which result from factors related to 
social determinants of health.
    One commenter recommended that home dialysis quality measures 
should include stratification by race and ethnicity to ensure home 
dialysis is being offered equitably. One commenter recommended that CMS 
add a measure to determine equal access to home dialysis that includes 
patient demographics and reason(s) why the patient did not choose a 
home dialysis option or was not suitable because USRDS data show Black 
and Hispanic patients are vastly underrepresented among those on home 
dialysis and without more data it is impossible to know and address why 
this occurs.
    A few commenters suggested that CMS broaden the applicability of 
current ESRD QIP measures to include home dialysis patients, noting 
that home dialysis is underrepresented in the current ESRD QIP measure 
set. A few commenters recommended a measure that surveils bloodstream

[[Page 67264]]

infection in home hemodialysis patients. One commenter recommended 
revising the ICH CAHPS to include home dialysis. One commenter 
recommended CMS consider a Technical Expert Panel (TEP) to determine 
the most appropriate survey questions and prioritize either new 
development of a measure or validation and refinement of existing tools 
to capture the experiences of patients receiving home-based dialysis, 
noting that the current ICH CAHPS survey focuses on HD, whereas most 
home dialysis patients are on PD. One commenter recommended expanding 
the Kt/V Dialysis Adequacy measure. One commenter recommended 
prioritization of outcome measures that focus on relevant outcomes such 
as reporting peritonitis rate, inpatient readmission rates, and 
mortality. One commenter recommended that CMS explore hospitalization 
as an indicator of quality care for home dialysis patients, noting that 
the hospitalization rate is the biggest factor in reducing the total 
cost of care for home dialysis. One commenter recommended that CMS 
tailor measure performance standards within the ESRD QIP separately for 
in-center dialysis and home dialysis. This commenter also recommended 
that performance on a dialysis adequacy measure could be assessed 
separately within modality and then reaggregated at the facility level, 
which commenter believes would maintain a comprehensive dialysis 
adequacy measure while further promoting the uptake of home dialysis.
    A few commenters expressed concern with our efforts to expand the 
ESRD QIP to include more home dialysis measures. One commenter 
expressed concern that scoring home dialysis programs on only a few 
measures is a barrier to home dialysis uptake due to the risk for an 
ESRD QIP payment reduction. One commenter noted that home dialysis 
programs are negatively impacted by current ESRD QIP scoring and 
recommended that CMS revise the scoring methodology for home dialysis 
programs, to reweight measures, establish appropriate benchmarks, and 
create reporting minimums for the home dialysis programs. Although the 
commenter expressed support for additional opportunities to monitor the 
quality of care for home dialysis patients, the commenter did not 
support the inclusion of additional measures aimed at home dialysis in 
the ESRD QIP. This commenter recommended that if any home dialysis 
measure is included in the ESRD QIP, that such measure be a reporting 
measure and exclude nursing home patients due to unique nature of their 
care needs. One commenter did not support the RFIs on ESRD QIP because 
they believe there is inadequate adjustment for or inclusion or 
pediatric patients within the RFI which results in financial 
penalization exacerbating inequities in provision of ESRD care to 
pediatric patients.
    Response: We appreciate all of the comments and interest in this 
topic. We believe that this input is very valuable in the continuing 
development of our efforts to support home dialysis. We will continue 
to take all concerns, comments, and suggestions into account for future 
development and expansion of our home dialysis-related efforts.
2. Request for Information on Potential Future Inclusion of Two Social 
Drivers of Health Measures
(1) Background
    Our commitment to supporting facilities in building equity into 
their health care delivery practices centers on empowering their 
workforce to recognize and eliminate health disparities that 
disproportionately impact people with ESRD, such as, individuals who 
are members of racial and ethnic minority groups, have low incomes, 
and/or reside in rural areas. In the CY 2022 ESRD PPS final rule, we 
noted our intention to initiate additional request(s) for information 
(RFIs) on closing the health equity gap, including identification of 
the most relevant social risk factors for people with ESRD (86 FR 
61930). Health-related social needs (HRSNs), defined as individual-
level, adverse social conditions that negatively impact a person's 
health or health care, are significant risk factors associated with 
worse health outcomes as well as increased health care 
utilization.\299\ In the CY 2023 ESRD PPS proposed rule, we stated our 
belief that consistently pursuing identification of HRSNs would have 
two significant benefits (87 FR 38554). First, because social risk 
factors disproportionately impact underserved communities, promoting 
screening for these factors could serve as evidence-based building 
blocks for supporting facilities and health systems in actualizing 
commitment to address disparities, improve health equity, and implement 
associated equity measures to track progress.\300\ Second, these 
measures could support ongoing quality improvement initiatives by 
providing data with which dialysis providers would be able to stratify 
patient risk and organizational performance.
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    \299\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. June 
2021. Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion. Accessed: November 23, 2021.
    \300\ American Hospital Association. (2020). Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at: 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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    In the proposed rule, we stated that we are investigating potential 
integration of screening for health-related social needs into the ESRD 
QIP measure set (87 FR 38554). This type of screening was the subject 
of the recently ended Accountable Health Communities (AHC) Model, which 
was implemented by the CMS Innovation Center.\301\ The CMS Innovation 
Center developed the AHC Model based on evidence that addressing 
health-related social needs (HRSNs) through enhanced linkages between 
health systems and community-based organizations can improve health 
outcomes and reduce costs.\302\ HRSNs are significant risk factors 
associated with adverse health outcomes and increased health care 
utilization, including excessive emergency department (ED) visits and 
avoidable hospitalizations.303 304 Unmet HRSNs, such as food 
insecurity, inadequate or unstable housing, and inadequate 
transportation may increase risk for onset of chronic conditions, such 
as ESRD, and accelerate exacerbation of related adverse health 
outcomes.305 306 307
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    \301\ Additional information about the Accountable Health 
Communities Model is available at: https://innovation.cms.gov/innovation-models/ahcm.
    \302\ RTI International. (2020). Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \303\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \304\ Alley, D. E., C. N. Asomugha, P. H. Conway, and D. M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \305\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \306\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \307\ Laraia, B.A. (2013). Food Insecurity and Chronic Disease. 
Advances in Nutrition, 4: 203-212, doi: 10.3945/an.112.003277.

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[[Page 67265]]

    We stated our belief that consistent identification of HRSNs among 
people with ESRD would have two significant benefits that would 
contribute to reduction in health disparities and improvements in 
quality and efficiency of dialysis care delivery. First, due to the 
association between chronic condition risk and HRSNs, screening for 
these needs could serve as evidence-based building blocks for 
supporting ESRD facilities and health systems in addressing persistent 
disparities and tracking progress towards closing the health equity gap 
in the ESRD population. Second, these measures would support ongoing 
quality improvement initiatives, specifically, care coordination for 
ESRD patients, by providing data with which to potentially stratify 
quality performance in dialysis providers. This is especially relevant 
in settings where a disproportionate number of patients have HRSNs and 
adverse health care outcomes, including hospital readmissions, that 
result in higher penalties related to diminished quality 
performance.308 309 We stated our belief that these measures 
align with The CMS Quality Strategy Goals around effective care 
coordination and prevention and treatment of chronic conditions.\310\ 
We noted that advancing health equity by addressing the health 
disparities that underlie the country's health system is one of our 
strategic pillars and a Biden-Harris Administration priority.\311\ In 
the proposed rule, we sought public comment on the potential future 
inclusion of two related measures discussed later in this section.
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    \308\ National Academies of Sciences, Engineering, and 
Medicine.2017. Accounting for social risk factors in Medicare 
payment. Washington, DC: The National Academies Press. doi: 
10.17226/23635.
    \309\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \310\ Centers for Medicare & Medicaid Services. (2021) CMS' 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
    \311\ Brooks-LaSure, C. (2021). My First 100 Days and Where We 
Go From Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
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(2) Screening for Social Drivers of Health Measure
    Significant and persistent health disparities in the United States 
result in adverse health outcomes for people with 
ESRD.312 313 The COVID-19 pandemic has illuminated the 
detrimental interaction between HRSNs, adverse health outcomes, and 
health care utilization in the United States.314 315 
Individuals from racial and ethnic minority groups and with lower 
incomes are less likely to receive recommended care for CKD risk 
factors and are also less likely to reduce CKD risk through recommended 
treatment goals.316 317 318 319 Consequently, some groups 
are more likely to progress from CKD to ESRD and less likely to be 
under the care of a nephrologist before starting dialysis.\320\ 
Individuals from racial and ethnic minority groups with ESRD are more 
likely to have 30-day hospital readmissions when compared to non-
Hispanic White patients.\321\ Emerging evidence has shown that specific 
social risk factors are directly associated with health outcomes and 
health care utilization and costs.322 323 324 325 Of 
particular concern among people with ESRD are barriers to treatment 
prior to and after diagnosis, including inadequate access to healthy 
foods, unstable housing, limited transportation, and community safety 
concerns.326 327
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    \312\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \313\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et.al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \314\ Centers for Disease Control. CDC COVID-19 Response Health 
Equity Strategy: Accelerating Progress Towards Reducing COVID-19 
Disparities and Achieving Health Equity. July 2020. Available at: 
https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 2021.
    \315\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et.al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \316\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \317\ Benjamin O, Lappin SL. End-Stage Renal Disease. [Updated 
2021 Sep 16]. In: Stat Pearls [internet]. Treasure Island (FL): 
StatPearls Publishing; 2022. Available from: https://www.ncbi.nlm.nih.gov/books/NBK499861/.
    \318\ Norris, K.C., Williams, S.F., Rhee, C.M., Nicholas, S.B., 
Kovesdy, C.P., et.al. (2017). Hemodialysis Disparities in African 
Americans: The Deeply Integrated Concept of Race in the Social 
Fabric of Our Society. Seminars in Dialysis 30(3):213-223. 
doi:10.1111/sdi.12589.
    \319\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
    \320\ Norton, J. M., Moxey-Mims, M. M., Eggers, P. W., Narva, A. 
S., Star, R. A., Kimmel, P. L., & Rodgers, G. P. (2016). Social 
Determinants of Racial Disparities in CKD. Journal of the American 
Society of Nephrology: JASN, 27(9), 2576-2595. https://doi.org/10.1681/ASN.2016010027.
    \321\ CMS (2014). Health Disparities Among Aged ESRD 
Beneficiaries, 2014. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/ESRD-Infographic.pdf.
    \322\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \323\ Dean, E.B., French, M.T., Mortensen, K. (2020). Health 
Services Research 55 (Supplement 2): 883-893. doi: 10.1111/1475-
6773.13283.
    \324\ Berkowitz, S.A., Kalkhoran, S., Edwards, S.T., Essien, 
U.R., Baggett, T.P. (2018). Unstable Housing and Diabetes-Related 
Emergency Department Visits and Hospitalization: A Nationally 
Representative Study of Safety-Net Clinic Patients. Diabetes Care 
41: 933-939. https://doi.org/10.2337/dc17-1812.
    \325\ National Academies of Sciences, Engineering, and Medicine 
2019. Dialysis Transportation: The Intersection of Transportation 
and Healthcare. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25385.
    \326\ Ibid.
    \327\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
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    In the proposed rule, we stated our belief that improvement in care 
coordination between ESRD facilities, hospitals, and community-based 
organizations would yield better health outcomes for people with ESRD 
and quality performance for dialysis and other health care providers. 
Recognizing the importance of social drivers of health, this year we 
have finalized proposals to include social drivers of health screening 
measures in the Hospital Inpatient Quality Reporting Program (87 FR 
49202 through 49220). In the CY 2023 ESRD PPS proposed rule, we stated 
our belief that screening for social drivers of health would similarly 
help inform facilities and other health care providers of the impact of 
HRSNs in people with ESRD, including their health outcomes and health 
care utilization (87 FR 38555). The Screening for Social Drivers of 
Health measure would assess the proportion of adult patients who are 
screened for social drivers of health in five core domains, including 
food insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety.
    In the CY 2023 ESRD PPS proposed rule, we stated that CMS's goal is 
to lay the groundwork for potential future measures that focus on the 
development of an action plan to address these HRSNs, including 
efficiently navigating patients to available resources and 
strengthening the system of community-based supports where resources 
are

[[Page 67266]]

lacking. Collecting baseline data via this measure would be crucial in 
informing design of future measures that could enable us to set 
appropriate performance targets. While widespread interest in 
addressing HRSNs exists, action is inconsistent, specifically in ESRD 
facilities. In the proposed rule, we noted that we are exploring 
potential future inclusion of social drivers of health screening 
measures to the ESRD QIP. Therefore, we sought public comment on adding 
a new measure, Screening for Social Drivers of Health, to the ESRD QIP 
measure set in the next rulemaking cycle. We stated that the measure 
would assess the proportion of a facility's patients that are screened 
for one or more social drivers of health in the five core domains.
    In the proposed rule, we stated our belief that facilities should 
screen for HRSNs among their patients to assess and increase the 
effectiveness of care coordination. Referral to community-based 
organizations can potentially reduce avoidable hospitalizations and 
disruptions to dialysis care. Data demonstrate that an overwhelming 
majority of people with ESRD travel outside their homes for dialysis 
three times per week, round trip, and that transportation challenges 
contribute to shortened treatment episodes and adverse health 
outcomes.328 329 We stated our belief that screening for 
HRSNs like transportation in people with ESRD and targeted care 
coordination that links them to community-based services could improve 
health outcomes in this population. We also noted our belief that 
publishing social drivers of health screening rates would be helpful to 
many patients who need additional care coordination but may experience 
reluctance in seeking assistance due to concerns for personal 
stigmatization. Under our Meaningful Measures Framework, the Screening 
for Social Drivers of Health measure would address the quality priority 
``Promoting Effective Prevention and Treatment of Chronic Disease'' 
through the Meaningful Measures Area ``Management of Chronic 
Conditions.''
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    \328\ Ibid.
    \329\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
---------------------------------------------------------------------------

(3) Screen Positive Rate for Social Drivers of Health Measure
    In the CY 2023 ESRD PPS proposed rule, we stated our belief that it 
is important to screen patients with ESRD for HRSNs that can negatively 
impact health outcomes and contribute to avoidable hospitalizations (87 
FR 38556). Unmet HRSNs can interrupt dialysis treatment and other 
routine care, including preventive health screenings, that is essential 
for ESRD-related conditions. Many patients treated in ESRD facilities 
have other chronic conditions that require consistent, 
multidisciplinary care to maintain their health.330 331 
Household food insecurity has been associated with reliance on energy-
dense foods which increase risks for onset of diabetes and 
hypertension, the leading causes of ESRD.\332\ Housing instability and 
transportation difficulties both contribute to interruptions in 
dialysis care which leads to avoidable 
hospitalizations.333 334 Additionally, the COVID-19 pandemic 
has highlighted associations between disproportionate health risk, 
hospitalization, and adverse health outcomes.335 336 
Capturing HRSN data may facilitate strengthening of linkages between 
facilities, medical providers (inpatient and outpatient), and 
community-based organizations which potentially could enhance care 
coordination for this group. Therefore, we sought public comment on the 
possible addition of a new measure, Screen Positive Rate for Social 
Drivers of Health, to the ESRD QIP measure set in future rulemaking. 
The measure would assess the proportion of patients who screen positive 
for HRSNs in five core domains, including food insecurity, housing 
instability, transportation needs, utility difficulties, and 
interpersonal safety. In the CY 2023 ESRD PPS proposed rule, we also 
stated our belief that publishing screen positive rates for social 
drivers of health would be helpful to many patients who need additional 
care coordination but may experience reluctance in seeking assistance 
due to concerns for personal stigmatization (87 FR 38556). Under our 
Meaningful Measures Framework, the Screening for Social Drivers of 
Health measure would address the quality priority ``Promoting Effective 
Prevention and Treatment of Chronic Disease'' through the Meaningful 
Measures Area ``Management of Chronic Conditions.''
---------------------------------------------------------------------------

    \330\ Benjamin O, Lappin SL. End-Stage Renal Disease. [Updated 
2021 Sep 16]. In: Stat Pearls [Internet]. Treasure Island (FL): 
StatPearls Publishing; 2022. Available from: https://www.ncbi.nlm.nih.gov/books/NBK499861/.
    \331\ Norris, K.C., Williams, S.F., Rhee, C.M., Nicholas, S.B., 
Kovesdy, C.P., et al. (2017). Hemodialysis Disparities in African 
Americans: The Deeply Integrated Concept of Race in the Social 
Fabric of Our Society. Seminars in Dialysis 30(3):213-223. 
doi:10.1111/sdi.12589.
    \332\ Laraia, B.A. (2013). Food Insecurity and Chronic Disease. 
Advances in Nutrition, 4: 203-212, doi: 10.3945/an.112.003277.
    \333\ United States Renal Data System. 2021 USRDS Annual Data 
Report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2021.
    \334\ National Academies of Sciences, Engineering, and Medicine 
2019. Dialysis Transportation: The Intersection of Transportation 
and Healthcare. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25385.
    \335\ Centers for Disease Control. CDC COVID-19 Response Health 
Equity Strategy: Accelerating Progress Towards Reducing COVID-19 
Disparities and Achieving Health Equity. July 2020. Available at: 
https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 2021.
    \336\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et.al., (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
---------------------------------------------------------------------------

    We welcomed public comment on potentially adding these two related 
Social Drivers of Health measures to the ESRD QIP measure set. We also 
welcomed public comment on data collection, submission, and reporting 
for these two measures. We received comments in response to this 
request for information and have summarized them here. We also note 
that since publication of the CY 2023 ESRD PPS proposed rule, we 
finalized the adoption of these two measures for the Hospital Inpatient 
Quality Reporting Program (87 FR 49201 through 49220).
    Comment: Many commenters supported addition of the Screening for 
Social Drivers of Health and Screen Positive Rate for Social Drivers of 
Health measures to the ESRD QIP measure set as part of future 
rulemaking efforts. Commenters supported these two measures as 
important steps towards meaningful measurement of unique challenges 
affecting dialysis patients and their health outcomes. Commenters 
believed the two measures will align well with CMS' commitment to 
health equity because they will enable identification of health 
disparities in dialysis patients. Additionally, commenters believed the 
measures will clarify understanding of the overall impact of HRSNs in 
dialysis patients at the facility level by capturing relevant data for 
diverse patient cohorts. Several commenters highlighted the potential 
for these measures to inform actionable planning at the facility level 
and for resource allocation with the ESRD QIP. A few commenters noted 
the measures will improve understanding of access to appropriate care 
continuity for patients from under-resourced communities and 
consequently, provide evidence of health disparities in the management 
of specific disease and associated outcomes that disproportionately 
affect these groups. One commenter noted that dialysis providers are in 
a unique position

[[Page 67267]]

because they see most of their patients three times per week and often 
form trusting relationships, which provide opportunities for screening 
for social drivers of health. One commenter cited opportunities to 
promote whole-person care, particularly in CKD and ESRD patients from 
communities that have been underserved and/or historically marginalized 
by the health care system, as the rationale for their support for 
adding the two Social Drivers of Health measures to the ESRD QIP 
measure set.
    Several commenters provided specific and related reasons for 
supporting the two Social Drivers of Health measures, including 
valuable data capture of HRSNs affecting dialysis patients which they 
believe would inform quality improvement strategies to help advance 
health equity. One commenter noted the two measures could help inform 
actionable planning at the facility level and overall resource 
allocation within the ESRD QIP. Another commenter believes the measures 
will improve understanding of access to appropriate care continuity for 
dialysis patients from communities that are under-resourced and allow 
evaluation of health disparities in the management of specific diseases 
that disproportionately impact patient outcomes in this population.
    Several commenters expressed support for the addition of the two 
Social Drivers of Health measures to the ESRD QIP measure set and 
offered specific recommendations for their implementation. A few 
commenters recommended CMS consider the use of Z codes to document 
patients' HRSNs, with a focus on the most common non-clinical barriers 
to home dialysis, including housing instability, financial insecurity, 
inadequate caregiver support, and advanced age. A few commenters 
recommended CMS address how the measures will be implemented, 
specifically how the Social Drivers of Health data would be used to 
link patients to follow-on community-based services to address HRSNs. 
One commenter recommended the measures be classified as reporting 
measures, not performance measures, while another recommended voluntary 
reporting for the measures with patients being able to opt-out to 
prevent penalization for patients who refuse to participate in Social 
Drivers of Health screening. A commenter recommended CMS consider a 
trial period to test the feasibility of Social Drivers of Health 
screening process in dialysis patients. One commenter recommended CMS 
submit the two Social Drivers of Health measures for NQF review and 
approval prior to adding them to the ESRD QIP measure set. A commenter 
recommended screening be comprehensive to include the needs of family 
caregivers, since caregiver burden can prompt an emergency department 
visit or hospitalization. One commenter noted the important role that 
social workers in dialysis facilities can play in assessing HRSNs and 
connecting patients to available resources. A commenter recommended 
selection of The Protocol for Responding to and Assessing Patients' 
Assets, Risks, and Experiences (PRAPARE) developed by the National 
Association of Community Health Centers, Inc (NACHC) as the screening 
instrument for the HRSN screening measure because it will address the 
five core HRSN domains noted in the RFI. One commenter recommended CMS 
consider how pediatric ESRD patients are impacted by issues such as 
housing instability, food insecurity, and transportation needs. A 
commenter recommended that CMS require dialysis facilities to report 
Social Drivers of Health data in EQRS and encourage them to address 
patient-level HRSNs in individual care planning and at the facility-
level in Quality Assessment and Performance Improvement meetings.
    A few commenters expressed support for the addition of the two 
Social Drivers of Health measures to the ESRD QIP measure set but 
expressed concerns about their implementation. A few commenters 
expressed concerns about the limited availability of community-based 
resources to address dialysis patients' HRSNs. A few commenters did not 
believe that quality measurement is the appropriate approach for 
addressing patients' social needs. A few commenters expressed concern 
about documentation burden for providers and patients if the screening 
tool would be self-administered.
    Several commenters expressed concerns and noted questions related 
to the actual screening process for the Social Drivers of Health 
measures. A few commenters were specifically concerned about potential 
use of the Accountable Health Communities Model (AHC) Screening Tool 
for capturing Social Drivers of Health data in the ESRD QIP. One 
commenter noted the tool has not been reviewed by NQF for appropriate 
utilization in a penalty-based accountability program. Another 
commenter noted the AHC Model Screening Tool has not been validated in 
ESRD patients. One commenter recommended use of The Protocol for 
Responding to and Assessing Patients' Assets, Risks, and Experiences 
(PRAPARE) developed by the National Association of Community Health 
Centers, Inc (NACHC) as the instrument for Social Drivers of Health 
screening in the ESRD QIP because it is national standardized patient 
risk assessment protocol designed to engage patients in assessing and 
addressing social drivers of health because it is paired with an 
Implementation and Action Toolkit, and standardized across 
ICD[hyphen]10, LOINC, and SNOMED. A commenter recommended CMS consider 
a focused question set to eliminate the need for annual screening. One 
commenter recommended testing the AHC Screening Tool for feasibility, 
accuracy, and validity before introducing it to existing data 
collection requirements for the ESRD QIP.
    Several commenters supported the Screening for Social Drivers of 
Health measure in particular, noting the ability of that measure to 
capture HRSN data that inhibits dialysis patients' ability to access 
and participate in appropriate care and treatment, and increased 
availability of essential data to support health care professionals, 
including registered dietitian nutritionists and community and social 
services providers. One commenter recommended CMS provide guidance on 
addressing ERSD patients' HRSNs. A commenter recommended CMS establish 
universal standards for screening to address timeframe, data collection 
and use. A commenter recommended an incremental approach to adding the 
Screening for Social Drivers of Health measure to the ESRD QIP measure 
set to start with voluntary reporting on one HRSN with subsequent 
introduction of additional domains over time and mandatory reporting to 
start the second year because it would allow dialysis facilities to 
become more familiar with HRSNs and screening process logistics.
    One commenter specifically supported the Screen Positive Rate for 
Social Drivers of Health measure because it believes the measure is the 
next logical step after screening for drivers of health. Another 
commenter agreed that the measure has the potential to enable 
development of action plans to address the HRSNs for which dialysis 
facilities would screen.
    A few commenters expressed concerns about adding the Screen 
Positive Rate for Social Drivers of Health measure to the ESRD QIP 
measure set. One commenter was concerned about potential penalization 
for facilities providing care for more patients from communities that 
are historically underserved. Another commenter stated it is essential 
that a higher screen positive rate is not used to reduce quality 
standards or expected outcomes for a given facility. One

[[Page 67268]]

commenter expressed similar concerns about availability of the measure 
specification similar to the Screening for Social Drivers of Health 
measure and asked that CMS provide additional information on screening 
requirements in the context of the ESRD QIP.
    A few commenters provided recommendations for implementing the 
Screen Positive Rate for Social Drivers of Health measure. One 
commenter recommended that CMS provide requirements for action plans to 
address HRSNs when patients screen positive, either within the measure 
itself or through patient follow-up requirements, to make the measure 
meaningful to patients. A commenter suggested that CMS eventually 
require referrals that link patients to services to address their HRSNs 
after screening. One commenter recommended that CMS consider other 
opportunities to leverage existing data sources to capture HRSN data.
    Response: We thank the commenters for their feedback. We agree that 
screening for social drivers of health has potential to support 
meaningful measurement of unique challenges affecting dialysis patients 
and their health outcomes. We anticipate that such screening will align 
well with CMS's commitment to health equity because the measures will 
clarify understanding of the overall impact of HRSNs in dialysis 
patients. We also acknowledge the potential implementation issues and 
appreciate commenters' suggestions for mitigation strategies. We are 
committed to collecting and reporting data--including related to 
drivers of health--that will be relevant to the unique challenges 
facing the ESRD QIP patient population, and will take commenters' 
feedback into consideration in future policy development.
3. Request for Information on Overarching Principles for Measuring 
Health Care Quality Disparities Across CMS Quality Programs
a. Background
    Significant and persistent inequities in health care outcomes exist 
in the United States. Belonging to a racial or ethnic minority group; 
being a member of a religious minority; living with a disability; being 
a member of the LGBTQ+ community; living in a rural area; or being near 
or below the poverty level, are often associated with worse health 
outcomes.337 338 339 340 341 342 343 344 345 In the CY 2023 
ESRD PPS proposed rule, we stated that we are committed to achieving 
equity in health care outcomes for our beneficiaries by supporting 
health care providers' quality improvement activities to reduce health 
disparities, enabling beneficiaries to make more informed decisions, 
and promoting health care provider accountability for health care 
disparities (87 FR 38556 through 38557).\346\
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    \337\ Joynt KE, Orav E, Jha AK. (2011). Thirty-day readmission 
rates for Medicare beneficiaries by race and site of care. JAMA, 
305(7):675-681.
    \338\ Milkie Vu et al. Predictors of Delayed Healthcare Seeking 
Among American Muslim Women, Journal of Women's Health 26(6) (2016) 
at 58; S.B. Nadimpalli, et al., The Association between 
Discrimination and the Health of Sikh Asian Indians.
    \339\ Lindenauer PK, Lagu T, Rothberg MB, et al. (2013). Income 
inequality and thirty-day outcomes after acute myocardial 
infarction, heart failure, and pneumonia: Retrospective cohort 
study. British Medical Journal, 346.
    \340\ Trivedi AN, Nsa W, Hausmann LRM, et al. (2014). Quality 
and equity of care in U.S. hospitals. New England Journal of 
Medicine, 371(24):2298-2308.
    \341\ Polyakova, M., et al. (2021). Racial disparities in excess 
all-cause mortality during the early COVID-19 pandemic varied 
substantially across states. Health Affairs, 40(2): 307-316.
    \342\ Rural Health Research Gateway. (2018). Rural communities: 
age, income, and health status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-incomehealth-status-recap.pdf.
    \343\ HHS Office of Minority Health. (2020). Progress Report to 
Congress: 2020 Update on the Action Plan to Reduce Racial and Ethnic 
Health Disparities. Available at: https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \344\ Heslin, KC, Hall, JE. (2021). Sexual Orientation 
Disparities in Risk Factors for Adverse COVID-19-Related Outcomes, 
by Race/Ethnicity--Behavioral Risk Factor Surveillance System, 
United States, 2017-2019. MMWR Morb Mortal Wkly Rep 2021;70:149-154. 
Available at: https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
    \345\ Poteat TC, Reisner SL, Miller M, Wirtz AL. (2020). COVID-
19 vulnerability of transgender women with and without HIV infection 
in the Eastern and Southern U.S. preprint. medRxiv. 2020;2020.07.21. 
20159327. doi:10.1101/2020.07.21.20159327.
    \346\ Centers for Medicare and Medicaid Services. (2016). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
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    Health equity is an important component of an equitable society. 
Equity, as defined in Executive Order 13985, is ``the consistent and 
systematic fair, just, and impartial treatment of all individuals, 
including individuals who belong to underserved communities that have 
been denied such treatment, such as Black, Latino, and Indigenous and 
Native American persons, Asian Americans and Pacific Islanders and 
other persons of color; members of religious minorities; lesbian, gay, 
bisexual, transgender, and queer (LGBTQ+) persons; persons with 
disabilities; persons who live in rural areas; and persons otherwise 
adversely affected by persistent poverty or inequality.'' \347\
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    \347\ https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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    In the CY 2023 ESRD PPS proposed rule, we stated that we define 
health equity as the attainment of the highest level of health for all 
people, where everyone has a fair and just opportunity to attain their 
optimal health regardless of race, ethnicity, disability, sexual 
orientation, gender identity, religion, socioeconomic status, 
geography, preferred language, or other factors that affect access to 
care and health outcomes (87 FR 38557). We noted that we are working to 
advance health equity by designing, implementing, and operationalizing 
policies and programs that support health for all the people served by 
our programs, eliminating avoidable differences in health outcomes 
experienced by people who are disadvantaged or underserved, and 
providing the care and support that our beneficiaries need to 
thrive.\348\
---------------------------------------------------------------------------

    \348\ Centers for Medicare & Medicaid Services. (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
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    Such disparities in health outcomes and health care access are the 
result of multiple factors including differences in access to routine 
dialysis and primary care which contribute to health disparities among 
patients with ESRD. We discussed the impact of these disparities on 
patients with ESRD in our request for information on closing the health 
equity gap in the CY 2022 ESRD PPS proposed rule (86 FR 36362). Because 
we are working toward the goal of all ESRD patients receiving high 
quality dialysis treatment and other health care, irrespective of 
individual characteristics, in the CY 2023 ESRD PPS proposed rule we 
stated that we are committed to supporting dialysis providers and 
health systems in building a culture of equity that focuses on 
educating and empowering the health care workforce to recognize and 
eliminate health disparities in ESRD patients (87 FR 38557).\349\
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    \349\ Centers for Medicare and Medicaid Services. (2016). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Qualityinitiativesgeninfo/downloads/cms-quality-strategy.pdf.
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    Closing the health equity gap would require multipronged approaches 
that effectively address the many drivers of health disparities. As 
summarized in the CY 2022 ESRD PPS final rule request for information, 
we noted our intention to initiate additional request(s) for 
information (RFIs) on closing the health equity gap, including 
identification of

[[Page 67269]]

the most relevant social risk factors for people with ESRD (86 FR 
61930). Advancing health equity would require a variety of efforts 
across the health care system. The reduction in health care disparities 
is one aspect of improving equity that we have prioritized. In the CY 
2022 ESRD PPS final rule request for information, ``Closing the Health 
Equity Gap in CMS Hospital Quality Programs'' (86 FR 61928 through 
61937), we described programs and policies we have implemented over the 
past decade with the aim of identifying and reducing health care 
disparities, including: the CMS Mapping Medicare Disparities Tool \350\ 
and the CMS Disparity Methods stratified reporting.\351\ CMS has also 
begun efforts supporting implementation of the National Standards for 
Culturally and Linguistically Appropriate Services (CLAS) in Health and 
Health Care (78 FR 58539); \352\ as well as improvement of the 
collection of social determinants of health in standardized patient 
assessment data in four post-acute care settings and the collection of 
health-related social need data by model participants in the CMMI 
Accountable Health Communities Model.353 354 355
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    \350\ Centers for Medicare and Medicaid Services. (2021). CMS 
Office of Minority Health. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH-Mapping-Medicare-Disparities.
    \351\ Centers for Medicare and Medicaid Services. Disparity 
Methods Confidential Reporting. Available at: https://qualitynet.cms.gov/inpatient/measures/disparity-methods.
    \352\ https://www.federalregister.gov/documents/2013/09/24/2013-23164/national-standards-for-culturally-and-linguistically-appropriate-services-clas-in-health-and-health.
    \353\ Centers for Medicare and Medicaid Services. (2021). 
Accountable Health Communities Model. Available at: https://innovation.cms.gov/innovation-models/ahcm.
    \354\ https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf.
    \355\ Centers for Medicare and Medicaid Services. (2021). IMPACT 
Act Standardized Patient Assessment Data Elements. Available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/-IMPACT-Act-Standardized-Patient-Assessment-Data-Elements.
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    Measuring health care disparities and reporting these results to 
health care providers is a cornerstone of our approach to advancing 
health equity. It is important to consistently measure differences in 
care received by different groups of our beneficiaries, and this can be 
achieved by methods to stratify quality measures. Measure 
stratification is defined for this purpose as calculating measure 
results for specific groups or subpopulations of patients. Assessing 
health care disparities through stratification is only one method for 
using health care quality measurement to address health equity, but it 
is an important approach that allows health care providers to tailor 
quality improvement initiatives, decrease disparity, track improvement 
over time, and identify opportunities to evaluate upstream drivers of 
health. The use of measure stratification to assess disparities has 
been identified by CMS Office of Minority Health (CMS OMH) as well as 
by external organizations such as the American Hospital Association as 
a critical component of an organized response to health 
disparities.356 357 To date, we have performed analyses of 
disparities in our quality programs by using a series of stratification 
methodologies identifying quality of care for patients with heightened 
social risk or with demographic characteristics with associations to 
poorer outcomes.
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    \356\ Centers for Medicare & Medicaid Services. (2021). Building 
an Organizational Response to Health Disparities [Fact Sheet]. U.S. 
Department of Health and Human Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \357\ Improving Health Equity Through Data Collection and Use: A 
Guide for Hospital Leaders. (2011). Available at: https://www.hpoe.org/Reports-HPOE/improvinghealthequity3.2011.pdf.
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    As efforts to improve methods and sources of social determinant and 
demographic data collection mentioned previously are ongoing, we would 
continue to evaluate opportunities to expand these current measure 
stratification reporting initiatives with existing sources of data. We 
aim to provide comprehensive and actionable information on health 
disparities to health care providers participating in our quality 
programs, in part, by starting with confidential reporting of 
stratified measure results that highlight potential gaps in care 
between groups of patients using existing data sources. This includes 
examining and reporting disparities in care across additional social 
risk factors and demographic variables associated with historic 
disadvantage in the health care system, and examining disparities 
across additional health care quality measures, and in new care 
settings. As disparity measurement initiatives expand through the use 
of measure stratification, it is important to model efforts off of 
existing best practices by continuing to gather feedback from 
interested parties and to make use of lessons learned in the 
development of existing disparity reporting efforts.
    Specific efforts aimed at closing the health equity gap in ESRD 
patients include the Chronic Kidney Disease Disparities: Educational 
Guide for Primary Care, which is intended to foster the development of 
primary care practice teams to enhance care for medically underserved 
patients with CKD and are at risk of progression of disease or 
complications,\358\ and the CMS ETC Model, which aims to test the 
effectiveness of adjusting certain Medicare payments to encourage more 
home dialysis and kidney transplants, support beneficiary modality 
choice, and preserve or improve quality of care provided to ESRD 
beneficiaries while reducing Medicare expenditures.\359\
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    \358\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
    \359\ CMS (2021). ESRD Treatment Choices (ETC) Model. Available 
at: https://innovation.cms.gov/innovation-models/esrd-treatment-choices-model.
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    In the CY 2023 ESRD PPS proposed rule, we noted that measuring 
health care disparities and reporting the results to dialysis providers 
is under consideration as a central component of our approach to 
closing the health equity gap in patients with ESRD (87 FR 38558). 
Stratification of quality measures would facilitate consistent 
measurement of differences in care received and subsequent outcomes by 
different groups of patients. Stratification is one of several 
methodological approaches to estimating health disparities that would 
support facilities in tailoring quality improvement initiatives to 
reduce disparities and track improvement over time. We have identified 
stratification as a critical component of an organized response to 
health disparities.360 361 To date, we have employed 
stratification techniques in a few programs to evaluate quality of care 
for patients with disproportionate social risk burden and demographic 
characteristics associated with adverse health outcomes. For example, 
in the FY 2018 IPPS/LTCH PPS final rule, the Hospital Inpatient Quality 
Reporting Program introduced confidential reporting of hospital quality 
measure data stratified by dual eligibility (82 FR 38403 through 
38409).
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    \360\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \361\ https://www.hpoe.org/Reports-HPOE/improvinghealthequity3.2011.pdf.
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    As efforts to improve methods and sources of social determinant and 
demographic data collection are ongoing, in the CY 2023 ESRD PPS 
proposed rule we stated our intent to continue to evaluate 
opportunities to expand these current measure stratification reporting 
initiatives with existing sources of data (87 FR 38558). We noted that 
we anticipate expanding our efforts to provide comprehensive

[[Page 67270]]

and actionable information on health disparities to dialysis providers 
participating in the ESRD QIP by providing measure stratification 
results to highlight potential gaps in care among patient groups. This 
includes examining and reporting disparities in care across specific 
social risk factors and demographic variables associated with historic 
disadvantage in ESRD care in particular and examining disparities 
across ESRD QIP measures. We stated that we aim to gather feedback from 
technical experts and dialysis providers as we evaluate existing best 
practices for measure stratification methods and reporting approaches 
applied to health disparity evaluation. As disparity measurement 
initiatives expand through the use of measure stratification, it is 
important to model efforts off of existing best practices by continuing 
to gather feedback from interested parties and to make use of lessons 
learned in the development of existing disparity reporting efforts.
    There are several key considerations that we intend to consider 
when advancing the use of measurement and stratification as tools to 
address health care disparities and advance health equity. In the CY 
2023 ESRD PPS proposed rule, we sought input on key considerations in 
five specific areas that could inform our approach (87 FR 38558). Each 
is described in more detail later in this section:
     Identification of Goals and Approaches for Measuring 
Health Care Disparities and Using Measure Stratification in ESRD QIP--
This section identifies the approaches for measuring health care 
disparities through measure stratification in CMS quality reporting 
programs.
     Guiding Principles for Selecting and Prioritizing Measures 
for Disparity Reporting--This section describes considerations that 
could inform the selection of ESRD QIP measures to prioritize for 
stratification.
     Principles for Social Risk Factor and Demographic Data 
Selection and Use--This section describes social risk factor and 
demographic data that we would consider investigating for use in 
stratifying ESRD QIP measures for health care disparity measurement. 
Dialysis and other health care providers would use their own 
demographic data to address disparities affecting their patients.
     Identification of Meaningful Performance Differences--This 
section reviews several strategies for identifying meaningful 
differences in performance when ESRD QIP measures apply stratification 
or disparity reporting that are easily understood but remain useable by 
dialysis providers.
     Guiding Principles for Reporting Disparity Results--This 
final section reviews considerations we would consider in determining 
how ESRD QIP would report disparity results to dialysis providers, as 
well as the ways different reporting strategies would hold providers 
accountable.
    We then solicited public input on these topics.
b. Identification of Goals and Approaches for Measuring Health Care 
Disparities and Using Measure Stratification in ESRD QIP
    Our goal in developing methods to measure disparities in care is to 
provide actionable and useful results to dialysis providers. By 
quantifying health care disparities (that is, through quality measure 
stratification), we aim to provide useful tools for dialysis providers 
and facilities to drive improvements. In the CY 2023 ESRD PPS proposed 
rule, we stated our belief that these results would support dialysis 
providers and facilities efforts in examining the underlying drivers of 
disparities in their patients' care and to develop their own innovative 
and targeted quality improvement interventions (87 FR 38558). With 
stratified disparity information available, it may be possible to drive 
system-wide advancement through incremental, provider-level 
improvement.
    There are multiple conceptual approaches to stratifying measures 
for reporting health disparities. In recent years, we have focused on 
identifying health care disparities by reporting stratified results for 
acute care hospitals in two complementary ways. First, stratification 
by a given social risk factor or demographic variable has generated 
measure results for subgroups of patients cared for by individual 
providers that can be directly compared. This type of comparison 
identifies important disparities, such as gaps in care and outcomes 
between patient groups. This approach is sometimes referred to as 
``within-provider'' disparity. This can be done for most measures that 
include patient-level data and can be helpful to quantitatively express 
a provider's disparity in care. However, similar to the measure itself, 
the approach to perform this type of comparison would differ based on 
the measure's complexity. For example, when risk adjustment is used in 
the measure, the stratification approach would have to be adapted to 
address clinical risk adjustment.\362\ Second, a health care provider's 
performance on a measure for only the subgroup of patients with that 
social risk factor can be compared to other providers' performance for 
that same subgroup of patients (sometimes referred to as ``across-
provider'' disparities measurement). This type of comparison 
illuminates the health care provider's performance for only the 
population with a given social risk factor, allowing comparisons for 
specific performance to be better understood and compared to peers or 
State and national benchmarks. These approaches are reviewed and 
recommended by The Assistant Secretary of Planning and Evaluation 
(ASPE) as ways to measure health equity in their 2020 Report to 
Congress.\363\
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    \362\ Centers for Medicare & Medicaid Services. (2015). Risk 
Adjustment Fact Sheet. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/Risk-Adjustment-Fact-Sheet.pdf.
    \363\ ASPE. (2020). Social Risk Factors and Performance in 
Medicare's Value-Based Purchasing Program: The Second of Two Reports 
Required by the Improving Medicare Post-Acute Care Transformation 
(IMPACT) Act of 2014. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195191/Second-IMPACT-SES-Report-to-Congress.pdf.
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    Alone, each approach may provide an incomplete picture of 
disparities in care for a particular measure, but when reported 
together with overall quality performance can give detailed information 
about where differences in care exist. For example, a dialysis provider 
may underperform when compared to national averages for patients with a 
given risk factor, but if they also underperform for patients without 
that risk factor, the measured difference, or disparity in care, could 
be negligible even though performance for the group historically 
underserved group remains poor. In this case, simply stratifying the 
measure results could show little difference in care between patient 
groups within the facility, comparing results for only the group that 
has been historically marginalized would signal the need to improve 
care for this population.
    In the proposed rule, we stated that we are especially sensitive to 
the need to ensure all disparity reporting avoids measurement bias. 
Stratified results must be carefully examined for potential measurement 
or algorithmic bias that is introduced through stratified 
reporting.\364\ Furthermore, results of stratified reporting must be 
evaluated for any type of selection bias that fails

[[Page 67271]]

to capture disparity due inadequate representation of subgroups of 
patients in measure cohorts. During measure re-evaluation, we would aim 
to carefully examine stratified results and methods to mitigate the 
potential for drawing incorrect conclusion from results.
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    \364\ Obermeyer Z, Powers B, Vogeli C, Mullainathan S. 
Dissecting racial bias in an algorithm used to manage the health of 
populations. Science. 2019;366(6464):447-53.
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c. Guiding Principles for Selecting and Prioritizing Measures for 
Disparity Reporting
    In the proposed rule, we stated our intent to begin our efforts to 
provide stratified reporting for ESRD QIP measures, provided they offer 
meaningful and valid feedback to dialysis and other health care 
providers on their care for ESRD patients that may face social 
disadvantage or other forms of discrimination or bias (87 FR 38559). 
Further development of stratified reporting of ESRD QIP measures can 
provide dialysis and other health care providers with more granular 
results that support targeting resources and initiatives to improve 
health equity. We noted that we are mindful that it may not be possible 
to calculate stratified results for all ESRD QIP measures, or there may 
be situations where stratified reporting may not be desired. To help 
inform prioritization of the candidate ESRD QIP measures for stratified 
reporting, we stated that we aim to receive feedback on several 
systematic principles under consideration that we believe would help us 
prioritize measures for disparity reporting across programs.
    These considerations, when assessed within the context of specific 
programs, like the ESRD QIP, help gauge the utility and potential uses 
of stratified measure results to provide usable and impactful 
information on disparity broadly across our programs. While we aim to 
standardize approaches where possible, we also recognize that the 
variety of measures and care settings involved and the contextual 
nature of stratified reporting would require decisions to be made at 
the program level.
    In the CY 2023 ESRD PPS proposed rule, we noted that we have 
developed the following guiding principles for prioritizing ESRD QIP 
measures for disparity reporting:
     Prioritize validated clinical quality measures--When 
considering disparity reporting of stratified quality measures, there 
are several advantages to focusing on recognized measures which have 
met industry standards for measure reliability and validity. First, 
existing measures highlight agreed upon priority areas for quality 
measurement specific to the program setting, which have been developed 
under adherence to the CMS Measures Management System Blueprint \365\ 
and have been reviewed for their clinical and population relevance by 
experts knowledgeable about the nuances of care delivered in these 
settings. Furthermore, these measures have been reviewed for clinical 
significance, applicability, and scientific rigor by additional 
organizations, such as the National Quality Forum (NQF), and have been 
selected for inclusion in programs with their recommendations in mind. 
Adapting these existing tools to measure disparity through 
stratification maintains adherence to predefined measurement priorities 
and utilizes a great deal of extant expert and methodological 
validation. The application of stratified reporting to validated 
clinical quality measures which are used across the health care sector 
also aim to mitigate any potential additional administrative burden on 
health care providers, hospitals, and facilities.
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    \365\ Centers for Medicare and Medicaid Services. (2020). CMS 
Measures Management System Blueprint (Blueprint v 16.0).Available 
at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/MMS/Downloads/Blueprint.pdf.
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     Prioritizing Measures with Identified Disparity in 
Treatment or Outcomes Among Participating Facilities for Selected 
Social or Demographic Factors--Candidate ESRD QIP measures for 
stratification should be supported by evidence of underlying health 
care disparities in the procedure, condition, or outcome being 
measured. A review of peer-reviewed research studies should be 
conducted to identify disparities related to treatment or procedure the 
measure evaluates, or outcome used to score the measure, and should 
carefully consider both social risk factors and patient demographics. 
Disparity related to the measure could be based on the outcome or 
procedures and practices assessed by the measure. In addition, analysis 
of Medicare-specific data should be done to demonstrate evidence of 
disparity in care for some or most health care providers that treat 
Medicare patients. In addition to disparities in outcomes and quality, 
consideration should also be given to conditions that have highly 
disproportionate prevalence in certain populations.
     Prioritize Measures with Sufficient Sample Size to Allow 
for Reliable and Representative Comparisons--Sample size holds specific 
significance for statistical calculations; however, it holds additional 
importance in the context of disparity reporting. Candidate measures 
for stratification would need to have sufficient sample size of 
enrollees to ensure that reported results of the disparity calculation 
are reliable and representative. This may be challenging if cohorts 
with a given social risk factor are small.
    In the proposed rule, we stated that ESRD QIP may further consider 
measures for disparity reporting based on the utility of the stratified 
information, namely, prioritizing measures for stratification that show 
large differences in care between patient groups (87 FR 38560). Large 
differences in care for patients along social or demographic lines may 
indicate high potential that targeted initiatives could be effective. 
We noted that this is only one consideration in identifying the most 
meaningful differences in care, however, as initiatives designed for 
measures that show small disparities, but have very large cohorts, may 
have very large aggregate impacts on the national scale.
     Prioritize Outcome Measures and Measures of Access and 
Appropriateness of Care - Quality measurement in CMS programs often 
focus on outcomes of care, such as mortality or readmission, as high 
priority quality measures. For example, two key ESRD QIP outcome 
measures are the SHR clinical measure and the SRR clinical measure, 
which we are updating so that the measure results are expressed as 
rates. Such outcome measures remain a priority in the context of 
disparities measurement. However, measures that focus on access, when 
available, are also critical tools for addressing health care 
disparities. Measures that address health care access can 
counterbalance the risk of creating perverse incentives, for example, 
whereby a facility may improve its performance on existing quality 
measures by limiting access to care for populations who are 
historically underserved.
    To complement measure stratification focused on clinical outcomes, 
we stated in the proposed rule that the ESRD QIP would consider 
prioritizing measures with a focus on access to or appropriateness of 
care (87 FR 38560). These measures, when reported in tandem with 
clinical outcomes, would provide a broader picture of care provided at 
a facility, illuminate potential performance drivers, and identify 
organizations that fail to address access to care barriers for patient 
sub-groups. We acknowledge that the measurement of access and 
appropriateness of care is a growing field, and quality measures in 
these areas are limited. However, as our ability to measure these 
facets of health

[[Page 67272]]

care improve, they would be high priority for measure stratification.
d. Principles for Social Risk Factor and Demographic Data Selection and 
Use
    There are numerous non-clinical drivers of health associated with 
patient outcomes, including social risk factors such as socioeconomic 
status, housing availability, and nutrition, as well as marked inequity 
in outcomes based on patient demographics such as race and ethnicity, 
being a member of a minority religious group, geographic location, 
sexual orientation and gender identity, religion, and disability 
status.366 367 368 369 370 371 372 373The World Health 
Organization (WHO) defines social risk factors as ``non-medical factors 
that influence health outcomes. They are the conditions in which people 
are born, grow, work, live, and age, and the wider set of forces and 
systems shaping the conditions of daily life.'' \374\ These include 
factors such as income, education, job insecurity, food insecurity, 
housing, social inclusion and non-discrimination, access to affordable 
health services, and any others. Research has indicated that these 
social factors may have as much or more impact on health outcomes as 
clinical care itself.375 376 Additionally, differences in 
outcomes based on patient race and ethnicity have been identified as 
significant, persistent, and of high priority for CMS and other Federal 
agencies.\377\
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    \366\ Joynt KE, Orav E, Jha AK. (2011). Thirty-day readmission 
rates for Medicare beneficiaries by race and site of care. JAMA, 
305(7):675-681.
    \367\ Lindenauer PK, Lagu T, Rothberg MB, et al. (2013). Income 
inequality and thirty-day outcomes after acute myocardial 
infarction, heart failure, and pneumonia: retrospective cohort 
study. British Medical Journal, 346.
    \368\ Trivedi AN, Nsa W, Hausmann LRM, et al. (2014). Quality 
and equity of care in U.S. hospitals. New England Journal of 
Medicine, 371(24):2298- 2308.
    \369\ Polyakova, M., et al. (2021). Racial disparities in excess 
all-cause mortality during the early COVID-19 pandemic varied 
substantially across states. Health Affairs, 40(2): 307-316.
    \370\ Rural Health Research Gateway. (2018). Rural communities: 
Age, income, and health status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-incomehealth-status-recap.pdf.
    \371\ HHS Office of Minority Health (2020). 2020 Update on the 
Action Plan to Reduce Racial and Ethnic Health Disparities. 
Available at: https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \372\ Poteat TC, Reisner SL, Miller M, Wirtz AL. (2020). COVID-
19 vulnerability of transgender women with and without HIV infection 
in the Eastern and Southern U.S. medRxiv [Preprint]. 
2020.07.21.20159327. doi: 10.1101/2020.07.21.20159327. PMID: 
32743608; PMCID: PMC7386532.
    \373\ Milkie Vu et al. Predictors of Delayed Healthcare Seeking 
Among American Muslim Women, Journal of Women's Health 26(6) (2016) 
at 58; S.B. Nadimpalli, et al., The Association between 
Discrimination and the Health of Sikh Asian Indians.
    \374\ World Health Organization. Social Determinants of Health. 
Available at: https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
    \375\ Hood, C., Gennuso K., Swain G., Catlin B. (2016). County 
Health Rankings: Relationships Between Determinant Factors and 
Health Outcomes. Am J Prev Med. 50(2):129-135. doi:10.1016/
j.amepre.2015.08.024.
    \376\ Chepaitis, A.E., Bernacet, A., Kordomenos, C., Greene, 
A.M., Walsh, E.G. (2020). Addressing social determinants of health 
in demonstrations under the financial alignment initiative. RTI 
International. Available at: https://innovation.cms.gov/data-and-reports/2021/fai-sdoh-issue-brief.
    \377\ White House. (2021). Executive Order On Advancing Racial 
Equity and Support for Underserved Communities Through the Federal 
Government. Available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
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    In prioritizing among social risk factors and demographic 
variables, disability, and other markers of disadvantage for stratified 
reporting, the ESRD QIP would develop approaches that have the most 
relevance for the existing measure set. Patient reported data are 
considered to be the gold standard for evaluating care for patients 
with social risk factors or who belong to certain demographic groups as 
this is the most accurate way to attribute social risk.\378\ Although 
some of this information is currently reported on Form 2728--ESRD 
Medical Evidence Report Medicare Entitlement And/or Patient 
Registration (OMB control number 0938-0046), in the proposed rule we 
stated our belief that additional development of patient-reported 
social risk factor and demographic variable data sources may be 
necessary to collect data that is complete enough to consider for 
disparity reporting (87 FR 38560). We noted that currently, there are 
many efforts underway to further develop data collection for self-
reported patient social risk and demographic variables. Yet, given that 
data sources are small, they may only have the ability to provide 
statistically significant disparity results for a small proportion of 
care facilities.
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    \378\ Jarr[iacute]n OF, Nyandege AN, Grafova IB, Dong X, Lin H. 
(2020). Validity of race and ethnicity codes in Medicare 
administrative data compared with gold-standard self-reported race 
collected during routine home health care visits. Med Care, 
58(1):e1-e8. doi: 10.1097/MLR.0000000000001216. PMID: 31688554; 
PMCID: PMC6904433.
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    We would continue to evaluate patient-reported sources of social 
risk and demographic information. Until validated data are available, 
in the proposed rule we stated that we are considering three sources of 
social risk and demographic data that would allow us to report 
stratified measure results:
     Billing and Administrative Data--The majority of quality 
measurement tools used in our quality programs focus on utilizing 
existing enrollment and claims data for Medicare beneficiaries. Using 
these existing data to assess disparity, for example by the use of dual 
enrollment for Medicare and Medicaid, allows for high impact analyses 
with negligible facility burden. In the proposed rule, we noted that 
there are, however, limitations in these data's usability for 
stratification analysis. Our current administrative race and ethnicity 
data have been shown to have historical inaccuracies due to limited 
collection classifications and attribution techniques, and are 
generally considered not to be accurate enough for stratification and 
disparity analyses.\379\ International Classification of Diseases,10th 
Revision (ICD-10) codes for socioeconomic and psychosocial 
circumstances (``Z codes'' Z55 to Z65) represent an important 
opportunity to document patient-level social risk factors in Medicare 
beneficiaries, however, they are rarely used in clinical practice, 
limiting their usability in disparities measurement.\380\ If the 
collection of social risk factor data improves in administrative data, 
we would continue to evaluate its applicability for stratified 
reporting in the future.
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    \379\ Jarr[iacute]n OF, Nyandege AN, Grafova IB, Dong X, Lin H. 
(2020). Validity of race and ethnicity codes in Medicare 
administrative data compared with gold-standard self-reported race 
collected during routine home health care visits. Med Care, 
58(1):e1-e8. doi: 10.1097/MLR.0000000000001216. PMID: 31688554; 
PMCID: PMC6904433.
    \380\ Centers for Medicare & Medicaid Services, Office of 
Minority Health. (2021). Utilization of Z codes for social 
determinants of health among Medicare fee-for-service beneficiaries, 
2019. Available at: https://www.cms.gov/files/document/z-codes-data-highlight.pdf.
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    Dual eligibility is a widely used proxy for low socioeconomic 
status and is an exception to the previously discussed limitations, 
making it an effective indicator for worse outcomes due to low 
socioeconomic status. The use of dual eligibility in social risk factor 
analyses was supported by ASPE's First and Second Reports to 
Congress.\381\ \382\ These reports found that in the context of VBP 
programs, dual eligibility, as an

[[Page 67273]]

indicator of social risk, was among the most powerful predictors of 
poor health outcomes among those social risk factors that ASPE examined 
and tested.
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    \381\ Office of the Assistant Secretary for Planning and 
Evaluation. (2016). Social risk factors and performance under 
Medicare's value-based purchasing programs. Available at: https://aspe.hhs.gov/reports/report-congress-social-risk-factors-performance-under-medicares-value-based-purchasing-programs.
    \382\ Office of the Assistant Secretary For Planning and 
Evaluation. (2020). Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at: https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
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     Area-based Indicators of Social Risk Information and 
Patient Demographics--Area-based indicators pool area-level information 
to create approximations of patient risk or describe the neighborhood 
or context that a patient resides in. Popular among them are the use of 
the American Community Survey (ACS), which is commonly used to 
attribute social risk to populations at the ZIP code or Federal 
Information Processing Standards (FIPS) county level. Several indices, 
such as the Agency for Healthcare Research and Quality (AHRQ) 
Socioeconomic Status (SES) Index,\383\ Centers for Disease Control and 
Prevention/Agency for Toxic Substances and Disease Registry Social 
Vulnerability Index (CDC/ATSDR SVI),\384\ and Health Resources and 
Services Administration Area Deprivation Index,\385\ combine multiple 
indicators of social risk into a single score which can be used to 
provide multifaceted contextual information about an area and may be 
considered as an efficient way to stratify measures that include many 
social risk factors.
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    \383\ Bonito A., Bann C., Eicheldinger C., Carpenter L. (2008). 
Creation of New Race-Ethnicity Codes and Socioeconomic Status (SES) 
Indicators for Medicare Beneficiaries. Final Report, Sub-Task 2. 
(Prepared by RTI International for the Centers for Medicare & 
Medicaid Services through an interagency agreement with the Agency 
for Healthcare Research and Policy, under Contract No. 500-00-0024, 
Task No. 21) AHRQ Publication No. 08-0029-EF. Rockville, MD, Agency 
for Healthcare Research and Quality.
    \384\ Flanagan, B.E., Gregory, E.W., Hallisey, E.J., Heitgerd, 
J.L., Lewis, B. (2011). A social vulnerability index for disaster 
management. Journal of Homeland Security and Emergency Management, 
8(1). Available at: https://www.atsdr.cdc.gov/placeandhealth/svi/img/pdf/Flanagan_2011_SVIforDisasterManagement-508.pdf.
    \385\ Center for Health Disparities Research. About the 
Neighborhood Atlas. Available at: https://www.neighborhoodatlas.medicine.wisc.edu/.
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     Imputed Sources of Social Risk Information and Patient 
Demographics--Imputed data sources use statistical techniques to 
estimate patient-reported factors, including race and ethnicity. In the 
case of race and ethnicity, indirect estimation improves upon imperfect 
and incomplete data by drawing on information about a person's name and 
address and the linkage of those variables to race and ethnicity. One 
such tool is the Medicare Bayesian Improved Surname Geocoding (MBISG) 
method (currently in version 2.1), which combines information from 
administrative data, surname, and residential location to estimate 
patient race and ethnicity.\386\ This tool was originally developed by 
the RAND Corporation, and further customized for the Medicare 
population to improve existing CMS administrative data on race and 
ethnicity.
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    \386\ Haas A., Elliott M.N., Dembosky J.W., Adams J.L., Wilson-
Frederick S.M., Mallett J.S. et al. (2019). Imputation of race/
ethnicity to enable measurement of HEDIS performance by race/
ethnicity. Health Serv Res, 54(1):13-23. doi: 10.1111/1475-
6773.13099. Epub 2018 Dec 3. PMID: 30506674; PMCID: PMC6338295. 
Available at: https://pubmed.ncbi.nlm.nih.gov/30506674/.
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    The MBISG 2.1 method does not assign a single race and ethnicity to 
an individual; instead, it generates a set of six probabilities, each 
estimating what the individual would self-identify as given a set of 
racial and ethnic groups to choose from including: American Indian or 
Alaska Native, Asian or Pacific Islander, Black, Hispanic, Multiracial, 
and White. In no case would the estimated probability be used for 
making inferences about a beneficiary; only self-reported data on race 
and ethnicity should be used for that purpose. However, in aggregate, 
these results can provide insight and accurate information at the 
population level, such as the patients of a given facility, or the 
members of a given plan. MBISG 2.1 is currently used by CMS' OMH to 
undertake various analyses, such as comparing scores on clinical 
quality of care measures from the Healthcare Effectiveness Database and 
Information Set (HEDIS) by race and ethnicity for Medicare Part C/D 
health plans, and in developing a Health Equity Summary Score (HESS) 
for Medicare Advantage (MA) health plans.\387\
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    \387\ Agniel D., Martino S.C., Burkhart Q., Hambarsoomian K., 
Orr N., Beckett M.K, et al. (2021). Incentivizing excellent care to 
at-risk groups with a health equity summary score. J Gen Intern Med, 
36(7):1847-1857. doi: 10.1007/s11606-019-05473-x. Epub 2019 Nov 11. 
PMID: 31713030; PMCID: PMC8298664. Available at: https://pubmed.ncbi.nlm.nih.gov/31713030/.
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    While the use of area-based indicators and imputed data sources are 
not meant to replace efforts to improve patient-level data collection, 
in the proposed rule we noted that we are considering how they might be 
used to quickly begin population-level disparity reporting of 
stratified measure results while being conscientious about data 
limitations.
    Imputed data sources, particularly when used to identify patient 
populations for measurement, must be carefully evaluated for their 
potential to negatively affect the populations being studied. For this 
reason, imputed data sources should only be considered after 
significant validation study has been completed, including evaluation 
by key interested parties for face validity, and any calculations that 
incorporate these methods should be continuously evaluated for the 
accuracy of their results and the necessity of their use. While neither 
imputed nor area-level geographic data should be considered a 
replacement for improved data collection, researchers have found their 
use to be a simple and cost-efficient way to make general estimations 
of social risk at a community level.\388\ Even more potent, when 
patient-level information is not available, are the combination of 
several sources of imputed or area-level data to provide diverse 
perspectives on social risk of a population.
---------------------------------------------------------------------------

    \388\ Bi, Q., He, F., Konty, K., Gould, L. H., Immerwahr, S., & 
Levanon Seligson, A. (2020). ZIP code-level estimates from a local 
health survey: Added value and limitations. Journal of Urban Health: 
Bulletin of the New York Academy of Medicine, 97(4), 561-567.
---------------------------------------------------------------------------

e. Identification of Meaningful Performance Differences
    In examining potential ways to report disparity data in the ESRD 
QIP, including the results of quality measure stratification, in the 
proposed rule we stated that we would consider different approaches to 
identifying meaningful differences in performance. Stratified results 
can be presented in a number of ways to describe to providers how well 
or poorly they are performing, or how they perform when compared to 
other care facilities. For this reason, it is important to identify how 
best to present meaningful differences in performance for measures of 
disparity reporting. We noted our aim to provide information that 
offers meaningful information to dialysis providers. While we aim to 
use standardized approaches where possible, identifying differences in 
performance on stratified results would be made at the program level 
due to contextual variations across programs and settings. We stated 
that we looked forward to feedback on the benefits and limitations of 
the possible reporting approaches we have described in this Request for 
Information.
     Statistical Differences--When aiming to examine 
differences in disparities results among facilities, the use of 
statistical testing can be helpful. There are many statistical 
approaches that can be used to reliably group results, such as using 
confidence intervals, creating cut points based on standard deviations, 
or using a clustering algorithm. Importantly, these approaches may 
result in groupings that are statistically different, but not 
meaningfully different depending on the distribution of results.
     Rank Ordering and Percentiles--Ordering health care 
providers in a

[[Page 67274]]

ranked system is another option for reporting disparity results in a 
meaningful way. In this system, facilities could be ranked based on 
their performance on disparity measures to quickly allow them to 
compare their performance to other similar health care providers. This 
approach works well as a way for facilities to easily compare their own 
performance against others; however, a potential drawback is that it 
does not identify the overall magnitude of disparity. For example, if a 
measure shows large disparity in care for patients based on a given 
factor, and that degree of disparity has very little variation between 
health care providers, the difference between the top and bottom ranked 
facilities would be very small even if the overall disparity is large.
     Threshold Approach--A categorization system could also be 
considered for reporting disparity results. In this system, facilities 
could be grouped based on their performance using defined metrics, such 
as fixed intervals of results of disparity measures, indicating 
different levels of performance. Using a categorized system may be more 
easily understood by interested parties by giving a clear indication 
that outcomes are not considered equal. However, this method does not 
convey the degree of disparity between facilities or the potential for 
improvement based on the performance of other facilities. Furthermore, 
it requires a determination of what is deemed `acceptable disparity' 
when developing categories.
     Benchmarking--Benchmarking, or comparing individual 
results to, for example, State or national averages, is another 
potential reporting strategy. This type of approach could be done, 
especially in combination with a ranked or threshold approach, to give 
facilities more information about how they compare to the average care 
for a patient group.
    Another consideration for each of these approaches is grouping 
similar care settings together for comparison through a peer grouping 
step, especially if a ranked system is used to compare facilities. 
Interested parties have stated that comparisons between facilities have 
limited meaning if the facilities are not similar, and that peer 
grouping would improve their ability to interpret results. Overall, the 
value of peer grouping must be weighed against the potential to set 
different standards of meaningful disparity among different care 
settings.
f. Guiding Principles for Reporting Disparity Results
    In the proposed rule, we stated that there are several options for 
reporting of disparity results to drive improvements in quality (87 FR 
38562). Confidential reporting, or reporting results privately to 
providers, is an approach we have used for new newly adopted measures 
in a CMS quality program to give providers an opportunity to become 
more familiar with calculation methods and to begin improvement 
activities before other forms of reporting. Providing early results to 
facilities is an important way to provide facilities the information 
they need to design impactful strategies to reduce disparity. Public 
reporting, or reporting results publicly, is a second reporting option. 
This method could provide ESRD QIP participants and ESRD patients with 
important information on facility quality, and by turn relies on market 
forces to incentivize health care providers to improve and become more 
competitive in their markets without directly influencing payment from 
CMS. Payment accountability could potentially offer a direct line for 
us to reward health care providers for having low disparity rates, or 
for performing well for medically underserved population groups.
    We stated that we are exploring the most optimal methods of 
reporting disparity results. Initially, confidential reporting may be 
prudent for facilities and health care providers to understand 
stratification methodology and the presentation of stratified results, 
and to begin to implement programs to reduce disparities at their 
facilities. We noted that we are considering this approach to begin 
having an impact on disparity, while allowing providers time to 
interpret results and set up processes to address disparities.
    It would be important to carefully consider the context of 
reporting, including measure specifications, data sources, care 
setting, and dialysis providers' and patients' perspectives before 
implementing a reporting strategy. In the proposed rule, we identified 
risks to applying stratification to all measures using all available 
social risk factor and demographic variables, such as the chance that 
unexpected results may exacerbate disparity. In the proposed rule, we 
stated our intent to consider these risks compared to the benefits of 
different reporting strategies when developing implementation plans.
    Regardless of the methods used to report results, it is important 
to report stratified measure data alongside overall measure results. 
Review of both measure results along with stratified results can 
illuminate greater levels of detail about quality of care for subgroups 
of patients, providing important information to drive quality 
improvement. Unstratified quality measure results address general 
differences in quality of care between health care providers and 
promote improvement for all patients, but unless stratified results are 
available, it is unclear if there are subgroups of patients that 
benefit most from initiatives. Notably, even if overall quality measure 
scores improve, without identifying and measuring differences in 
outcomes between groups of patients, it is impossible to track progress 
in reducing disparity for patients with heightened risk of poor 
outcomes.
g. Solicitation of Public Comments
    In the proposed rule, we stated that the goal of this request for 
information was to describe key considerations that we would 
acknowledge when advancing the use of measure stratification as one 
quality measurement tool to address health care disparities and advance 
health equity in the ESRD QIP. We also stated that this was important 
as a means of setting priorities and expectations for the use of 
stratified measures. We specifically noted that several important 
factors may limit the use of stratification or may need to be taken 
into consideration.
    We invited general comments on the principles and approaches listed 
previously, or additional thoughts about disparity measurement or 
stratification guidelines suitable for overarching consideration across 
our programs. Specifically, we invited comment on:
     Overarching goals for measuring disparity that should be 
considered across CMS quality programs, including: the importance of 
pairing stratified results to evaluate gaps in care among groups of 
patients attributed to a given facility and comparison of care for a 
subgroup of patients across facilities, and the goal that these 
stratified results are reported alongside overall measure results to 
have a comprehensive view of disparities.
     Principles to consider for prioritization of measures for 
disparity reporting, including prioritizing stratification for: valid 
clinical quality measures; measures with established disparities in 
care; measures that have adequate sample size and representation among 
facilities; and, measures that consider access and appropriateness of 
care.
     Principles to be considered for the selection of social 
risk factors and demographic data for use measuring disparities, 
including the importance of identifying new social risk factor and 
demographic variables to use to stratify measures. We also sought 
comment on

[[Page 67275]]

the use of imputed and area based social risk and demographic 
indicators for measure stratification when patient reported data are 
unavailable.
     Preferred ways that meaningful differences in disparity 
results can be identified or should be considered.
     Guiding principles for the use and application of the 
results of disparity measurement, such as providing confidential 
reporting initially versus public reporting.
    We received comments in response to this request for information 
and have summarized them here.
    Comment: Many commenters supported efforts to address disparity 
measurement and health equity in the ESRD QIP. Several commenters 
specifically supported stratification as a potential approach to 
identifying the impact of health disparities in diverse population 
groups. One commenter stated that health disparities measurement will 
advance policies and practices that will promote health equity and 
improve health outcomes in patients from populations that are 
historically underserved. A few commenters noted that measure 
stratification will reveal the impact of social risk factors on health 
outcomes. One commenter identified the Percentage of Prevalent Patients 
Waitlisted (PPPW) measure as priority for stratification if the ESRD 
QIP measure set. A commenter stated that measure stratification by 
race, ethnicity, and dual eligibility status may be too broad to 
decipher the underlying cause of health disparities, but supports 
collection of this data as an important preliminary step. One commenter 
expressed general support for the creation of an ESRD Facility Equity 
Score and believes dialysis facilities should be accountable for 
closing health equity gaps with support and guidance from CMS. A 
commenter recommended that CMS work with interested parties to identify 
evidence-based measurable solutions to addressing health disparities.
    Several commenters expressed concerns about the implementation of 
health disparities measurement in the ESRD QIP. A few commenters 
identified the potential for increased administrative burden as a 
concern. A few commenters expressed concern about CMS's plans to ensure 
that valid data collection and subsequent analytic procedures are in 
place. One commenter was concerned that measure stratification could 
potentially increase financial penalties for facilities that serve 
patients experiencing poverty or another disadvantage. Another 
commenter noted that dialysis facilities may have difficulties with 
data collection due to resource limitations and patient preferences.
    Commenters offered multiple recommendations for future measurement 
of health disparities in the ESRD QIP. A few commenters recommended 
that CMS consider potential administrative burden in development of 
data collection and reporting procedures. Another commenter recommended 
that CMS include specific health equity measures in the ESRD QIP 
measure set to ensure financial accountability for facilities. One 
commenter noted the disproportionate impact of ESRD on patients from 
communities that are historically under-resourced and recommended 
enhanced attention to CKD prevention, quality of life improvement for 
CKD and ESRD patients and increased access to home dialysis and 
transplantation as treatment modalities. A commenter noted the 
importance of fairly applying quality incentives to promote equitable 
access to high-quality care and recommended incorporation of social 
risk factors into future analytic methodologies. One commenter 
recommended that patients be able to opt-out of participation in health 
disparities data collection.
    Many commenters noted that they would like to see health disparity 
measurement linked to actionable planning that will advance health 
equity, and several commenters provided multiple recommendations for 
measuring health disparities. A few commenters supported using 
``within-provider'' and ``across-provider'' approaches. A few 
commenters requested that CMS work with interested parties to define 
performance methodologies and reporting requirements, specifically 
related to stratification of measures. These commenters were especially 
concerned that CMS consider efforts to reduce administrative burden and 
financial penalization associated with serving patients from 
communities that are historically underserved while ensuring accurate 
and fair assessment performance evaluation at the facility level.
    A few commenters recommended that CMS prioritize measures that have 
a sufficient sample size so that comparisons are reliable and 
representative. A few commenters suggested that CMS prioritize outcome 
measures and measures of access and appropriateness of care. A few 
commenters requested that CMS clarify the definition of access and 
appropriateness of care measures. One commenter recommended that CMS 
prioritize validated and reliable clinical quality measures over 
reporting measures. Another commenter recommended that CMS prioritize 
measures that are supported by evidence of disparities identified for 
selected social or demographic factors. One commenter recommended 
prioritization of measures that are directly related to patient 
outcomes, measures for which disparities are the largest, measures for 
which disparities are worsening, and measures that are actionable. One 
commenter recommended that CMS establish standards for stratification 
and robust segmentation to identify existing gaps in outcomes within 
patient groups. One commenter recommended initial prioritization of 
measures that facilities have experience with collecting and reporting 
to ensure that stratified measures have been validated and align with 
CMS priorities such as clinical quality, safety, and patient experience 
measures.
    Several commenters recommended that CMS leverage existing data 
sources, including patient-level self-reported data, to stratify ESRD 
QIP measures by such factors as race and ethnicity, income, insurance 
status at the initiation of dialysis treatment and geographic area of 
residence. One commenter recommended that CMS develop and make 
available datasets that will track how closely the community generally, 
and each provider specifically, provides care across key demographic 
groups and whether that care aligns with the demographics of the 
service area. A few commenters noted the importance of collecting 
social drivers of health data for future resource allocation. A few 
commenters believed that z-code data would be a meaningful approach to 
increasing understanding of the impact of demographic and social risk 
factors in ESRD patients. A few commenters recommended that CMS take a 
stepwise approach to stratification of ESRD QIP measures, suggesting 
stratification according to dual-eligibility status as an appropriate 
starting place. One commenter recommended that CMS account for physical 
disability and limited English proficiency as key variables because 
patients with these characteristics may generate greater costs to the 
healthcare system due to mobility restrictions and need for 
translators. One commenter recommended that CMS make stratified health 
disparities data publicly available so that interested parties can 
better assess the diverse needs of different patient populations.

[[Page 67276]]

    Several commenters provided recommendations for applying risk 
adjustment methods to identification of meaningful differences in 
disparity results. One commenter noted that risk adjustment should not 
include patients' clinical conditions because differences due to these 
factors are excluded from quality performance comparison. A few 
commenters stated that risk should control for clinical conditions and 
basic demographic characteristics (age and sex), which are legitimate 
reasons for variation in outcomes since they are biologically based and 
would potentially quantify outcome differences related to non-
biological and/or social factors like race, ethnicity, and poverty that 
contribute to health inequities. One commenter believed risk adjustment 
methodologies incorporate utilization and cost variables to identify 
facility-level factors that may contribute to differences in ESRD 
patient outcomes including program design, provider characteristics and 
biases in care delivery or other non-clinical social factors. One 
commenter recommended identifying meaningful performance differences 
beyond process measures with more attention given to data-driven 
improved patient outcomes, including potentially avoidable hospital 
admissions, complications, readmissions, ambulatory complications, and 
emergency department visits that are adjusted for clinical and social 
risk. This commenter believed that reporting disparity results should 
track appropriate utilization to permit benchmarking for clinically 
similar cohorts because this approach would elucidate actual versus 
expected differences in utilization outcomes. One commenter recommended 
that CMS consider using the Social Deprivation Index (SDI) tool to 
ascertain a more granular perspective on social risk factors in the 
ESRD population to prevent masking of additional disparities apart from 
race and ethnicity. Another commenter emphasized that it will be 
important for CMS to work with experts to test proposed methods and 
identify best practices for data collection and stratification to avoid 
inadvertent quality measurement bias and exacerbation of existing 
health disparities. One commenter did not support the use of rank 
ordering or percentiles to identify differences in performance because 
such approaches can potentially mask the actual performance between top 
and bottom ranked facilities. One commenter believed that using 
statistical differences, thresholds, and benchmarking are more 
appropriate methods for identifying meaningful differences.
    Several commenters recommended that CMS initially implement 
confidential facility-level reporting. A few commenters supported 
confidential reporting prior to public reporting. A few commenters 
noted that initial confidential reporting would allow time for 
evaluation of data collection and analytic methodologies which can 
reduce risk of misinterpretation of facility-level data and selection 
bias among patients. One commenter believed that de-identified 
aggregate reporting of disparity results may be helpful for sharing 
results beyond the facility level. A few commenters stated that 
publicly reporting disparity data in the future will promote 
transparency and accountability. One commenter cautioned against public 
reporting of disparity data because facilities have resource 
constraints that prohibit them from providing patients with social 
supports. Another commenter recommended that CMS collaborate with the 
kidney care community in future efforts to identify and address health 
disparities in ESRD patients.
    Response: We appreciate all of the comments and interest in this 
topic. We believe that this input is very valuable in the continuing 
development of CMS health equity efforts. We will continue to take all 
concerns, comments, and suggestions into account for future policy 
development and expansion of our strategic vision for advancing health 
equity. For more information on these ongoing efforts, we refer readers 
to our recently released CMS National Quality Strategy (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy), the CMS 
Strategic Plan for Health Equity (https://www.cms.gov/files/document/health-equity-fact-sheet.pdf), and the CMS Framework for Health Equity 
(https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/framework-for-health-equity) in which we describe our five 
priorities for advancing health equity.

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

A. Background

    Section 1115A of the Act authorizes the Innovation Center to test 
innovative payment and service delivery models expected to reduce 
Medicare, Medicaid, and CHIP expenditures while preserving or enhancing 
the quality of care furnished to the beneficiaries of these programs. 
The purpose of the ETC Model is to test the effectiveness of adjusting 
certain Medicare payments to ESRD facilities and Managing Clinicians to 
encourage greater utilization of home dialysis and kidney 
transplantation, support Beneficiary modality choice, reduce Medicare 
expenditures, and preserve or enhance the quality of care. As described 
in the Specialty Care Models final rule (85 FR 61114), beneficiaries 
with ESRD are among the most medically fragile and high-cost 
populations served by the Medicare program. ESRD Beneficiaries require 
dialysis or kidney transplantation to survive, and the majority of ESRD 
Beneficiaries receiving dialysis receive hemodialysis in an ESRD 
facility. However, as described in the Specialty Care Models final 
rule, alternative renal replacement modalities to in-center 
hemodialysis, including home dialysis and kidney transplantation, are 
associated with improved clinical outcomes, better quality of life, and 
lower costs than in-center hemodialysis (85 FR 61264).
    The ETC Model is a mandatory payment model. ESRD facilities and 
Managing Clinicians are selected as ETC Participants based on their 
location in Selected Geographic Areas--a set of 30 percent of Hospital 
Referral Regions (HRRs) that have been randomly selected to be included 
in the ETC Model, as well as HRRs with at least 20 percent of ZIP 
codes\TM\ located in Maryland.\389\ CMS excludes all U.S. Territories 
from the Selected Geographic Areas.
---------------------------------------------------------------------------

    \389\ ZIP code\TM\ is a trademark of the United States Postal 
Service.
---------------------------------------------------------------------------

    Under the ETC Model, ETC Participants are subject to two payment 
adjustments. The first is the Home Dialysis Payment Adjustment (HDPA), 
which is an upward adjustment on certain payments made to participating 
ESRD facilities under the ESRD Prospective Payment System (PPS) on home 
dialysis claims, and an upward adjustment to the Monthly Capitation 
Payment (MCP) paid to participating Managing Clinicians on home 
dialysis-related claims. The HDPA applies to claims with claim service 
dates beginning January 1, 2021 and ending December 31, 2023.
    The second payment adjustment under the ETC Model is the PPA. For 
the PPA, we assess ETC Participants' home dialysis rates and transplant 
rates during a Measurement Year (MY), which includes 12 months of 
performance data. Each MY has a corresponding PPA Period--a 6-month 
period that begins 6 months after the conclusion of the MY. We adjust 
certain

[[Page 67277]]

payments for ETC Participants during the PPA Period based on the ETC 
Participant's home dialysis rate and transplant rate, calculated as the 
sum of the transplant waitlist rate and the living donor transplant 
rate, during the corresponding MY.
    Based on an ETC Participant's achievement in relation to benchmarks 
based on the home dialysis rate and transplant rate observed in 
Comparison Geographic Areas during the Benchmark Year, and the ETC 
Participant's improvement in relation to their own home dialysis rate 
and transplant rate during the Benchmark Year, we will make an upward 
or downward adjustment to certain payments to the ETC Participant. The 
magnitude of the positive and negative PPAs for ETC Participants 
increases over the course of the Model. These PPAs apply to claims with 
claim service dates beginning July 1, 2022 and ending June 30, 2027.
    In the CY 2022 ESRD PPS final rule, we finalized a number of 
changes to the ETC Model. We made adjustments to the calculation of the 
home dialysis rate (86 FR 61951 through 61955) and the transplant rate 
(86 FR 61955 through 61959) and updated the methodology for attributing 
Pre-emptive Living Donor Transplant (LDT) Beneficiaries (86 FR 61950 
through 61951). We modified the achievement benchmarking and scoring 
methodology (86 FR 61959 through 61968), as well as the improvement 
benchmarking and scoring methodology (86 FR 61968 through 61971). We 
specified the method and requirements for sharing performance data with 
ETC Participants (86 FR 61971 through 61984). We also made a number of 
updates and clarifications to the kidney disease patient education 
services waivers and made certain related flexibilities available to 
ETC Participants (86 FR 61984 through 61994).

B. Summary of the Proposed Provisions, Public Comments, and Responses 
to Comments on the ETC Model

    The CY 2023 ESRD PPS proposed rule appeared in the June 28, 2022 
version of the Federal Register, with a comment period that ended on 
August 22, 2022. In that proposed rule, we proposed to make several 
changes to the ETC Model, effective January 1, 2023. We received 33 
timely public comments on our proposals, including comments from ESRD 
facilities and dialysis organizations; national renal, nephrologist, 
and patient organizations; manufacturers; healthcare systems; and 
individual clinicians.
    We also received comments related to issues that we did not discuss 
in the CY 2023 ESRD PPS proposed rule. These include, for example, 
general expressions of support for the ETC Model, the focus on 
increasing rates of home dialysis and transplantation, and the policies 
related to reducing disparities; recommendations for additional ways to 
refine the model, including changes to ETC Participant selection and 
ESRD Beneficiary attribution, aggregation group construction, and the 
achievement benchmarking methodology; concerns related to the impact of 
COVID-19 and the COVID-19 PHE on the ETC Model and ETC Participants; 
and recommendations to make the ETC Model, or specific elements of the 
ETC Model, available nationally. While we are generally not addressing 
those comments in this final rule, we thank commenters for their input 
and may consider their recommendations in future rulemaking.
    In this final rule, we provide a summary of each proposed 
provision, a summary of the public comments received and our responses 
to them, and the policies we are finalizing for the ETC Model. These 
policies take effect January 1, 2023.
1. Performance Payment Adjustment Achievement Scoring Methodology
    Under the ETC Model, the PPA is a positive or negative adjustment 
on dialysis and dialysis-related Medicare payments for both home 
dialysis and in-center dialysis. To calculate an ETC Participant's PPA, 
we assess the ETC Participant's performance on the home dialysis rate 
and the transplant rate in relation to achievement and improvement 
benchmarks, as described in 42 CFR 512.370(b) and (c), respectively.
    An ETC Participant's achievement is scored at the aggregation group 
level in relation to achievement benchmarks, which are constructed 
based on the home dialysis rate and transplant rate observed among 
aggregation groups located in Comparison Geographic Areas during 
corresponding Benchmark Years. Achievement benchmarks are percentile 
based, and set at the <30th, >30th, >50th, >75th, and >90th percentile 
of rates for Comparison Geographic Areas during the Benchmark Year. An 
ETC Participant receives the achievement points that correspond with 
its performance, at the aggregation group level, on the home dialysis 
rate and transplant rate in relation to the achievement benchmarks, as 
described in Sec.  512.370(b)(1).
    In the CY 2022 ESRD PPS final rule, we modified the achievement 
benchmarking methodology such that, beginning MY3, achievement 
benchmarks are stratified based on the proportion of beneficiary years 
attributed to the ETC Participant's aggregation group for which 
attributed beneficiaries are dually eligible for Medicare and Medicaid 
or receive the Low Income Subsidy (LIS). Beginning MY3, we create two 
strata, with the cutpoint set at 50 percent of attributed beneficiary 
years being for attributed beneficiaries who were dual-eligible or 
received the LIS, as described in Sec.  512.370(b)(2).
    As discussed in the CY 2023 ESRD PPS proposed rule, based on 
subsequent analysis, we found that stratifying achievement benchmarks 
in this way has increased the likelihood that the lowest benchmark--set 
at the 30th percentile--could be set at a home dialysis rate or 
transplant rate of zero. This change occurred because dividing the set 
of attributable beneficiaries in Comparison Geographic Areas into two 
strata means that there are fewer observations per strata, changing the 
underlying distributions.
    We explained that awarding achievement points for a home dialysis 
rate or transplant rate of zero is inconsistent with the design and 
goals of the ETC Model. The purpose of the ETC Model is to test the use 
of certain payment adjustments to increase rates of home dialysis and 
transplantation, thereby improving or maintaining quality and reducing 
Medicare expenditures. Awarding achievement points, which are used to 
determine the magnitude and direction of an ETC Participant's PPA, for 
a home dialysis rate or a transplant rate of zero is antithetical to 
the ETC Model's design.
    To address this issue, in the CY 2023 ESRD PPS proposed rule, we 
proposed to further modify the achievement scoring methodology for the 
ETC Model. Specifically, we proposed to add a requirement, to be 
codified in a new provision at Sec.  512.370(b)(3), to specify that, 
beginning MY5, an ETC Participant's aggregation group must have a home 
dialysis rate or a transplant rate greater than zero to receive an 
achievement score for that rate. We sought comment on this proposal.
    The comments on this proposal, and our responses to the comments, 
are set forth below.
    Comment: Several commenters expressed support for our proposal to 
modify the achievement scoring methodology such that an ETC 
Participant's aggregation group must have a home dialysis rate or a 
transplant rate greater than zero to receive an achievement score for 
that rate. One of these commenters stated that they

[[Page 67278]]

agreed with our statement that awarding points for a home dialysis rate 
or a transplant rate of zero was counter to the intent of the model.
    Response: We appreciate the commenters' support.
    Comment: Several commenters stated that they appreciated CMS's 
continued efforts to refine the ETC Model regarding assessing ETC 
Participant achievement. Of these commenters, a few stated that they 
did not oppose this proposal, but suggested additional changes to 
assessing ETC Participant achievement, including changes to the 
achievement benchmarking methodology, such as weighting aggregation 
groups by size, increasing the number of strata, and basing achievement 
benchmarks on something other than rates observed in Comparison 
Geographic Areas during the Benchmark Year.
    Response: We appreciate the commenters' continued engagement with 
the design of the ETC Model and the methodology by which we assess ETC 
Participant achievement. In the CY 2023 ESRD PPS proposed rule, we did 
not propose modifications to the achievement benchmarking methodology, 
and as such, we are not finalizing any changes to the achievement 
benchmarking methodology in this final rule. We may take these 
suggestions under consideration for potential future modifications to 
the ETC Model.
    Final Rule Action: After considering the comments received, we are 
finalizing our proposal to add a requirement, by revising Sec.  
512.370(b) and adding Sec.  512.370(b)(3), to specify that, for MY5 
through MY10, an ETC Participant's aggregation group must have a home 
dialysis rate or a transplant rate greater than zero to receive an 
achievement score for that rate.
2. Kidney Disease Patient Education Services
    Under section 1861(ggg)(1) of the Act and Sec.  410.48 of our 
regulations, Medicare Part B covers outpatient, face-to-face kidney 
disease patient education services provided by certain qualified 
persons to beneficiaries with Stage IV chronic kidney disease. As noted 
in the Specialty Care Models final rule, kidney disease patient 
education services play an important role in educating patients about 
their kidney disease and helping them make informed decisions on the 
appropriate type of care and/or dialysis needed for them (85 FR 61337). 
In addition, as we noted in the Specialty Care Models final rule, 
kidney disease patient education services are designed to educate and 
inform beneficiaries about the effects of kidney disease, their options 
for transplantation, dialysis modalities, and vascular access (85 FR 
61337).
    Because kidney disease patient education services have been 
infrequently billed, we found it necessary for purposes of testing the 
ETC Model to waive select requirements of kidney disease patient 
education services as authorized in section 1861(ggg)(1) of the Act and 
in the implementing regulation at 42 CFR 410.48. Specifically, to 
broaden the availability of kidney disease patient education services 
under the ETC Model, we used our authority under section 1115A(d) of 
the Act to waive certain requirements for individuals and entities that 
furnish and bill for kidney disease patient education services. We 
codified these waivers at Sec.  512.397(b). These include waivers to 
allow a broader scope of beneficiaries to have access to kidney disease 
patient education services, as well as greater flexibility in how the 
kidney disease patient education services are performed. CMS also 
waived the requirement that only doctors, physician assistants, nurse 
practitioners, and clinical nurse specialists can furnish kidney 
disease patient education services to allow kidney disease patient 
education services to be provided by clinical staff under the direction 
of and incident to the services of the Managing Clinician who is an ETC 
Participant.
    Specifically, under Sec.  512.397(b)(1), kidney disease patient 
education services may be provided by ``qualified staff,'' which 
includes any qualified person (as defined at Sec.  410.48(a)) as well 
as clinical staff. In the CY 2022 ESRD PPS final rule (86 FR 61988), we 
defined ``clinical staff'' under 42 CFR 512.310 of our regulations to 
mean a licensed social worker or registered dietician/nutrition 
professional who furnishes services for which payment may be made under 
the physician fee schedule under the direction of and incident to the 
services of the Managing Clinician who is an ETC Participant.
    In addition, in the CY 2022 ESRD PPS final rule, we added a new 
provision at Sec.  512.397(c) permitting an ETC Participant to reduce 
or waive the 20 percent coinsurance requirement for kidney disease 
patient education services furnished on or after January 1, 2022, if 
several conditions are satisfied, including a requirement that the 
individual or entity that furnished the services is qualified staff and 
was not leased from or otherwise provided by an ESRD facility or 
related entity. We finalized this cost-sharing reduction policy because 
we believed this patient incentive would advance the ETC Model's goal 
of increasing access to kidney disease patient education services and 
make beneficiaries more aware of their choices in kidney treatment, 
including the choice of receiving home dialysis, self-dialysis, or 
nocturnal in-center dialysis, rather than traditional in-center 
dialysis. We also determined that under Sec.  512.397(c)(3), the 
federal anti-kickback statute safe harbor for CMS-sponsored model 
patient incentives (42 CFR 1001.952(ii)(2)) is available to protect the 
kidney disease patient education coinsurance waivers that satisfy the 
requirements of such safe harbor and Sec.  512.397(c)(1).
    We recognized in the CY 2022 ESRD PPS final rule that ESRD 
facilities and other entities sometimes enter into arrangements with 
clinicians or other parties to provide certain services (86 FR 61991). 
We also recognized that some ETC Participants may wish to furnish 
kidney disease patient education services using staff or other 
resources furnished under a contractual arrangement with an ESRD 
facility or other entity. We were concerned, however, that even if such 
arrangements were structured to comply with all applicable fraud and 
abuse laws, they could nevertheless result in program abuse. 
Specifically, such arrangements could operate to circumvent the 
statutory prohibition against ESRD facilities furnishing kidney disease 
patient education services. For example, the staff or resources 
furnished to the ETC Participant from an ESRD facility or related 
entity could be used to market a specific ESRD facility or chain of 
ESRD facilities to beneficiaries who may need to choose an ESRD 
facility in the future. We stated that we did not believe that ETC 
Participants should obtain safe harbor protection for the reduction or 
waiver of cost-sharing on kidney disease patient education services if 
such services were furnished by personnel leased from an ESRD facility 
or related entity. We explained that a ``related entity'' would include 
any entity that is directly or indirectly owned in whole or in part by 
an ESRD facility and that this policy aligns with the statutory 
provision that excludes ESRD facilities from the individuals and 
entities that can furnish kidney disease patient education services.
    Currently, the prohibition against the furnishing of kidney disease 
patient education services by qualified staff who are leased from or 
otherwise provided by an ESRD facility or related entity does not apply 
unless an ETC Participant reduces or waives the

[[Page 67279]]

Beneficiary's coinsurance obligation for kidney disease patient 
education services. In the CY 2023 ESRD PPS proposed rule, we proposed 
that a similar prohibition would apply with respect to ``clinical 
staff'' regardless of whether the ETC Participant is reducing or 
waiving the kidney disease patient education coinsurance obligation. 
Specifically, we proposed to add a sentence to Sec.  512.397(b)(1) 
stating that, for purposes of the waiver under Sec.  512.397(b)(1) of 
our regulations, beginning for MY5, ``clinical staff'' may not be 
leased from or otherwise provided to the ETC Participant by an ESRD 
facility or related entity. Applying this prohibition on ``clinical 
staff'' could also protect beneficiaries and their care choices and 
limit the likelihood that the ``clinical staff'' furnished to the ETC 
Participant from an ESRD facility or related entity would result in 
steering a Beneficiary to a specific ESRD facility or chain of ESRD 
facilities.
    To further ensure that beneficiaries are not unduly influenced to 
choose a particular ESRD facility, we also considered whether the final 
rule should include a requirement that, for purposes of the waiver 
under Sec.  512.397(b)(1), the content of the kidney disease patient 
education furnished by clinical staff cannot market a specific ESRD 
facility or chain of ESRD facilities to beneficiaries. However, we 
recognized that some forms of marketing can be quite subtle. For 
example, a Beneficiary's treatment choices could be unduly biased if 
the Beneficiary is made aware of the leased staff person's employment 
by an ESRD facility (for example, by the trainer's responses to 
Beneficiary questions or discussion of personal experience, or even by 
a logo on the trainer's clothing or educational materials). Because it 
would be difficult for us to enforce this content restriction in many 
cases of subtle marketing, we did not think this restriction would 
sufficiently protect against improper influence of Beneficiary choice 
with respect to the selection of an ESRD facility unless we also 
finalized our proposal to prohibit qualified staff from furnishing 
kidney disease patient education services if they are leased from or 
otherwise provided by an ESRD facility.
    We solicited public comments on these proposed changes to Sec.  
512.397(b)(1). The comments on this proposal, and our responses to the 
comments, are set forth below.
    Comment: Several commenters supported our proposal to prohibit an 
ESRD facility or related entity from leasing or otherwise providing 
``clinical staff'' for the purposes of furnishing kidney disease 
patient education services regardless of whether the ETC Participant 
reduces or waives the Beneficiary's coinsurance obligation. One 
commenter noted that the proposed prohibition against the furnishing of 
kidney disease patient education services by qualified staff who are 
leased from or otherwise provided by an ESRD facility or related entity 
would protect patient choice. Another commenter agreed that 
beneficiaries should not be steered to any specific ESRD facility or 
chain of ESRD facilities.
    Response: We appreciate the commenters' support.
    Comment: Several commenters opposed our proposal to prohibit an 
ESRD facility or related entity from leasing or otherwise providing 
``clinical staff'' for the purposes of furnishing kidney disease 
patient education services regardless of whether the ETC Participant 
reduces or waives the Beneficiary's coinsurance obligation. A few 
commenters opposed our proposal because they stated it could exacerbate 
the underutilization of kidney disease patient education services. One 
commenter stated that beneficiaries should have kidney disease patient 
education services furnished by the best qualified professionals, 
regardless of where they are employed. Several commenters who opposed 
our proposal stated that they would be willing to work with CMS to 
address issues with steering beneficiaries to a specific ESRD facility 
or chain of ESRD facilities if they were to arise. Commenters also 
stated that CMS could create guardrails around steering beneficiaries 
to a specific ESRD facility or chain of ESRD facilities by producing 
non-branded materials for use in furnishing kidney disease patient 
education services.
    Response: We appreciate the commenters' feedback. In the Specialty 
Care Models final rule, we waived certain Medicare payment requirements 
regarding kidney disease patient education services to give ETC 
Participants additional access to tools to educate beneficiaries about 
their renal replacement options (85 FR 61114). Educating patients about 
the management of comorbidities, prevention of complications, and 
therapeutic options and ensuring access to the best qualified health 
care professionals is essential to protecting Beneficiary choice. We 
agree that Beneficiaries should have access to the best qualified 
professionals, but we do not agree that the Beneficiary protections we 
are finalizing in this rule will preclude access to these 
professionals. We appreciate commenters' concerns that the inability to 
perform these services using staff leased from an ESRD facility or 
related entity could result in underutilization of kidney disease 
patient education services, but it is important that these services are 
furnished without any undue pressure on beneficiaries. While we 
appreciate commenters' willingness to work with CMS to address issues 
with steering that arise, we do not believe that we should finalize a 
policy that would simply result in remedial action if some patient 
education services were to result in patient steering. Because patient 
steering can be difficult for CMS to discover, we prefer to finalize a 
policy that would prevent the abuse from occurring in the first 
instance. Similarly, we do not believe that we have the resources to 
develop non-branded materials for use in furnishing kidney disease 
patient education services. We continue to believe that adding a 
sentence to Sec.  512.397(b)(1) stating that, for purposes of the 
waiver under Sec.  512.397(b)(1) of our regulations, beginning for MY5, 
``clinical staff'' may not be leased from or otherwise provided to the 
ETC Participant by an ESRD facility or related entity, is necessary to 
preserve patient choice regarding their treatment modality and the ESRD 
facility or chain of ESRD facilities from which they may receive 
treatment.
    Comment: Several commenters expressed their support for further 
improving access to kidney disease patient education services. A few 
commenters recommended that CMS increase the types of qualified staff 
who would be permitted to provide kidney disease patient education 
services under the direction of and incident to the services of the 
Managing Clinician who is an ETC Participant.
    Response: We thank commenters for their engagement with the waivers 
provided for the ETC Model test. We may take the recommendation to 
increase the types of qualified staff who would be permitted to provide 
kidney disease patient education services under consideration for 
potential future modifications to the ETC Model.
    Final Rule Action: After considering the comments received, we are 
finalizing our proposal to add a sentence to Sec.  512.397(b)(1) 
stating that, for purposes of the waiver under Sec.  512.397(b)(1) of 
our regulations, beginning for MY5, only ``clinical staff'' that are 
not leased from or otherwise provided to the ETC Participant by an ESRD 
facility or related entity may provide kidney disease patient education 
services. We believe this requirement is necessary to preserve

[[Page 67280]]

patient choice of modality and ESRD facility or chain of ESRD 
facilities.
3. Publication of Participant Performance
    In the Specialty Care Models final rule, CMS established certain 
general provisions in subpart A of 42 CFR part 512 that apply to the 
ETC Model. One such general provision pertains to rights in data. 
Specifically, in the Specialty Care Models final rule, we stated that 
to enable CMS to evaluate the Innovation Center models (defined to 
include the ETC Model and Radiation Oncology Model) as required by 
section 1115A(b)(4) of the Act and to monitor the Innovation Center 
models pursuant to Sec.  512.150, in Sec.  512.140(a) we would use any 
data obtained in accordance with Sec. Sec.  512.130 and 512.135 to 
evaluate and monitor the Innovation Center models (85 FR 61124). We 
also stated that, consistent with section 1115A(b)(4)(B) of the Act, 
CMS would disseminate quantitative and qualitative results and 
successful care management techniques, including factors associated 
with performance, to other providers and suppliers and to the public. 
We stated that the data to be disseminated would include, but would not 
be limited to, patient de-identified results of patient experience of 
care and quality of life surveys, as well as patient de-identified 
measure results calculated based upon claims, medical records, and 
other data sources. We finalized these policies in 42 CFR 512.140(a).
    Consistent with these provisions, as discussed in the CY 2023 ESRD 
PPS proposed rule, we intend to publish patient de-identified results 
from all MYs of the ETC Model, including results from MYs that have 
already been completed. Specifically, for each MY, we intend to post 
the aggregate results for the home dialysis rate and the transplant 
rate for each aggregation group, as well as the individual components 
of each rate for the aggregation group as a whole. This would include 
the number of beneficiary months in home dialysis, self-dialysis, or 
nocturnal dialysis and the number of beneficiary months on the 
transplant waitlist, as well as the number of living donor transplants 
and, if applicable, pre-emptive living donor transplants performed. We 
would also identify all of the ESRD facilities or Managing Clinicians 
in the aggregation group for the MY. The results would be published on 
the ETC Model website. We explained that because the ETC Model includes 
a process for ETC Participants to request a targeted review of the 
calculation of the modality performance score (MPS)--which is 
calculated based on the various rates we intend to publish--CMS intends 
to publish these rates only after they have been finalized and CMS has 
resolved any targeted review requests timely received from ETC 
Participants under 42 CFR 512.390(c). We noted that we believed that 
the release of this information would inform the public about the cost 
and quality of care and about ETC Participants' performance in the ETC 
Model. This would supplement the annual evaluation reports that CMS is 
required to conduct and release to the public under section 1115A(b)(4) 
of the Act.
    We sought comment on our intent to post this information to our 
website, as well as the information we intend to post and the manner 
and timing of the posting. The comments and our responses are set forth 
below.
    Comment: Several commenters supported our plan to publish de-
identified ETC Model results on the ETC Model website.
    Response: We appreciate the feedback from commenters and are 
planning to post the results on the ETC Model website at https://innovation.cms.gov/innovation-models/esrd-treatment-choices-model, to 
promote transparency and to help educate the public about the effects 
of the ETC Model on beneficiaries.
    Comment: We received requests for more details about what CMS will 
post, including requests for specific information about how publicly 
posted results will account for members of an aggregation group.
    Response: CMS appreciates this feedback. As we described in the CY 
2023 ESRD PPS proposed rule, we are only planning to post results at 
the aggregation group level, as well as a list of the relevant Managing 
Clinicians or ESRD facilities within the aggregation group. We plan to 
share results using a method similar to how we shared results with ETC 
Participants for each MY, which will give the overall payment 
adjustment and break down the individual components that go into the 
home dialysis rate and transplant rate, de-identified in accordance 
with 45 CFR 164.514(b).
    Comment: We received multiple requests for the ability to pre-
review results before they are posted publicly.
    Response: CMS appreciates this feedback from commenters, but 
believes that the targeted review process outlined in 42 CFR 512.390(c) 
provides a sufficient opportunity for ETC Participants to review the 
results before they are posted publicly. As we described in the CY 2023 
ESRD PPS proposed rule, we will post de-identified results at the 
aggregation group level, which will have already been reviewed by ETC 
Participants as part of the targeted review process.
    Final Rule Action: CMS will publish performance data for Managing 
Clinicians and ESRD facilities after the conclusion of each Measurement 
Year. Consistent with the discussion in the proposed rule, we will also 
publish results from MYs that have already been completed. We 
appreciate the feedback from commenters about how we should publish 
results and will represent results for aggregated performance groups in 
a clear manner.

VI. Collection of Information Requirements

    We solicited public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
1. ESRD QIP--Wage Estimates (OMB Control Numbers 0938-1289 and 0938-
1340)
    To derive wages estimates, we used data from the U.S. Bureau of 
Labor Statistics' May 2020 National Occupational Employment and Wage 
Estimates. In the CY 2016 ESRD PPS final rule (80 FR 69069), we stated 
that it was reasonable to assume that Medical Records and Health 
Information Technicians, who are responsible for organizing and 
managing health information data, are the individuals tasked with 
submitting measure data to CROWNWeb (now EQRS) and NHSN, as well as 
compiling and submitting patient records for the purpose of data 
validation studies. In the proposed rule, we stated that the most 
recently available median hourly wage of a Medical Records and Health 
Information Technician is $21.20 per hour (87 FR 38566).\390\ In this 
final rule, we are updating the median hourly wage to $22.43 per hour, 
which reflects the most recently available data.\391\
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    \390\ https://www.bls.gov/oes/2020/may/oes292098.htm.
    \391\ https://www.bls.gov/oes/current/oes292072.htm. Accessed on 
September 16, 2022.

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[[Page 67281]]

We also calculate fringe benefit and overhead at 100 percent. We 
adjusted these employee hourly wage estimates by a factor of 100 
percent to reflect current HHS department-wide guidance on estimating 
the cost of fringe benefits and overhead. We stated that these are 
necessarily rough adjustments, both because fringe benefits and 
overhead costs vary significantly from employer to employer and because 
methods of estimating these costs vary widely from study to study. 
Nonetheless, we stated that there is no practical alternative and we 
believe that these are reasonable estimation methods. Therefore, using 
these assumptions, in the proposed rule we estimated an hourly labor 
cost of $42.40 as the basis of the wage estimates for all collections 
of information calculations in the ESRD QIP (87 FR 38566). In this 
final rule, we are updating our previously estimated hourly labor cost 
to $44.86 as the basis of the wage estimates for all collections of 
information calculations in the ESRD QIP.
    We used this updated wage estimate, along with updated facility and 
patient counts to re-estimate the total information collection burden 
in the ESRD QIP for PY 2025 that we discussed in the CY 2023 ESRD PPS 
proposed rule (87 FR 38566) and to estimate the total information 
collection burden in the ESRD QIP for PY 2026. We provide the re-
estimated information collection burden associated with the PY 2025 
ESRD QIP and the newly estimated information collection burden 
associated with the PY 2026 ESRD QIP in section VII.C.3 of this final 
rule. Although we also proposed updates for PY 2023 and PY 2024, these 
proposals did not affect our estimates of the annual burden associated 
with the program's information collection requirements, and therefore, 
we are not updating our previously finalized information collection 
burden estimates associated with the PY 2023 or PY 2024 ESRD QIP due to 
our finalized policies in this final rule. Although we are finalizing 
the suppression of seven measures for PY 2023 instead of six measures 
as originally proposed, as discussed further in section IV.B.2 of this 
final rule, we believe that this will not impact the information 
collection burden, as facilities are still expected to continue to 
collect measure data during this time period for both suppressed and 
non-suppressed measures.
2. Estimated Burden Associated With the Data Validation Requirements 
for PY 2025 and PY 2026 (OMB Control Numbers 0938-1289 and 0938-1340)
    In the CY 2020 ESRD PPS final rule, we finalized a policy to adopt 
the CROWNWeb data validation methodology that we previously adopted for 
the PY 2016 ESRD QIP as the methodology we would use to validate 
CROWNWeb data for all payment years, beginning with PY 2021 (83 FR 
57001 through 57002). Although we are now using EQRS to report data 
that was previously reported in CROWNWeb, the data validation 
methodology remains the same. Under this methodology, 300 facilities 
are selected each year to submit 10 records to CMS, and we reimburse 
these facilities for the costs associated with copying and mailing the 
requested records. The burden associated with these validation 
requirements is the time and effort necessary to submit the requested 
records to a CMS contractor. In the proposed rule, we did not propose 
any changes to the EQRS data validation process. However, in this final 
rule, we are updating these burden estimates using a newly available 
wage estimate of a Medical Records Specialist. In the CY 2020 ESRD PPS 
final rule, we estimated that it would take each facility approximately 
2.5 hours to comply with this requirement (84 FR 60787). If 300 
facilities are requested to submit records, we estimated that the total 
combined annual burden for these facilities would be 750 hours (300 
facilities x 2.5 hours). Since we anticipate that Medical Records 
Specialists or similar administrative staff would submit these data, we 
estimate that the aggregate cost of the EQRS data validation each year 
would be approximately $33,645 (750 hours x $44.86), or an annual total 
of approximately $112.15 ($33,645/300 facilities) per facility in the 
sample. The burden cost increase associated with these requirements 
will be revised in the information collection request (OMB control 
number 0938-1289).
    In the CY 2021 ESRD PPS final rule, we finalized our policy to 
reduce the number of records that a facility selected to participate in 
the NHSN data validation must submit to a CMS contractor, beginning 
with PY 2023 (85 FR 71471 through 71472). Under this finalized policy, 
a facility is required to submit records for 20 patients across any two 
quarters of the year, instead of 20 records for each of the first two 
quarters of the year. The burden associated with this policy is the 
time and effort necessary to submit the requested records to a CMS 
contractor. In the proposed rule, we did not propose any changes to the 
NHSN data validation process. However, in this final rule we are 
updating these burden estimates using a newly available wage estimate 
of a Medical Records Specialist. Applying our policy to reduce the 
number of records required from each facility participating in the NHSN 
validation, we estimated that it would take each facility approximately 
5 hours to comply with this requirement. If 300 facilities are 
requested to submit records each year, we estimated that the total 
combined annual burden hours for these facilities per year would be 
1,500 hours (300 facilities x 5 hours). Since we anticipate that 
Medical Records Specialists or similar staff would submit these data, 
using the newly available wage estimate of a Medical Records 
Specialist, we estimate that the aggregate cost of the NHSN data 
validation each year would be approximately $67,290 (1,500 hours x 
$44.86), or a total of approximately $224.30 ($67,290/300 facilities) 
per facility in the sample. While the burden hours estimate would not 
change, the burden cost updates associated with these requirements will 
be revised in the information collection request (OMB control number 
0938-1340).
3. EQRS Reporting Requirements for PY 2023 and PY 2024 (OMB Control 
Number 0938-1289)
    To determine the burden associated with the EQRS reporting 
requirements (previously known as the CROWNWeb reporting requirements), 
we look at the total number of patients nationally, the number of data 
elements per patient-year that the facility would be required to submit 
to EQRS for each measure, the amount of time required for data entry, 
the estimated wage plus benefits applicable to the individuals within 
facilities who are most likely to be entering data into EQRS, and the 
number of facilities submitting data to EQRS. In the CY 2021 ESRD PPS 
final rule, we estimated that the burden associated with EQRS reporting 
requirements for the PY 2023 ESRD QIP was approximately $208 million 
(85 FR 71475).
    As discussed in section IV.B.2 of this final rule, we are 
finalizing our six measure suppressions that would apply for PY 2023. 
We are also finalizing the suppression of the Standardized Fistula Rate 
clinical measure for PY 2023. However, we believe that finalizing these 
measure suppressions would not affect our estimates of the annual 
burden associated with the Program's information collection 
requirements, as

[[Page 67282]]

facilities are still expected to continue to collect measure data 
during this time period for all ESRD QIP measures, including both 
suppressed and non-suppressed measures. Although we are updating the 
SHR and SRR clinical measure results to be expressed as rates beginning 
in PY 2024 in section IV.D of this final rule, these technical updates 
would not affect our estimates of the annual burden associated with the 
Program's information collection requirements.
4. EQRS Reporting Requirements for PY 2025 and PY 2026 (OMB Control 
Number 0938-1289)
    To determine the burden associated with the EQRS reporting 
requirements (previously known as the CROWNWeb reporting requirements), 
we look at the total number of patients nationally, the number of data 
elements per patient-year that the facility would be required to submit 
to EQRS for each measure, the amount of time required for data entry, 
the estimated wage plus benefits applicable to the individuals within 
facilities who are most likely to be entering data into EQRS, and the 
number of facilities submitting data to EQRS. In the CY 2022 ESRD PPS 
final rule, we estimated that the burden associated with EQRS reporting 
requirements for the PY 2025 ESRD QIP was approximately $215 million 
for approximately 5,085,050 total burden hours (86 FR 61999).
    We did not propose any changes in the proposed rule that would 
affect the burden associated with EQRS reporting requirements for PY 
2025 or PY 2026. However, we have re-calculated the burden estimate for 
PY 2025 using updated estimates of the total number of ESRD facilities, 
the total number of patients nationally, and wages for Medical Records 
Specialists or similar staff as well as a refined estimate of the 
number of hours needed to complete data entry for EQRS reporting. 
Consistent with our approach in the CY 2022 ESRD PPS final rule (86 FR 
61999), in the proposed rule we estimated that the amount of time 
required to submit measure data to EQRS was 2.5 minutes per element and 
did not use a rounded estimate of the time needed to complete data 
entry for EQRS reporting. We are further updating these estimates in 
this final rule. There are 229 data elements for 514,406 patients 
across 7,847 facilities. At 2.5 minutes per element, this yields 
approximately 625.49 hours per facility. Therefore, the PY 2025 burden 
is 4,908,291 hours (625.49 hours x 7,847 facilities). Using the wage 
estimate of a Medical Records Specialist, we estimate that the PY 2025 
total burden cost is approximately $220 million (4,908,291 hours x 
$44.86). There is no net incremental burden change from PY 2025 to PY 
2026 because we are not changing the reporting requirements for PY 
2026.
5. Additional Reporting Requirements Beginning With PY 2025
    In section IV.E.1.a of the preamble of this final rule, we are 
finalizing our proposal to adopt a COVID-19 Vaccination Coverage among 
HCP reporting measure beginning with the PY 2025 ESRD QIP. Facilities 
would submit data through the CDC NHSN. The NHSN is a secure, internet-
based system maintained by the CDC and provided free.\392\ Currently, 
the CDC does not estimate burden for COVID-19 vaccination reporting 
under the CDC information collection requirement (ICR) approved under 
OMB control number 0920-1317 because the agency has been granted a 
waiver under section 321 of the National Childhood Vaccine Injury Act 
(NCVIA).\393\ Although the burden associated with the COVID-19 
Vaccination Coverage among HCP reporting measure is not accounted for 
under the CDC ICR 0920-1317 or 0920-0666 due to the NCVIA waiver, the 
estimated cost and burden information are included in section VII.D.2.b 
and would be accounted for by the CDC under OMB control number 0920-
1317.
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    \392\ More information on the NHSN can be found at: https://www.cdc.gov/nhsn/.
    \393\ Section 321 of the National Childhood Vaccine Injury Act 
(NCVIA) provides the PRA waiver for activities that come under the 
NCVIA, including those in the NCVIA at section 2102 of the Public 
Health Service Act (42 U.S.C. 300aa-2). Section 321 is not codified 
in the U.S. Code, but can be found in a note at 42 U.S.C. 300aa-1.
---------------------------------------------------------------------------

    We estimate that it would take each facility, on average, 
approximately 1 hour per month to collect data for the COVID-19 
Vaccination Coverage among HCP reporting measure and enter it into 
NHSN. We have estimated the time to complete this entire activity, 
since it could vary based on provider systems and staff availability. 
This burden is comprised of administrative hours and wages. We believe 
it would take an Administrative Assistant \394\ between 45 minutes and 
1 hour and 15 minutes to enter this data into NHSN. For PY 2025 and 
subsequent years, facilities would incur an additional annual burden 
between 9 hours (0.75 hours/month x 12 months) and 15 hours (1.25 
hours/month x 12 months) per facility and between 70,623 hours (9 
hours/facility x 7,847 facilities) and 117,705 hours (15 hours/facility 
x 7,847 facilities) for all facilities. Each facility would incur an 
estimated cost of between $324.18 (9 hours x $36.02/hour) and $540.30 
annually (15 hours x $36.02/hour). The estimated cost across all 
facilities would be between $2,543,840.46 ($324.18/facility x 7,847 
facilities) and $4,239,734.10 ($540.30/facility x 7,847 facilities) 
annually. We recognize that many health care facilities are also 
reporting other COVID-19 data to HHS. We believe the benefits of 
reporting data on the COVID-19 Vaccination Coverage among HCP reporting 
measure to monitor, track, and provide transparency for the public on 
this important tool to combat COVID-19 outweigh the costs of reporting.
---------------------------------------------------------------------------

    \394\ https://www.bls.gov/oes/current/oes436013.htm (accessed on 
March 29, 2022). The adjusted hourly wage rate of $36.02/hour 
includes an adjustment of 100 percent of the median hourly wage to 
account for the cost of overhead, including fringe benefits.
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    We did not receive any comments on the ESRD QIP collection of 
information discussions.

VII. Regulatory Impact Analysis

A. Statement of Need

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

[[Page 67283]]

basket to reflect a CY 2020 base year. We are also finalizing our 
proposals to increase the ESRD PPS wage index floor as discussed in 
section II.B.1.b.(3) of this final rule, and to apply a permanent 5-
percent cap on wage index decreases for CY 2023 and subsequent years, 
as discussed in section II.B.1.b.(2) of this final rule. Lastly, as 
discussed in section II.B.1.c.(4) of this final rule, we are finalizing 
our proposal to change our methodology for calculating the FDL amount 
for adults to target more effectively ESRD PPS outlier payments that 
equal 1 percent of total ESRD PPS payments. We believe that each of 
these changes will improve payment stability and adequacy under the 
ESRD PPS.
    Furthermore, as discussed in section II.B.1.f. of this final rule, 
we are finalizing our proposal to modify the definition of ``oral-only 
drug'' at Sec.  413.234(a) to specify that equivalence refers to 
functional equivalence, in line with our current drug designation 
process and reliance on the ESRD PPS functional categories. We believe 
this change will improve beneficiaries' access to renal dialysis drugs, 
promote health equity, and advance other goals as discussed in that 
section of this final rule. Lastly, we are finalizing our proposal to 
clarify the descriptions of several existing ESRD PPS functional 
categories to ensure our descriptions are as clear as possible for 
potential TDAPA applicants and the public. We believe this 
clarification will improve public understanding of the ESRD PPS 
functional categories and drug designation process.
2. AKI
    This final rule updates the payment for renal dialysis services 
furnished by ESRD facilities to individuals with AKI. As discussed in 
section III.B.2 of this final rule, we are also finalizing our proposal 
to apply to all AKI dialysis payments in an ESRD facility the same wage 
index floor and permanent 5-percent cap on wage index decreases that we 
will apply under the ESRD PPS. We believe that these changes will 
improve payment stability and adequacy for AKI dialysis in ESRD 
facilities. Failure to publish this final rule would result in ESRD 
facilities not receiving appropriate payments in CY 2023 for renal 
dialysis services furnished to patients with AKI in accordance with 
section 1834(r) of the Act.
3. ESRD QIP
    Section 1881(h)(1) of the Act requires a payment reduction of up to 
2 percent for eligible facilities that do not meet or exceed the mTPS 
established with respect to performance standards for the ESRD QIP each 
year. This final rule finalizes updates for the ESRD QIP, including the 
suppression of several ESRD QIP measures for PY 2023 under our 
previously finalized measure suppression policy, an update to the PY 
2023 performance standards, updates regarding the SHR clinical measure 
and the SRR clinical measure for PY 2024, and updates regarding the 
STrR and Hypercalcemia measures, the adoption of the COVID-19 
Vaccination Coverage among HCP reporting measure, as well as a policy 
to create a new reporting measure domain and to re-weight measure 
domains, beginning in PY 2025.
4. ETC Model
    We believe it is necessary to make certain changes to the ETC 
Model. ETC Participants will continue to receive adjusted payments but 
beginning MY5, certain aspects of the ETC Model used to determine those 
payment adjustments will change. The change to the PPA achievement 
scoring methodology is necessary to increase fairness and accuracy of 
the PPA. The change to the kidney disease patient education services 
waiver and the discussion of our intent to disseminate participant-
level model performance information to the public are necessary to 
support ETC Participants operating in the ETC Model.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96 354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with economically 
significant effects ($100 million or more in any 1 year). Based on our 
estimates, OMB's Office of Information and Regulatory Affairs has 
determined this rulemaking is ``economically significant'' as measured 
by the $100 million threshold, and hence also a major rule under 
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 
1996 (also known as the Congressional Review Act). Accordingly, we have 
prepared a Regulatory Impact Analysis that to the best of our ability 
presents the costs and benefits of the rulemaking. Therefore, OMB has 
reviewed these regulations, and the Departments have provided an 
assessment of their impact in the following sections of this CY 2023 
ESRD PPS final rule.
    We solicited comments on the regulatory impact analysis provided in 
the CY 2023 ESRD PPS proposed rule.
    Comment: Several individual commenters raised concerns that payment 
impacts for certain ESRD facilities, particularly several rural 
facilities, would be lower than the overall impact analysis presented 
in the proposed rule.
    Response: As we noted in the CY 2023 ESRD PPS proposed rule (87 FR 
38568), proposed updates to the wage index would have distributive 
impacts and would affect different ESRD facilities in different ways. 
We always strive to present as much information as possible in the 
proposed rule so that the costs and benefits of rulemaking can be 
effectively analyzed. In addition, we provide a facility-level impact 
file as an addendum to present impacts at a more granular level than 
can be presented in the Federal Register.
    Final Decision: After consideration of the comments, we are 
finalizing our proposed methodology for analyzing the impacts of 
rulemaking. We have revised

[[Page 67284]]

our impact analysis to reflect more recent data sources and information 
for this final rulemaking.

C. Impact Analysis

1. ESRD PPS
    We estimate that the revisions to the ESRD PPS will result in an 
increase of approximately $300 million in payments to ESRD facilities 
in CY 2023, which includes the amount associated with updates to the 
outlier thresholds, payment rate update, updates to the wage index, and 
continuation of the approved TPNIES and TDAPA from CY 2022.
2. AKI
    We estimate that the updates to the AKI payment rate will result in 
an increase of approximately $2 million in payments to ESRD facilities 
in CY 2023.
    3. ESRD QIP
    We estimate that the finalized updates to the ESRD QIP will result 
in an additional $32 million in estimated payment reductions across all 
facilities for PY 2025.
4. ETC Model
    We estimate that the finalized changes to the ETC Model will not 
impact the Model's projected direct savings from payment adjustments 
alone. We estimate that the Model will generate $28 million in direct 
savings related to payment adjustments over 6.5 years.

D. Detailed Economic Analysis

    In this section, we discuss the anticipated benefits, costs, and 
transfers associated with the changes in this final rule. Additionally, 
we estimate the total regulatory review costs associated with reading 
and interpreting this final rule.
1. Benefits
    Under the CY 2023 ESRD PPS and AKI payment, ESRD facilities will 
continue to receive payment for renal dialysis services furnished to 
Medicare beneficiaries under a case-mix adjusted PPS. We continue to 
expect that making prospective payments to ESRD facilities will enhance 
the efficiency of the Medicare program. Additionally, we expect that 
updating ESRD PPS and AKI payments by 3.0 percent based on the CY 2023 
ESRD PPS market basket update less the CY 2023 productivity adjustment 
will improve or maintain beneficiary access to high quality care by 
ensuring that payment rates reflect the best available data on the 
resources involved in delivering renal dialysis services.
2. Costs
a. ESRD PPS and AKI
    We do not anticipate the provisions of this final rule regarding 
ESRD PPS and AKI rates-setting will create additional cost or burden to 
ESRD facilities.
b. ESRD QIP
    As discussed in section IV.B.2 of this final rule, we are adopting 
measure suppressions that would apply for PY 2023. However, we believe 
that none of the policies that we are finalizing in this final rule 
would affect our estimates of the annual burden associated with the 
Program's information collection requirements, as facilities are still 
expected to continue to collect measure data during this time period. 
For PY 2025 and PY 2026, we have re-estimated the costs associated with 
the information collection requirements under the ESRD QIP with updated 
estimates of the total number of ESRD facilities, the total number of 
patients nationally, wages for Medical Records Specialists or similar 
staff, and a refined estimate of the number of hours needed to complete 
data entry for EQRS reporting. We have made no changes to our 
methodology for calculating the annual burden associated with the 
information collection requirements for the EQRS validation study 
(previously known as the CROWNWeb validation study), the NHSN 
validation study, and EQRS reporting.
    We also finalized the payment reduction scale using more recent 
data for the measures in the ESRD QIP measure set. We estimate 
approximately $220 million in information collection burden, which 
includes the cost of complying with this rule, and an additional $32 
million in estimated payment reductions across all facilities for PY 
2025, for an impact of $252 million as a result of the policies we have 
previously finalized and the policies we have finalized in this final 
rule.
    For PY 2026, we estimate that the finalized revisions to the ESRD 
QIP would result in $220 million in information collection burden, and 
$32 million in estimated payment reductions across all facilities, for 
an impact of $252 million as a result of the policies we have 
previously finalized and the policies we have finalized in this final 
rule.
3. Transfers
    We estimate that the updates to the ESRD PPS and AKI payment rate 
will result in a total in increase of approximately $300 million in 
payments to ESRD facilities in CY 2023, which includes the amount 
associated with updates to the outlier thresholds, and updates to the 
wage index. This estimate includes an increase of approximately $2 
million in payments to ESRD facilities in CY 2023 due to the updates to 
the AKI payment rate, of which approximately 20 percent is increased 
beneficiary co-insurance payments. We estimate approximately $240 
million in transfers from the Federal Government to ESRD facilities due 
to increased Medicare program payments and approximately $60 million in 
transfers from beneficiaries to ESRD facilities due to increased 
beneficiary co-insurance payments as a result of this final rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on last year's proposed rule will be the number of reviewers 
of this final rule. We acknowledge that this assumption may understate 
or overstate the costs of reviewing this rule. It is possible that not 
all commenters reviewed last year's rule in detail, and it is also 
possible that some reviewers chose not to comment on the proposed rule. 
For these reasons we thought that the number of past commenters would 
be a fair estimate of the number of reviewers of this rule. We did not 
receive any public comments specific to our solicitation.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore for the purposes of our estimate we assume that each reviewer 
reads approximately 50 percent of the rule.
    We sought public comments on this assumption. We did not receive 
any public comments specific to our solicitation.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $115.22 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it will take approximately 316 minutes 
(5.3 hours) for the staff to review half of this final rule, which is 
approximately 79,000 words. For each entity that reviews the rule, the 
estimated cost is $610.67 (5.2 hours x $115.22).

[[Page 67285]]

Therefore, we estimate that the total cost of reviewing this regulation 
is $177,704.97 ($610.67 x 291).
5. Impact Statement and Table
a. CY 2023 End-Stage Renal Disease Prospective Payment System
(1) Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities, it is necessary to compare 
estimated payments in CY 2022 to estimated payments in CY 2023. To 
estimate the impact among various types of ESRD facilities, it is 
imperative that the estimates of payments in CY 2022 and CY 2023 
contain similar inputs. Therefore, we simulated payments only for those 
ESRD facilities for which we are able to calculate both current 
payments and new payments.
    For this final rule, we used CY 2021 data from the Part A and Part 
B Common Working Files as of July 30, 2022, as a basis for Medicare 
dialysis treatments and payments under the ESRD PPS. We updated the 
2021 claims to 2022 and 2023 using various updates. The updates to the 
ESRD PPS base rate are described in section II.B.1.d of this final 
rule. Table 31 shows the impact of the estimated CY 2023 ESRD PPS 
payments compared to estimated payments to ESRD facilities in CY 2022.

[[Page 67286]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.033


[[Page 67287]]


[GRAPHIC] [TIFF OMITTED] TR07NO22.034

    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of dialysis treatments (in millions). The overall effect of the changes 
to the outlier payment policy described in section II.B.1.c of this 
final rule is shown in column C. For CY 2023, the impact on all ESRD 
facilities as a result of the changes to the outlier payment policy 
will be a 0.0 percent increase in estimated payments. All ESRD 
facilities are anticipated to experience a positive effect in their 
estimated CY 2023 payments as a result of the outlier policy changes.
    Column D shows the effect of the update to the LRS for CY 2023 of 
55.2 percent. This update is implemented in a budget neutral manner, so 
the total impact of this change is 0.0 percent; however, there are 
distributional effects of the change among different categories of ESRD 
facilities. Facilities located in rural areas are estimated to 
experience a 0.6 percent decrease in payments, and those located in 
urban areas are estimated to experience a 0.1 percent increase in 
payments.
    Column E shows the effect of the updates to the wage index, as 
described in section II.B.1.b of this final rule. That is, this column 
reflects the update from the CY 2022 ESRD PPS wage index continuing to 
use the 2018 OMB delineations as finalized in the CY 2021 ESRD PPS 
final rule, with a basis of the FY 2023 pre-floor, pre-reclassified 
IPPS hospital wage index data in a budget neutral manner. This column 
also includes the increase of the wage index floor to 0.6000 and the 
permanent 5-percent cap on wage index decreases. The total impact of 
this change is 0.0 percent; however, there are distributional effects 
of the change among different categories of ESRD facilities. The 
largest estimated increase will be 7.1 percent for facilities located 
in Puerto Rico and the Virgin Islands, and the largest estimated 
decrease will be 0.6 percent for facilities in New England.
    Column F reflects the overall impact, that is, the effects of the 
outlier policy changes, the updated wage index, and the payment rate 
update as described in section II.B.1.d of this final rule. The ESRD 
PPS payment rate update is 3.0 percent, which reflects the ESRDB market 
basket percentage increase factor for CY 2023 of 3.1 percent and the 
productivity adjustment of 0.1 percent. We expect that overall ESRD 
facilities will experience a 3.1 percent increase in estimated payments 
in CY 2023. The categories of types of facilities in the impact table 
show impacts ranging from a 2.0 percent increase to an 8.2 percent 
increase in their CY 2023 estimated payments.
(2) Effects on Other Providers
    Under the ESRD PPS, Medicare pays ESRD facilities a single bundled 
payment for renal dialysis services, which may have been separately 
paid to other providers (for example, laboratories, durable medical 
equipment suppliers, and pharmacies) by Medicare prior to the 
implementation of the ESRD PPS. Therefore, in CY 2023, we estimate that 
the ESRD PPS will have zero impact on these other providers.

[[Page 67288]]

(3) Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in CY 2023 will be approximately $ 7.9 
billion. This estimate considers a projected decrease in fee-for-
service Medicare ESRD beneficiary enrollment of 3.5 percent in CY 2023.
(4) Effects on Medicare Beneficiaries
    Under the ESRD PPS, beneficiaries are responsible for paying 20 
percent of the ESRD PPS payment amount. As a result of the projected 
3.1 percent overall increase in the CY 2023 ESRD PPS payment amounts, 
we estimate that there will be an increase in beneficiary co-insurance 
payments of 3.1 percent in CY 2023, which translates to approximately 
$60 million.
(5) Alternatives Considered
(i) CY 2023 Impacts: 2019-2020 Versus 2021 Claims Data
    Each year CMS uses the latest available ESRD claims to update the 
outlier threshold, budget neutrality factor, and payment rates. Due to 
the COVID-19 PHE, we compared the impact of using CY 2019 or CY 2020 
claims against CY 2021 claims to determine if there was any substantial 
difference in the results that would justify potentially deviating from 
our longstanding policy to use the latest available data. Analysis 
suggested that ESRD utilization did not change substantially during the 
pandemic, likely due to the patients' vulnerability and need for these 
services. Consequently, we finalized our proposal to use the CY 2021 
data because it does not negatively impact ESRD facilities and keeps 
with our longstanding policy to make updates using the latest available 
ESRD claims data.
(ii) Outlier Methodology Alternatives
    As discussed in section II.B.1.c.(4) of this final rule, we are 
finalizing a change to the methodology used to determine the outlier 
FDL amounts for adult beneficiaries. We also considered but did not 
propose maintaining the current outlier methodology or decreasing the 
1.0 percent outlier target. In addition, we considered but did not 
propose a reconciliation process for the outlier methodology.
b. Continuation of Approved Transitional Add-On Payment Adjustment for 
New and Innovative Equipment and Supplies (TPNIES) and Transitional 
Drug Add-On Payment Adjustments (TDAPA) for New Renal Dialysis Drugs or 
Biological Products for CY 2023
(1) Tablo[supreg] System
    One product, the Tablo[supreg] System, that was approved for the 
TPNIES in CY 2022 will continue to be eligible for the TPNIES in CY 
2023. In this final rule we are continuing our CY 2022 estimates into 
CY 2023. We estimate $2.5 million in spending of which, approximately 
$490,000 would be attributed to beneficiary coinsurance amounts.
(2) KORSUVATM (difelikefalin)
    One renal dialysis drug for which the TDAPA was paid in CY 2022 
will continue to be eligible for the TDAPA in CY 2023. CMS Transmittal 
11295,\395\ implemented the 2-year TDAPA period specified in Sec.  
413.234(c)(1) for KORSUVATM (difelikefalin). The TDAPA 
payment period began on April 1, 2022 and will continue in CY 2023. As 
set forth in Sec.  413.234(c), TDAPA payment is based on 100 percent of 
average sales price (ASP). If ASP is not available, then the TDAPA is 
based on 100 percent of wholesale acquisition cost (WAC) and, when WAC 
is not available, the payment is based on the drug manufacturer's 
invoice.
---------------------------------------------------------------------------

    \395\ CMS Transmittal 11295 rescinded and replaced CMS 
Transmittal 11278, dated February 24, 2022 and is available at: 
https://www.cms.gov/files/document/r11295CP.pdf
---------------------------------------------------------------------------

    We based the CY 2023 impacts on the most current 72x claims data; 
from April 1, 2022 through July 31, 2022. The average number of 
beneficiaries per month, receiving KORSUVATM during this 
timeframe is 50. However, we anticipate that this number will double in 
CY 2023 as more ESRD facilities incorporate KORSUVATM into 
their business operations. If the estimated 100 beneficiaries were to 
receive thirteen doses per month (100 * 13 = 1,300) for 12 months, the 
estimated number of doses would be 15,600 (1,300 * 12 = 15,600) in CY 
2023. Although dosing varies by patient weight, we have based our 
estimates on a single dose vial. Current KORSUVATM pricing 
is estimated at $150.00 per single dose vial.\396\ Multiplying the 
15,600 estimated doses by the current pricing of $150 per single dose 
vial would result in approximately $2,340,000 in spending (15,600 * 
$150.00 = 2,340,000), of which, approximately $468,000 ($2,340,000 * 
0.20 = $468,000) would be attributed to beneficiary coinsurance 
amounts.
---------------------------------------------------------------------------

    \396\ CMS ESRD PPS Transitional Drug Add-on Payment Adjustment 
web page. Payment Amounts for New Renal Dialysis Drugs and 
Biological Products Currently Eligible for the TDAPA. Available at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/Drugs-and-Biologicals-Eligible-for-TDAPA.pdf. 
Accessed on September 12, 2022.
---------------------------------------------------------------------------

c. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
(1) Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities for renal dialysis services 
furnished to individuals with AKI, it is necessary to compare estimated 
payments in CY 2022 to estimated payments in CY 2023. To estimate the 
impact among various types of ESRD facilities for renal dialysis 
services furnished to individuals with AKI, it is imperative that the 
estimates of payments in CY 2022 and CY 2023 contain similar inputs. 
Therefore, we simulated payments only for those ESRD facilities for 
which we are able to calculate both current payments and new payments.
    For this final rule, we used CY 2021 data from the Part A and Part 
B Common Working Files as of July 30, 2022, as a basis for Medicare for 
renal dialysis services furnished to individuals with AKI. We updated 
the 2021 claims to 2022 and 2023 using various updates. The updates to 
the AKI payment amount are described in section III.B of this final 
rule. Table 32 shows the impact of the estimated CY 2023 payments for 
renal dialysis services furnished to individuals with AKI compared to 
estimated payments for renal dialysis services furnished to individuals 
with AKI in CY 2022.

[[Page 67289]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.035


[[Page 67290]]


[GRAPHIC] [TIFF OMITTED] TR07NO22.036

    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of AKI dialysis treatments (in thousands). Column C shows the effect of 
the update to the LRS for CY 2023 of 55.2 percent. Column D shows the 
effect of the CY 2023 wage indices, including the increase to the wage 
index floor and the 5-percent cap on wage index decreases.
    Column E shows the overall impact, that is, the effects of the LRS, 
wage index updates, and the payment rate update of 3.0 percent, which 
reflects the ESRDB market basket percentage increase factor for CY 2023 
of 3.1 percent and the productivity adjustment of 0.1 percent. We 
expect that overall ESRD facilities will experience a 2.9 percent 
increase in estimated payments in CY 2023. The categories of types of 
facilities in the impact table show impacts ranging from an increase of 
2.0 percent to 8.6 percent in their CY 2023 estimated payments.
(2) Effects on Other Providers
    Under section 1834(r) of the Act, as added by section 808(b) of 
TPEA, we proposed to update the payment rate for renal dialysis 
services furnished by ESRD facilities to beneficiaries with AKI. The 
only two Medicare providers and suppliers authorized to provide these 
outpatient renal dialysis services are hospital outpatient departments 
and ESRD facilities. The patient and his or her physician make the 
decision about where the renal dialysis services are furnished. 
Therefore, this change will have zero impact on other Medicare 
providers.
(3) Effects on the Medicare Program
    We estimate approximately $80 million will be paid to ESRD 
facilities in CY 2023 as a result of patients with AKI receiving renal 
dialysis services in the ESRD facility at the lower ESRD PPS base rate 
versus receiving those services only in the hospital outpatient setting 
and paid under the outpatient prospective payment system, where 
services were required to be administered prior to the TPEA.
(4) Effects on Medicare Beneficiaries
    Currently, beneficiaries have a 20 percent co-insurance obligation 
when they receive AKI dialysis in the hospital outpatient setting. When 
these services are furnished in an ESRD facility, the patients will 
continue to be responsible for a 20 percent coinsurance. Because the 
AKI dialysis payment rate paid to ESRD facilities is lower than the 
outpatient hospital PPS's payment amount, we expect beneficiaries to 
pay less co-insurance when AKI dialysis is furnished by ESRD 
facilities.
(5) Alternatives Considered
    As we discussed in the CY 2017 ESRD PPS proposed rule (81 FR 
42870), we considered adjusting the AKI payment rate by including the 
ESRD PPS case-mix adjustments, and other adjustments at section 
1881(b)(14)(D) of the Act, as well as not paying separately for AKI 
specific drugs and laboratory tests. We ultimately determined that 
treatment for AKI is substantially different from treatment for ESRD 
and the case-mix adjustments applied to ESRD patients may not be 
applicable to AKI patients and as such, including those policies and 
adjustment is inappropriate. We continue to monitor utilization and 
trends of items and services furnished to individuals with AKI for 
purposes of refining the payment rate in the future. This monitoring 
will assist us in developing knowledgeable, data-driven proposals.
d. ESRD QIP
(1) Effects of the PY 2023 and PY 2024 ESRD QIP on ESRD Facilities
    The ESRD QIP is intended to prevent reductions in the quality of 
ESRD facility services provided to beneficiaries. The general 
methodology that we use to determine a facility's TPS is described in 
our regulations at 42 CFR 413.178(e).
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2023 and PY 2024 ESRD QIP will apply to the 
ESRD PPS payments made to the facility for services furnished in CY 
2023 and CY 2024, respectively, as codified in our regulations at 42 
CFR 413.177.
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2025 ESRD QIP will apply to the ESRD PPS 
payments made to the facility for services furnished in CY 2025, as 
codified in our regulations at 42 CFR 413.177.
    For the PY 2023 ESRD QIP, we estimate that, of the 7,847 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 10.1 percent or 795 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2023. Among an estimated 795 facilities that would receive a 
payment reduction, approximately 62 percent or 492 facilities would 
receive the smallest payment reduction of 0.5 percent. We are 
presenting an estimate for the PY 2023 ESRD QIP to update the estimated 
impact that was provided in the CY 2021 ESRD PPS final rule (85 FR 
71479 through 71481). Based on our final policies, the total estimated 
payment reductions for all the 795 facilities expected to receive a 
payment reduction in PY 2023 would be approximately $5,548,652.69. 
Facilities that do not receive a TPS do not receive a payment 
reduction.
    Table 33 shows the overall estimated distribution of payment 
reductions resulting from the PY 2023 ESRD QIP.

[[Page 67291]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.037

    To estimate whether a facility would receive a payment reduction 
for PY 2023, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims, excluding the 
measures that we are suppressing for PY 2023 as discussed in section 
IV.B.2 of this final rule. Payment reduction estimates are calculated 
using the most recent data available (specified in Table 34) in 
accordance with the policies finalized in this final rule. Measures 
used for the simulation are shown in Table 34.
    For all measures except the seven measures we are suppressing in 
IV.B.2 of this final rule, as well as the STrR measure, measures with 
less than 11 patients for a facility were not included in that 
facility's TPS. For the STrR reporting measure, facilities were 
required to have at least 10 patient-years at risk to be included in 
the facility's TPS. Each facility's TPS was compared to an estimated 
mTPS and an estimated payment reduction table that were consistent with 
the final policies outlined in sections IV.B and IV.C of this final 
rule. Facility reporting measure scores were estimated using available 
data from CY 2021 for MedRec, UFR, Clinical Depression, Hypercalcemia, 
and NHSN Dialysis Event. Facilities were required to have at least one 
measure in at least two domains to receive a TPS.
    To estimate the total payment reductions in PY 2023 for each 
facility resulting from this final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2021 and December 2021 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
[GRAPHIC] [TIFF OMITTED] TR07NO22.038


[[Page 67292]]


(2) Effects of the PY 2025 ESRD QIP on ESRD Facilities
    For the PY 2025 ESRD QIP, we estimate that, of the 7,847 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 47.87 percent or 3,592 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2025. Among an estimated 3,592 facilities that would receive a 
payment reduction, approximately 55 percent or 1,983 facilities would 
receive the smallest payment reduction of 0.5 percent. We are 
presenting an estimate for the PY 2025 ESRD QIP to update the estimated 
impact that was provided in the CY 2022 ESRD PPS final rule (86 FR 
62008 through 62011). Based on our final policies, the total estimated 
payment reductions for all the 3,592 facilities expected to receive a 
payment reduction in PY 2025 would be approximately $32,457,692.52. 
Facilities that do not receive a TPS do not receive a payment 
reduction.
    Table 35 shows the overall estimated distribution of payment 
reductions resulting from the PY 2025 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TR07NO22.039

    To estimate whether a facility would receive a payment reduction 
for PY 2025, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates are calculated using the most recent data available 
(specified in Table 36) in accordance with the policies finalized in 
this final rule. Measures used for the simulation are shown in Table 
36.
[GRAPHIC] [TIFF OMITTED] TR07NO22.040

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For the SHR 
clinical measure and the SRR clinical measure, facilities were required 
to have at least 5 patient-years at risk and 11 index discharges, 
respectively, to be included in the facility's TPS. For the STrR 
reporting measure, which we are converting to a clinical measure 
beginning in PY 2025 in section IV.E.1.b of this final rule, facilities 
were required to have at least 10 patient-years at risk to be included 
in the facility's TPS. Each facility's TPS was compared to an estimated 
mTPS and an estimated payment reduction table that were consistent with 
the final policies

[[Page 67293]]

outlined in section IV.E of this final rule. Facility reporting measure 
scores were estimated using available data from CY 2021 for MedRec, 
UFR, Clinical Depression, Hypercalcemia, and NHSN Dialysis Event. 
Facilities were required to have at least one measure in at least two 
domains to receive a TPS.
    To estimate the total payment reductions in PY 2025 for each 
facility resulting from this final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2021 and December 2021 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 37 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2025. The table also 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and urban and by region), and 
facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are using for the PY 2025 ESRD QIP, the actual 
impact of the PY 2025 ESRD QIP may vary significantly from the values 
provided here.
(3) Effects of the PY 2026 ESRD QIP on ESRD Facilities
    For the PY 2026 ESRD QIP, we estimate that, of the 7,847 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 47.87 percent or 3,592 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2026. Among an estimated 3,592 facilities that would receive a 
payment reduction, approximately 55 percent or 1,983 facilities would 
receive the smallest payment reduction of 0.5 percent. The total 
payment reductions for all the 3,592 facilities expected to receive a 
payment reduction is approximately $32,457,692.52. Facilities that do 
not receive a TPS do not receive a payment reduction.

[[Page 67294]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.041

    Table 38 shows the overall estimated distribution of payment 
reductions resulting from the PY 2026 ESRD QIP.
    To estimate whether a facility would receive a payment reduction in 
PY 2026, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates were calculated using the most recent data 
available (specified in Table 39) in accordance with the policies 
finalized in this final rule. Measures used for the simulation are 
shown in Table 39.

[[Page 67295]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.042

[GRAPHIC] [TIFF OMITTED] TR07NO22.043

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For SHR and SRR, 
facilities were required to have at least 5 patient-years at risk and 
11 index discharges, respectively, to be included in the facility's 
TPS. For the STrR reporting measure, which we are converting to a 
clinical measure beginning in PY 2025 in section IV.E.1.b of this final 
rule, facilities were required to have at least 10 patient-years at 
risk to be included in the facility's TPS. Each facility's TPS was 
compared to an estimated mTPS and an estimated payment reduction table 
that incorporates the policies outlined in section IV.F of this final 
rule. Facility reporting measure scores were estimated using available 
data from CY 2021 for MedRec, UFR, Clinical Depression, Hypercalcemia, 
and NHSN Dialysis Event. Facilities were required to have at least one 
measure in at least two domains to receive a TPS.
    To estimate the total payment reductions in PY 2026 for each 
facility resulting from this final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2021 and December 2021 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 40 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2026. The table 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and urban and by region), and 
facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are using for the PY 2026 ESRD QIP, the actual 
impact of the PY 2026 ESRD QIP may vary significantly from the values 
provided here.

[[Page 67296]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.044

(4) Effects on Other Providers
    The ESRD QIP is applicable to ESRD facilities. We are aware that 
several of our measures impact other providers. For example, with the 
introduction of the SRR clinical measure in PY 2017 and the SHR 
clinical measure in PY 2020, we anticipate that hospitals may 
experience financial savings as facilities work to reduce the number of 
unplanned readmissions and hospitalizations. We are exploring various 
methods to assess the impact these measures have on hospitals and other 
facilities, such as through the impacts of the Hospital Readmissions 
Reduction Program and the Hospital-Acquired Condition Reduction 
Program, and we intend to continue examining the interactions between 
our quality programs to the greatest extent feasible.
(5) Effects on the Medicare Program
    For PY 2026, we estimate that the ESRD QIP would contribute 
approximately $32,457,692.52 in Medicare savings. For comparison, Table 
41 shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2026.

[[Page 67297]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.045

(6) Effects on Medicare Beneficiaries
    The ESRD QIP is applicable to ESRD facilities. Since the Program's 
inception, there is evidence on improved performance on ESRD QIP 
measures. As we stated in the CY 2018 ESRD PPS final rule, one 
objective measure we can examine to demonstrate the improved quality of 
care over time is the improvement of performance standards (82 FR 
50795). As the ESRD QIP has refined its measure set and as facilities 
have gained experience with the measures included in the Program, 
performance standards have generally continued to rise. We view this as 
evidence that facility performance (and therefore the quality of care 
provided to Medicare beneficiaries) is objectively improving. We are in 
the process of monitoring and evaluating trends in the quality and cost 
of care for patients under the ESRD QIP, incorporating both existing 
measures and new measures as they are implemented in the Program. We 
would provide additional information about the impact of the ESRD QIP 
on beneficiaries as we learn more. However, in future years we are 
interested in examining these impacts through the analysis of available 
data from our existing measures.
(7) Alternatives Considered
    In section IV.B.2 of this final rule, we are finalizing the 
suppression of seven measures for PY 2023 due to the impacts of the 
COVID-19 PHE on CY 2021 data. We considered not suppressing these seven 
measures for PY 2023. However, we concluded that measure suppression 
was appropriate under our previously finalized measure suppression 
policy due to the impact of the COVID-19 PHE on these PY 2023 ESRD QIP 
measures. This approach would help to ensure that a facility would not 
be penalized for performance on measures which have been impacted by 
extraordinary circumstances beyond the facility's control.
e. ETC Model
(1) Overview
    The ETC Model is a mandatory payment model designed to test payment 
adjustments to certain dialysis and dialysis-related payments, as 
discussed in the Specialty Care Models final rule (85 FR 61114) and the 
CY 2022 ESRD PPS final rule (86 FR 61874), for ESRD facilities and for 
Managing Clinicians for claims with dates of service from January 1, 
2021 to June 30, 2027. The requirements for the ETC Model are set forth 
in 42 CFR part 512, subpart C.
    The changes in this final rule (discussed in detail in section V.B 
of this final rule) will impact model payment adjustments for PPA 
Period 5, starting July 1, 2024. The change that is most likely to 
affect the impact estimate for the ETC Model is the additional 
parameter to the PPA achievement scoring methodology such that an ETC 
Participant's aggregation group must have a positive home dialysis rate 
or transplant rate to receive an achievement score for that rate, as 
described in section V.B.1 of this final rule. We do not anticipate 
that the policy to clarify the requirements for qualified staff to 
furnish and bill kidney disease patient education services under the 
ETC Model's Medicare program waivers or the policy to post certain 
model data, described in section V.B.2 of this final rule, will affect 
the impact estimate for the ETC Model.
    The ETC Model is not a total cost of care model. ETC Participants 
will still bill FFS Medicare, and items and services not subject to the 
ETC Model's payment adjustments will continue to be paid as they would 
in the absence of the ETC Model.
(2) Data and Methods
    A stochastic simulation was created to estimate the financial 
impacts of the changes to the ETC Model relative to baseline 
expenditures, where baseline expenditures were defined as data from CYs 
2018 and 2019 without the changes applied. The simulation relied upon 
statistical assumptions derived from retrospectively constructed ESRD 
facilities' and Managing Clinicians' Medicare dialysis claims, 
transplant claims, and transplant waitlist data reported during 2018 
and 2019, the most recent years of complete data available before the 
start of the ETC Model. Both datasets and the risk-adjustment 
methodologies for the ETC Model were developed by the CMS Office of the 
Actuary (OACT).
    For the modeling exercise used to estimate changes in payment to 
providers and suppliers and the resulting savings to Medicare, OACT 
maintained the previous method to simulate identification of ETC 
Participants (including aggregation group construction), beneficiary 
attribution (and exclusions), calculation of home dialysis rates and 
transplant rates, calculation of achievement benchmarks, and 
calculation of improvement scores. For a detailed description of this 
methodology, see the detailed economic analysis included in the CY 2022 
ESRD PPS final rule (86 FR 62012 through 62014).
    Beginning for MY5 and beyond, the PPA achievement scoring 
methodology included one modification. Specifically, achievement scores 
were only awarded for the home dialysis rate or the transplant rate to 
ETC Participants in aggregation groups with a home dialysis rate or 
transplant rate greater than zero, respectively, in accordance with the 
change described in section V.B.1 of this final rule. To clarify, no 
changes to the achievement scoring methodology were

[[Page 67298]]

made to MY1 through MY4. For a detailed description of the methodology 
for simulating achievement scoring methodology, see the CY 2022 ESRD 
PPS final rule (86 FR 60213 through 60214).
    No changes were made to the payment structure for the HDPA 
calculation, as no changes were proposed. Similarly, no changes were 
made to the kidney disease patient education services utilization and 
cost calculations, as the change does not impact expected utilization. 
For a detailed description of this methodology, see the detailed 
economic analysis included in the CY 2022 ESRD PPS final rule (86 FR 
62014).
(3) Medicare Estimate--Primary Specification, Assume Achievement 
Scoring Update
[GRAPHIC] [TIFF OMITTED] TR07NO22.046

    Table 42 summarizes the estimated impact of the ETC Model when the 
achievement benchmarks for each year are set using the average of the 
home dialysis rates for year t-1 and year t-2 for the HRRs randomly 
selected for participation in the ETC Model. We estimate that the 
Medicare program will save a net total of $43 million from the PPA and 
HDPA between January 1, 2021 and June 30, 2027 less $15 million in 
increased training and education expenditures. Therefore, the net 
impact to Medicare spending is estimated to be $28 million in savings. 
This is consistent with the net impact to Medicare spending estimated 
for the CY 2022 ESRD PPS final rule, in which the net impact to 
Medicare spending was also estimated to be $28 million in savings (86 
FR 62014 through 62016).
    In Table 42, negative spending reflects a reduction in Medicare 
spending, while positive spending reflects an increase. The results for 
this table were generated from an average of 400 simulations under the 
assumption that benchmarks are rolled forward with a 1.5-year lag. For 
a detailed description of the key assumptions underlying the impact 
estimate, see the CY 2022 ESRD PPS final rule (86 FR 60214 through 
60216).
    As was the case in the Specialty Care Models final rule (85 FR 
61353) and the CY 2022 ESRD PPS final rule (86 FR 61874), the 
projections do not include the Part B premium revenue offset because 
the payment adjustments under the ETC Model will not affect Beneficiary 
cost-sharing. Any potential effects on Medicare Advantage capitation 
payments were also excluded

[[Page 67299]]

from the projections. This approach is consistent with how CMS has 
previously conveyed the primary FFS effects anticipated for an 
uncertain model without also assessing the potential impact on Medicare 
Advantage rates.
(4) Effects on the Home Dialysis Rate, the Transplant Rate, and Kidney 
Transplantation
    The changes in this final rule will not impact the findings 
reported for the effects of the ETC Model on the home dialysis rate or 
the transplant rate described in the CY 2022 ESRD PPS final rule (86 FR 
62017).
(5) Effects on Kidney Disease Patient Education Services and HD 
Training Add-Ons
    The changes in this final rule will not impact the findings 
reported for the effects of the ETC Model on kidney disease patient 
education services and HD training add-ons described in the Specialty 
Care Models final rule (85 FR 61355) or the CY 2022 ESRD PPS final rule 
(85 FR 62017).
(6) Effects on Medicare Beneficiaries
    The changes in this final rule will not impact the findings 
reported for the effects of ETC Model on Medicare beneficiaries 
regarding the ETC Model's likelihood of incentivizing ESRD facilities 
and Managing Clinicians to improve access to home dialysis and 
transplantation for Medicare beneficiaries.
    As previously noted in the Specialty Care Models final rule (85 FR 
61357) and the CY 2022 ESRD PPS final rule (86 FR 62017), we continue 
to anticipate that the ETC Model will have a negligible impact on the 
cost to beneficiaries receiving dialysis. Under current policy, 
Medicare FFS beneficiaries are generally responsible for 20 percent of 
the allowed charge for services furnished by providers and suppliers. 
This policy will remain the same for most beneficiaries under the ETC 
Model. However, we will waive certain requirements of title XVIII of 
the Act as necessary to test the PPA and HDPA under the ETC Model and 
hold beneficiaries harmless from any effect of these payment 
adjustments on cost sharing.
    In addition, the Medicare Beneficiary's quality of life has the 
potential to improve if the Beneficiary elects to have home dialysis, 
or nocturnal in-center dialysis, as opposed to in-center dialysis. As 
discussed in the Specialty Care Models final rule, studies have found 
that home dialysis patients experienced improved quality of life as a 
result of their ability to continue regular work schedules or life 
plans; as well as better overall, physical, and psychological health in 
comparison to other dialysis options (85 FR 61264 through 61270).
(7) Alternatives Considered
    Throughout this final rule, we have identified our policies and 
alternatives that we have considered, and provided information as to 
the likely effects of these alternatives and rationale for each of our 
policies
    This final rule addresses a model specific to ESRD. It provides 
descriptions of the requirements that we will waive, identifies the 
performance metrics and payment adjustments to be tested, and presents 
rationales for our changes, and where relevant, alternatives 
considered. For context related to alternatives previously considered 
when establishing and modifying the ETC Model we refer readers to the 
Specialty Care Models final rule (85 FR 61114) and the CY 2022 ESRD PPS 
final rule (86 FR 61874), respectively, for more information on policy-
related stakeholder comments, our responses to those comments, and 
statements of final policy preceding the limited modifications proposed 
here.

E. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 43 showing the classification of the impact associated with the 
provisions of this final rule.

[[Page 67300]]

[GRAPHIC] [TIFF OMITTED] TR07NO22.047

F. Regulatory Flexibility Act Analysis (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. We do not believe ESRD facilities are 
operated by small government entities such as counties or towns with 
populations of 50,000 or less, and therefore, they are not enumerated 
or included in this estimated RFA analysis. Individuals and states are 
not included in the definition of a small entity. Therefore, the number 
of small entities estimated in this RFA analysis includes the number of 
ESRD facilities that are either considered small businesses or 
nonprofit organizations.
    According to the Small Business Administration's (SBA) size 
standards,\398\ an ESRD facility is classified as a small business if 
it has total revenues of less than $41.5 million in any 1 year. For the 
purposes of this analysis, we exclude the ESRD facilities that are 
owned and operated by LDOs and regional chains, which will have total 
revenues of more than $9.5 billion in any year when the total revenues 
for all locations are combined for each business (LDO or regional 
chain), and are not, therefore, considered small businesses. Because we 
lack data on individual ESRD facilities' receipts, we cannot determine 
the number of small proprietary ESRD facilities or the proportion of 
ESRD facilities' revenue derived from Medicare payments. Therefore, we 
assume that all ESRD facilities that are not owned by LDOs or regional 
chains are considered small businesses. Accordingly, we consider the 
474 facilities that are independent and 376 facilities that are 
hospital-based, as shown in the ownership category in Table 31 to be 
small businesses. These facilities represent approximately 11 percent 
of all ESRD facilities in our data set.
---------------------------------------------------------------------------

    \398\ More information available at https://www.sba.gov/content/small-business-size-standards (Kidney Dialysis Centers are listed as 
North American Industry Classification System (NAICS) code 621492 
with a size standard of $41.5 million).
---------------------------------------------------------------------------

    Additionally, we identified in our analytic file that there are 825 
facilities that are considered nonprofit organizations, which is 
approximately 10 percent of all ESRD facilities in our data set. In 
total, accounting for the 382 nonprofit ESRD facilities that are also 
considered small businesses, there are 1,293 ESRD facilities that are 
either small businesses or nonprofit organizations, which is 
approximately 16 percent of all ESRD facilities in our data set.
    For the ESRD PPS updates in this rule, a hospital-based ESRD 
facility (as defined by type of ownership, not by type of ESRD 
facility) is estimated to receive a 3.1 percent increase in payments 
for CY 2023. An independent facility (as defined by ownership type) is 
likewise estimated to receive a 3.2 percent increase in payments for CY 
2023. As shown in Table 31, we estimate that the overall revenue impact 
of this final rule on all ESRD facilities is a positive increase to 
Medicare payments by approximately 3.1 percent.
    For AKI dialysis, we are unable to estimate whether patients will 
go to ESRD facilities, however, we have estimated there is a potential 
for $80 million in payment for AKI dialysis treatments that could 
potentially be furnished in ESRD facilities.
    For the ESRD QIP, we estimate that of the 3,592 ESRD facilities 
expected to receive a payment reduction as a result of their 
performance on the PY 2025 ESRD QIP, 488 are ESRD small entity

[[Page 67301]]

facilities. We present these findings in Table 35 (``Estimated 
Distribution of PY 2025 ESRD QIP Payment Reductions'') and Table 37 
(``Estimated Impact of QIP Payment Reductions to ESRD Facilities for PY 
2025'').
    For the ETC Model, this final rule includes as ETC Participants 
Managing Clinicians and ESRD facilities required to participate in the 
Model, pursuant to Sec.  512.325(a). We assume for the purposes of the 
regulatory impact analysis that the great majority of Managing 
Clinicians are small entities by meeting the SBA definition of a small 
business. The greater majority of ESRD facilities are not small 
entities, as they are owned, partially or entirely, by entities that do 
not meet the SBA definition of small entities. Under the ETC Model, the 
HDPA is a positive adjustment on payments for specified home dialysis 
and home dialysis-related services. The PPA, which includes both 
positive and negative adjustments on payments for dialysis and 
dialysis-related services, excludes aggregation groups with fewer than 
132 attributed beneficiary-months during the relevant year. The 
aggregation methodology groups ESRD facilities owned in whole or in 
part by the same dialysis organization within a Selected Geographic 
Area and Managing Clinicians billing under the same Tax Identification 
Number (TIN) within a Selected Geographic Area. Taken together, the low 
volume threshold exclusions and aggregation policies, coupled with the 
fact that the ETC Model affects Medicare payment only for select 
services furnished to Medicare FFS beneficiaries; we have determined 
that the provisions of the final rule for the ETC Model will not have a 
significant impact on spending for a substantial number of small 
entities.
    The HDPA is a positive adjustment on payments for specified home 
dialysis and home dialysis-related services. The PPA, which includes 
both positive and negative adjustments on payments for dialysis and 
dialysis-related services, excludes aggregation groups with fewer than 
132 attributed beneficiary-months during the relevant year. The 
aggregation methodology groups ESRD facilities owned in whole or in 
part by the same dialysis organization within a Selected Geographic 
Area and Managing Clinicians billing under the same Tax Identification 
Number (TIN) within a Selected Geographic Area, which increases the 
statistical liability of the home dialysis rate and the transplant rate 
for ETC Participants in the aggregation group. Taken together, the low 
volume threshold exclusions and aggregation policies, coupled with the 
fact that the ETC Model affects Medicare payment only for select 
services furnished to Medicare FFS beneficiaries; we have determined 
that the provisions of the final rule will not have a significant 
impact on spending for a substantial number of small entities.
    The economic impact assessment is based on estimated Medicare 
payments (revenues) and HHS's practice in interpreting the RFA is to 
consider effects economically ``significant'' only if greater than 5 
percent of providers reach a threshold of 3 to 5 percent or more of 
total revenue or total costs. As a result, since the overall estimated 
impact of these updates is a net increase of greater than 3 percent in 
revenue across almost all categories of ESRD facility, the Secretary 
has determined that this final rule will have a significant positive 
revenue impact on a substantial number of ESRD facilities identified as 
small entities.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. We do not 
believe this final rule will have a significant impact on operations of 
a substantial number of small rural hospitals because most dialysis 
facilities are freestanding. While there are 121 rural hospital-based 
ESRD facilities, we do not know how many of them are based at hospitals 
with fewer than 100 beds. However, overall, the 121 rural hospital-
based ESRD facilities will experience an estimated 2.2 percent increase 
in payments. Therefore, the Secretary has certified that this final 
rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.

G. Unfunded Mandates Reform Act Analysis (UMRA)

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

H. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have substantial direct effects on the rights, roles, and 
responsibilities of States, local or Tribal governments.

I. Congressional Review Act

    This final regulation 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.

VIII. Files Available to the Public via the Internet

    The Addenda for the annual ESRD PPS proposed and final rule will no 
longer appear in the Federal Register. Instead, the Addenda will be 
available only through the internet and will be posted on the CMS 
website under the regulation number, CMS-1768-F at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. In addition to the 
Addenda, limited data set files are available for purchase at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile. Readers who experience 
any problems accessing the Addenda or LDS files, should contact CMS by 
sending an email to CMS at the following mailbox: 
[email protected].
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on October 25, 2022.

[[Page 67302]]

List of Subjects

42 CFR Part 413

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

42 CFR Part 512

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

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

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

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

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


0
2. Effective January 1, 2023, Sec.  413.178 is amended by revising 
paragraphs (a)(8) and (d)(2), and adding paragraph (i) to read as 
follows:


Sec.  413.178  ESRD quality incentive program.

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

0
3. Effective January 1, 2023, Sec.  413.231 is amended by adding 
paragraphs (c) and (d) to read as follows:


Sec.  413.231  Adjustment for wages.

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


Sec.  413.234  [Amended]

0
4. Effective January 1, 2025, Sec.  413.234, amend paragraph (a) 
(effective January 1, 2025) by adding the word ``functional'' before 
the word ``equivalent'' in the definition of ``Oral-only drug''.

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

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

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


0
6. Effective January 1, 2023, Sec.  512.370 is amended by revising 
paragraph (b) introductory text and adding paragraph (b)(3) to read as 
follows:


Sec.  512.370  Benchmarking and scoring.

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

0
 7. Effective January 1, 2023, Sec. 512.397 is amended by revising 
paragraph (b)(1) to read as follows:


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

* * * * *
    (b) * * *
    (1) CMS waives the requirement under section 1861(ggg)(2)(A)(i) of 
the Act and Sec.  410.48(a) of this chapter that only doctors, 
physician assistants, nurse practitioners, and clinical nurse 
specialists can furnish kidney disease patient education services to 
allow kidney disease patient education services to be provided by 
clinical staff (as defined at Sec.  512.310) under the direction of and 
incident to the services of the Managing Clinician who is an ETC 
Participant. The kidney disease patient education services may be 
furnished only by qualified staff (as defined at Sec.  512.310). 
Beginning MY5,

[[Page 67303]]

only clinical staff that are not leased from or otherwise provided by 
an ESRD facility or related entity may furnish kidney disease patient 
education services pursuant to the waiver described in this section.
* * * * *

    Dated: October 27, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-23778 Filed 10-31-22; 4:15 pm]
BILLING CODE 4120-01-P